DON'T BUY
The valuation has been a 50% premium to the market for the past several years. He worries about management with CEO in and out of this job several times; they can't find a successor. Also, he worries about their shutdown in China. In recent years, they have gathered $14 billion in debt and have negative net worth in order to buyback shares. True, Coke and McDonald's also have net worth, but they have predictable cash flows. SBUX's debt is unsustainble.
food services
DON'T BUY
Have 188,000 charging stations for EV's in a growing business and expanding industry. But they have a $4.5 billion market cap and only $250 million in revenues. So, they're trading at an extremely high valuation in anticipation of success. Also, CHPT is facing more and more competition to meet demand. In the U.S. there are 5 charging stations per 100 EV's; that needs to increase that by 300-400%.
Automotive
WATCH
Their theme parks have sustained them. Disney+ is a great opportunity for them; the market took that and ran with it by pushing shares to nearly $200 which he felt was extreme during the pandemic. Shares have settled back to the $90s--very interesting. He's watching it and just might step in.
entertainment services
BUY
They just rebranded and the ticker is now ELV. About 50% of their business comes from the commercial insurance market, the rest from government contracts. Past recessions didn't really impact their business. They insure about 50 million US citizens. Their major peer is UnitedHealth, but he prefers Athem because its valuation its 5 PE points lower.
medical services
BUY
Wait for a lower price? Don't wait for a lower price. Once the US Fed gets late in its cycle for tightening, then the opportunity will be gone. The upside far outweighs the temporary weakness. Likes RTX for blending defence (a stable business) and commercial aerospace (about 60%+ of all revenues).
Defense
PAST TOP PICK
(A Top Pick Jul 14/21, Down 39%) The stock split 20-for-1 a few months ago. The return is not so good, though. A fabulous company, but the Russian war and inflation happened. Also, last year, Amazon built a lot of warehouses and hired a lot of people, then demand softened. Long-term, this is a strong company, but his timing was poor. If you like this, buy it. Over time, this will work out.
specialty stores
PAST TOP PICK
(A Top Pick Jul 14/21, Down 7%) They make the skin for aircraft. A big customer is Boeing. More aircraft demand will benefit HXL. Still likes it.
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