Stock Thoughts

An Investment in Knowledge Pays the Best Interest

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CVS Offers Recession-Resistant Growth with Transformation

• 3.5% Dividend Yield, $14.5 billion in stock repurchase remaining.
• M&A period over, now focusing on integrating new businesses and strengthening the balance sheet.
• Healthcare as a sector is recession-resistant.
• Sees cost recovery by 2H24, with the conclusion of a cost optimization program expected to yield $700-800 million in savings.
• Expected addition of $2 billion to EBITDA by FY26 from Oak Street and a significant internal referral network from Signify Health.

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Qualcomm Drives into the Future with Apple Renewal and Auto Deals

• 2.8% Dividend Yield, $5.5 billion in stock repurchase remaining.
• QCOM’s renewed agreement with Apple to supply 5G chips through FY26.
• The company anticipates significant growth in the Automotive sector, underscored by recent partnerships with BMW and Mercedes to supply infotainment chip systems.
• QCOM holds 140,000 patents across over 18 billion devices, an estimated 38% market share in RF IoT technology.
• Nuvia SoC ARM chipset to launch in FY24 for Windows, competing with Apple’s M1 and M2.

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Aging Demographics and Medicare Advantage Growth Heal Outlook for Healthcare Sector

• On a secular basis, a demographic shift toward an older population has tailwinds in care needs and individual spending per visit. Medicare Advantage (Medicare Part C) will grow to become the largest payor by 2026.
• Healthcare is recession-resistant, with the largest payors, Medicare and Medicaid, being price agnostic toward care.
• A concentrated effort in the sector to expand margins through rate increases, cutting administrative costs, and reducing contract labor.
• US spending on healthcare will grow at a 7.1% 5-year CAGR – outpacing GDP by an estimated 240bps.

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LHX Growth Prospects Take Off with Space wins and Defense Spending

• 2.72% Yield.
• Huge backlog which expanded by 25% year over year to $25 billion. Increased book-to-bill to 1.18x across the entire company.
• Global rearmament campaign, NATO militaries ex United States increasing equipment spending by 24.9% year over year. The US approved the largest defense spending package in history.
• Expanding the total addressable market in space, with a 1.7x book-to-bill, and the acquisition of Aerojet Rocketdyne, adding $2 billion per year in revenue.

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VFC Has Deep Value Proposition with a 6.2% Dividend Yield

• 6.2% dividend yield.
• Stock has pulled back 81% from January 2020 and now represents a deep value proposition with low PE and a big dividend yield.
• VFC’s strongest brands, Vans and The North Face, are pivoting to a more digital DTC (Direct-to-Consumer) presence.
• VFC is guiding towards a minor recovery for this 2024 holiday season and is entering the holiday season in an improved logistical and inventory position.
• Despite headwinds, there is significant brand recognition and value in VFC’s premium retail brands.

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Cheap Pureplay and Short Term Expansion Yields Long Term Cashflows for EQT

• Earnings and Dividends are expected to ratchet higher with Mountain Valley Pipeline opening by 2024.
• Dividend Yield 1.36%, extensive share buyback regimen with $1.4 billion in repurchases left open.
• Pure player in one of the cheapest gas basins in the world. EQT produces 6% of total US natural gas output.
• Acquisition of Tug Hill, adding 800 MMcfe/d* in capacity while reducing firm-wide breakeven by $0.15/MMbtu*.
• Favorable natural gas conditions expect a shortfall in supply compared to demand. EIA expects 16% increase in global demand year over year.

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Video: Gold Stocks That are Attractive from a Valuation Perspective: NEM, GFI, GOLD, BTG

• The US faces numerous economic problems, from the credit rating downgrade to ballooning debt and an aging population.
• Central banks have significantly increased their gold purchases, with a 152% year-over-year increase in 2022, primarily driven by countries like China and Russia seeking to move away from the US dollar.
• Gold has been a historically stable value asset, now being one of the only options now that Treasuries are falling out of favor internationally hinting at its potential to reach unprecedented price levels.

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Gildan’s Vertical Integration Provides Sustainable Opportunity

• Dividend Yield 2.48%, robust share buyback program.
• High-margin, vertically integrated player with facilities in trade-advantaged countries in Central America and the Caribbean.
• Near-term volatility in cotton markets subsiding, increase in underwear and hosiery sales partially offset consumer reluctance to spend on activewear.
• Sustainable Growth initiative, hoping to capture consumer shift toward ESG clothing sources while continuing to expand the company’s core competencies.

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Molson-Coors

Molson-Coors Wins Beyond Domestic Beer

• Dividend Yield 2.87%.
• Significant tailwinds in the short-term from a competitor’s blunder, a sales increase of 12.1% year over year.
• Revitalization campaign in brand identity, advertising spend, and brewery operations. Equalization of advertising dollar spend across brands has yielded excellent double-digit volume increases in Canada and the UK.
• Targeting smaller acquisitions, hoping to build a “string-of-pearls” across every segment of the alcohol market.
• Long-term partnership with Coca-Cola to market hard versions of Simply Lemonade and Peace tea.

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Gold’s Resurgence in a De-Dollarizing World

• China/BRICS is actively working to reduce global trade’s dependency on the US Dollar, settling international agreements in their currency, the RMB.
• The US faces numerous economic problems, from the credit rating downgrade to ballooning debt and an aging population.
• Central banks have significantly increased their gold purchases, with a 152% year-over-year increase in 2022, primarily driven by countries like China and Russia seeking to move away from the US dollar.
• Gold has been a historically stable value asset, now being one of the only options now that Treasuries are falling out of favor internationally hinting at its potential to reach unprecedented price levels.

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FNF: Navigating Horizontal Expansion Amid Challenges

• Dividend yield 4.27%, experiencing a recovery in both commercial and residential title issuance markets.
• Investment in technology to provide further value-added solutions for real estate.
• Long-term reinsurance deal with Blackstone, significantly reducing risk on the books and costs by as much as 25%.
• Strong balance sheet, free cash flow machine at $21.70/share past year.

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Avoid: Medical Properties Trust (MPW)

MPW lending to Steward in order for Steward to pay rent is a sign of weakness. Revenues down. Dividend needs to be cut. Do not buy until this dividend cut occurs. You can then assess. The balance sheet is deteriorating quickly. If Steward cannot fix its operations, MPW has more downsize.

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