Latest Stock Buy or Sell? Make More Informed Decisions!
Today, Mark Grammer commented about whether 2181 JP, V-N, REPYY-5, PFE-N, LVMUY-OTC, PM-N, BA-N, BABA-N, MG-T, FMX-N, ZIL2-GR, PMTYF-OTC, NSRGY-OTC, HSBC-N, SAN-N, X-N, LYG-N, BAC-N are stocks to buy or sell.
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What drives stocks are earnings and the cash flow they generate. He doesn’t see the growth potential with this bank. Haven’t grown their earnings in well over 3 years, and has an ROE that is well below its cost of capital. Their efficiency ratio is one of the higher ones at almost 69%. Prefers some of the regional banks.
Japan? The government had been adamant that they were going to raise the consumption tax, but there are lots of strong voices that are saying that this is not the right time. Japan’s economy is slowly eking out some growth, but there is a lot of fear that a tax hike right now would destroy any recovery that there has been in the market. (See Top Picks.)
Has had so many headwinds that it has been very difficult for them. Have fairly high costs, so their efficiency ratio is not great. It does provide a fairly decent yield of around 5.5%. If you hold this, you have to have a very long time horizon. You need China to be healthy for this stock to work.
(A Top Pick Feb 9/15. Down 1.70%.) One of the most stable companies globally, and is probably better than owning a government bond. The market is a little unhappy with them because they haven’t met their model price for the last couple of years. However, they are still growing their top line at 4%+, a little under the 5% that they promised to do. About $41 out of every $100 comes from emerging markets, which is what you should expect from a global consumer staple. In the last year or 2, China has been a bit of a drag on their growth, but there has been a marked turnaround. Dividend yield of 3.08%.
Emerging markets? Probably has just under 10% of emerging markets in his portfolio. One area he likes in emerging markets is Mexico, and this is a stock that he likes. Its main asset is Coca-Cola bottling in Latin America and the Philippines. Also, has convenience stores that have been growing double digits per annum, with a very high return on equity. Dividend yield of 1.5%.
Not a bad investment. They will surpass Wal-Mart (WMT-N) in Gross Mercantile Value within the next few months, and will probably be double by 2020. You have to keep in mind that of China’s total retail sales, only 10% is done online right now. US has 15% and growing, meaning that there is still a fair amount of headroom for growth. China has adopted online to offline faster than anywhere else globally, and this company will be exposed to that.
Converting backlog into profits has been somewhat difficult for both this company and Airbus. They both faced some production delays. Because of that, there are penalties associated with revenue from customers. It is the penalties that cause the fluctuation in earnings, which translates into volatility in the share price. Finds this one very hard to model, because there is a lot of risk in the manufacturing process.
Global Markets. The US is his major focus. In the global market, it is 50% of the index, and really drives the economy for the whole world. The US economic situation is fairly benign, i.e. it is slow growth that we will continue to see for the foreseeable future. The big question mark going forward is what the Fed will do. At first it was to be 4 to 6 hikes, now it’s down to 2 to 4, and he expects it will be 2. Doesn’t think it won’t be too aggressive because of the impact it would have on emerging markets, China in particular. Knowing what is going on in China is critical to his analysis. The Chinese government is now going through a stimulus program that has raised some eyebrows, but in a positive sense. He is fairly optimistic on Europe with fairly robust auto sales. Their banks need to be healthier in order for the economy to be healthier.