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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

CCO has had three broker target price downgrades in April. In addition, the uranium sector has been weak as investors consider whether Russian exports will be allowed to resume if there is some resolution to the Ukraine War.
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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Multiples Needed to Breakeven from Drawdowns

One of the most often misunderstood concepts in investing is the difference in percentages from a drawdown against an increase. For example, if a stock declines by 10%, a subsequent increase of 10% will not bring the investor back to breakeven, but rather an 11% increase in the price is required to break even. For example, a $10 stock declines by 10% to $9, a subsequent 10% rise from $9 brings the stock up to only $9.9. Below we have listed various drawdown percentages in increments of 10%, and the subsequent percentage increases needed to break even, along with their respective ‘multiples. For example, a 90% drawdown in the price of a $10 stock requires a 10X to bring the stock back up to $10. 
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BUY

It reports Monday. As an investment bank, its business can be episodic, but he expects the CEO to deliver on the top and bottom lines--the top because of trading (their forte) and bottom because of, well, firing a bunch of people that they've been doing.

WATCH

It reports Tuesday when we should get a legal update about those suing JNJ for cancer allegedly being in their talcum powder.  It's been stuck in a range forever, though not in a perpetual downturn like other pharma. This could turn around on any big news on any new drug.

WATCH

It reports Wednesday. They will report on their strong franchises and their baby formula lawsuit which would have hurt their valuation for a long time. Not long ago, this was 14 points higher during that brutal, ridiculous rotation. These stocks are now all the way down.

DON'T BUY

It reports Wednesday. Is afraid it will miss like last time. Not exactly opaque--a complicated company.

WATCH

Many feel this is am Nvidia proxy, that if NVDA is strong, TSM flies. But this hasn't been true in the last couple quarters. Listen to their call only to get a sense on the semis space.

BUY

It reports Thursday. Not too high of a PE and not overly loved and purely domestic. It has pricing power.

WATCH

It reports Thursday. It trades on new card sign-ups, especially from young people and he expects that in the report. But careful: they usually trades badly in the morning of a report, then reverses. Listen to the call before deciding.

BUY

It reports Thursday. They have a giant data centre business within their company. Blackstone will tell us otherwise, that the data centre them is not over. It could help the semis stocks.

BUY ON WEAKNESS

He prefers Eli Lilly, but shares of NVO have come down enough.

DON'T BUY

They have one small division that Chinese authorities investigated, so the stock lost 25% of its value, and hasn't bounced back. He likes DD, but who knows what China will do during this trade war with Trump.

BUY

They are doing everything right, but face very good competition. This gets no credit in data centres.

BUY ON WEAKNESS

A winner for him, the parent company of Titleist and Footjoy brands, a leader golf brand. Shares have climbed 4-fold since late 2016, an outperformer. The stock has swung a lot the past year from inconsistent quarters, but it bounced but with a strong Q3 surprise, but the next quarter last February was mixed with a revenue miss. Remember that golf is a seasonal game, so one quarter will be weak. Their 2025 guidance is mixed: slightly weaker sales and in-line EBITDA. Sales are slowing though. He's not worried about their guidance, which is usually cautious, and this is a tought environment. They are buying back $250 million of shares and raised its dividend which is small though. This signals confidence.

DON'T BUY

A controversial merger where the popularity of Topgolf fizzled after Covid and the company's pricing was too aggressive, leading to bad numbers last year. The merger failed. Also, with a possible recession and weakening consumer, avoid this.