Latest Stock Buy or Sell? Make More Informed Decisions!

Markets. We have moved from a point of low volatility to suddenly high volatility. When that happens, the challenge is you’ve got a number of hedge fund investors who are leveraged, and they measure volatility as a way of deciding how much risk they should be taking. As market volatility picks up, they are forced to reduce risks on both the Long and the Short side. We saw a lot of that on Monday in the big sell off. J.P. Morgan recently said they expect as much as $100 billion to follow on selling from those types of investors. A dip like that often retests the lows, so that would be back to the lows that we saw on Monday. The rally back was very much what he would consider low quality equities. He didn’t see meaningful, long term value buyers step in to pick a bottom, which leads him to believe that there is further downside. If you are trying to construct a balanced portfolio, it has been a real challenge. The more defensive aspects have not been defending you.

This stock hits 2 of his biggest metrics, price momentum and value. Scores in the top 10% in momentum and in the top 20% on value. ROE is off the charts at 50%, and has historically had a strong Return on Equity for a long period of time. This doesn’t look expensive on a multiple basis.

Scores really well on a valuation basis and is trading at 3X EBITDA. Good ROE in the 20% range and beat on the last quarter. There is no good reason for this to be trading at the low end of its range, but this is a market that has checked back and a lot of stocks like this have checked back with it. As we see better employment numbers, it is certainly a reason for people to start to upgrade their cars. The only knock against this is that price momentum has turned lower with a lot of other things in the market.

Has a bit of a bias against gold stocks in general, as they tend not to be great fundamental value investments, and tend not to cash flow. This scores poorly on a lot of metrics and has a fair bit of debt.

This scores tops in terms of stability, and has a reasonable ROE. Price to free cash flow is not cheap, which is generally true for telcos, but they are very stable businesses. They can carry more debt and typically pay a good yield. Dividend yield of 5.8%. If you are looking for a place to hide, this would be a great place.

Distributes medical products to clinics, and buys up other players that do the same type of thing. The challenge with these rollup’s is that they tend to do it with debt, and at very high valuations. This is trading at 25X EBITDA. They don’t really cash flow and this is trading at 45X cash flow. All of their growth is in the future in terms of cash flow growth. You are really counting on their growth to continue. On any kind of miss on earnings or check-back in the space, these stocks don’t have a floor for a fair bit of time before value buyers step in. Not a long-term investment, but something you might want to trade.

Has good valuation and scores in the top 20% for him. Price momentum, despite its check back, is actually holding in pretty well. Scores in the top 70% for him. Reasonably valued and has a good yield. Will benefit from a rising rate environment. The kind of stock you can hold for the longer-term.

(A Top Pick July 7/15. Down 23.24%.) Sold his holdings when price momentum turned negative, but thinks it is a well-run company. From a valuation perspective, longer-term the company is still in the top 20% for him. Good ROE’s and trades at about a 9% free cash flow yield. Have been aggressive in buying back their stock.

(A Top Pick July 7/15. Down 11.77%.) There is not a specific reason for this stock to be down. It is still one of his larger holdings. The valuation is still excellent. ROE of about 21%.

(A Top Pick July 7/15. Up 27.16%.) (A Short) This was the type of stock that he likes to short. Had really bad price momentum and a levered balance sheet with not a lot of cash flow. Has started covering his position.

Definitely challenged by a high US$. He likes it for its low volatility. One of the most stable stocks in the S&P 500. A stock that you can own and sleep well at night. Trading at about 17X earnings. 3.9% dividend yield.

Despite the huge run up and share price over the last 5 years, it is still cheap. Scores in the top 10% for him on value. Has a 41% ROE. Trading at about 12X earnings. Pristine balance sheet.

A potentially good purchase for retail investors looking for yield. Price momentum is very good. Utilities in general tend to be defensive in a down market, so it has held up particularly well. Very stable. Not cheap on an EBITDA basis and carries a fair bit of debt, which is true of all these types of utility companies. Dividend yield of 4.3%.

(Has a small Short.) Scores very poorly for him on just about every metric. Negative ROE and the balance sheet is stretched. If you own, he is not sure he would Sell down here. Doesn’t think it is a company that is going bankrupt. They have options on the table.

Likes this company, primarily on valuation. ROE is at around 15%. PE of about 16. Beat their last quarter by about 27%. Yield of 2.9%.