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TOP PICK
Stockchase Research Editor: Michael O'Reilly This international manufacturer of luxury items that includes the Coach and Kate Spade brands is reiterated as a TOP PICK. Recently reported earnings beat expectations by 17% and ROE is over 29%. They are using cash reserves to buy back shares and pay down debt. They trade at 15x earnings, compared to peers at 28x. They have re-instated the dividend at a good yield, while keeping the payout ratio under 10% of cash flow. We recommend trailing up the stop (from the $30.00 as previously recommended) to $38.50, looking to achieve $56 -- upside potential over 27%. Yield 2.30%. (Analysts’ price target is $55.93)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly Trading at 27x earnings, compared to a sector average of 42x, KO is good value and is reiterated as a TOP PICK. Recently reported earnings beat analyst expectations by 12% and it maintains a ROE over 40%. We also like that it it paid down a sizable portion of debt. The company provides a strong dividend and has done so for the past 59 consecutive years (it also grows 10% per year). It has modest upside, but we like the stability. We recommend trailing up the stop (from $45, as previously recommended) to $48, looking to achieve $62.50 -- upside potential of 13%. Yield 3.05% (Analysts’ price target is $62.22)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly HAS's strategy to enter into digital entertainment is reaping rewards and is why the 100 year old toy manufacturer is reiterated as a TOP PICK. It recently released a My Little Pony film on NFLX linked to AMZN shopping - an excellent business model. This has helped the company deal with mitigating supply chain issues that held back sales in Q3. Recently released earnings beat expectations by 15% and its ROE continues above 24%. We also like they increased cash reserves while paying down a sizable chunk of debt. Not going to double your money, but a solid and steady performer. It pays a decent dividend, which has increased for 17 consecutive years, backed by a payout ratio under 55% of expected cashflow. We recommend trailing up the previously recommend stop (from $85) to $88, looking to achieve $116 -- upside potential over 14%. Yield 2.69% (Analysts’ price target is $115.92)
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PAST TOP PICK
(A Top Pick Apr 22/21, Up 3.4%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with LRN has triggered its stop at $32.50. We recommend covering the position at this time. We will look for better opportunities.
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COMMENT
Tempted to go to cash? That's always a temptation, but it's a mug's game trying to second guess the market. All you can do is buy the best stocks you can at reasonable prices. Even if they do get thrown out with the high flyers from time to time, they tend to recover. Financial strength, safety of dividends, and stay the course. In a market like this, what tends to happen is you tend to be a net seller rather than a net buyer. You're probably a bit heavier in cash today than you were a year ago.
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COMMENT
US tech stocks. Have been a wonderful gift. As a value investor, there's very little he'd play in that field. Multiples are beyond his reach. He wants tried and true, long-term companies. Most of his investors are looking for capital preservation, not the big swings that you can get with some of the tech stocks these days.
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COMMENT
Oil and gas. Yes, he's in. Never totally abandoned them. Energy will be a necessary part of powering the world for the foreseeable future. Yes, lots of divestment. Weaker companies have fallen away, providing opportunities for the larger players to pick up production growth reasonably. Huge swings in oil prices this last year. As long as we can remain in the range we are, companies that are left tend to be huge free cashflow generators. We're already seeing dividend improvement. It's still an area of good value that people can exploit.
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