Contrarian Value Ideas

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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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ADM back above 200 MA.



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PFE golden cross.




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>>> Hershey's once-in-a-decade valuation


https://finance.yahoo.com/news/500-2-absurdly-cheap-stocks-124500224.html


Battling cocoa prices that have more than tripled over the last two years due to erratic rainfall in West and Central Africa, The Hershey Company has seen its share price drop 34% from its all-time highs.

Despite this rapid rise in the price of the company's most essential ingredient, Hershey has continued to increase its sales and earnings-per-share (EPS) ever higher over the last few years -- as the company has traditionally done for decades.

However, with management expecting flat EPS growth in 2024, the market has taken a wait-and-see approach toward Hershey's stock, leaving it to trade at just 18 times earnings -- what looks like a once-in-a-decade valuation.

Compared to the S&P 500's average price-to-earnings (P/E) ratio of 25, this low valuation looks like a deep discount for a robust blue chip business such as Hershey. Similarly, the company's 2.8% dividend yield is at its highest level in the last decade, which is equal to the mark it set in 2018.

While the company won't be mistaken for a high-growth stock anymore, its recent acquisitions of Skinny Pop popcorn and Dot's Pretzels for a combined $2.8 billion seem to be paying dividends so far. Generating a combined $860 million in sales during 2023, the two salty snack brands are already Hershey's sixth- and ninth-highest-selling products.

The cherry on top for investors? In a recent survey by Statista, Hershey's, Reese's, and Kit Kat (all Hershey labels) were the first, second, and fourth most-consumed chocolate brands by Americans in 2023. Buoyed by this long-standing and somewhat unshakable popularity, Hershey looks primed to raise its dividend not just for its 15th consecutive year but potentially for decades to come.

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Global Life - >>> Billionaire Warren Buffett Recently Cut This Stock From Berkshire Hathaway's Portfolio. It Just Dropped 53% In 1 Day. Here's What Investors Need to Know.


by Courtney Carlsen

Motley Fool

Apr 17, 2024


https://finance.yahoo.com/news/billionaire-warren-buffett-recently-cut-101500983.html


Globe Life (NYSE: GL) stock plummeted by more than 53% in a single day last week after short-seller Fuzzy Panda Research accused the life insurance company of fraud. The claims piled onto the already struggling stock, which had previously been a longtime holding of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).

If you're thinking about buying the dip in the stock, there are some things you'll want to know.

Globe Life's troubles began last year

Globe Life was one of Berkshire Hathaway's longest-held investments, having been part of the conglomerate's portfolio for more than two decades. Berkshire held Globe Life through several difficult economic periods, including the COVID-19 pandemic, which put tremendous pressure on life insurers by elevating claims costs.

Buffett examines a management team's character and trustworthiness when investing. Buffett and his team have an excellent track record of evaluating management, which is a big reason for the conglomerate's long-term success. When Globe Life became the subject of several lawsuits accusing it of misconduct, Berkshire pulled the plug on its investment.

Last year, two Globe Life subsidiaries, American Income Life Insurance Co. and Arias Agencies, faced a lawsuit accusing them of inappropriate workplace conduct; this included rampant drug use, sexual abuse, and degradation of agents who didn't hit sales targets.

Globe Life's struggles continued when a former executive claimed he was fired for blowing the whistle on "potentially illegal" sales practices at the subsidiary. It appears that the accusations were why Berkshire sold its stake in the insurer last year.

Here's what short seller Fuzzy Panda had to say about the insurer

Fast-forward to this year, and Globe Life's troubles have gone from bad to worse. On March 6, the U.S. Department of Justice issued subpoenas to Globe Life and American Income Life. The subpoena is part of an investigation into allegations of fraud and misconduct at the (renamed) Arias Organization, now one of American Income Life's agencies.

Last week, the dam broke after short-seller Fuzzy Panda Research accused Globe Life of "extensive" insurance fraud that was ignored by management. According to Breakout Point and reported by Bloomberg, Fuzzy Panda Research was the best-performing active short-seller in 2023. Although short-sellers -- investors who try to profit from falling share prices -- suffered deep losses during the long bull market of the 2010s, they can help expose harmful or downright fraudulent business practices.

Fuzzy Panda reviewed hundreds of court documents and interviewed former executives and agents "who showed us where the fraud was hidden." According to the short-seller, the fraud was ignored by management despite being "obvious and reported hundreds of times." After the short report was released, Globe Life's stock plummeted 53% in a single day.

Following the serious accusations from Fuzzy Panda, Globe Life responded by saying:

We reviewed the report and found it to be wildly misleading, mixing anonymous allegations with recycled points pushed by plaintiff law firms to coerce Globe Life into settlements ... The short seller analysis by Fuzzy Panda Research mischaracterizes facts and uses unsubstantiated claims and conjecture to present an overall picture of Globe Life that is deliberately false, misleading and defamatory.

Buy the dip?

According to The Fly, analysts believe the stock sell-off is overdone, but big question marks remain. Investment bank and investment firm Piper Sandler said that Globe Life's response "serves to assuage concerns but does not completely remove the vacuum that remains absent a broader communication about this matter with the investment community."

Another investment firm, Evercore, meanwhile, sees limited downside from here but says there is still "significant uncertainty for the shares."

Globe Life faces serious allegations, and the stock price reflects this. After its significant sell-off, aggressive investors may find the stock ripe for the picking. If you're willing to tolerate this risk, though, don't bet more than you're willing to lose.

However, given the uncertainty around the situation and the Department of Justice's investigation, most investors are better off waiting to see how things shake out; they should avoid the stock for now.

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High Tide (HITI) - nice break out on high volume :o)


>>> High Tide Inc. (HITI) engages in the cannabis retail business in Canada, the United States, and internationally. The company operates through Retail and Wholesale segments. It operates licensed retail cannabis stores; and provides data analytics services. In addition, the company manufactures and distributes consumption accessories. Further, it sells its products through online sales via e-commerce platform. The company offers its products under the Daily High Club, DankStop, FABCBD, GC, Nuleaf, Smoke Cartel, and Blessed CBD brands. The company was formerly known as High Tide Ventures Inc. and changed its name to High Tide Inc. in October 2018. High Tide Inc. was founded in 2009 and is headquartered in Calgary, Canada. <<<



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HUM, UNH - >>> US health insurers slide as final Medicare payment rates fall below expectations


Reuters

4-2-24


https://www.msn.com/en-us/money/markets/us-health-insurers-slide-as-final-medicare-payment-rates-fall-below-expectations/ar-BB1kWIXt?OCID=ansmsnnews11#;


(Reuters) - Shares of U.S. health insurers tumbled between 6% and 12% on Tuesday after the final 2025 rates for Medicare Advantage (MA) payments by the government implied a cut and triggered worries about a margin squeeze.

The rates, which indicated a 0.2% fall in average payments, are unchanged from what was proposed in January, despite pressure from companies and industry groups to incorporate a late-year surge in medical care demand.

The U.S. Centers for Medicare & Medicaid Services typically raises the final reimbursement from the advanced notice.

The rates could pile more pressure on margins at insurers already struggling with high medical costs, and uncertainty around insurance claims processing due to the fallout of a hack at UnitedHealth's tech unit.

Shares of Medicare-focused insurer Humana fell the most, plunging more than 12% to a near four-year low of $308.22. UnitedHealth slumped 6.6%, while CVS Health sunk 7.7% in early trading.

The steep losses also dragged down the blue-chip Dow index and the benchmark S&P 500 in morning trading. [.N]

The "less-than-favorable rate updates, which coupled with the potentially clouded claims development in light of the Change Health cyberattack ... may put the once-golden Medicare Advantage market in somewhat less favorable standing," said Citi analyst Jason Cassorla.

The CMS, in a final notice published on Monday, said it had not observed higher demand for medical care during the fourth quarter of 2023, in sharp contrast to recent comments from insurers such as Humana and UnitedHealth.

The closely watched proposal determines how much insurers can charge for monthly premiums, plan benefits they offer and, ultimately, their profits.

The high costs, coupled with low rates, put pressure on insurers to cut the number of benefits they cover, said BoFA Securities analyst Kevin Fischbeck in a note.

"The amount of benefit cuts needed could begin to weigh on the perceived value of Medicare Advantage," he said.

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Derf, >> low angst = low results <<

I'm finding the opposite - the lower the angst, the better the results. And also - the less trading, the better the results.

I guess the bottom line is finding the right formula that works for you. Some are heavy sleepers, some are nervous nellies, some can trade, while others lose their shirts trying to trade. So whatever works :o)



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[fung_derf]

low angst=low results...I rather spend that time doing the sudoku or Jumble

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Derf, >> get up in the morning to watch a half share <<

For me that's the whole idea --> low angst :o)



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[fung_derf]

Talking with you is like when I'm talking with Mark Cuban. I wouldn't get up in the morning to watch a half share.
I wouldn't even know HOW TO buy a half share.
You make me feel like a billionaire.

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Derf, >> NVDA <<

Chart-wise, it looks like the 50 MA should reach 800 before long, so that might be a decent entry point if the stock gets there. But for the longer term it probably doesn't matter that much.

With NVDA I have a whopping 1/2 shares lol. But I like these tiny positions since it makes it easy to buy / hold and not worry about it. I figure with stocks, the big money is made by buying quality and holding LT / forever. Of course that sounds good in theory, but we'll see what happens when we get another crash / crisis, which will happen at some point.



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[fung_derf]

Actually, now that I'm looking at it, I'd say $NVDA is a bit better buy than SMCI.
I'd like to buy it under $700 though. I'm not willing to chase it.

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Derf, With SMCI, it looks like support at the rising 50 MA. I figure it's a logical longer term buy / hold, but am only holding the 'free' shares from the previous double. Looks like the chart is pretty much tracking NVDA. I'm figuring on holding these longer term, but only small positions.

It's actually good to see the market consolidating. Europe really needed it, based on the German chart and the Euro Stoxx 50 futures charts. Both had spiked for 2-3 months without a real pullback. Unlike here, Europe's economy has been weak / recession, so they are lowering % rates before the US Fed does.

Looking at Fed policy, they are guiding for 3 rate cuts this year, so Jim Rickards is predicting July, Nov, and Dec. He says Oct is out since it's too close to the election, and July may be more likely than June since the Fed isn't in much hurry with the US economy so resilient, and July will give an extra month of inflation data. Sounds logical, and Fed easing should give an underlying tailwind, and help offset other uncertainties, geopolitical and the election. Always something to worry about though.. For Fed policy guidance, check out the Nick Timiroas (WSJ) headlines periodically, since he's the designated Fed leaker to Wall Street -


https://www.wsj.com/news/author/nick-timiraos



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Derf, Yes, looks like the strength in SCCO continues. I missed the boat on copper, but did pick up a little RIO, along with several nuclear related ETFs (URA and NLR), albeit tiny positions. I'm thinking of these as longer term buy / holds, and they have nice dividends. A little late with NLR though. I had some last Fall but unfortunately decided to exit. NLR holds a number of smaller nuclear utilities that have been on a tear. But even after the runup, I figure a small LT investment will at least give some exposure to the sector.

Gold continues it's breakout from that 12 year cup + handle, and it looks like silver may be starting to join in.

With copper, using the futures chart as a guide, it looks like there could be another ~ 10% upside before it reaches the resistance levels ~ 4.5. Just a guess though, and these commodities are unpredictable. But since the Chinese decision to cut production was reportedly a key factor that ignited the current copper move, maybe it has further to go, but tough to say. I figure it's better to go with longer term trends, but copper also has that aspect, with the global 'electric everything' paradigm. I missed the boat with SCCO, so maybe on a pullback. But as a shorter term trade, nice going :o)



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[fung_derf]

Reading so many pro copper articles I'm starting to get nervous. $SCCO keeps running.
up about 28% since August. My rule used to be 30% up and I was out, but that was for the "old stock market"...not today's that logic is nonexistent.
$SMCI pulling back again to around $875 I think....do I dare??