ClearedHot Posted February 19, 2017 Posted February 19, 2017 (edited) The investment showdown thread seems to be more focused on types of investments and strategies. I thought a thread to discuss specific stocks and rationale might be interesting to some. Stocks I have been watching as of late: 1. Western Digital (WDC), mainly because they bought Sandisk (I bought Sandisk years ago in the low single digits and held it through four splits and the acquisition), I ended up with a large number of shares from the acquisition so I continue to follow. 2. Cisco (CSCO), This is an interesting beast because it appears their software/cloud sector is poised to surpass their hardware division. Interested in the thoughts of others. Edited March 30, 2017 by ClearedHot
Chida Posted February 19, 2017 Posted February 19, 2017 Tmobile. Probably will gobble up Sprint-Softbank (or vice versa). Plus they have a lot of spectrum, growth potential, and dynamic CEO. Sent from my iPhone using Tapatalk
schokie Posted February 19, 2017 Posted February 19, 2017 How are those stocks currently valued? My experience has been that companies with great future potential already have that expected growth factored into their value. I'm less interested in buying into a well-run company at any cost than I am at buying a well-run company for cheap. While that seems rather obvious, how do you calculate "cheap"? Or does that not matter as much considering the other variables? 1
SCardinals Posted February 19, 2017 Posted February 19, 2017 (edited) The #1 I look at is Apple...Honestly. In 2016 they started at ~120 ish, went down to 90, and slowly climbed back up to 120 by the year's end. Recently beat analysts expectations, now it's the highest it has ever been. They have continually beat up Samsung (not to mention the note7 battery fire outrage) that forced many to switch over. Apple has been gnawing away at the market in China. Buffett bought a ton of shares to kick the year off, BOA and ML have issued a strong buy rating on Apple, with a projection of 145. This year is poised to be an interesting one with the 10yr anniversary of the iPhone, a complete design re-haul, etc. Also their dividends are attractive. I think Apple is a safe bet for the next 2-3 years, but they will have to stop relying on 2/3rds sales from the iPhone to drive growth. That ship will sail soon, and a new market will have to be tackled. Lastly, with the corporate tax rate set to be reduced, Apple will surely bring home a lot of its cash. Next up is Amazon...Aka the next Walmart. Bezos is such a smart guy- to think they started out with book rental/purchase, e-readers, and now involved with CRM/cloud/web services, Amazon Fresh/grocery. The downside is their $845 price tag, with their last split coming in '98. Another risky attraction. If a split occurs this year, I think Amazon may be a good long-term hold. Unfortunately they miss expectations 3/4ths of the year and after everyone they get hammered...yet claw their way back. With a very high P/E, most are betting on Amazon's future rather than the short-term success, as I think its best years are ahead. Edited February 19, 2017 by SCardinals
MilitaryToFinance Posted February 19, 2017 Posted February 19, 2017 1 hour ago, SCardinals said: The #1 I look at is Apple...Honestly. In 2016 they started at ~120 ish, went down to 90, and slowly climbed back up to 120 by the year's end. Recently beat analysts expectations, now it's the highest it has ever been. They have continually beat up Samsung (not to mention the note7 battery fire outrage) that forced many to switch over. Apple has been gnawing away at the market in China. Buffett bought a ton of shares to kick the year off, BOA and ML have issued a strong buy rating on Apple, with a projection of 145. This year is poised to be an interesting one with the 10yr anniversary of the iPhone, a complete design re-haul, etc. Also their dividends are attractive. I think Apple is a safe bet for the next 2-3 years, but they will have to stop relying on 2/3rds sales from the iPhone to drive growth. That ship will sail soon, and a new market will have to be tackled. Lastly, with the corporate tax rate set to be reduced, Apple will surely bring home a lot of its cash. Next up is Amazon...Aka the next Walmart. Bezos is such a smart guy- to think they started out with book rental/purchase, e-readers, and now involved with CRM/cloud/web services, Amazon Fresh/grocery. The downside is their $845 price tag, with their last split coming in '98. Another risky attraction. If a split occurs this year, I think Amazon may be a good long-term hold. Unfortunately they miss expectations 3/4ths of the year and after everyone they get hammered...yet claw their way back. With a very high P/E, most are betting on Amazon's future rather than the short-term success, as I think its best years are ahead. A few words of caution. First, never believe the buy/hold/sell ratings from banks, they don't actually mean buy or hold or sell. I suggest reading this for a quick explanation of how sell-side equity research works: https://www.bloomberg.com/view/articles/2017-01-20/wall-street-analysts-give-investors-what-they-want Second a stock split cannot change the value of a company. If you think AMZN is a good value after the stock splits it is an equally good value today. 477M shares at $845 gives a market cap of $403B, if they split 2-for-1 you have 954M shares at $422.50 which is still a $403B market cap. On a stock specific note I disagree with your assessment of Amazon. The retail business has negative working capital so when it was growing rapidly they could reinvest that float into other business areas. As that growth slows they lose that excess cash for investment. With the exception of cloud services they continue to invest in low margin or no margin businesses that don't earn an ROIC above their cost of capital. Growth without profitability is value destructive. Groceries are a terrible business, the music and video offerings have escalating costs and Amazon has no competitive advantage in either of them. Nobody is making money in the restaurant take-out business. At 172x P/E (think of a bond with a 0.58% interest rate and no guaranteed payout), 3x Sales and 34x EV/EBITDA you are betting everything on profitability 10+ years in the future. Maybe you'll be right but there are many other, lower-risk options out there in my opinion. 2
SCardinals Posted February 19, 2017 Posted February 19, 2017 (edited) On 2/19/2017 at 1:42 PM, MilitaryToFinance said: A few words of caution. First, never believe the buy/hold/sell ratings from banks, they don't actually mean buy or hold or sell. I suggest reading this for a quick explanation of how sell-side equity research works: https://www.bloomberg.com/view/articles/2017-01-20/wall-street-analysts-give-investors-what-they-want Second a stock split cannot change the value of a company. If you think AMZN is a good value after the stock splits it is an equally good value today. 477M shares at $845 gives a market cap of $403B, if they split 2-for-1 you have 954M shares at $422.50 which is still a $403B market cap. On a stock specific note I disagree with your assessment of Amazon. The retail business has negative working capital so when it was growing rapidly they could reinvest that float into other business areas. As that growth slows they lose that excess cash for investment. With the exception of cloud services they continue to invest in low margin or no margin businesses that don't earn an ROIC above their cost of capital. Growth without profitability is value destructive. Groceries are a terrible business, the music and video offerings have escalating costs and Amazon has no competitive advantage in either of them. Nobody is making money in the restaurant take-out business. At 172x P/E (think of a bond with a 0.58% interest rate and no guaranteed payout), 3x Sales and 34x EV/EBITDA you are betting everything on profitability 10+ years in the future. Maybe you'll be right but there are many other, lower-risk options out there in my opinion. Very fair- I meant to add "take with a grain of salt". My intent of the stock split talk was more of future 'easier accessibility'...kind of like Apple post 7-1 split. These two in particular are more of my "high risk" assessments. I think Amazon is overvalued, but I think people are betting on the future of it. We'll see what happens tho. Wishful thinking. Thanks for your input. What's your take on Apple? Edited February 21, 2017 by SCardinals
MilitaryToFinance Posted February 20, 2017 Posted February 20, 2017 It certainly looks cheap, especially on an ex-cash basis. If they really cut the repatriation tax as much as planned that will be huge for Apple. My concern has always been the dependence on the iPhone and how long that can last. At some point they need a new product to carry the flag and it's hard to see what that will be. It says something when the Apple Watch was considered a flop after selling "only" $6B in the first year. Lots of companies would kill for a $6B revenue product but for Apple it didn't move the needle at all. It will take something massive to replace the profits from the iPhone and I have no idea what that will be.
Termy Posted February 21, 2017 Posted February 21, 2017 "My intent of the stock split talk was more of future affordability...kind of like Apple post 7-1 split." I am not trying to pick on you, but this is twice now in this thread you have something bizarre or wrong about splits. Affordability? What are you talking about? Unless you are only buying one share of something you can barely afford, it doesn't matter. You got the same amount of apple for $100 (or any denomination) the day before and the day after the split. I can think of one time ever that "affordability" of a given stock has mattered: Berkshire (which has never split) is expensive per share. Which is exactly why they created B shares. My advice as a dumb pilot that does have degree in finance and an MBA from a top 15 program, unless you can discuss: leading and trailing pe, yield and beta on a coherent level at a minimum you have no business buying individual equities. Buy an index fund and sleep tight. 2
SCardinals Posted February 21, 2017 Posted February 21, 2017 (edited) 24 minutes ago, Termy said: "My intent of the stock split talk was more of future affordability...kind of like Apple post 7-1 split." I am not trying to pick on you, but this is twice now in this thread you have something bizarre or wrong about splits. Affordability? What are you talking about? Unless you are only buying one share of something you can barely afford, it doesn't matter. You got the same amount of apple for $100 (or any denomination) the day before and the day after the split. I can think of one time ever that "affordability" of a given stock has mattered: Berkshire (which has never split) is expensive per share. Which is exactly why they created B shares. My advice as a dumb pilot that does have degree in finance and an MBA from a top 15 program, unless you can discuss: leading and trailing pe, yield and beta on a coherent level at a minimum you have no business buying individual equities. Buy an index fund and sleep tight. Totally understand- I probably have the wrong terminology. I was referring to it being more accessible at a lower cost per share. Perhaps that's the wording I should have used instead? More "accessible" at $100 vs $700. Unless my terminology is still way off? Not referring to the value, cause it's the same as it was pre/post as you said. I follow that. Sorry for mixing it up! Edited February 21, 2017 by SCardinals
Slick Posted February 21, 2017 Posted February 21, 2017 I have money invested in Titan Medical (TITXF on the OTC). Titan has developed a surgical robotic console called "SPORT" that theoretically can out-compete the "da Vinci" console made by a company called Intuitive Surgical. Right now, Intuitive essentially own the surgical robotic market since they don't have any big competition. The da Vinci sells for ~2 million and requires multiple incision sites in the patient. The console made by Titan Medical supposedly will be selling for ~1 million and it only requires a single incision site in the patient. Less incision sites means better surgical outcomes and hospital administrators also love saving money. Robotic consoles garner huge reoccurring revenue in the form of disposable equipment for the robot that hospitals need to buy. Robotic surgery is a multi-billion dollar industry and projected to keep growing. I've been following Titan Medical for about 2 years. Their previous management team failed to deliver a product launch on their proposed timeline. However, at the end of 2016 they hired a new CEO with substantial experience growing small companies. Their previous CEO's experience was working within large already-established companies. Right now Titan is trading at .38/share with tremendous upside potential. Intuitive was trading at less than $10 at one point and is now over $700. Definitely worth checking out.
Vertigo Posted February 22, 2017 Posted February 22, 2017 On 2/20/2017 at 8:53 PM, Slick said: I have money invested in Titan Medical (TITXF on the OTC). Titan has developed a surgical robotic console called "SPORT" that theoretically can out-compete the "da Vinci" console made by a company called Intuitive Surgical. Right now, Intuitive essentially own the surgical robotic market since they don't have any big competition. The da Vinci sells for ~2 million and requires multiple incision sites in the patient. The console made by Titan Medical supposedly will be selling for ~1 million and it only requires a single incision site in the patient. Less incision sites means better surgical outcomes and hospital administrators also love saving money. Robotic consoles garner huge reoccurring revenue in the form of disposable equipment for the robot that hospitals need to buy. Robotic surgery is a multi-billion dollar industry and projected to keep growing. I've been following Titan Medical for about 2 years. Their previous management team failed to deliver a product launch on their proposed timeline. However, at the end of 2016 they hired a new CEO with substantial experience growing small companies. Their previous CEO's experience was working within large already-established companies. Right now Titan is trading at .38/share with tremendous upside potential. Intuitive was trading at less than $10 at one point and is now over $700. Definitely worth checking out. How are potential sales though? If hospitals have already bought Intuitive's console, why would they dump that to buy Titan's? Or is this such a new tech that not many hospitals have it yet so they sales potential is wide open?
Vetter Posted February 25, 2017 Posted February 25, 2017 (edited) Read "A Random Walk Down Wall Street" and you'll realize it's a rigged game. By the time you find the next great stock, most likely it's past it's prime. Edited February 25, 2017 by Vetter 1
ClearedHot Posted March 1, 2017 Author Posted March 1, 2017 Target got creamed this week, down $8 a share. They are feeling the heat from Amazon (as are all brick and mortar stores), and political backlash from their stand on gender and bathrooms. Some think they still have upside and they took a lot of steps this week to correct the downturn, I just don't know if I can take a chance on them.
MilitaryToFinance Posted March 2, 2017 Posted March 2, 2017 On 2/25/2017 at 11:03 AM, Vetter said: Read "A Random Walk Down Wall Street" and you'll realize it's a rigged game. By the time you find the next great stock, most likely it's past it's prime. If you believe in Random Walk then you believe in efficient markets which by definition is the opposite of a rigged game. It means that no matter what you buy the price of all information is already in the stock so in aggregate you won't beat the market. In order to rig the market somebody would need to have information you don't and be taking advantage of you. The book is an interest read but you have to remember the reason we have economists is to make weathermen look accurate. Efficient Markets Hypothesis makes for building great theoretical models and having fun with math but has been widely refuted by real world market dynamics.
Vetter Posted March 3, 2017 Posted March 3, 2017 (edited) Buying individual stocks because you heard from your neighbors cousin that you can't lose is the rigged game. Might as well just go to Vegas...at least you'll get free drinks. I own the entire stock market (admittedly, weighted slightly toward small caps) and I sleep well at night. Edited March 3, 2017 by Vetter 2
MilitaryToFinance Posted March 4, 2017 Posted March 4, 2017 (edited) I definitely agree with you there. If you're getting a "hot tip" you're the sucker at the table. However I do believe if you are willing to put in the effort to research individual names and situations you can do better than the market over time. It requires a significant amount of effort to do so and is something you really need to have a personal interest in to commit the amount of time necessary to be successful. My suggestion is for people to start with areas they have some level of expertise already because you aren't going to compete with the professionals in the amount of time you can dedicate to research. So know your strengths and play to them. If you're a pilot with a Poly Sci degree maybe don't try and outsmart the PhD's by investing in small cap biotech stocks. Edited March 4, 2017 by MilitaryToFinance
Slick Posted March 5, 2017 Posted March 5, 2017 (edited) On 2/22/2017 at 3:57 PM, Vertigo said: How are potential sales though? If hospitals have already bought Intuitive's console, why would they dump that to buy Titan's? Or is this such a new tech that not many hospitals have it yet so they sales potential is wide open? I don't know for sure, but I'd guess that they would not dump the da Vinci if they acquired the SPORT. The SPORT should supplant the da Vinci for the most part, but not completely. The single-port approach does have limitations that the multi-port approach can overcome. So, some hospitals might want to keep both consoles available. When I say some hospitals though, I am referring to the major medical centers where money seems to be no object. Smaller regional centers that are most cost conscious that mainly do simple routine procedures don't have a need for the da Vinci, perhaps partly because of the costs of the console. But, they do have a need for something with the capabilities, and at the price point, of the SPORT. As I said, robotic surgery is a multi-billion dollar per year industry. If Titan Medical can finally get this off the ground, then many see it as being a slam dunk. Edited March 5, 2017 by Slick
Vetter Posted March 5, 2017 Posted March 5, 2017 On 3/4/2017 at 10:04 AM, MilitaryToFinance said: I definitely agree with you there. If you're getting a "hot tip" you're the sucker at the table. However I do believe if you are willing to put in the effort to research individual names and situations you can do better than the market over time. It requires a significant amount of effort to do so and is something you really need to have a personal interest in to commit the amount of time necessary to be successful. The numbers just don't back up your claim. While you may get lucky a year or two, the vast, vast majority of professional investors and fund managers who actively trade do not beat the market in the long run. These are the guys that have unlimited resources, analysts, and prob insider information. 2
11F... Posted March 19, 2017 Posted March 19, 2017 On 3/5/2017 at 2:06 PM, Vetter said: The numbers just don't back up your claim. While you may get lucky a year or two, the vast, vast majority of professional investors and fund managers who actively trade do not beat the market in the long run. These are the guys that have unlimited resources, analysts, and prob insider information. "who actively trade"....those are the most important three words in your post. This is why most of us, professional and individual, fail to beat the market IMO. Because we "actively trade." Professionals are active because otherwise there is no commission to be earned. And if they just barely keep up with the market, then what's the incentive for anyone to use them? So they have to try and beat the market. Individuals fail because we're emotional creatures and tend to sell low, despite telling ourselves we won't. But that's where we, as individuals, have an advantage over professionals. We don't have to be active. Buying and selling constantly, trying to time the market, is a very difficult proposition. I'm a firm believer that markets (prices) are irrational in the short term, but over the long term, they are not. That is, today's price and tomorrow's price may go up and may go down, but over the long term, prices definitely bounce around a mean that is reflective of a valuation. If anyone doesn't have a ton of $$ and cheap commissions available to diversify their investments though, I wholeheartedly agree with Vetter that the best thing to do is passively invest in low cost index funds, periodically rebalance, and just not stress about it. 15-20 years from now, you'll thank your younger self. Just for discussion which I think this thread was all about, TGT, VFC, and maybe SBUX are consumer disc companies I like at today's prices. QCOM in tech (CSCO also, but less so). CAH in healthcare. T in telecom. Utilities are all overpriced...SO maybe? Consumer Staples I can't find hardly anything right now....WMT, perhaps. I just bought HRL recently, though I don't think it's really a steal of a deal. TD for financials (it's a Canadian bank though). But you can see none of these are big growth companies. All very boring, based on my investment style. Now, I'm also the guy who said I thought TGT was slightly undervalued last summer at $67 or so. So take my thoughts for what they're worth....not much :) My average TGT price is in the low to mid-60's so I'm definitely at a "paper loss" there. But based on an earlier comment in this thread about TGT though, I do still think TGT is greatly undervalued here. They still have tons of cash and cash flow, they don't even pay out half of it in the form of a dividend and that's even with their reduced guidance. Excellent credit rating, yield at an all time high and payout ratio still less than 50%, P/E ratio is very good, but poor leadership IMO and losing revenue to WMT and AMZN online is certainly a risk factor. That said, TGT's % online growth was more than even AMZN's last quarter (though obviously the scales don't even warrant a comparison really). I could see TGT dropping slightly even further in the short term, but I have no concerns about TGT long term, at this time. I've got a $56 put expiring next week on them and would be very happy to pick up a hundred shares at that price. (And again, for full disclosure, even if I pick up these hundred shares, TGT is still only 3.5% of my total portfolio, so unless you're willing to accept a ton of risk, buying individual stocks should be accompanied with a ton of diversification). If anyone is looking for short term gains though, I wouldn't touch TGT (or really anything else for that matter, since I don't have any confidence in prices short term). In today's market, I do think it's pretty difficult to find many companies that are undervalued. Not a ton of bargains out there right now, IMO. Great thread, by the way. I'll be interested to see the comments of others on here over time, though I suspect that most folks on here prefer (wisely) just dumping money into index funds, which makes most of this discussion unwarranted.
Day Man Posted March 19, 2017 Posted March 19, 2017 I've had decent luck selling weekly ITM covered calls...I tend to do it with stocks I like, but earnings season provides some nice volatility.
ClearedHot Posted March 20, 2017 Author Posted March 20, 2017 I'm moving a portion of my portfolio into commodities with the following rationale; given the rapid market growth the past two months (my portfolio is 11% since 1 Jan), increased job creation, increased manufacturing, and tax reform which will certainly bring home some overseas orphaned money...I think we will see increased consumer spending in the coming months. Time will tell.
mcbush Posted March 21, 2017 Posted March 21, 2017 Which kind of commodities, if you don't mind me asking? Do you think they're better poised to capture gains in spending than certain segments that fall under the consumer discretionary umbrella?
ClearedHot Posted March 21, 2017 Author Posted March 21, 2017 Pork Bellies. There are several index funds that go beyond the "bigs" people typically associate with the mercantile. I am trying to carefully target my position because I want nothing to do with oil right now (OPEC is getting their ass kicked by America and chances are oil is going to the $42-$40 range), I prefer commodities associated with consumer consumption of manufactured goods. I am going to sprinkle a bit on precious metals staying away from gold...a little platinum, palladium and silver along with a few others specific to consumer electronics production.
ClearedHot Posted March 30, 2017 Author Posted March 30, 2017 On 2/18/2017 at 8:50 PM, ClearedHot said: Stocks I have been watching as of late: 1. Western Digital (WDC), mainly because they bought Sandisk (I bought Sandisk years ago in the low single digits and held it through four splits and the acquisition), I ended up with a large number of shares from the acquisition so I continue to follow. I am truly loving WDC, up 20% since I posted this in Feb.
Orbit Posted June 9, 2017 Posted June 9, 2017 NVDA is getting destroyed today after this https://citronresearch.com/nvidia-trade-back-130/
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