Latest Stock Buy or Sell? Make More Informed Decisions!
Today, Josh Brown, CEO, Ritholtz Wealth Management and Stockchase Insights commented about whether TSU-T, MDA-T, HEI-N, SBUX-Q, DIS-N, NFLX-Q are stocks to buy or sell.
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Buy on this pullback. This was down 13% in 2022, and 2% in 2023 and another 2% this year. It's rare for SBUX to be down three straight years. We'll know when they report Jan. 28 if the turnaround is working. They will do $1 billion in revenue, -1% YOY, $1.12 billion in EBIT or -23% YOY. Analyst expectations are very low. Shares are trading at their 10-year median valuation. They just hired the best QSR CEO who will turn things around. At $80-65, he will add a lot more shares.
HEI has seen a bit of a pullback recently but is still up 32% over the last year. Growth seemed to slow a bit in the last quarter and trading at 55X earnings doesn't leave a whole lot of room for error. Regardless, we don't think a whole lot has changed with a single earnings report here and we don't think a thesis needs to change at this stage. We would be comfortable as a HOLD and would be more of a BUY if it approached $220.
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MDA is not cheap at 37X earnings. But it has nice contract, a competitive edge (barriers to entry), a strong balance sheet and solid growth. EPS should rise at least 33% next year and it has leverage to further contracts. Debt is barely six months' cash flow. Free cash flow was $258M in the last 12 months. The last quarter was very strong and well ahead of estimates. We think $27 would be a good price.
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We think TSU is one of the under-the-radar insurance names that possesses both a decent track record of maintaining healthy underwriting discipline and is well-managed. TSU retains most of its earnings for future growth - if the company can grow profitably by underwriting policies conservatively, we would not be surprised if TSU becomes a long-term compounder. The company is trading at 2.5x Price/Book, which we think is a fair valuation for an insurance company with healthy profit margins, and a consistent ROE above 15%.
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Bitcoin vs. Gold
A common assumption is that investors are no longer interested in gold because they are too busy buying bitcoin and other cryptocurrencies. Looking at current prices, it is easy to see how this assumption is so prevalent today. Bitcoin has soared to records, while gold has been a dog for the past little while.
But just because one is up and one is down does not mean there is an automatic correlation. Gold might be weak for entirely different reasons (inflation disbelief, for example — see above). The fact that gold is down does not mean bitcoin is the cause of the decline.
Bitcoin, while getting more popular, has not been tested in multiple different economic environments. Gold has thousands of years of history behind its use as a store of value. In a different world, bitcoin investors might sell bitcoin for gold. Who knows? But we would certainly not assume it cannot happen.
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He stopped out of this last May. He pounced in 2022 when it was selling off. He probably should have kept it. Problem is, a lot of positives are baked into the valuation. It's growing revenue this year faster than in any other. It's the second-best year for subscriber growth. Trades at 40x PE. It's a media/ad business. NFLX has all the momentum in the world. This and DIS will work. Streaming will work in 2025, unlike in previous years.