Value Investing / Main Index / previous / next

August, 2018

OUR DIRTY DOZEN
by LARRY

According to an online asset monitor, my wife and I lost over six grand today, August 15, and this got me to thinking. Everyone loves come from behind winners, like "The Karate Kid," "Seabiscuit," Clark Kent, "Little Miss Sunshine," Phil Connors, "The Magnificent Seven," J. K. Rowling, or "Forrest Gump," to mention a few. What if we constructed a portfolio out of our biggest losers? Would that work? So, I collected our stocks that are down the most, today or over the longer term, culled a few probably deserving of their drops in prices, and came up with twelve that stand a great chance of beating the market in the months or years ahead. See how they look to you.


Aegon, N.V., ADR (AEG) - Recent price $6.04. A powerful, yet undervalued insurance sector player with a hefty dividend (5.2%) and excellent long-term prospects.

AT&T (T)- Recent price $32.47. This company has terrific financial strength plus a juicy, low risk dividend (6.2%) and seems to have the media growth potential to do well for at least the next decade.

Alteryx, Inc. (AYX) - Recent price $53.17. Alteryx has no dividend but enormous growth potential. This surging, small company leases a software platform that permits easy preparation, analysis, and visualization of great volumes of data. Users speak highly of it. AYX has had enormous revenue growth. In addition, for those with more speculative inclinations, it has been rumored to be a takeover target.



Berkshire Hathaway, Class B shares (BRK/B) - Recent price $204.50. This holding company is under the management of CEO Warren Buffett, arguably the finest capital allocator ever. Though gains have slowed of late, the corporation's share price has still increased on average over 20% annually for over fifty years.

Honda Motor Company, Ltd., ADR (HMC) - Recent price $29.43. Even if beaten down these days, Honda Motor Company's stock sports a dividend of 3.10%, and the asset represents a business of great financial strength, a fine reputation for superior vehicle and small engine quality, and since late 2017 an entry into the electric car market.

McKesson Corp. (MCK) - Recent price $126.42. A titan in the healthcare industry, McKesson offers care management, data, and supply products. It appears to have exceptionally strong long-term prospects.



RioTinto PLC, ADR (RIO) - Recent price $47.43. This is a high dividend (6.2%) mining company, a producer of aluminum, iron ore, diamonds, energy, and industrial minerals. Rio is undervalued on both a price to earnings and a price to free cash flow basis.

Schlumberger, Ltd. (SLB)- Recent price $62.29. Schlumberger offers a nice dividend (3.2%) to shareholders as they await a turnaround in the company's fortunes. SLB is a major oilfield services corporation, yet temporarily weakened the past few years by a slump in the price of oil and then a contention with Haliburton (HAL) over patent rights. In my view, once those headwinds are behind it, SLB should see good gains.

Square, Inc. (SQ) - Recent price $72.24. Square is part of an ongoing trend toward perhaps the eventual eradication of cash. SQ is a successful innovator in e-commerce, digital payments, and income collection via smart phones and other devices. For example, Square began helping small enterprises accept credit cards on their cell phones or iPads, went on to add a bunch of additional services, and even lends dollars to customers, given good understandings of their enterprises. SQ will likely be growing extra and very practical applications for businesses as the latter improve and expand and so need to rely more heavily on such services. Square's revenue improvement has been phenomenal.



Twilio, Inc. (TWLO) - Recent price $74.63. TWLO makes tools to facilitate online communications, and these are easily placed on already available platforms. Though prospects for Twilio are considered awesome, and the share price is up well over 100% just this year, the company has to date a net loss instead of profits from operations. Experts suggest they have turned the corner and will show lucrative advances going forward. There is no question, however, that this is not a risk-free stock.

Vodafone Group, PLC, ADR (VOD) - Recent price $22.73. Already a powerful and growing provider of voice and wireless connections in Europe and India, VOD provides a hefty dividend (7.9%) while investors await further long-term and profitable developments.

WPP PLC, ADR (WPP)- Recent price $79.35. This major paper and paper products company appears well situated to grow its revenue and share price in the years ahead. For those seeking income, it also has a large dividend (5.0%). Investment services suggest the share price could easily double in the next 4 years.



Our above "dirty dozen" are of course merely a few of many worthwhile assets available at currently attractive prices. I note them merely because they are in the nest egg which is already our main focus and, though lately off their highs or below their cost bases, all seem such valuable components of our liquid assets as not to be sold simply because their prices at the moment are below their potential. Indeed, to me each of them warrants further accumulation while their shares are at relatively bargain levels, subject only to a precautionary preference as well for keeping a significant proportion of total holdings in bond funds or short-term reserves. Naturally, others may well find, though, a number of other securities that are at least equally deserving of their investments.


DISCLAIMER

Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)



Value Investing / Main Index / previous / next