Value Traps

  • 17 Aug
    MET looks like a value trap

    MET looks like a value trap

    There’s a popular saying that you might have heard in a lot of different settings outside of the stock market: “If it looks like a duck, walks like a duck, and smells like a duck…then it’s a duck.” It’s interesting to me that I haven’t heard or seen the saying used when talking about stocks, given how often I’ve heard it throughout my life in common, everyday settings. The more time I spend paying attention to the market, though, the more I think there’s a reason for that. The truth about stocks – and, quite frankly, one of the things that makes most people simply toss their hands in the air when it comes to active investing – is that very often, the reality about a stock, or the underlying company, is quite different than the perception.

    One of the dangers of value investing is that sometimes you’ll start paying attention to a stock that looks, at least at first blush, like it could be a good bargain. It might be a very well-known and respected company, and so sometimes when people realize the stock has dropped off of recent highs, they’ll automatically assume it’s a great opportunity to buy the stock cheap. This kind of situation is often called a value trap, meaning that it looks good enough to get you interested, and perhaps even to go ahead and put your hard-earned capital into it. The trap is that sometimes there are very good reasons the stock has been dropping – and the risk is that it could go even lower.



    My own investing style can put me at risk of running into these kinds of value traps. To be clear, the risks I’m talking about aren’t just about the fact the stock might already be in a long, sustained downward trend; they often aren’t readily visible unless you’re willing to open the hood and really start probing around the guts of the business. That means analyzing a lot of the company’s fundamentals and being able to accept when you see a significant amount of problematic data that can act as an early warning that there is more trouble ahead.

    I believe MetLife, Inc. (MET) is a pretty good example of what I’m talking about right now. The company has great public visibility and presence, and a strong, long-standing position of leadership in the Life & Health Insurance industry. Since the beginning of the year, the stock is also down more than 20% as of this writing, putting it in clear bear market territory, and near to its 52-week low prices right now. There are some indications of good fundamentals in place, and some basic valuation measurements like the Price/Earnings and Price/Book ratios that look attractive at first glance. If you dig a little deeper, though, you’ll find that there are also some things to be concerned about, and that should give investors ample reason to think twice before buying the stock.



    Fundamental and Value Profile

    MetLife, Inc. is a provider of life insurance, annuities, employee benefits and asset management. The Company’s segments include U.S.; Asia; Latin America; Europe, the Middle East and Africa (EMEA); MetLife Holdings, and Corporate & Other. Its U.S. segment is organized into Group Benefits, Retirement and Income Solutions and Property & Casualty businesses. Its Asia segment offers products, including life insurance; accident and health insurance, and retirement and savings products. Latin America offers products, including life insurance, and retirement and savings products. Life insurance includes universal, variable and term life products. EMEA offers products, including life insurance, accident and health insurance, retirement and savings products, and credit insurance. MET has a current market cap of about $45.3 billion.

    • Earnings and Sales Growth: Over the last twelve months, earnings have been flat, while revenues increased nearly 23%. In the last quarter, earnings declined by about 4.5% while revenues increased 43%. This is a pattern that I think shows the company is becoming more and more inefficient. In addition, the company’s margin profile shows that Net Income as a percentage of Revenues dropped from a little over 6% over the last twelve months to 4.2% in the last quarter. That might not sound like a big drop, but to put it in perspective, in the last quarter, 1% of Revenues equaled about $212 million. That means the company has seen its profit margin erode by roughly $425 million.
    • Free Cash Flow: MET’s free cash flow is healthy, at more than $13 billion. The warning signal about Free Cash Flow – and something that I think helps to put the erosion of Net Income/Revenues in perspective – is that it has declined from from about $19 billion over the last year.
    • Debt to Equity: MET has a debt/equity ratio of .29. This is a very manageable number, and since the company has more than twice the amount of cash (more than $34 billion) than it does long-term debt (about $15.5 billion) there is no concern about their ability to service, or even to liquidate their debt if necessary.
    • Dividend: MET’s annual divided is $1.68 per share and translates to a yield of 3.68% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for MET is $54.11 and translates to a Price/Book ratio of .84 at the stock’s current price. That’s pretty attractive at first glance to value investors, who generally like to see Price/Book ratios below 1. However, the stock’s historical average Price/Book ratio is only .88, which puts a target price for the stock at only about $47.50 per share, or only about 4.2% higher than its current price. This is also where I’m seeing one of the biggest and most persuasive reasons to be concerned: the stock’s Book Value has been declining steadily for the last two years, from a high at $72.25 in mid-2016 to its current level. I read that as an erosion of the company’s intrinsic value. Warren Buffett likes to think of Book Value as a reflection of the per share amount of money a shareholder can expect to see if the company suddenly decided to pay off its debts and close up shop. Would you want to buy a stock that has seen the value of its basic business operations erode by more than twenty percent?



    Technical Profile

    Here’s a look at the stock’s latest technical chart.

     

    • Current Price Action/Trends and Pivots: The red diagonal line measures the length of the stock’s longer-term upward trend, and also informs the Fibonacci trend retracement lines shown on the right side of the chart. The stock’s downward trend dates back to November of last year after the stock hit a 52-week high at around $56 per share. Since February of this year, the stock has hovered in a mostly sideways range between about $48.50 on the high side and $43 on the low end. That range has been narrowing since July, with resistance at around $46.50, with support looking steady at between $43 and $44 per share. At the bottom of a downward trend, a sideways range can often point to signs the stock is getting ready to rebound; however the narrowing of that range over the last month looks to me like a deterioration of the stock’s ability to sustain its current price levels.
    • Near-term Keys: The stock’s Fibonacci retracement lines are a pretty good reference point to use to look for clues that the stock could be finding some strength and might actually reverse its downward trend. Look for a break above the 38.2% retracement line at $48 as a first signal that a new upward trend is in the offing; until that happens, any kind of bullish bet on the stock is purely speculative, with a very low probability of success and not a lot of upside potential to offset the downside risk. A drop below current support at $43 could be an opportunity to look for a bearish trade, however, with a short-term target between $35 and $38 looking very possible.


  • 10 Aug
    TRI: short-term bullish strength, interesting value potential. How should you play it?

    TRI: short-term bullish strength, interesting value potential. How should you play it?

    The search for bargains in the stock market is an ongoing challenge for any investor. Sometimes the challenge is harder than at other times; when the market is at or near historical highs, as it is right now for example, finding stocks that offer a legitimate value at their current price takes a little more work and effort. It also often means going against the grain of the broader market, since the best values are usually found in stocks that are trading at or near historical lows.

    Thomson Reuters Corp (TRI) is a stock that offers a somewhat different profile. As of this writing, the stock is only about $6, or 12.5% below its all-time high price at around $48 per share, but still well above its 52-week low price, which is around $34 per share. That certainly puts the stock in correction territory; but perhaps not yet at quite the level a strict value investor might generally look for to believe the stock is deeply discounted enough to warrant a more serious look. I think there are some really interesting elements to look at, however, that at least make TRI a stock that long-term investors should be putting on their watchlists; you may even decide that the stock is worth a serious look as a good value investment right now.

    Thomson Reuters is a multinational company, based in Toronto, Ontario, Canada that has been in existence since the 1850’s. The company deals in news and information services, including financial market, legal, and tax and accounting data. As you’ll see below, the company is a cash flow machine, with healthy operating profits, manageable debt, and a global footprint. Their latest quarterly earnings report was two days ago, and along with a generally positive financial report, also disclosed that they expect to complete a sale of a 55% stake in their Financial & Risk unit – the segment of their business that provides data and news primarily to financial customers, including brokerages and investment banks – to private equity firm Blackstone Group LP for $20 billion. A portion of those proceeds will be used to pursue expansion opportunities in their legal and accounting businesses.



    Fundamental and Value Profile

    Thomson Reuters Corp (Thomson Reuters) is a Canada-based provider of news and information for professional markets. The Company is organized in three business units: Financial & Risk, Legal, and Tax & Accounting. The Financial & Risk unit is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal unit is a provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world. The Tax & Accounting unit is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government. The Company also operates Reuters, Global Growth Organization (GGO) and Enterprise Technology & Operations (ET&O). Thomson Reuters operates in over 100 countries. TRI’s current market cap is $29.7 billion.

    • Earnings and Sales Growth: Over the last twelve months, earnings and revenues both declined. This is a trend that has been typical of companies in the Capital Markets industry, and TRI’s performance was better than the industry average. TRI operates with a healthy margin profile, however, with Net Income a little more than 14% of Revenues over the last twelve months. This number also improved to nearly 50% in the most recent quarter.
    • Free Cash Flow: TRI’s free cash flow is very healthy, at $1.9 billion at the end of the first quarter of the year. This number also increased dramatically from the beginning of the year, at around $1.1 billion, but declined about $25 million in the second quarter. The decline was attributed primarily to costs related to the Blackstone transaction.
    • Debt to Equity: TRI has a debt/equity ratio of .40. Their balance sheet indicates their operating profits are more than adequate to repay their debt. The Blackstone sale, which should be completed by the end of the year will infuse even more cash (about $500 million in the last quarter) onto their balance sheet. Besides financing acquisitions as already observed, it will also give them the flexibility, if they choose to do so, to practically wipe out their long-term debt, which amounted to a little less than $5 billion.
    • Dividend: TRI pays an annual dividend of $1.38 per share, which translates to a yield of about 3.28% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for TRI is $18.86 and translates to a Price/Book ratio of 2.22 at the stock’s current price. Their historical average Price/Book ratio is 2.28. That suggests the stock is fairly valued right now, which at first blush doesn’t imply a “screaming deal for a value-oriented investor. However, the Price/Cash Flow suggests a little different story, since it is trading almost 20% below its historical average.



    Technical Profile

    Here’s a look at the stock’s latest technical chart.

     

    • Current Price Action/Trends and Pivots: The red diagonal line measures the length of the stock’s intermediate downward trend, and also informs the Fibonacci trend retracement lines shown on the right side of the chart. The stock bounced off of trend support at around $36.50 to push up to its current price. Along the way, it has shown an almost picture-perfect, upward “stair step” pattern to establish its short-term upward trend. The stock has seen resistance around $42.50, which coincides with the 50% retracement line. A break above that level could see the stock push quickly to $44, with its 52-week high in the $48 range not far off from that point. The 38.2% retracement line, which is sitting at around $41, should act as a strong support level if the short-term trend has any chance of extending into an intermediate time period. A break below that level could see the stock drop back to its 52-week lows around $36 per share.
    • Near-term Keys: If you prefer to wait for a more cut-and-dried value proposition on this stock, it might be safer to wait and see if the stock can reverse its short-term upward trend and push near to its yearly lows, or even to extend them a little more; that would put the stock’s Price/Book ratio significantly below its historical average and make the value argument more compelling than it may be today. If its bullish momentum, continues and the stock pushes above $42.50, a good short-term momentum trade could lie in buying call options, or the stock outright, with a short-term target price around $44 or $45 per share. If the stock breaks down, and you want to work with the bearish side, a good put option or short selling set up would come below $41, with a target price at around $36 per share.


  • 03 Aug
    Why CAT’s 20% drop could be a value trap

    Why CAT’s 20% drop could be a value trap

    When you put a big part of your investing focus on bargains, emphasizing value-based fundamental analysis to determine whether a stock is worth your time and money, you inevitably end up filtering through a lot of different stocks, but cast most aside. I think that is useful, because being more selective helps you narrow the universe of stocks you’re paying attention to at any given time. The problem, however is that sometimes the metrics a value investor learns to rely on can give you a false sense of whether a stock really fits a good description of a good value. That can lead you to make an investment in a stock that might be down from a recent high because it looks like it’s available now at an attractive price compared to where it was; but in reality it’s a bit like trying to catch a falling knife – the only real way to avoid getting cut is to get out of the way and let the knife fall to the floor. These kinds of situations are also called value traps, because they provide numbers that lure less careful investors in and motivate them to make an investment at some of the most dangerous times possible.

    I think Caterpillar Inc. (CAT) is actually one of those traps right now. My opinion differs from most other analysts and “experts” out there, who point to the company’s solid earnings growth over the last year, and the stock’s decline in price since January of this year of more than 20% as reasons that investors should be treating the stock as a great value opportunity right now. They’ll also point to a popular valuation metric, a stock’s P/E ratio, as a clear indication that the stock is undervalued and something you should be paying attention to right now. I’ll admit that at first blush, I thought the stock might be a good opportunity, too; but the more I drilled down to really look at some of the other data points that are important to me, the more concerned I got.



    Another risk element that investors seem to be trying to shrug aside right now when it comes to stocks like CAT is the fact that while the U.S. seems to have found some sense of resolution – or at least a path to it – in trade with the European Union, the same can’t be said of discussions with China. Today, on top of existing tariffs that already amount to more than $34 billion against its single largest trading partner, President Trump proposed another $200 billion in new tariffs, prompting what seems like the customary Chinese response to retaliate in kind. The market’s reaction was pretty ho-hum; could it mean the investors are beginning to accept trade tension as a normal state of affairs? If they are, then I think it means they are becoming desensitized to that risk, and that is a troubling indication all by itself.

    Multinational stocks, and especially those with major operations in China, remain at risk if trade tensions continue as they are, or escalate even further. And let’s not forget that while the E.U. have, for now at least, agreed to hold off on further tariffs against each other and work toward compromise, it doesn’t mean that situation has been resolved. CAT is one of the companies that I think could be the most dramatically affected. That affect may not be showing up in earnings reports or sales numbers yet; but the risk that it will increases more and more with every week, month, and quarter that continues with trade affairs as they are. To my way of thinking, that puts something of a jaundiced eye on any currently glowing numbers. Just about every analyst report I’ve been able to find on CAT forecasts stable to growing revenues along with continued earnings growth for the foreseeable future, and under most circumstances I think that should be a good thing; but the thing that is setting off warning bells for me is that none of the reports I have found discuss trade or tariffs as risk factors.



    Fundamental and Value Profile

    Caterpillar Inc. (CAT) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The Company operates through segments, including Construction Industries, which is engaged in supporting customers using machinery in infrastructure, forestry and building construction; Resource Industries, which is engaged in supporting customers using machinery in mining, quarry, waste and material handling applications; Energy & Transportation, which supports customers in oil and gas, power generation, marine, rail and industrial applications, including Cat machines; Financial Products segment, which provides financing and related services, and All Other operating segments, which includes activities, such as product management and development, and manufacturing of filters and fluids, undercarriage, tires and rims, ground engaging tools, fluid transfer products, and sealing and connecting components for Cat products. CAT has a market cap of $82.5 billion.

    • Earnings and Sales Growth: Over the last twelve months, earnings grew by almost 100%, while sales growth was almost 24%. Growing earnings faster than sales is hard to do, and generally not sustainable in the long-term; however it is also a positive mark of management’s ability to maximize their business operations. Net Income as a percentage of Revenues also improved from about 6% for the trailing twelve months to more than 12% in the most recent quarter.
    • Free Cash Flow: CAT’s free cash flow over the last twelve months is more than $3.7 billion. Cash and liquid assets are also more than $7.8 billion, which does give the company quite a bit of financial flexibility; however these numbers are offset in my analysis by the stock’s very high debt to equity ratio
    • Debt to Equity: CAT has a debt-to-equity ratio of 1.59. Their long-term is more than $23.5 billion and marks CAT as one of the most highly leveraged companies in the Heavy Machinery industry.
    • Dividend: CAT currently pays an annual dividend of $3.44 per share, which translates to an annual yield of 2.49% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for CAT is $24.99 per share. At the stock’s current price, that puts the Price/Book ratio at 5.52, versus a historical average of 3.62. The historical average puts the stock’s “fair value” a little above $90 per share – more than 34% below the stock’s current price. Some analysts like to point out that the stock is trading about 32% below its historical Price/Earnings ratio as an indication the stock is undervalued, but I view Book Value, and the Price/Book ratio as a better measurement and more indicative of a company’s intrinsic value.



    Technical Profile

    Here’s a look at the stock’s latest technical chart.

     

    • Current Price Action/Trends and Pivots: The diagonal red line traces the stock’s upward trend until January of this year and provides the reference for calculating the Fibonacci retracement levels indicated by the horizontal red lines on the right side of the chart. The stock’s decline from late January’s high at around $173 puts the stock in a clear, intermediate-term downward trend, with the stock trading near to the lowest point of that trend around $135 per share. The stock is hovering around a major support point, marked by the 61.8% Fibonacci retracement line, and if that line holds, it could give the stock some momentum to start pushing higher to reclaim its highs from earlier in the year. On the other hand, a drop below $135 would mark a clear break through support that would give the stock room to drop as far as the 88.6% retracement line around $120 in fairly short order. That’s more than $15 of near-term risk if support is broken, and about $18 of legitimate risk right now. Even if the stock does rally from that support point, it should find major resistance in the $150 range, where the 38.2% retracement line sits, meaning that a bullish investor stands to make about $12 per share if he’s right; but he could lose $18 per share if he’s wrong. That’s easy math that should make anybody hesitate.
    • Near-term Keys: If you’re looking for a good reward: risk trade opportunity for CAT, watch to see if the stock pushes below support around $135. If it does, there could be a very good opportunity to short the stock or use put options, with a target price around $120, and a stop loss a little above $136 per share. That’s a set up that offers $15 of reward, against only a couple of dollars per share of risk.


  • 02 Aug
    CSCO is down almost 10% since May – should you buy the dip?

    CSCO is down almost 10% since May – should you buy the dip?

    Cisco Systems Inc. (CSCO) is one of the most recognizable and established companies in the Technology sector. With a market cap of nearly $200 billion, they are also one of the largest, if not THE largest player in the Networking & Communications segment. They are, without question, the standard that all other networking businesses are measured and compete against. No matter whether you’re talking about wired or wireless networking, CSCO is one of the companies that not only developed the standards and infrastructure the entire Internet is built on today, but that continues to lead the way into the future, including the next generation of technology in the so-called “Internet of Things” (IoT).

    It’s ironic, perhaps that despite CSCO’s unquestioned dominance in its market, the stock has mostly languished for nearly two decades. After riding the “dot-com boom” of the late 1990’s to a peak at around $80 per share, the stock cratered when that boom went bust, dropping to as low as about $8 in late 2002. From that point it never rose higher than into the low $30 range – at least not until the latter part of 2017, when the stock finally broke that top-end resistance. That pushed the stock to a high in May a little above $46 per share as Tech stocks generally prospered.



    Recently, however, it seems that CSCO has fallen victim to the latest “Amazon rumor mill” phenomenon that has afflicted companies like CVS Health Corp (CVS), The Kroger Company (KR), and others who watched their stock price slide amid rumors Amazon.com (AMZN) was looking for a way to expand its business into their respective industry. The latest rumor is that AMZN is considering branching their Web Services unit into network switching hardware – the same technology that CSCO has dominated for more than two decades. 

    Despite the fact AMZN has provided no validation of the rumor, and in fact has given to indication they were in fact considering the move, or actually developing any such products, the mere suggestion has been sufficient to help drive the stock from that May high price to its current level a little below $42 per share. That might not sounds like much of a drop, but it does represent a 10% decline in the stock price – enough that some analysts have been recommending investors should “buy the dip.”

    I’m not sure that I agree. While I recognize CSCO’s dominance in its industry, expect it to continue, and recognize the company’s core fundamental strength, my reliance on value analysis also forces me to look at the stock’s current price in more conservative terms. It looks very overvalued right now. The company is due for its latest earnings report later this month, and that report could alter my perspective somewhat; but as of now I have to believe the stock is at a greater risk of a steeper decline than it is of staging a rebound to test its recent highs. Here’s what I mean.



    Fundamental and Value Profile

    Cisco Systems, Inc. (CSCO) designs and sells a range of products, provides services and delivers integrated solutions to develop and connect networks around the world. The Company operates through three geographic segments: Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific, Japan and China (APJC). The Company groups its products and technologies into various categories, such as Switching; Next-Generation Network (NGN) Routing; Collaboration; Data Center; Wireless; Service Provider Video; Security, and Other Products. In addition to its product offerings, the Company provides a range of service offerings, including technical support services and advanced services. The Company delivers its technology and services to its customers as solutions for their priorities, including cloud, video, mobility, security, collaboration and analytics. The Company serves customers, including businesses of all sizes, public institutions, governments and service providers. CSCO has a market cap of $197 billion.

    • Earnings and Sales Growth: Over the last twelve months, earnings grew by a little over 11%, while sales growth was more modest, at about 4%. Growing earnings faster than sales is hard to do, and generally not sustainable in the long-term; however it is also a positive mark of management’s ability to maximize their business operations. In the most recent quarter, both metrics grew about 4%. Over the last twelve months, the company also reported negative Net Income of about $1.2 billion, raising questions about their operating costs and margins.
    • Free Cash Flow: CSCO’s free cash flow over the last twelve months is more than $12 billion. This is a number that the company has historically managed to maintain at very healthy levels. It should be noted that the negative Net Income just mentioned appears to be a temporary phenomenon, and the company’s massive “war chest” of cash really makes it just a temporary blip on the radar.
    • Debt to Equity: CSCO has a conservative, manageable debt-to-equity ratio of .44. I already alluded to the company’s large cash position; at more than $54.4 billion, it is also more than twice the total amount of long-term debt shown on their balance sheet. The company also recently announced the repatriation of approximately $67 billion of cash from overseas resulting from the passage of tax reform, with plans to use the money to fund a 14% dividend hike and a $25 billion increase its ongoing share repurchase program as a clear effort to return value to their shareholders.
    • Dividend: CSCO currently pays an annual dividend of $1.32 per share, which translates to an annual yield of 3.15% at the stock’s current price.
    • Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for CSCO is $9.69 per share, and this is where the biggest cracks in the bargain argument really exist. At the stock’s current price, its Price/Book ratio, at is more than 4.34, is nearly twice as high as its historical average of 2.42; a drop to par with that average puts the stock at risk of a decline of more than 43% (around $23.50 per share) from its current price. That would also put the stock at price levels it hasn’t seen since early 2016.



    Technical Profile

    Here’s a look at the stock’s latest technical chart.

     

    • Current Price Action/Trends and Pivots: The diagonal red line traces the stock’s upward trend until early May and provides the reference for calculating the Fibonacci retracement levels indicated by the horizontal red lines on the right side of the chart. The stock’s decline from that point has followed a pretty gradual slope, which to some is a positive indication. I tend to believe the opposite is true, since gradually sloping trends, in any direction are generally easier to sustain over an extended period of time. It can also be argued that the more gradual a trend’s slope is, the more likely the trend’s momentum becomes to accelerate in the direction of that trend; at some point, more and more investors will take note of the trend and be likely to overreact to it. The stock is currently quite near to the 38.2% Fib retracement level around $40.25, with $38 or even $36 (the 50% and 61.8% Fib levels, respectively) not far out of reach. Compared to the upside if the stock reverses the short-term downtrend, you have about $5 per share in either direction, which translates to a 1:1 risk-to-reward ratio right now.
    • Near-term Keys: “Buying the dip” right now is pretty risky move, and when the potential opportunity is identical to the likely risk, it’s hard to say that’s a good decision to make. The risk: reward profile could change if the stock comes a little closer to the 38.2% retracement line, and then pivots back to the upside; that could offer a reasonable opportunity to go long in the stock or to start working with call options, with a tight stop set just below that retracement line at around $39 per share. A drop below $40, on the other hand might offer a reasonable opportunity to short the stock or start working with put options, with a closing target price in that case in the $36 range.


  • 20 Jun
    Will DKS break out, or break down?

    Will DKS break out, or break down?

    At the end of May, Dick’s Sporting Goods (DKS) released its latest quarterly earnings report, and the numbers soundly beat Wall Street’s expectations. That spurred the stock, which had been mostly range-bound since the beginning of the year, to break out in a big way, with an overnight move of more than 26% to around $38 per share. More →

  • 11 Jan
    Investing In Telecoms – Sven Shows You What To Look For

    Investing In Telecoms – Sven Shows You What To Look For

    • Today, we’ll discuss whether or not the top 10 global telecoms are value traps or if they are value investments.
    • There’s a lot going on in the sector, from 5G to the internet of things.
    • The lowest risk higher reward investment strategy might not come from the biggest companies in the field.



    Introduction

    I’m constantly coming across stocks from the telecom sector that have a low valuation and a strong dividend. Today, we’ll discuss whether or not there is value or if the whole sector is a value trap. More →

  • 30 Oct
    They May Be Cheap, But Don’t Buy Retail Stocks Now – Here’s Why

    They May Be Cheap, But Don’t Buy Retail Stocks Now – Here’s Why

    • Don’t look at past figures and expect them to suddenly reappear. Retail is a tough business with tight margins.
    • Retailers have experienced a margin decline recently. But there’s still plenty of room for them to fall further and the situation may get really ugly.
    • Some will win, but who can identify the winners now?



    Introduction

    Retail stocks keep getting cheaper and cheaper, and many investors look at current valuations and think they are too cheap to be true. In today’s article, we’ll dig into the sector, see if there is value, or if the “too cheap to be true” retailers are all just Potemkin’s villages.

    Before digging into specifics, I want to share a retail example from my neighborhood. More →

  • 20 Jun
    How To Identify Value Traps

    How To Identify Value Traps

    • Value stocks are tempting, but the vast majority turn out to be value traps.
    • There are a few things to look at that lower the probability of getting caught in a value trap.

    Introduction

    Everybody has been talking for the last few days about Amazon’s (NASDAQ: AMZN) buyout of Whole Foods (NASDAQ: WFM), and the negative repercussions that purchase had on competitors like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), Costco (NASDAQ: COST), and Kroger (NYSE: KR). More →