Latest Expert Opinions

Signal
Opinion
Expert
DON'T BUY
DON'T BUY
May 1, 2017

When people look at this, they always go on about the mortgages and how good they are, default rates, etc., and that is not relevant at all. What is relevant, is their deposits. If you look at the 4th quarter balance sheets, they have about $9 billion that can do at any time within a year. The reality is, it is a liquidity issue. They are losing deposits, which is the biggest crux of the problem. Even the $2 billion they have is probably not enough. It may give them some time to try and sell themselves, but whether it provides the liquidity they need if someone continues to take money out, it could be very, very hard. The mortgages are fine. He would not own the stock here.

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When people look at this, they always go on about the mortgages and how good they are, default rates, etc., and that is not relevant at all. What is relevant, is their deposits. If you look at the 4th quarter balance sheets, they have about $9 billion that can do at any time within a year. The reality is, it is a liquidity issue. They are losing deposits, which is the biggest crux of the problem. Even the $2 billion they have is probably not enough. It may give them some time to try and sell themselves, but whether it provides the liquidity they need if someone continues to take money out, it could be very, very hard. The mortgages are fine. He would not own the stock here.

BUY
BUY
May 1, 2017

This is a drinks company and their big thing is Johnny Walker and a couple of others. Trading at about 20X earnings. He likes the industry, and it throws up a lot of free cash. They’ve had some trouble with margins in the emerging markets area, but have sorted those out, so there should be better margins going forward. He likes the stock.

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Diageo PLC (DEO-N)
May 1, 2017

This is a drinks company and their big thing is Johnny Walker and a couple of others. Trading at about 20X earnings. He likes the industry, and it throws up a lot of free cash. They’ve had some trouble with margins in the emerging markets area, but have sorted those out, so there should be better margins going forward. He likes the stock.

DON'T BUY
DON'T BUY
May 1, 2017

This has a great Asian franchise, but if you want to own a global bank, he would prefer J.P. Morgan (JPM-N) or Bank of America (BAC-N), which he feels are much more suited to those areas. If you wanted something more retail oriented, he would own Lloyds (LLOY-LN). They have been restructured as much is they should, and that has really hurt them. (See Top Picks.)

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This has a great Asian franchise, but if you want to own a global bank, he would prefer J.P. Morgan (JPM-N) or Bank of America (BAC-N), which he feels are much more suited to those areas. If you wanted something more retail oriented, he would own Lloyds (LLOY-LN). They have been restructured as much is they should, and that has really hurt them. (See Top Picks.)

COMMENT
COMMENT
May 1, 2017

This company has executed incredibly well. The acquisitions they made have taken off and done very well. If anybody wants to do online advertising, there are only 2 places to go now, this one and Alphabet (GOOG-Q). They are getting stronger and stronger, and have the capacity to go out and buy their competition.

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Facebook (FB-Q)
May 1, 2017

This company has executed incredibly well. The acquisitions they made have taken off and done very well. If anybody wants to do online advertising, there are only 2 places to go now, this one and Alphabet (GOOG-Q). They are getting stronger and stronger, and have the capacity to go out and buy their competition.

TOP PICK
TOP PICK
May 1, 2017

A pharmaceutical company, long-term care company and a consulting services company. Has a free cash flow yield of about 7%. The CVS business is a good solid business with lots of cash. There are only 2 competitors in the US drug store business. There has been a little slippage on same-store sales, but feels they have straightened that out. Their long-term care business is really important, and he thinks there is good growth here. Thinks the stock is worth around $95. Yield of 2.4%. (Analysts’ price target is $87.50.)

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A pharmaceutical company, long-term care company and a consulting services company. Has a free cash flow yield of about 7%. The CVS business is a good solid business with lots of cash. There are only 2 competitors in the US drug store business. There has been a little slippage on same-store sales, but feels they have straightened that out. Their long-term care business is really important, and he thinks there is good growth here. Thinks the stock is worth around $95. Yield of 2.4%. (Analysts’ price target is $87.50.)

TOP PICK
TOP PICK
May 1, 2017

A private equity company. In the bad times, they were able to buy a lot of assets, which they have either sold right now or will continue to sell. Recently bought about $100 billion in cash, which is sitting on their balance sheet, which they can use to buy other things. Thinks it is worth somewhere in the $50-$60 range. Pays a very strong dividend of 7.8%. (Analysts’ price target is $35.)

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A private equity company. In the bad times, they were able to buy a lot of assets, which they have either sold right now or will continue to sell. Recently bought about $100 billion in cash, which is sitting on their balance sheet, which they can use to buy other things. Thinks it is worth somewhere in the $50-$60 range. Pays a very strong dividend of 7.8%. (Analysts’ price target is $35.)

TOP PICK
TOP PICK
May 1, 2017

They have some very good businesses and are cutting costs through the use of technology. Trading at 11X earnings. Have lots of Tier 1 capital which was at 13.6% in the last quarter. Trading at less than BV of $24.30. Dividend yield of 1.3%. (Analysts’ price target is $26.)

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They have some very good businesses and are cutting costs through the use of technology. Trading at 11X earnings. Have lots of Tier 1 capital which was at 13.6% in the last quarter. Trading at less than BV of $24.30. Dividend yield of 1.3%. (Analysts’ price target is $26.)