APO

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

There Will Be Volatility

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By Brian Nelson, CFA Last year, 2022, was a big test for equity investors, and the downside volatility that we witnessed during the year wasn’t comfortable, to say the least. Following the COVID-19 crash and rebound during 2020, and then the market surge in 2021, it wouldn’t be a stretch to say many investors’ heads are probably still spinning from all the volatility witnessed to start this decade. That said, part of what we’ve been warning about the past few years with respect to the equity market, especially in Value Trap, is that the proliferation of price-agnostic trading (e.g. quant, machine/algorithmic trading, etc.) will only lead to more and more market volatility, so while we were somewhat surprised by last … Read more

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio

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Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN). Summary of Best Ideas Newsletter portfolio changes UnitedHealth Group (UNH): 0% –> 4%-6% Booking Holding (BKNG): 0% –> 4%-6% Chipotle (CMG): 1%-2% –> 6%-8% Technology Select Sector SPDR (XLK): 0% –> 4%-6% By Brian Nelson, CFA With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We “rode” the latest upswing with … Read more

Brief Take: Chart of Best Ideas Newsletter Portfolio Idea Chipotle Looks Beautiful!

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Image: Chipotle’s shares have surged to a 52-week high. We continue to like the company’s long-term market opportunity. Brian Nelson, CFA Chipotle’s (CMG) shares have broken out to a 52-week high, and its chart looks beautiful. We attribute the recent strength in shares to greater conviction by the market in the company’s long-term restaurant growth potential. The company expects to open 255-288 new restaurants in 2023, a number that includes roughly a dozen or so restaurants that will be relocated to accommodate a Chipotlane drive-through. Adding more Chipotlanes, an initiative that grew out of meeting the needs of consumers during the worst of the COVID-19 pandemic, is key to our long-term thesis on the name. The pace of restaurant growth … Read more

ALERT: We’re ‘Raising Cash’ in the Newsletter Portfolios

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Image: American Union Bank, New York City. April 26, 1932. Public Domain “We firmly believe that an investment in a bank must come with the acknowledgement of the distinct possibility that another financial crisis may occur at an unknown time in the future. Why? Banks do not keep a 100% reserve against deposits. Our good friend George Bailey knew this very well when he tried to discourage Bedford Falls residents from making a “run” on the famous and beloved Building and Loan.” – Brian Nelson, CFA, September 4, 2013   SUMMARY OF CHANGES Best Ideas Newsletter Portfolio Johnson & Johnson (JNJ): 4%-6% à 0% Exxon Mobil (XOM): 4%-6% à 0% Chevron (CVX) 3%-5% à 0% Dollar General (DG): 3%-5% à 0% Korn/Ferry (KFY): 1%-2% à 0% … Read more

Realty Income’s Dividend Track Record Unfazed by Its Weakened Theater Exposure

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Image Source: Realty Income By Brian Nelson, CFA On Monday, February 22, Realty Income (O) reported solid fourth quarter results that beat expectations. For the quarter ending December 31, 2020, net income per share came in at $0.33, adjusted funds from operations per share was $0.84, and the REIT collected 93.6% of contractual rent, a decent percentage given that the troubled theater industry comprises ~5.6% of its annualized contractual rent. Regal Cinemas and AMC Entertainment (AMC) are top-10 customers. Though Realty Income continues to face headwinds from its non-investment grade client tenant portfolio, the REIT continues to invest for the future, with over $1 billion allocated to properties and properties under development or expansion in the period. As with many … Read more

Earnings Roundup: EXPE and LB

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Image Shown: Covering recent earnings reports from Expedia Group Inc and L Brands Inc. By Callum Turcan In this earnings roundup note, we cover travel company EXPE and specialty retailer LB to get an idea of how various industries are performing during the ongoing coronavirus (‘COVID-19’) pandemic. Expedia Group On May 20, Expedia Group Inc (EXPE) reported first-quarter 2020 earnings that beat consensus top-line estimates and missed consensus bottom-line estimates. Expedia’s GAAP revenues fell 15% year-over-year and management communicated in the earnings press release that the pain proceeded to get worse through April, noting that “the percentage of cancellation inquiries for air travel managed without an agent increased from approximately 65% in February to over 95% in April” which indicates … Read more

Cisco Delivers, Deere Disappoints, Pinterest Plummets, More Reports

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Cisco Delivers, Deere Disappoints, Pinterest Plummets, More Reports — In alphabetical order by ticker symbol: AMAT, BIDU, CSCO, DE, FLO, INTC, JACK, PINS, WMT — Applied Materials (AMAT): Applied Materials reported better-than-expected second-quarter fiscal 2019 results May 16, but the headline print wasn’t that exciting. Revenue dropped 23%, its operating margin gave back 6.3 percentage points, and diluted earnings per share dropped 34%, but the results were “toward the top-end of (its) guidance range, reflecting solid execution across the company in a business environment that remains challenging.” The chip-maker’s risk profile is too high for our taste, and we just have a hard time getting comfortable with the instability of operating results. We value shares of Applied Materials at $48 each, … Read more

Dividend Increases/Decreases for the Week Ending May 17

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Below we provide a list of firms that raised their dividends during the week ending May 17. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Adams Resources (AE): now $0.24 per share quarterly dividend, was $0.22. Business First Bancshares (BFST): now $0.10 per share quarterly dividend, was $0.08. Chubb (CB): now $0.75 per share quarterly dividend, was $0.73. CoreSite Realty (COR): now $1.22 per share quarterly dividend, was $1.03. Curtiss-Wright (CW): now $0.17 per share quarterly dividend, was $0.15. Extended Stay America (STAY): now $0.23 per share quarterly dividend, was $0.22. … Read more

Dividend Increases/Decreases for the Week Ending August 17

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Below we provide a list of firms that raised their dividends during the week ending August 17. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Apollo Global Management (APO): now $0.43 per share quarterly dividend, was $0.38. Apollo Senior Floating Rate Fund (AFT): now $0.098 per share monthly dividend, was $0.096. Apollo Tactical Income Fund (AIF): now $0.107 per share monthly dividend, was $0.104. Atrion (ATRI): now $1.35 per share quarterly dividend, was $1.20. CAE (CAE): now $0.10 per share quarterly dividend, was $0.09. Carpenter Technology (CRS): now $0.20 per share … Read more