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Has attracted him over the years, but has always shied away because it's messy. There seems to always be something introduced that throws them off their game. Whether it’s the US$ moving up or down because a lot of their business comes from outside of the US. They are in court a lot because of their appliances. Just last week, the US government put a tariff on any washing machine, regardless of where it was produced coming into the US. It looks attractive, but he just can't get comfortable enough with it.
(A Top Pick Jan 26/17. Up 40.92%.) When you've got 2 billion active users plus, and a higher and higher percentage of your audience is using mobile apps there is more face time, which is a dream from a producers' standpoint, because advertisers want to pay more for that. But still, the advertising business has not caught up with the social media. There is still a long way to go for companies like this.
Everything has changed with this company. It went from being a darling 20 years ago at the end of the Jack Walsh era. Jeff Immelt was a darling for far, far too long. He is now out, and Mr. Flannery is in. They've ratcheted down their earnings expectations, as their cash flow is awful. He wouldn't look at this. It will have a bottom, but he doesn't know where that is.
This has done extremely well. It’s always been a fairly high valued company. Because of that, he has stayed away, but has a great deal of respect for the franchise and what they’ve done. China is doing extremely well for them, and is very exciting. However, domestic operations in the US, and to some extent in Canada, are suffering from a lack of traffic. If it was a lower multiple company, he might be a little more excited, but there are too many other exciting opportunities.
This has over 1 billion installed devices around the world, with a 93% loyalty rate. That means 93% of people would buy another Apple product. That’s a pretty good business plan. They also have a $30 billion services business that would be a top 50 company on its own. This company has lots of legs.
Looking at a long-term chart, this company has done extremely well, and has certainly participated in this broader rally. It’s doing very well and is a beneficiary of a very good market. Also, they are very well-managed and there is a lot to look forward to. Look at the costs embedded in in their P&L, delivery costs, labour, fuel costs, equipment costs, 150,000 vehicles and 800 airplanes. All this is changing. We are going to autonomous driving and drone delivery at some point. That is going to change the whole model in their favour. Trades at a very reasonable multiple, about 15 or 16 times earnings.
He owned this in the past and sold at 3 or 4 years ago, because a great percentage of revenues and profits were made up of ESPN and ABC, and he was seeing cord cutting and subscriber growth waning. The purchase of 21st-century Fox will take those shackles off. They are getting a great library, but also control of HULU, a streaming medium. They own 30% already, but 21st-century Fox also owns 30%, so they now have majority ownership. A year from now we are going to see that "glass half empty" of cord cutting into a "glass half full". They are going to take Netflix on and you are going to see a Disney channel being streamed into homes. Trading at a reasonable multiple. Dividend yield of 1.5%. (Analysts' price target is $119.18.)
Sold this in 2017 at $99 on the proposed acquisition by AT&T. He did very well with it, but there was a bit of a deal risk on the table that came to fruition. However, the Justice Department didn't like the deal and were going to sue AT&T and block the deal. It was in court, and the stock fell into the low $90s, and he repurchased it. He would have been happy if the Justice Department had lost. The company will make about $6.75 in this fiscal year. Even if they lose, he is happy owning it. The stock will react negatively but it will recover. Dividend yield of 1.7%. (Analysts' price target is $103.61.)
This works primarily with structural products, composite materials. Their biggest customer is the aerospace industry. 30% of revenues come from Airbus and 35% comes from Boeing. They basically do the skin on airplanes. With the new airplanes, and the huge production Airbus and Boeing are involved with, this company is doing very well and growing at a fairly fast clip. Dividend yield of 0.7%. (Analysts' price target is $67.54.)
