Contrarian Value Ideas

[gfp927z]

Derf, Just curious if you are still long Scotts Miracle-Gro? I remember you mentioned it back in late Feb, and chart-wise it looks like the bottom is likely in. I had some a few years back in 2020 when it was zooming, but just recently got back in with a small position as a turnaround.

While SMG has the big cannabis angle to it via its Hawthorne unit, it also has the original lawn care business, so has some diversity. While net income is still negative (per Yahoo Finance), and the debt level is on the high side (2.8 bil) compared to the current 4 bil market cap, the cash flow is positive by over 1 bil, and the PEG is only 0.4. The short position is still high, 13.6% of the float, but revenues were 3.5 bil, up 8%. But this data is from Yahoo Finance, so it might be slightly dated.

Anyway, the chart is what got me re-interested in the stock. It formed a quasi- ascending triangle over the last 2 years, and has put in a series of higher lows. So I figure it might finally be time for a long position as a turnaround, though could take patience due to the cannabis connection. The relatively high debt / mkt cap ratio will improve quickly once the stock moves higher.

In the very near term it left a bearish candlestick today, so might need a near term pullback. But after that the upside target should be 76 and then 80, which is the key resistance area of the ascending triangle. Once through that the Wall Street traders should take notice, and the 13% short position could start covering. Should be interesting.




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[gfp927z]

Derf, >> triple net <<

Just curious if you are owning commercial properties, or residential, and is it directly or via pooled private equity, a REIT, etc? Thanks.

Like you, I'm not much into the maintenance and hassles of owning real estate, but I realize that as a 'hard asset', these properties will be one of the safer places to be when / if the US dollar gets into big trouble (ie 'Debt Bomb'). Around here (Phila suburbs), residential real estate is up around 50% in just a few years, which really means that the value of the US dollar has dropped tremendously in purchasing power. While inflation has cooled for now, what happens as the $35 trillion US debt continues on its rapid path to $45 and then $50 trillion? I'm thinking that real estate might be one of the only ways to maintain one's wealth.

Bonds certainly won't. Buffett said that bonds "are among the most dangerous of assets", and that "bonds should come with a warning label". He also noted that - “Over the past century these instruments (bonds) have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.”

Anyway, just curious to get your take on the best ways to add real estate to one's holdings. Thanks :o)



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[fung_derf]

I'd go to the dentist far more if she was working on me!
I told the dentist my issue last time, and he just kinda ignored it. He's a golf buddy, so I guess I need to reiterate my pain.
Probably the gums as I have some receding. I'd trade ya stock advice for dental work.
BTW, how is there not painless dentistry by now?

[gfp927z]

Derf, Btw, with your molar and sensitivity to cold -

First, did the cold sensitivity start all at once, or was it more gradual? If all at once, the cause is often a cracked filling, which is usually easy to see by the dentist. But if the filling looks fine, then the cause is likely a crack / fracture line in the tooth itself. These are pretty common, but not always visible since it will be under an existing filling, and since the fracture line is usually perpendicular to the x-ray beam, it will not be visible on an x-ray. The only way to know for sure is to remove the existing filling, and look for the fracture line.

Shallow fracture lines are not uncommon, but if they get deeper the cold sensitivity increases, and if the fracture gets too close to the tooth's pulp chamber, the pulp can become inflamed (and the cold sensitivity ends, but sensitivity to heat begins). Eventually the pulp can degenerate, and the throbbing begins, and then it's root canal time. But a fracture line can remain stable for years, and sensitivity resolves as the tooth creates a layer of 'reparative dentin' that protects the pulp.

Another common cause of cold sensitivity occurs after the gums recede with age, which exposes the root surfaces (which lack protective enamel). Then with abrasion / wear from toothbrushing, cold sensitivity occurs. This is easy to determine by the dentist, so in your case it sounds like a fracture line is more likely.

There are numerous de-sensitizing toothpastes on the market, so that should help. If your symptoms morph into heat sensitivity, that would be a bad sign, indicating the fracture line has deepened and the pulp of the tooth is becoming inflamed, so the dreaded root canal is looming. Then a crown, and a large dental bill that will help the dentist make the payments on his new beach house, lol. But hopefully they will have a friendly assistant :o)

(As you can tell, I have WAY too much free time on my hands..)






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[fung_derf]

I agree with you for all the same reasons, but figured since you quote him often......it's very tough to mirror what he does considering it doesn't get reported for a while. He really has a very unfair advantage

[gfp927z]

Derf, Good point about the estate tax exemption reverting back to the pre-Trump level. More and more people will be affected, after the big inflationary surge in home prices, etc. My dad passed away in 2020, and his estate was under the limit, but a sizable number of families will lose a bundle if the exemption reverts back to the previous amount -

>>> on January 1, 2026, the exemption is scheduled to automatically reset (or sunset) to $5,000,000, indexed to inflation (approximately $7,000,000), unless Congress acts prior to then. <<<



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[gfp927z]

Derf, >> BRK <<

I own some of the same stocks found in Berkshire, but don't actually own BRK itself. I always figured Buffett wouldn't be around too much longer, but here he is at 94 and still at it. I don't have as much confidence in the new guys yet (Weschler, Combs), and also wonder about potential tax problems there might be for Berkshire shareholders after Buffett is gone (?) There's also the possibility that as a conglomerate, Berkshire is broken up after Buffett is out of the picture. The conglomerate structure has worked well for Buffett, especially since the insurance side provides lots of 'float' cash to invest, but conglomerates can be unwieldy and are viewed as worth more when broken up.

Another reason I haven't owned BRK is that I don't understand the attraction of some of the holdings. The 'Oracle' obviously knows what he's doing, but some of the holdings aren't 'steady' enough looking (chart-wise). Owning a select group of his stocks, as I do, also has risks since he periodically trims positions or sells them outright, which can tank the stock when the stock sale is announced later. I decided to hold on to numerous of these anyway, even after he sells, since the long term chart is so great (AON, MMC, MCO, COST).



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[fung_derf]

The way I'm reading the new unrealized gains tax, sounds a lot like what Florida tried with their intangible tax, but that was repealed.
Of course the larger fear is on the Estate Tax, which will sunset in 2025. If Dems in office, I have a great fear this will be vastly reduced. I remember when it was $600k. It's currently $13.61 million.

[gfp927z]

Derf, >> taxable account will get a stepped up cost basis <<

Let's hope that doesn't change anytime soon. They are already talking about taxing unrealized capital gains for the 'wealthy', and the way the US 'debt bomb' is going ($35 trillion and climbing fast), the trend could be toward confiscatory taxation of estates. Luckily the politicians don't want their own assets taxed, so that should slow down the process.

Fwiw, I'm figuring that when the US debt approaches $50 trillion, something is likely to 'break'. Probably a crisis in the US dollar, as other countries shift into alternatives, like gold and the new gold-linked BRICS currency. So the incentive for us investors will be to gradually transition into more hard assets, and fewer bonds.



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[fung_derf]

I'm curious, do you own BRK? If not, why?

[fung_derf]

Darn, I was hoping for the stripper.
In reality, what you are doing is fine. You want to be hands on and it gives you as you said, "a hobby". My dad used to sit around all day watching CNBC to root his stocks on. He'd never sell, but he seemed to get enjoyment by watching them scroll across the screen.
Sorry to hear about the losses, but it sounds like, (unlike 98% of the mullets here), you learned from your mistakes. And that's good!
Actually, I've never ever been a fan of real estate. It's not very liquid and the expenses are high. However, when crazy inflation hit recently, it made sense to buy tangible goods for cash. But I think triple net is the only way to go. I don't want someone calling me to repair stuff.
Now, a question for you....I've got this molar in back that the cold just kills, but my dentist can't seem to locate the issue....what do you suggest?

[gfp927z]

Derf, >> INTC <<

That could be an interesting contrarian long term turnaround play, or a shorter term oversold bounce play. I don't know a lot about the sector, but Intel has obviously missed the boat in a big way to produce such a collapse in the stock. For 'deep' turnarounds I figure you need to know the sector pretty well (work in that field, etc). The other approach is to go with a stock that has only dropped moderately, and thus has a high % chance of resuming its winning ways.

I remember Buffett was asked about turnarounds, and he said the problem is they almost never turn around. So I've been sticking more to relative 'contrarian value', and then only with small investments.

For exposure to the semiconductor sector, I've been using the 'usual suspects' --

Semiconductors -


iShares Semiconductor ETF (SOXX) - (0.35%)

Analog Devices (ADI) - Data converter products, semicond (90 Bil)

Broadcom (AVGO) - Semiconductor devices (508 Bil)

KLA Corp (KLAC) - Solutions for semiconductor and electronics industries (76 Bil)

Monolithic Power Systems (MPWR) Semiconductor + electronics solns (29 Bil)

Nvidia (NVDA) - Graphics processing semiconductors (1.8 Tril)

Onto Innovation (ONTO) - Optical tech for semicond + advanced packaging devices (9 Bil)


https://investorshub.advfn.com/Elite-Stocks-38031


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[gfp927z]

Derf, >> 20 year old stripper in Taiwan <<

Bingo, how did you guess? :o) But no, actually a 69 year old retired DDS / DMD. In the early days I bungled my investment results by being too aggressive and cavalier (biotech, etc), but then got serious and spent a year learning TA / Charts at the Stockcharts.com 'chart school', and eventually developed the current strategy, which so far has been working well. Stocks are 30% of the portfolio, so fairly low, but seems about right for retirement.

The tax side / capital gains hasn't been a problem yet since I still have some loss carryforwards from the 'bad old days'. Hence the tendency has been to take profits quickly. But buy / hold is where the real growth and profits are, so the challenge has been finding a way to 'stay the course'.

It sounds like you have a wide variety of investments. You mentioned triple net real estate, and having exposure to hard assets seems like a great idea. I currently only have a condo, which is great in retirement, but with inflation and the growing US 'debt bomb', it seems wise to get more exposure to hard asset inflation hedges.




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[fung_derf]

A 10-15 year chart is a loooong time. I'll give you credit for patience. However, if a stock isn't paying a dividend and you are just buying and holding, how does it ever end??
I used to use Woolworth's as a great example of a stock that was either great or terrible, depending on when you bought. Currently, $TPL is that stock. I guess right now, if you held long term you'd be ok, but had you been buying and selling at the right time, it could be one of your greatest stocks ever. (I guess the same could be said for SMCI right now).
It seems to me you are just saying you buy a stock, keep it....then buy another stock and keep it....I guess if you have unlimited money come in, you can do this, but again I'd ask....is this just to pass on to someone else when you're gone? In this case, forget the ROTH. A taxable account will get a stepped up cost basis.

[gfp927z]

Derf, On the fundamental analysis side, while us I-Hubbers have limited abilities compared to a Buffett or a professional money manager, I always do a cursory examination of the company's 'numbers', using data from Yahoo Finance. This only takes a few minutes, and includes -

Market Cap
PE
PEG
Margins
ROA / ROE
Cash / Debt
Dividend
Payout %
Shorts
Cash Flow
Revenue
Rev Growth
Net Income
Earnings Growth

Any clunkers that stand out (high debt, negative margins, shorts, etc) are noted, and too many red flags will nix the idea of owning the stock. But some sectors tend to have screwy looking numbers (finance, REITS), so these can be disregarded in the analysis. For example, REITS sometimes have a payout ratio over 100%, finance stocks often have screwy looking numbers, some industries (distributors) tend to have low margins, but high revenues, capital intensive industries can have higher debt, etc.

But for me, the trajectory and steadiness of the 10-15 year is the most important criteria for a long term buy/hold stock, assuming the 'numbers' look OK. Usually if the numbers are bad, then the chart will also not be great, which makes sense. A nice 10-15 chart is the fastest way to judge the nature of the company's business (growth or cyclical), quality of management, steadiness of earnings, etc. Some of these great companies have high valuations though (Cintas, Costco), too high for Buffett's valuation criteria, but I keep some of them in the portfolio even after Buffett has reduced his stake.




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[fung_derf]

Also, I must mention, unless you are doing all your trading in a ROTH, you must be creating some sort of tax nightmare for your accountant.

BTW, I'd disagree with this statement below....

Another reason to have so many stocks is that there are so many great long term stocks out there.

No, there are a handful of GREAT stocks. There seem to be many good ones right now.

[fung_derf]

I guess.
I don't know anything about you, other than you seem to enjoy researching and following stocks.
You may be a 20 year old stripper in Taiwan, or you may be an 85 year old real estate mogul in Atlanta. So, it is beyond me to try to guess your ultimate goal. I just think, for most people, you are making it too tough, just to get average returns.
You could just as easily buy mutual funds since you are buying S&P 500 stocks, THEN buying the S&P 500. If it were me, at the very least I'd be looking into the equal weighted S&P ($RSP).
You didn't mention your annual returns, but I would be curious as to whether your strategy is working. If you are gaining huge returns, what you are doing is a hobby.
Are you seeking growth? Are you looking to leave a legacy for others? Does income matter to you? Obviously you are not risk averse, but do you also buy fixed income? Does diversification to you just mean many sectors?
Personally, I own stocks, mutual funds, muni bonds, variable annuities...and a bit of real estate of which I lack the knowledge to handle properly. Currently I'm seeking out triple net properties.

[gfp927z]

Derf, >> going to see mutual fund like returns <<

Yes, that's true. Having 200 stocks likely means returns will be similar to the S+P 500. But having so many stocks makes it almost impossible to sell everything at the first sign of trouble, which has always been my problem (nervous nellie). Bailing out after the profits start to build up is another problem that this approach solves. So to 'stay the course', I made it too cumbersome to sell.

So having 200 stocks is mainly a psychological tactic, but only for 1/2 of the stock allocation. The other 1/2 is in the S+P 500, which can be sold off easily if needed, or adjusted depending upon market conditions. So there is a nice balance, which so far has been working.

Another reason to have 200 stocks is the 'collecting' aspect. Some people have been bitten by the 'collecting bug' (coins, stamps, records, etc), so stocks are just one more category to collect. Another reason to have so many stocks is that there are so many great long term stocks out there. My main screening tool is the trajectory and steadiness of the 10-15 year chart, and there are dozens and dozens of stocks that qualify. Add in 10 or so turnarounds, and voila, you soon have 215 stocks. It's also a fun and interesting hobby if you are retired with too much free time. But whatever works. Every investor is different.



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[gfp927z]

Derf, >> ULTA <<

As a turnaround candidate, I had initially rejected it since the chart had broken key support. But then the news came that Berkshire had taken a position in ULTA (most likely Weschler, not Buffett), so I decided to get a small position. Sure enough, the 'Berkshire effect' kicked in, and the stock is now back above that broken support level. So far so good, ULTA also has a pretty nice long term chart, which is a plus since it raises the odds of a return to the long term uptrend.

As for the fundamental analysis of the company's numbers and business prospects, I'll defer to Berkshire / Weschler's superior knowledge. Also, articles I've read on the company make it sound like the company's setbacks are temporary. So I figure what the heck, a small position makes sense.



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[fung_derf]

BTW, you had asked what I've been buying, I added quite a bit of $INTC in August around $19. Not sure what my target price is though. Basically, I bought a bunch to lower my cost per share based on my buys back in 2018.

[fung_derf]

I don't like ULTA either. You are picking stocks on a major downtrend and betting they will break through a very large resistance. For my money, I'd rather buy them later, pay more, AFTER they've shown they could break out.
You have the potential for more upside, but also more likelihood they won't.

Newton's first law of motion states that a body at rest remains at rest, or, if in motion, remains in motion at a constant velocity unless acted on by a net external force. This is also known as the law of inertia.

[fung_derf]

Well, nice. I may have to hire you to do my fundamental analysis. However, I've found that banks and insurance companies are quite astute at creative accounting and the two industries I don't even try to understand the numbers (well I guess I'd definitely put the pharma sector in that category too).
I guess I'm not smart enough to analyze the numbers so I put more credence in my ability for technical analysis.
I see LNC as sitting on the support line with much more upside right now than downside. If it breaks support I dump it with a small loss. If it holds I see at least a run to $40+ (currently at $29.96).
When I was younger, my philosophy was....take any 30% gain or 15% loss and I only have to be right half as often.

When I'm in a casino, I'm playing craps. But I'm only playing the don'ts and laying the odds. My gambling is like my investing. I'm looking for long, slow, low risk returns now with limited downside. Sadly, craps doesn't pay a dividend so I prefer that in my stocks.
The penny stock guys are the ones playing craps/11. Of course they also are playing with loaded dice against them.

[fung_derf]

Hmmmm, I'm not sure I'd go that route. What is your annual rate of return?
While I'm a big fan of diversification, with that few shares I think I'd be more focused on honing it down to perhaps 40 or 50 of the best stocks and more shares. You've set yourself up for lower risk, but also for a lower total return. You do the research, so why not just own your favorites?
I checked the other day and I think I had around 90 stocks.
I think you're working too hard, and are just going to see mutual fund like returns.

[gfp927z]

Hershey - >>> 3 Reasons to Buy Hershey Stock Like There's No Tomorrow


by Reuben Gregg Brewer

Motley Fool

September 15, 2024


https://finance.yahoo.com/news/3-reasons-buy-hershey-stock-114500118.html


When you can purchase a great company at a fair price, it is often a good time to buy. When the price tag looks cheap, it can be a great time to buy.

Confectioner Hershey (NYSE: HSY) looks somewhere between fairly priced and cheap. Don't miss the chance to buy it because of a little near-term uncertainty. Here are three big reasons to jump at the chance to own the stock today.

1. Hershey looks like a bargain

Every business rides along a sine curve, with good times followed by bad ones, and vice versa. Right now, Hershey is dealing with a few problems (more on that below), and investors are downbeat on the stock. If you are a dividend investor who thinks in terms of decades and not days, this is an opportunity. Some numbers will help prove that out.

Hershey's price-to-sales ratio (P/S) is currently around 3.8. The five-year average for that valuation metric is 4.1. The company's price-to-earnings ratio (P/E) is 22.5, versus a five-year average of 25.5. Clearly, based on more-traditional metrics, the stock looks attractively priced.

But don't stop there: Its dividend yield is around 2.7%, which happens to be notably higher than its five-year average of 2%. If you have ever looked at Hershey stock and thought, "If only it were cheaper," well, it is cheaper right now.

2. Hershey's business is getting better even if its earnings are hard to read

One of the things that is interesting with Hershey today is that it has been making upgrades to its distribution system. But these come with risks, particularly for the company's retailers, which rely on it for products.

If the rollout of the new system doesn't go well, customers could end up without the inventory they need. Thus, retailers built up inventories ahead of the switch over to the new system, which boosted sales. The new system is working fine, but retailers are working down the inventory they previously built up, and that's now depressing sales.

This isn't exactly good news, but neither is it really bad news. It's more of a necessary blip in the process of improving the business over the long term. In other words, don't read too much into the company's earnings right now even though sales fell over 16% year over year in the second quarter.

There's another wrinkle in that number. About 9 percentage points of the drop were related to the system upgrade. The other 7 percentage points were tied to the seasonality of Hershey's business. Confection sales are heavily influenced by holidays, which can shift between quarters. So the numbers look extra ugly with the double hit, but there's likely no reason to be worried.

3. The biggest headwind is cocoa

The one negative that investors should monitor closely is the price of cocoa, a key ingredient for chocolate. There's an element of general inflation to the massive price spike that has taken place, but there are also fundamental reasons why cocoa prices might have stepped into a higher range (including aging crops and plant disease). This will affect Hershey's earnings. Just how bad is it? Cocoa is trading near all-time highs.

But people love chocolate and have historically been amenable to paying higher prices for this relatively low-cost luxury. Over the near term, Hershey believes it will be able to pass through price increases of around 6% to 7%.

That said, the plan isn't to pass through all of the cost increase right away. Instead, management wants to take it slowly, accepting a temporary hit to margins as it eases in price increases over time. That seems like a prudent way to deal with the issue.

Given the company's long and successful history, it seems logical to give management the benefit of the doubt and view the concern here as yet another reason to take a contrarian stance with the stock.

Out-of-favor Hershey could be a tasty treat

If Hershey were firing on all cylinders today, it wouldn't be on the sale rack. But if you can look at the long-term history of the business and its stock and recognize that this downturn is likely to be temporary, then now is the time to jump aboard. That's particularly true if your time horizon is long.

<<<



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[gfp927z]

Derf, >> LNC <<

Not being an accountant or securities analyst, I can't really understand the 'numbers' for some of these financial sector stocks. REITS can also have some bizarre numbers. Looking at LNC, Yahoo Finance has the cash level at over 7X the market cap (?), and debt at 2X. Levered cash flow is a negative 5X of the market cap (?), the dividend over 6%, but the payout ratio only 19%. These numbers would make sense to a Warren Buffett, but not to the average investor. The ultra low PE of 3-4% would be in the same category, so concluding that the stock is ultra cheap might not be accurate.

Market cap - 5 bil

Cash -------- 38 bil
Debt --------- 9 bil
Rev ---------- 14 bil

Levered Free Cash Flow -- negative 34 bil

Dividend ------ 6.1%
Payout Ratio - 19%



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[gfp927z]

Derf, >> CELH <<

I only have 9 shares, so not a big commitment :o) Most of my individual stock positions are in the $300 - $1000 range, so minimal sleep is lost. I do have a lot of them though, over 200 individual stocks (link below) -

Portfolio by Market Cap - https://investorshub.advfn.com/Buy-Hold-Stocks-42434

These are meant to be held long term, and are balanced by the S+P 500 ETF which can be sold quickly if necessary. Currently a 30% stock allocation, split 1/2 in individual stocks and 1/2 in the S+P 500. I figure if things really start to unravel, the S+P 500 can be sold, and it's possible to hedge the long individual stock position with a 1X short ETF like SH. Hopefully it doesn't come to that, but it's comforting to have it as an option if things really start falling apart ala 2008 or 2020.



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[fung_derf]

Actually I think 23% is low. I don't think that factors in dividends. Anyway, it gave me the chance to buy the spousal a new car and give money to the kids.

[fung_derf]

Geez, I was gonna tell ya that I didn't like CELH AT ALL, but since you already bought it, I won't tell you that.
Meanwhile, LNC pays a 6% dividend which means it won't hurt if I'm a little wrong. Did I mention the P/E is THREE!!!

[gfp927z]

ULTA is another interesting one in the 'contrarian value' category. It's been a decent long term stock, but had a bad 2024 and dropped over 40%. In August it fell through near term support, and was looking pretty ominous. But then word came out that one of the new Berkshire guys (Weschler) has been buying, and the stock recovered somewhat. I picked up a little, but wouldn't have without the Berkshire endorsement, since the chart had been deteriorating. Now it's back up to where key support had broken, so will be interesting to see how it does going forward. The short position (per Yahoo Finance) is in the 7-9% range, so perhaps some short covering occurred after the 'Berkshire effect' kicked in. In any event, it looks like a nice long term stock at a bargain price -


>>> Berkshire likes Ulta Beauty <<<

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174942025


>>> Ulta is a catch-all way to play a recovery in cosmetics spending <<<

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=175070062



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[gfp927z]

Derf, I put my toe in the water with CELH yesterday for the first time. The chart seems early since it hasn't formed a convincing bottom yet, but only bought a few shares. It has dropped by 2/3 this year as the triple digit growth rates have come down, but looks like a good stock for the longer term at a big discount. Just a small starter position though. In the shorter term, it looks like it might get a bounce up toward 40 and the 50 MA.

Fwiw, my philosophy with these 'out of favor' plays is to only buy stocks that you wouldn't mind owning for the longer term, so if the entry point is mistimed, it's no problem since time will bail you out.



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[gfp927z]

>>> Celsius Holdings, Inc. (CELH): A Bull Case Theory


Insider Monkey

by Ricardo Pillai

September 17, 2024


https://finance.yahoo.com/news/celsius-holdings-inc-celh-bull-163806873.html


We came across a bullish thesis on Celsius Holdings, Inc. (CELH) on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article we will summarize the bulls’ thesis on CELH. CELH Technologies, Inc. shares were trading at $33.18 as of Sept 16th.

Celsius Holdings (CELH) presents a compelling investment opportunity despite its recent stock price decline to $33.50, down from a 52-week high of $96.11. The company, headquartered in Boca Raton, Florida, boasts a market cap of $8.54 billion and has faced a significant drop in stock value, attributed primarily to revenue growth contraction and broader market challenges in the energy drink sector. Despite these headwinds, CELH’s performance remains robust, particularly in online sales and international markets, positioning it well for future growth.

CELH has experienced a reduction in revenue growth rates from triple-digit figures, which has affected investor sentiment. However, this slowdown should not overshadow the company's continued market strength. CELH’s online dominance is notable, with a 22.1% share on Amazon, surpassing competitors such as Monster and Red Bull. This strong performance indicates a loyal customer base and significant market presence, especially in e-commerce.

In the U.S. multi-outlet convenience store segment, CELH has shown a solid 36.5% growth this year. While this growth is promising, it is also potentially understated due to delays in store resets and promotional activities. Despite the broader energy drink market's slower growth, CELH's contribution to category expansion is evident. Management emphasizes that their focus is on driving category growth and attracting new consumers rather than directly competing for market share with established players like Red Bull and Monster.

Internationally, CELH's revenue is currently modest at $20 million but is growing at a strong 30% year-over-year. Notable progress has been made in Canada, with promising prospects in the UK, Ireland, Australia, and France. The company’s international strategy and expansion into new markets are poised to enhance revenue growth over the long term.

Looking ahead, CELH has plans to diversify its product offerings, including potential entries into water and food products like protein bars by 2025. These new product lines and international expansion present significant growth opportunities. While revenue growth rates may stabilize around 20% in the near term, CELH is expected to experience strong growth over a five-year horizon. The current stock price, given the company’s growth potential and strategic initiatives, represents an attractive entry point for investors.

<<<



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[gfp927z]

Derf, >> I-Hub <<

I know what you mean about I-Hub being home to throngs of penny stock addicts. I figure most of these guys are beyond help, so why bother. I was one of them 'back in the day', and paid a heavy price for being too cavalier. Losing money is probably the only way to reform a penny stock gambler.

Fwiw, I figure it's OK to have small amounts in riskier stocks, turnarounds, chart plays, etc. But not with the idea of 'get rich quick', which is what most of the young newbies are after. It just doesn't work that way.



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[gfp927z]

Derf, Thanks. A 23% return for the year is a great result.

At first glance the LNC chart looks vulnerable after the big rebound it's had off the 2023 bottom. Have to see if the 200 MA holds, but the longer term chart isn't good, so looks pretty risky as a buy hold. In the insurance sector, the property + casualty side is where Buffett mainly focuses, and the insurance brokers have also been great over the long haul (see below). The trajectory / steadiness of the charts is unreal. Here are some from my long term portfolio -


Insurance - Brokers -


Aon PLC (AON) - Financial services, insurance broker (73 Bil) (Ireland) (Berkshire)

Arthur J. Gallagher & Co (AJG) Insurance broker (41 Bil)

Brown + Brown (BRO) - Insurance broker (17 Bil)

CorVel (CRVL) - Insurance broker and diverse services (5 Bil)

Marsh & McLennan (MMC) - Insurance broker, services (86 Bil) (Berkshire)

Willis Towers Watson Plc (WTW) - Insurance brokerage, risk consulting (29 Bil) (UK)


Insurance - Property + Casualty -


Allstate (ALL) - Property + casualty insurance (48 Bil)

Arch Capital Group (ACGL) - Insurance (41 Bil) (Bermuda)

Chubb (CB) - Insurance (97 Bil) (HQ in Switzerland) (Berkshire)

Kinsale Capital Group (KNSL) - Property and casualty insurance (11 Bil)

Progressive Corp (PGR) - Insurance (79 Bil)

RLI Corp (RLI) - Insurance (6 Bil)

Travelers (TRV) - Insurance (51 Bil)

WR Berkley (WRB) - Insurance (19 Bil)



Portfolio -

https://investorshub.advfn.com/Elite-Stocks-38031



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[fung_derf]

Well, thank you. That is very kind of you to say. Although each time I get disgusted here and take time away, I come back a bit more cynical about helping the posters or more importantly, the website to succeed. After all, IHUB has an agenda that I am antithetical to.
My last argument (in which IHUB would not help support), was some penny stock pumper clown making fun of me for having a diversified portfolio vs day trading penny stocks....and its my posts that get deleted.
Anyway, as to $SMCI, at the moment my read has been incorrect (even though I think it will drop this week), but I have to interpret what I'm seeing today. Like you, I bought back in too early, but not as many shares as I had owned originally. I just refuse to add unless I'm right.
Yesterday I bought a lot more shares of $LNC. It's teetering right on the edge of a bounce and I may be buying too soon, but it currently has a P/E of 3!! and a 6+% dividend, so I feel the risk is worthwhile.
I'm not even going to try to guess who wins the election....or, with whoever wins, what their plans are. My hopes, as always is for a split Congress where nothing gets done and Wall St does its own thing.
My only take is, the market goes up, inflation goes up, real value goes down, I try to make enough to keep up.
I just checked my results for 1 year....up 23%. That seems crazy actually.

[gfp927z]

Derf, Good to see you back posting on I-Hub :o) Just curious about your latest stock and sector picks?

SMCI does look interesting as a turnaround, though as you pointed out on the SMCI board, the main chart support is down around 300. I'm figuring the Hindenburg info is probably correct, but on the other hand the company is extremely well positioned. I managed to get a double on the stock during the big runup, but then re-entered too soon, so am currently down. Just a small position though. Also small positions in a bunch of other 'turnaround' stocks (see list in I-Box).

Any ideas for the current market? I've been figuring that with the 'powers that be' favoring the incumbent Dem Party, they would try to keep the markets fairly buoyant leading up to the election. So 'buying the dip' turned out to be a good strategy, in spite of all the election and geopolitical uncertainties and general craziness.

Thanks for any ideas / insights :o)



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>>> Gladstone Land Corp (NASDAQ:LAND) is a McLean, VA-based specialty REIT, founded in 1997. It owns farmland and related properties in major agricultural U.S. markets and leases or lease-backs its properties to farmers. Gladstone presently owns 168 farms with 112,000 acres across 15 states. Gladstone Land also owns 49,000 acre-feet of banked water in California worth approximately $1.5 billion. About 40% of Gladstone Land's acreage is utilized for organic produce. Its acreage is 99.4% leased.

Gladstone has paid out 135 consecutive monthly cash distributions since its January 2013 IPO and has increased its dividend 34 times over the last 37 quarters.

On May 7, Gladstone Land released its first quarter operating results. FFO of $0.14 missed the estimate of $0.15 and was below the FFO of $0.17 in Q1 2023. Revenue of $20.252 million missed the consensus estimate of $22.307 million and was below revenue of $21.202 million in Q1 2023.

On June 11, Alliance Global Partners initiated coverage on Gladstone Land with a Buy rating and announced a price target of $16. Oppenheimer rates Gladstone Outperform and also has a $16 price target. Gladstone Land was recently trading at $13.60.

<<<


(June 13, 2024)

https://finance.yahoo.com/news/analysts-just-initiated-coverage-four-173951591.html


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OXY, MA, ULTA - >>> 3 Value Stocks to Buy as Berkshire Hathaway Hit an All-Time High on Warren Buffett's Birthday


by Daniel Foelber

Motley Fool

Sep 9, 2024


https://finance.yahoo.com/news/3-value-stocks-buy-berkshire-083000492.html


Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) stock price hit an all-time high on Aug. 30 -- Warren Buffett's 94th birthday -- before proceeding to rise even higher on Sept. 3 despite a 2.1% sell-off in the S&P 500. The shares of the giant conglomerate are now up more than 27% year to date, outperforming both the S&P 500 and Nasdaq Composite by a wide margin.

Its portfolio managers have been on something of a selling spree lately -- making a large reduction in its Apple stake earlier this year and trimming its Bank of America position by 14.5% since mid-July.

However, Berkshire has maintained a sizable holding in oil and natural gas exploration and production company Occidental Petroleum (NYSE: OXY), owns American Express, Visa, and Mastercard (NYSE: MA), and initiated a position in Ulta Beauty (NASDAQ: ULTA) earlier this summer.

Here's why Occidental Petroleum, Mastercard, and Ulta stand out as three top value stocks to buy now.


Oxy can rake in the cash even at mediocre oil prices

Berkshire Hathaway owns 27.3% of Occidental Petroleum -- commonly referred to as Oxy. That stake, Berkshire's sixth-largest public equity holding, is worth more than $14 billion. But Oxy hasn't been a very good investment of late. The stock is hovering around a 52-week low.

Oil prices affect the fortunes of the entire oil and natural gas value chain, but especially exploration and production companies like Oxy that build their businesses around selling hydrocarbons for more than it costs to get those resources out of the ground. Unfortunately for Oxy and its peers, the price of West Texas Intermediate (WTI) crude oil -- the U.S. benchmark -- just fell below $70 a barrel to its lowest level so far this year.

Although Oxy can break even at a much lower oil price, $70 is significant because Oxy has based some of its key decisions around the assumption that prices will be at or above that level. In its fourth-quarter 2023 investor presentation, it used that threshold to predict year-one free cash flow (FCF) from its $12 billion acquisition of CrownRock. The lower the oil price, the lower the FCF, and the worse the acquisition will look -- at least in the short term. The good news is that CrownRock has plenty of acreage where the estimated breakeven levels are below $60 per barrel for WTI.

Oxy has also done an excellent job improving the health of its balance sheet by paying down debt. It's also aggressively investing in carbon capture and storage projects that could have long-term benefits for the company, both from an ESG (environmental, social, and governance) perspective and as a potential revenue stream in the form of carbon credits.

Oxy today trades at a dirt-cheap price-to-earnings (P/E) ratio of 13.5 and a price-to-FCF ratio of 13 -- meaning its earnings and FCF could fall and the stock would still be cheap. Now is a great time to scoop up shares of Berkshire's top energy company on sale.


Mastercard has a powerful moat

Credit card companies have proven to be phenomenal long-term investments. Mastercard and its closest peer, Visa, now have a combined market cap of nearly $1 trillion. And yet, they aren't necessarily overvalued.

Mastercard trades now at a forward P/E ratio of 33.3. That's higher than the S&P 500's trailing P/E ratio of 28.8, so even if Mastercard generates the earnings analysts expect over the next 12 months, it will still be more expensive than the S&P 500. With Mastercard, though, the value isn't just in the earnings, but the quality of the company and its growth trajectory.

Mastercard is an incredibly efficient business, with a 58.6% operating margin. It also has just $8.2 billion in total net long-term debt on its balance sheet, which is very small for a company of its size. Few companies in the S&P 500 can compete with Mastercard's profitability and financial health.

It also benefits from a huge network effect. Mastercard and Visa process the majority of credit card transactions in the U.S., and both are growing internationally. Fees are collected on both the number of transactions and the payment volume of total transactions. The more Mastercard debit and credit cards are in circulation, and the greater the partnerships with financial institutions like banks and credit unions, the more useful the network becomes to all participants, and the more incentive other customers and businesses have to join it.

Mastercard is expanding its value-added services business as consumers and merchants seek fraud prevention tools, better analytics, and cybersecurity solutions. This segment grew faster than Mastercard's core business last quarter.

Add it all up, and Mastercard stands out as a quality company that can continue delivering strong returns for investors.


Ulta is a catch-all way to play a recovery in cosmetics spending

Ulta is a new addition to Berkshire's portfolio. Although the position is valued at about a quarter-billion dollars -- much less than its other holdings -- Berkshire Hathaway now owns 1.5% of the retailer.

Ulta checks a lot of the boxes that Buffett and his team look for when searching for quality value stocks. The stock's valuation is significantly below historical median levels.

As you can see, Ulta's forward P/E ratio is above its current P/E -- meaning that analysts expect earnings to shrink in the next 12 months. There's no sugarcoating that Ulta's second-quarter 2024 earnings call was bleak, with management cutting the outlook for the second time this year. Competition and weak consumer spending were the headline concerns. But taking a step back, a slowdown in Ulta's growth is completely understandable.

The cosmetic industry boomed in recent years. And consumer trends toward more value-focused products -- like those sold by e.l.f. Beauty -- and away from premium-priced products like those sold by Estee Lauder or L'Oreal means lower margins and fewer reasons for customers to shop in its stores, try new products, or use Ulta's salon services.

That all adds up to a sluggish near-term outlook for the retailer. However, for investors with the patience to hold on as they wait for the industry to turn around, Ulta's dirt-cheap valuation and market position make it worth considering now.

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Sirius XM - >>> The Most-Anticipated Reverse Stock Split of the Year Has Arrived -- and This Company Is a Screaming Bargain


by Sean Williams

Motley Fool

Sep 10, 2024


https://finance.yahoo.com/news/most-anticipated-reverse-stock-split-084100466.html


Since 2024 began, hype surrounding the artificial intelligence (AI) revolution has played a major role in lifting Wall Street's three major stock indexes to multiple record-closing highs. But AI isn't the only trend pushing the broader market higher. The euphoria surrounding stock splits has played an equally important role.

A stock split allows publicly traded companies to adjust their share price and outstanding share count by the same factor, without altering their market cap or underlying operating performance. It's a purely cosmetic maneuver that can have important consequences.

There are two varieties of stock splits, with investors decisively favoring one over the other. A reverse-stock split is geared at increasing a company's nominal share price, usually with the goal of ensuring it meets minimum continued listing standards for a major stock exchange. Conversely, a forward-stock split is designed to reduce a company's share price to make it more nominally affordable for everyday investors who can't purchase fractional shares through their broker.

Generally speaking, reverse splits are conducted by struggling businesses whose share price is floundering. Comparatively, companies completing forward splits are typically out-innovating and out-executing their peers. Unsurprisingly, most investors tend to focus on high-flying companies enacting forward splits.

Since late January, 13 prominent businesses have announced or completed a stock split -- 12 of which are of the forward-split variety -- including AI darlings Nvidia, Broadcom, and Super Micro Computer.

But it's the lone high-profile reverse-stock split that deserves the attention of Wall Street and investors today.

The most-awaited reverse-stock split of 2024 is now complete

In mid-December, Sirius XM Holdings (NASDAQ: SIRI) and Liberty Media's Sirius XM tracking stock, Liberty Sirius XM Group (NASDAQ: LSXMA)(NASDAQ: LSXMB)(NASDAQ: LSXMK), announced their intention to merge into a single class of shares. Liberty Media is the majority stakeholder in Sirius XM, and the variance in the price between Liberty Sirius XM Group's three classes of shares and the share price for Sirius XM stock has been head-scratching at times.

Last week, the final exchange ratio for this merger was announced, with Liberty Sirius XM Group stakeholders redeeming their shares "in exchange for 0.8375 of a share of common stock of New Sirius." Liberty Sirius XM Group stopped trading after the close of business yesterday, Sept. 9, which means today, Sept. 10, marks the first day of a single, non-confusing, class of Sirius XM shares.

But there's more to this combination than just getting the exchange ratio correct and ending the confusion of multiple shares classes.

In mid-June, Sirius XM announced that, upon consummation of the merger with Liberty Sirius XM Group, a 1-for-10 reverse-stock split would be conducted. This reverse split, which is now complete, has reduced the company's outstanding share count from well over 3 billion to an estimated 339.1 million shares.

What makes this reverse-stock split so unique is that it's not being executed out of weakness. In other words, Sirius XM was in no danger of delisting from the Nasdaq stock exchange.

Instead, it was enacted to increase its share price from the $3 to $6 range that it's hovered around for years to one that's more likely to attract institutional investors. Some money managers will avoid stocks priced below $5 for fear of increased volatility. Sirius XM's 1-for-10 reverse split eliminates this minor concern and should put the company back on the radar of top-tier money managers.

Sirius XM is a screaming bargain for opportunistic long-term investors

In addition to being Wall Street's only high-profile reverse-stock split of 2024, Sirius XM Holdings is, arguably, the top bargain among the 13 companies to have announced or completed a split this year.

Though I'll get to the figures that qualify Sirius XM as a "screaming bargain" in a moment, let me walk you through a few of the competitive advantages that make it a stock you can safely own for years to come.

To begin with, it's the only licensed satellite-radio operator. While this doesn't mean it's devoid of competition, it does convey that Sirius XM is a legal monopoly. As such, it affords the company exceptional pricing power with its monthly and annual subscriptions.

Another advantage to Sirius XM's operating model is its cost structure. While some of its expenses, such as royalties and talent acquisition, are going to fluctuate from quarter to quarter, transmission and equipment expenses typically don't change, regardless of how many subscribers the company has. If Sirius XM can expand its subscriber base, it should have a clear path to improve its operating margin over time, largely thanks to some of its costs being highly transparent and predictable.

A third competitive edge Sirius XM holds over traditional radio operators is the path by which revenue is generated. Online and terrestrial radio providers are overwhelmingly reliant on advertising to pay the bills. While this strategy works well during lengthy periods of economic expansion, it can lead to some big question marks when recessions inevitably occur.

Sirius XM has brought in less than 20% of its sales through the first six months from advertising. Comparatively, almost 77% of its revenue can be traced to subscriptions. There's a considerably lower likelihood of satellite-radio subscribers cancelling their service during a recession than there is of businesses cutting their ad spending. This tends to lead to more predictable cash flow for Sirius XM in any economic climate.

With these competitive advantages in mind, let me now address how historically cheap Sirius XM's stock is. Based on where shares closed on Sept. 6, Sirius XM can be scooped up by opportunistic long-term investors for 8.3 times forward-year earnings. This represents a 53% discount to its average forward price-to-earnings (P/E) multiple over the trailing-five-year period, and is a stone's throw away from its lowest forward P/E multiples since going public in September 1994.

Sirius XM is historically cheap relative to its cash flow generation, too. Its multiple of 5.6 times forecast operating cash flow in the current year (2024) equates to a 43% discount to its average price-to-cash-flow multiple over the last five years.

Tack on a sustainable 3.9% yield for good measure, and you have a screaming bargain that also happens to be Wall Street's most-anticipated reverse-stock split of 2024.

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>>> Sirius XM Stock Has a Good Debut as Independent Company. Berkshire Hathaway Becomes Top Shareholder.


Bloomberg

by Andrew Bary

Sept 10, 2024


https://www.barrons.com/articles/sirius-xm-stock-berkshire-hathaway-buffett-ca45b84c


An independent Sirius XM Holdings had an encouraging debut Tuesday, as Berkshire Hathaway emerged as the largest shareholder with an estimated 25% stake—replacing Liberty Media (FWONA) and its control holder, media mogul John Malone.

Sirius XM Holdings stock gained 2.6% Tuesday to $27.38, after trading as low as $24.43 earlier in the session.

A combination occurred late Monday of Sirius XM with Liberty Sirius XM Holdings, a tracking stock that held about 83% of Sirius XM shares. Sirius XM, the satellite radio company, also did a one-for-10 reverse stock split.

The merger caps what has been a poor year for the Sirius XM, which is down about 50% so far in 2024. The stock is off over 10% since the start of September.

The company provided updated financial guidance late Monday in conjunction with the merger. It reduced its projection for 2024 free cash flow by $200 million to $1 billion, reflecting several factors, including higher interest costs and year-to-date cash outflows at Liberty Sirius XM. That amounted to a modest disappointment, although revenue and Ebitda, or earnings before interest, taxes, depreciation, and amortization, projections were unchanged at $8.75 billion and $2.7 billion, respectively.

The combination between the two companies had been sought for years by Malone and Liberty CEO Greg Maffei to simplify Sirius XM’s structure, broaden its investor base to those who couldn’t hold tracking stocks, and potentially pave the way for its entry into some equity indexes.

Berkshire was the largest holder of the Liberty Sirius tracking stock, and now becomes the biggest investor in Sirius XM. The $2.3 billion stake in the company is believed to be managed by Ted Weschler; he is one of two investment managers that works with CEO Warren Buffett, who oversees Berkshire’s $300 billion equity portfolio. There was no immediate comment from Weschler.

Buffett is a fan of the satellite radio service and regularly tunes into its Siriusly Sinatra station that plays American standards when he’s driving in his Cadillac, Maffei said last year. The station plays songs performed by Frank Sinatra, Ella Fitzgerald, Billie Holiday, and others.

Sirius XM bulls point to the company’s low valuation at less than 10 times projected 2024 earnings and a 10% free cash flow yield. The stock yields about 4% based on a dividend of about 27 cents per share quarterly. The company’s share count fell about 12% in conjunction with the merger to 339 million shares.

The merger may wash out arbitragers who had been long Liberty Sirius XM and short Sirius XM to capture a spread that recently stood at more than 20%. In other words, these traders bought the tracking stock and sold short Sirius XM.

That could be a good setup for the stock if fundamental investors emerge to replace them. Free cash flow is expected to be higher in 2025 at $1.5 billion, Sirius has projected.

Negatives are ample debt of about $10 billion, or nearly four times projected 2024 Ebitda. The company’s target leverage ratio is mid-to-low three times. Sirius XM unveiled a $1.2 billion share repurchase program Monday, but said it plans to emphasize debt reduction with free cash flow until it meets its debt ratio goal.

Sirius XM stock has been hit hard this year for several reasons. The company’s revenue was down 5% in the latest quarter while self-paid satellite radio subscribers have fallen about 400,000 in the first half of 2024 to about 31.5 million. That has prompted concerns that the subscriber count will continue to decline and put pressure on the monthly subscription fee.

Weakness in cable TV stocks also has hurt Sirius XM’s valuation, which is now about seven times this year’s estimated Ebitda, in line with the major cable stocks.

Many investors had invested in the Liberty Sirius XM tracking stock because it long traded at a 25% to 40% discount to the value of its Sirius XM stake. But that strategy didn’t pan out well because of the sharp drop in Sirius XM stock this year which offset the discount.

That may have been the motivation for Berkshire’s involvement. It’s unclear what role Berkshire will play with Sirius XM but it usually takes a hands-off approach to its major investments—although it’s possible that Weschler or another Berkshire representative could join the board.

With a cleaner structure and Liberty essentially gone from the picture, Sirius could be in a position to deliver for investors after a tough year.

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>>> Why Celsius Stock Suddenly Plunged Today


by Jon Quast

Motley Fool

Sep 4, 2024


https://finance.yahoo.com/news/why-celsius-stock-suddenly-plunged-192700604.html


It started out as a calm morning for shares of Celsius Holdings. But around noon, management made an appearance at Barclays' 17th Annual Global Consumer Staples Conference. During the chat, management said something that sparked fear in investors: In the current quarter, sales to PepsiCo are down $100 million to $120 million compared to last year.

Investors took action, and that's why Celsius stock was down a painful 12% as of 3:15 p.m. ET.

How does Celsius generate revenue?

Pepsi became the primary distribution partner for Celsius in August 2022. For Celsius, it now recognizes revenue when it delivers inventory to Pepsi. From there, Pepsi distributes it to retail channels where it's purchased by consumers. And for this reason, there's a difference between when Celsius generates revenue and when its products actually sell in stores.

In 2023, Celsius' revenue was up an impressive 102% year over year and well ahead of expectations from analysts. But it's now clear that this outperformance was because Pepsi ordered too much product. It's a misstep that Pepsi is now correcting by ordering less from Celsius while it sells inventory it has on hand.

For the current third quarter of 2024, Celsius management estimates that Pepsi will order between $100 million and $120 million less than it ordered in the third quarter of 2023. To be sure, this will be a huge drag on Q3 results and it's why the stock plunged today.

What should investors do now?

There are cases where the financials don't clearly reflect the health of the business, and I believe this is one of those cases. During its chat today, Celsius management pointed out that Q3 sales for its products are up 10% so far. This won't be reflected in its revenue, because it generates revenue when it supplies inventory to Pepsi. But sales to consumers are growing nevertheless.

Moreover, Celsius management believes it's gained another whole point of market share in the energy drink space. And market share is huge for a beverage stock.

I'll stop short of calling the bottom for Celsius stock. But I believe the explanation of what's happening with the business is reasonable. And I consequently believe that investors are overreacting to today's news.

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>>> Super Micro stock plunges 19% after company delays annual report following short-seller report


Yahoo Finance

Ines Ferré

Aug 28, 2024


https://finance.yahoo.com/news/super-micro-stock-plunges-19-after-company-delays-annual-report-following-short-seller-report-200333718.html


Super Micro Computer (SMCI) stock plunged 19% on Wednesday after the company said it would delay the filing of its annual report for its fiscal year that ended June 30.

The announcement comes a day after short seller Hindenburg Research claimed, among other things, "accounting manipulation" at the artificial intelligence high flyer.

"SMCI is unable to file its Annual Report within the prescribed time period without unreasonable effort or expense," the company said in a statement. "Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024."

Super Micro shares soared from $290 in early January to about $1,200 by March, when the stock was added to the S&P 500 (^GSPC). The ticker also joined the Nasdaq 100 index (^NDX) in July.

Super Micro stock is now off more than 60% from its March peak but is still up 50% year to date. The company recently announced a 10-for-1 stock split effective Oct. 1.

The stock fell about 2% on Tuesday after Hindenburg said its three-month investigation "found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues." The firm also disclosed it had taken a short position in Super Micro.

The maker of data center servers and management software captured the attention of investors this year as it rode the AI wave. The company buys components from AI chipmaker Nvidia (NVDA).

Short sellers have been rewarded heavily from the stock's plunge.

Wednesday's drop in Super Micro’s stock price made short sellers more than $840 million in mark-to-market profits, according to S3 Partners data.

"SMCI shorts have been building their positions since SMCI was in the $900’s in April but have really put the pedal to the metal since mid-July," S3 Partners head of predictive analytics Ihor Dusaniwsky told Yahoo Finance on Wednesday.

"We expect continued short selling in SMCI as it’s stock price keep dipping – but beware of a slew of buy-to-covers when its stock price stabilizes and short sellers look to realize their recent outsized gains," added Dusaniwsky.

On Wednesday CFRA analysts downgraded the stock's rating to a Hold from Buy following Hindenburg Research's allegations.

"While we believe the evidence presented does not conclusively demonstrate significant accounting malpractice or verifiable sanction evasions, SMCI's delayed 10-K filing and potential reputational damage raises concerns," wrote CFRA Research senior equity analyst Shreya Gheewala.

In its report, Hindenburg claimed that despite a $17.5 million settlement in August 2020 with the SEC following an inquiry for "widespread accounting violations," Super Micro's business practices did not improve, and senior executives who had left amid the scandal were later rehired.

The report quoted a former salesperson: "Almost all of them are back. Almost all of the people that were let go that were the cause of this malfeasance."

"Even after the SEC settlement, pressure to meet quotas pushed salespeople to stuff the channel with distributors using 'partial shipments' or by shipping defective products around quarter-end, per our interviews with former employees and customers," Hindenburg said in its report.

"All told, we believe Super Micro is a serial recidivist."

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Celsius Holdings - >>> 4 Reasons to Buy Celsius Stock Like There's No Tomorrow


by Leo Sun

Motley Fool

Aug 27, 2024


https://finance.yahoo.com/news/4-reasons-buy-celsius-stock-092000173.html


Celsius' (NASDAQ: CELH) stock is down nearly 60% since it hit its record high this March. The energy drink maker's stock fizzled out as investors fretted over its slowing sales growth, declining domestic market share, and some big inventory reductions at its distribution partner PepsiCo. It also struggled to maintain its high valuations in a high interest rate environment.

Nevertheless, now could be the right time to buy Celsius' stock. There are four simple reasons why.

1. Celsius is still one of the fastest-growing beverage makers

Celsius carved out a niche by selling sugar-free energy drinks made from all-natural ingredients like green tea, ginger, and taurine. That strategy attracted a lot of attention from younger health-conscious consumers, and Celsius' annual revenue more than doubled in each of the past three years.

That's why the bulls were disappointed when Celsius' revenue only rose 29% year over year in the first half of 2024. However, that slowdown wasn't too surprising because fully lapped its new domestic distribution deal with PepsiCo, which started in August 2022 and significantly boosted its sales throughout 2022 and 2023.

Analysts expect its revenue to only rise 19% this year, but they expect it to continue growing at a compound annual growth rate (CAGR) of 25% from 2024 to 2026. That would still make it one of the fastest-growing beverage makers in the world. Its larger competitor, Monster Beverage, is only expected to grow at a CAGR of 8.5% from 2023 to 2026.

2. Celsius' near-term headwinds aren't that severe

On May 28, Nielsen reported that Celsius' U.S. market share had dipped 30 basis points on a weekly basis to 10.5%. By the week ending on Aug. 10, its share had slipped to 9.6%. That ongoing decline might seem like a red flag since Celsius still generated 95% of its revenue from North America in the first half of 2024.

However, Nielsen's latest data showed that Celsius actually grew faster year over year than all of its domestic competitors in the four weeks leading up to Aug. 10. Celsius' sales rose 8.8% year over year, which outpaced Red Bull's 1.8% growth and Monster's 3.5% decline (excluding its acquisition of Bang energy drinks from Vital Pharmaceuticals last year). On its own, Bang grew 6%. In other words, Celsius is still growing even as the energy drink market gets more crowded.

The expansion of Celsius' fledgling international business could also offset the slower growth of its North American business. It recently signed a new distribution deal with the Japanese beverage giant Suntory to sell its drinks in the U.K., Ireland, and Canada, and its domestic partnership with PepsiCo could eventually evolve into an international one. It's also selling a lot more products on Amazon, which contributed 10% to its second-quarter sales.

PepsiCo's recent inventory reductions also don't necessarily mean the domestic market's demand for Celsius drinks is drying up. It's fairly common for a distribution partner to reduce its inventories of a new drink as a deal matures, and Nielsen's latest data indicates Celsius' U.S. sales are still increasing despite the inventory reductions. It also wouldn't make sense for PepsiCo to intentionally throttle Celsius' growth when it already owns an 8.5% stake in the company.

3. Celsius' margins are still expanding

If Celsius were in trouble, we would have seen its gross and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins shrivel. But this is what actually happened over the past four and half years:

For 2024, analysts expect Celsius' adjusted EBITDA to rise 11% and lift its adjusted EBITDA margin to 29.5%. From 2024 to 2026, they expect its adjusted EBITDA to grow at a CAGR of 12%. That rosy outlook implies that economies of scale are kicking in.

4. Celsius stock looks reasonably valued

With an enterprise value of $9 billion, Celsius is valued at 6 times this year's sales and 25 times its adjusted EBITDA. Those valuations are reasonable relative to its growth rates and its industry peers. Monster, which is growing at a much slower rate, trades at 6 times this year's sales and 20 times its adjusted EBITDA.

Celsius might not be a hypergrowth stock anymore, but it still has plenty of upside potential. Its stock price could remain volatile, but it should stabilize and rally back toward its all-time high as the company overcomes its near-term challenges.

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>>> Here's Why Danaher Stock Surged Today


by Lee Samaha

Motley Fool

Jul 23, 2024


https://finance.yahoo.com/news/heres-why-danaher-stock-surged-155045315.html


Danaher's (NYSE: DHR) core revenue decline of 3.5% in the second quarter might not seem like anything to write home about. Still, as ever in investing, it's about context, and the company's earnings report shows that it's set to return to its long-term growth track.

The good news encouraged investors to bid the stock up by more than 7% in trading before 10 a.m. ET today.

Danaher beats guidance

As you might expect from a biotechnology, life sciences, and diagnostics company, Danaher's core revenue and earnings have bounced around in recent years due to the pandemic. Not only did Danaher manufacture PCR tests used to detect COVID-19, but it also sold life sciences equipment used to research vaccines.

The retraction from the massive boost in demand caused by the pandemic creates near-term challenges for Danaher. Therefore, management still expects this to be a year of low single-digit core revenue declines, but the evidence from the second-quarter earnings suggests that investors might have to revise their expectations at some point.

Going into the second-quarter earnings, management's guidance called for a year-over-year core revenue decline in the mid-single-digit range (implying 4%-6%) with an adjusted operating profit margin of 26%. However, the second-quarter core revenue declined by just 3.5%, and the adjusted operating profit margin came in at 27.3%.

Better-than-expected revenue and margin performance led to earnings per share of $1.72 in the quarter, compared to the analyst consensus of $1.57.

Where next for Danaher stock?

Management continues to expect a core revenue decline in the low single digits for the third quarter and the full year, but it's hard not to think it's being conservative.

CEO Rainer Blair cited positive momentum in its bioprocessing business and market share gains in its molecular diagnostic testing business, Cepheid. If Danaher can sustain those improvements, the company can return to the high-single-digit growth rates Wall Street analysts expect in 2025 and 2026.

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>>> Johnson & Johnson - Another quality business with a long track record of regularly hiking its dividends is healthcare staple Johnson & Johnson (NYSE: JNJ).

https://finance.yahoo.com/news/2-magnificent-p-500-dividend-082500784.html

J&J's stock price is down 19% from its early 2022 high. Part of that dip can be attributed to concerns regarding legal liabilities related to lawsuits involving its talc products. J&J is making efforts to resolve this (hopefully) short-term headwind. The dip can also partly be attributed to concerns about J&J's growth outlook for the next few years, when it will lose patent exclusivity on some of its pharmaceutical products, opening the door for other companies to make generic versions, which will put a drag on sales. But Wall Street is undervaluing the company's track record for developing new pharmaceuticals that can pick up the slack and drive further growth.

Johnson & Johnson has a long history of innovation. It has steadily increased its research and development budget for years, spending over $15 billion on it last year alone. The company is constantly investing in its pipeline of new treatments and technologies that will keep the company growing, as it has for over a century. In fact, products that were introduced within the last five years made up a quarter of J&J's total revenue last year.

It's a quality business in large part due to management's history of achieving high returns on capital. In addition to its product pipeline, management is always looking for opportunities to make strategic acquisitions that expand its capabilities in high-growth areas of healthcare, including its medical technology segment. It just completed its acquisition of Shockwave Medical, extending its presence in the high-growth market for cardiovascular intervention devices.

Johnson & Johnson's profitable business has funded a growing dividend for over 60 years. It recently raised the quarterly payment by $0.05 per share, bringing its forward dividend yield at the current share price to 3.32%.

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Pepsico - >>> Say goodbye to $6 Cheetos—snack companies finally lower prices


Fortune

by Eva Roytburg

Jul 12, 2024


https://finance.yahoo.com/news/goodbye-6-cheetos-snack-companies-191047362.html


One snack giant has finally admitted that $6 for a bag of Cheetos is crumbling consumers’ wallets.

After multiple years of raising prices for consumers, PepsiCo’s snack unit Frito-Lay is finally feeling them bite back. The company—which produces most of America’s chip favorites, including Doritos, Ruffles, and Lay's—reported a 0.5% decline in second quarter revenues Thursday. The drop comes after Frito-Lay saw its net revenues soar roughly $7 billion between 2020 and 2023.

Years of persistent inflation have created “tighter household financial conditions,” PepsiCo management said in prepared remarks. Now, as customers have become more “value-conscious,” the snack giant’s performance is “subdued.”

Upon this realization, Frito-Lay intends to cut prices for some salty snacks and expand marketing for others, PepsiCo chairman and CEO Ramon Laguarta said in a call to investors.

“There is some value to be given back to consumers after three or four years of a lot of inflation,” Laguarta added.

Frito-Lay will utilize a now familiar play to win back consumers, Laguarta said: investing in value-based deals. Multiple food retailers, from fast food to grocery stores, have begun offering deals in recent weeks to attract value-seeking customers. Like McDonald’s new $5 meal, or Whole Foods' $2 Tuesday rotisserie chickens, Frito-Lay is ready to jump on the trend of bargaining with its customers.

“It seems that customers are gravitating toward where they feel the best deal is right now,” Whole Foods CEO Jason Buechel previously told Fortune.

Laguarta, in response to multiple peppering comments from investors Thursday, agreed, admitting that “new entry points” and “new promotional kind of mechanics” would be necessary for consumers.

Some consumers might say that it’s about time. The average price of potato chips in June 2024 was $6.56—a near 30% jump from the June 2020 pandemic price of $5.09, according to Federal Reserve data.

And it’s not just potato chips—more than 80% of consumers say that overall, food prices have increased a little or a lot over the past 12 months, according to the May 2024 Consumer Food Insights Report from Purdue University. The same report found 37% of chip-loving Gen Zers and millennials say they are going into debt, or whittling away their savings, to pay for food.

Additionally, “food” was the top choice over categories like housing and childcare when consumers were asked which goods and services saw the largest year-over-year price increase.

The White House contests the impact of inflation on food prices, making the case that consumer purchasing power at grocery stores has actually increased. Grocery inflation has cooled in recent months, according to a recent White House report. And, if you narrow the scope to just the past year, at-home food prices have increased by only 1%, according to the Consumer Price Index, while wages grew by about 3.9%.

Yet, that data ignores the years of persistent price increases from compounding inflation; since 2021, groceries are about 25% more expensive.

“The reason consumers feel like prices are increasing is because they still are,” Kendall Meade, a certified financial planner at SoFi, previously told Fortune. “While inflation may be slowing down, it has not stopped and we are not seeing disinflation.”

However, falling revenues may be the wake-up call food retailers need to offer permanent price decreases, beyond promotional deals.

Over the past six months, food companies such as Conagra—which dominates the frozen meals section at grocery sections—have tried to use temporary discounts to woo customers, Bank of America analyst Peter Galbo told the Washington Post.

“But a lot of the promotional activity that they’ve put in place hasn’t really worked,” Galbo said. “So now it becomes a question of whether they need more permanent reductions on price.”

This story was originally featured on Fortune.com

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>>> Down 55%, Is Pfizer a Good Dividend Stock to Buy on the Dip?


Motley Fool

By Cory Renauer

Jul 8, 2024


https://www.fool.com/investing/2024/07/08/down-55-is-pfizer-a-good-dividend-stock-to-buy-on/


KEY POINTS

Despite a tanking stock price, Pfizer has raised its dividend for 15 consecutive years.

Pfizer's profits are off their peak but more than sufficient to continue raising the dividend.

The stock offers a yield more than 4 times the average yield from dividend payers in the S&P 500 index

Shares of the world's largest drugmaker offer a dividend yield above 6% at recent prices.


The past few years have been tough ones for investors holding shares of Pfizer (PFE 0.91%). The Big Pharma stock is down by more than half from the peak it set in late 2021.

Pfizer's stock price was hammered, but that didn't prevent the company from meeting and raising its dividend commitment. Last December, the pharmaceutical company raised its payout for the 15th consecutive year.

Shares of Pfizer offer an eye-popping 6.1% dividend yield at recent prices. Is the stock a buy for income-seeking investors? To find out, we'll need to weigh its strengths against reasons to avoid the stock.

Reasons to buy Pfizer now

Sales of Pfizer's COVID-19 vaccine, Comirnaty, and its antiviral-treatment Paxlovid soared to a combined $56 billion in 2022. The stock is down because sales of these drugs collapsed faster than expected. The stock could be a smart buy now because the company wisely reinvested a large swath of the proceeds.

Last year, Pfizer acquired Seagen, a cancer drug developer with four commercial-stage therapies, for about $43 billion. Also in 2023, the Food and Drug Administration approved a record nine new medicines from Pfizer's late-stage development pipeline.

One of the newly approved treatments Pfizer's launching now, Velsipity, came from the $6.7 billion acquisition of Arena Pharmaceuticals in 2022. It could generate more than $2 billion in sales by 2030 as a treatment for ulcerative colitis.

Also in 2022, Pfizer acquired Biohaven and its migraine headache drugs for $11.6 billion. The big purchase gave the company Nurtec, which is already on its way to becoming a blockbuster that could produce more than $1 billion in annual revenue.

Last year, the FDA approved Zavzpret, a drug similar to Nurtec that works as a fast-acting nasal spray and could be more popular than the original.

If we ignore Paxlovid, Comirnaty, and the negative effects of a stronger dollar, Pfizer reported total first-quarter sales that rose 11% year over year. With a lot of new drugs to sell, Pfizer expects adjusted earnings to reach a range between $2.15 and $2.35 per share this year, which is more than it needs to meet a dividend commitment currently set at $1.68 per share annually.

Reasons to remain cautious

Pfizer's biggest growth driver in the first quarter was a rare-disease treatment called Vyndaqel. This is a once-daily capsule that keeps transthyretin, a protein that transports vitamin A and thyroid hormone, from unraveling and forming life-threatening plaques in heart tissue and other organs.

There are somewhere between 5,000 and 7,000 new cases identified annually in the U.S. of cardiomyopathy caused by transthyretin amyloidosis. That was enough to drive first-quarter sales of Vyndaquel 66% higher year over year to an annualized $4.5 billion. Recent results from a still-experimental therapy, though, suggest Vyndaqel's sales growth could decelerate.

This June, Alnylam (ALNY -0.20%) reported successful phase 3 clinical trial results with vutrisiran, an injection given once every three months. Treatment with vutrisiran reduced patients' risk of heart attack or death from any cause by 28% for patients who were taking Pfizer's Vyndaqel. (?)

Pfizer's top-selling cancer drug, Ibrance, is responsible for about 7% of total sales, and it's losing ground to competitors. First-quarter Ibrance sales declined by 8% year over year.

A buy now?

Big pharma companies are made up of many pieces that are constantly moving in opposite directions. Comirnaty, Paxlovid, and Ibrance are on the way down, but it looks like Pfizer has enough new products to offset the losses and continue growing earnings and its dividend payout.

Adding some shares of Pfizer to a diversified portfolio and holding them for at least a decade looks like a smart move for most investors to make right now.

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>>> Pfizer -- At recent prices, Pfizer offers a juicy 6% yield, supported by profit from sales of innovative new drugs. The company has raised its dividend payout for 15 consecutive years, and it looks capable of maintaining this streak for at least another decade.


https://www.fool.com/investing/2024/07/06/3-reliable-dividend-stocks-with-yields-above-5-to/


Pfizer reinvested some of the enormous profit its COVID-19 products generated into new sources of revenue that can keep its needle moving in the right direction. For example, the $43 billion acquisition of Seagen in 2023 gave it access to four commercial-stage cancer drugs, including Padcev.

Last December, the Food and Drug Administration (FDA) approved Padcev for the treatment of newly diagnosed patients with advanced-stage bladder cancer. New patients tend to stay on therapy much longer than folks who have already relapsed, so this label expansion could add billions to Pfizer's top line in the years ahead.

In addition to Padcev's label expansion, the FDA also approved a record nine new drugs from Pfizer last year. With plenty of new revenue sources, another decade of steady dividend raises seems likely.

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WINA back above 200 MA. Strong day for the small caps, Russell up over 3%.



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MCD - key support (240-245) held, so hopefully recovers from here, though still early.



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GNRC hopefully creeping back up to test key resistance (~ 155)



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