Replies to post #123972 on Savvy Trades and Investments

[SSKILLZ1]

ELV

I started a position in ELV at $374.38 yesterday. here is what I like.

1) The sector of medical insurance has been out of favor and recently has gotten hit again and again thanks to UNH which is one disaster after another. However has times has gone on, it is becoming very apparent to me this is more a bunch of issues at UNH, rather than problems with the sector.

2) ELV has guided for $34.15-34.85 this year and I expect around $35 this year, and analyst estimates are for north of over $39 next FY as ELV should return to more historical growth patterns. That means ELV is trading at a PE of around 9x next years estimates. Historically ELV has traded in the 15-18 range, so the multiple is very depressed right now. If they return to the 15 multiple and earn over $39 next year, I see FV around $585, which would almost be slightly under a 60% return from here counting the dividend over the next 12 months.

3) ELV continue to return capital to shareholders. They don't have an enormous dividend but they are a pretty solid divy grower.
2020 $0.95 a quarter ($3.80 annualized)
2021 $1.13 a quarter ($4.52 annualized)
2022 $1.28 a quarter ($5.12 annualized)
2023 $1.48 a quarter ($5.92 annualized)
2024 $1.63 a quarter ($6.52 annualized)
2025 $1.71 a quarter ($6.84 annualized)

In addition to a albeit small on a dividend yield front, but solidly growing dividend, the company also buyback stock, in fact last quarter they picked up the pace purchasing 2.2 million shares or 880 million $ worth. End result is I expect them to continue to knock down the share count decently over all of the current FY.

Conclusion: I think ELV is attractive at current levels, I think they got hit recently again and again thanks to the constant failing of UNH which as I said earlier is become one disaster after another. in the meantime ELV has continued to execute and reiterated solid guidance for FY 25. Time will tell. All is just my opinion, and I could always be wrong though.

[SSKILLZ1]

CAG

Sold CAG today at $22.43, here is why I sold.

1) SJM had horrible guidance which is not a positive for the space.

2) CAG Has divested several brands which could be a headwind of say .07-.12 in the next FY by my quick calculation since I thought this was a good buy.

3) CAG maybe the most important part was the possible needing to mitigate tariffs from the increase on steel and aluminum tariffs from 25 to 50% that is another headwind to earnings next FY.

End result is before I expected $2.45-$2.55 now I expected $2.20-$2.30 which is not great. Hence with negative eps I don't see the PE expanding to 12x-13x and instead may stay at 10X hence I think FV for the next 12 months might be $22-23, I thought comps would improve next FY now I think they will slightly decline thanks to recent developments. Hence why I sold. All is just my opinion, and I could always be wrong though.