Daily General Discussion and spitballin thread Investing

Daily General Discussion and spitballin thread
Daily Advice Thread - All basic help or advice questions must be posted here.
Finding funds where managers have skin in the game
ARKK (Innovation Fund) Top 5 Stock Picks - Week Ending 3/7/21
Doordash should drop in coming weeks.
Bond yield below inflation rate.
Oh what a setup for gold ! ( bring your calculator )
ROKU DD based on the latest SEC 10K
Game of drones: Chinese Giant DJI hit by U.S. Tensions, Staff Defections-Many Workers Leaving To Work For US Based Competitors And DJI Also Shuttering US Locations...
U.S. Semiconductor Fab Companies
Financial Securities Transaction Taxes
Designing a profile from scratch for the long haul
The case about Ahold Delhaize.
Golden cross screener (preferably in thinkorswim)
Janus International (JIH) – under the radar SPAC combination positioned to benefit from rotation into the building products cyclical boom. 50%+ upside
Why I like TEVA especially at this price point.
Supercharing your Portfolio with Tesla
Vanguard is bullish on $BB

Daily General Discussion and spitballin thread

Posted: 08 Mar 2021 02:01 AM PST

Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here!

This thread is for:

General questions
Your personal commentary on markets
Opinion gathering on a given stock
Non advice beginner questions

Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google.

If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions.

Any posts that should be comments in this thread will likely be removed.

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Daily Advice Thread - All basic help or advice questions must be posted here.

Posted: 08 Mar 2021 02:00 AM PST

If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:

How old are you? What country do you live in?
Are you employed/making income? How much?
What are your objectives with this money? (Buy a house? Retirement savings?)
What is your time horizon? Do you need this money next month? Next 20yrs?
What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?)
What are you current holdings? (Do you already have exposure to specific funds and sectors? Any other assets?)
Any big debts (include interest rate) or expenses?
And any other relevant financial information will be useful to give you a proper answer.

Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources.

Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions!

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Finding funds where managers have skin in the game

Posted: 07 Mar 2021 02:44 PM PST

Hi all,

Only 55% of fund managers invest some of their own money in the funds they manage with only 15% investing over 1M, research suggests that funds where managers put a significant amount of money tend to have better outcomes.

So I'm looking for mutual funds and ETFs where the managers invest their own money in the fund. I read that funds report that to the SEC but I'm not sure where to find it...

Edit: Added more percentage data on fund managers stakes in their funds courtesy of u/poolandapondforyou

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ARKK (Innovation Fund) Top 5 Stock Picks - Week Ending 3/7/21

Posted: 07 Mar 2021 04:09 PM PST

Hey All, each Sunday, I plan to pick 5 stocks from ARK's funds that are most attractive from a fundamental perspective (i.e. growth rates, margins, valuation). I'm doing this for myself so thought it'd be helpful to share with others before trading begins on Mondays.

Planning to do this for the Innovation (ARKK) fund today, then the autonomous tech next week, then next gen internet, then fintech before the whole cycle repeats. (Unless it turns out that there's no interest in this, then I'll stop posting).

Why ARK?

Though ARK's strategy can be seen as overhyped and controversial, what I do like about the fund is that they are growth-focused with an internal annual hurdle rate of 15% based on a 5-year time horizon
But, I think ARK tends to be on the optimistic end of the spectrum and sometimes too tolerant of overly stretched valuations
As a result, I'm hoping to give you the best of both worlds: high growth stock picks at the most attractive prices, all by using ARK's ETF picks as a filter for vetted, high-growth companies
- To be clear, I'm not saying ARK's picks are all bulletproof. Just using the fund's picks since they have a much bigger research team and resources than an individual investor such as myself, so think of this post as a potential starting point for more research

My Process & Selection Criteria

First of all, I'll be excluding all non-tech stocks in my analysis because I personally like to focus on tech. Including healthcare stocks (which pretty much are what the non-tech stocks are) ruins the metric comparisons given the differences in industries.
My process was pretty simple. Downloaded all the tickers from ARK, pulled data from wallmine or went through filings myself. As a result, there may be some slight discrepancies from the data you use and mine but they should be around the same ballpark.
Next, my selection criteria, which will I'll likely change over time each week. Today the ones I'm using include the following (data sourced from wallmine and filings):
- Trading at less than 70% of the 52 week high - provides context around market sentiment
- Greater than 25% LTM revenue growth - guide for the future
- Greater than 60% LTM gross margins - operational efficiency
- LTM cash flow positive - operational efficiency
- LTM Revenue multiple of less than 15x - valuation
Given that the market is a bit bearish right now and punishing stocks with stretched valuations, I'm heavily weighting the valuation criteria as you'll see soon

The Top 5 Picks of the Week

2U - a leading edtech company
- 52 week high discount: 41%
- LTM revenue growth: 34%
- LTM gross margins: 71%
- LTM cash flow positive: 0%
- EV / LTM revenue: 3.3x
- Commentary: Most software companies are trading 20-30x with these types of fundamentals, so based on the valuation, 2U seems very promising
Baidu - a Chinese AI and internet conglomerate
- 52 week high discount: 26%
- LTM revenue growth: 46%
- LTM gross margins: 48%
- LTM cash flow positive: 33%
- EV / LTM revenue: 4.7x
- Commentary: Really great financial figures and super low revenue multiple, but do keep in mind that there's always heightened risk when investing in Chinese companies
PagerDuty - an incident response software company
- 52 week high discount: 36%
- LTM revenue growth: 27%
- LTM gross margins: 87%
- LTM cash flow positive: (35%)
- EV / LTM revenue: 13.1x
- Commentary: The company is in its growing phase so that's why I'm forgiving of its negative 35% free cash flow margin and a 13.1x revenue multiple seems very fair for this kind of financial profile for a software company. Keep in mind these are EV / LTM revenue multiples, so this multiple is even lower for NTM but I just don't have that data.
Teradyne - a test equipment manufacturing company whose customers include Samsung, Qualcomm, Intel, and more
- 52 week high discount: 23%
- LTM revenue growth: 34%
- LTM gross margins: 57%
- LTM cash flow positive: 29%
- EV / LTM revenue: 5.8x
- Commentary: Based on the growth rate, margins, and valuation, seems like a bargain
Taiwan Semiconductor Manufacturing Company - primarily makes chips
- 52 week high discount: 15%
- LTM revenue growth: 33%
- LTM gross margins: 53%
- LTM cash flow positive: 29%
- EV / LTM revenue: 11.4x
- Commentary: The company isn't trading at much of a discount relative to the others at 85% but I chose this company because there has been some news I came across recently of a chip shortage, which means there is incredible demand for TSMC's products

Edit: One thing I forgot to add - there's obviously a lot more to investing than just numbers. And it's very possible that the numbers I share each week has an important story behind it (i.e. an inflated revenue figure due to an acquisition rather than organic growth). So as I mentioned earlier in the post, please view this as a starting point of research and I'm not necessarily recommending all these as buys. Just that they are attractive from a financial perspective + it helps that the ARK team vetted the company.

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Doordash should drop in coming weeks.

Posted: 07 Mar 2021 06:32 PM PST

https://i.imgur.com/sOIoP2p.png

-Doordash has 2x as much revenue as Grub.
-But the market cap is 10x.

There are two ways you could go with this, either Grub undervalued or Door is overvalued. I pick the second.

Doordash, like every other food delivery, is still losing money. This is important because the pandemic is "as good as it gets" for Doordash--there will never be another time with so many people "forced" into ordering delivered food. Yet with all these factors lining up beyond their wildest dreams, Doordash is still unprofitable. How unprofitable?

4th quarter 2020: net loss of $2.67 per share.
Compared to $3.05 loss per share in Q4 2019.
That's a gain of 12.5%. Worldwide pandemic with people holed up in their houses, doordash only ups by 12.5%. Not bullish.

Lockup expiration:
Doordash float is 144M.
Doordash stock lockup expires 3/9, making 110M shares available.

The stock has basically "peaked". Won't there be a massive selloff in the coming weeks? It seems rational to me, that DDash insiders know the stock has peaked, and will want to get rid of shares while the going is good.

However, the short interest is only 5.4%. I would expect a much higher short if it were really going to tank. For comparison, GRUB shortint is a whopping 20%. Thoughts?

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Bond yield below inflation rate.

Posted: 08 Mar 2021 04:30 AM PST

I was wondering if someone could help explain a few things to me. My questions are below. Thanks a bunch.

Shouldn't bond yield always be higher than inflation rate?

So I'm just thinking why would anyone want to buy bond if they will lose money because the bond yield is below inflation rate? Do these people just have so much money that their primary goal is wealth preservation? They don't even care to make more money?

But even so, if they want to preserve wealth, index fund is safe and grows on an average 7% annually. MUCH better than bond yield to me. The market long term will always go up.

Is the fed purposely wanting to keep bond yield below inflation rate? If so, why? Can the fed control the bond yield? If the fed cannot control the demand, they can certainly control the supply right? After all, the fed is printing these bonds.

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Oh what a setup for gold ! ( bring your calculator )

Posted: 07 Mar 2021 05:32 AM PST

I think gold is falling to the nuclear trampoline people !

I would start with determining what is a sensible floor price for gold

The average all in mining costs for gold globally are $987 an ounce in 2020 (source spglobal.com)

Widely talked about, there was a Big Print of new money and more debt in 2020, with a 2nd mass stimulus on the way. The Mises Institute reported a record setting 38.6% year over year money supply growth (source mises.org) as of January 2021. Quite inflationary when one considers this supply growth is normally -0.5 to +2%.

But now we have a second stimulus, with no Mises report yet on what happens 6 months from now with this $1.9 Tril. I will take a shot at it assuming that money is also not coming from a budgeted tax base.

The M2 money supply is now $19395 billion (source tradingeconomics.com). $1.9 Tril is 1900 bil.

1.386 x ( 1900 + 19395) / 19395 = 1.5218

So this is a double stimulus giant 52.2% increase in money supply in a short time (year plus some weeks). Stimulus has been done before but never to this scale.

This would redefine gold to be fundamentally higher across people's value systems. You know the old "you can't print more gold" saying. Absorbing this factor into mining costs to be higher, at $987 x 1.522 = $1,502 an ounce

This I would argue is the absolute justifiable floor for gold going forward.

Track gold with symbol GC00 (number zeros, not capital letter O's) is about $1700 an ounce as of 3/6/21.

So we are 1700/1502 = 1.132 so only 13% above this floor

Contrast with silver, which has all in cost of $12.8 an ounce in 2020. Silver at kitco is $25.22 3/6/21, so using the same logic 25.22 / (12.8 x 1.522) = 1.29 or 29% above this floor.

In Feb 2020 we were right before the Big Print(s) and gold was trading at $1650 an ounce. If the same "I want it" vs "I don't want it" balance returns, this would set gold to

$1650 x 1.522 = $2,511 an ounce

After a big stimulus, gold has historically decoupled from bond effects for a while, going higher. See 2009 to 2010 history.

Back to now. Indeed gold shot to $2000 an ounce ish after the first stimulus by August 2020.

Oil is priced higher again, clearly an upward push on inflation as well.

I am not a total precious metals fan across the board. Palladium is used primarily for the catalytic convertors of gasoline powered cars, and so with the rise of EVs that metal doesn't have a future with me personally.

But look at what gold is used for. 78% of gold is used in jewelry (source goldprice.com). COVID-19 has put barriers in front of young people of marriage age forming relationships. According to greenvillebusinessmag.com, 63% of couples have delayed their weddings. A lot of times you shop for the ring first before you plan the wedding, but that is the USA practice. The issue is global. The main point is the delay in relationship formation is a force ahead in time of gold ring buying (or any jewelry for that matter).

So in summary you have a case for a $2,511 price due to record stimulus alone and are adding a huge backlog to the demand onto that. There are people out there saying "Gold is safety, and I don't need safety right now". Understood. However, you take the fact that gold is down in price and the tendency to break from the hold of bond's influence just after a stimulus and I would argue that you have a hell of a setup for gold to go up from this point !

Thanks for reading !

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ROKU DD based on the latest SEC 10K

Posted: 07 Mar 2021 11:21 AM PST

Since there has been some discussion on ARKK, and the fact that I do not want to touch TSLA, I figured, why not take a crack at ROKU

I love Roku's products - I have a streamer at home, and the company is well run, for the most part (my BIL worked there for a little)

They have 124M shares out. So, at the current quote of slightly above $350, their market cap is $44 Billion
2020 revenue was $1.778 Billion, up 57.5 % over 2019
1. Player (hardware) revenue was $510 M, up 31.6 % YoY (good number)
2. Platform revenue was $1.27 B, up 71.1 % YoY (excellent number)
Gross margins were 45.45% up 158 basis points YoY
1. Player (HW) margins were 8.55% up 414 bps YoY
2. Platform (SW) margins were 60.3% down 413 bps YoY
Number of shares were up 7.6 % YoY
Op-ex was up 47.9 % (S&M 67 %, G&A 48.8 %, R&D 34.25 %), all YoY
They do not use much leverage, current portion of LTD is below $100M
Cash position of a little over a billion dollars

So, "player" is their foot in the door, but "platform" is where they make money. Most of ROKU's platforms are not in the premium segment, but found in the value Smart TV segment

ROKU's current market share is a tad shy of 10% of the ~300M Smart TVs sold in 2020, and ROKU claims a 33% market share in the USA

I got into this wanting to trash ROKU. Instead, I "see" what they are accomplishing, with the exception of earning money (net income)

Valuation Method: Look at HW and SW separately

A $510M HW company with a 32 % growth rate, and 8.5% gross margins. Hard to value at over 2x sales. So, let's call it $1 Billion
A $1.27 Billion SW company with 60% gross margins, and a 71% growth rate. This is harder to put a firm number on, but anywhere from 10x to 20x sales. So, $12.7 B to $25 B
Add them up, and I get a range of $14 B to $26 B, or a stock price between $113 to $209
For reference, Morningstar's FVE estimate is $150 with a high degree of uncertainty

Conclusion: ROKU is seriously overvalued at the current "depressed" quote of $350+/share. My valuation metrics are "more than generous". This is not financial advice

Reference: https://www.sec.gov/ix?doc=/Archives/edgar/data/1428439/000156459021009021/roku-10k_20201231.htm

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Game of drones: Chinese Giant DJI hit by U.S. Tensions, Staff Defections-Many Workers Leaving To Work For US Based Competitors And DJI Also Shuttering US Locations...

Posted: 07 Mar 2021 06:53 PM PST

Based on the Biden Chinese Tech Ban article posted a few days ago, this is a good sign in the Drone industry that the whole industry is beginning to shift in the US! Of course, things could change but seems at least at this point with some of these "canary in the cole mine" actions by workers, and of course DJI shuttering locations and staff in the US behind the scenes, that they are expecting and planning on this US based trend to continue into the foreseeable future! Either way, these are little "green flags" for any US drone stocks and companies in general and for many that are somewhat small they could potentially see some record growth years here moving forward due to this shift!

https://finance.yahoo.com/news/game-drones-chinese-giant-dji-220227078.html

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U.S. Semiconductor Fab Companies

Posted: 08 Mar 2021 02:29 AM PST

I'm not a financial advisor. I write scary stories for a living. The highest level of math I attained was College Algebra, and I got a B. Taking financial advice from me would be a terrible idea, and this isn't financial advice.

I made a list of my favorite publicly traded semiconductor businesses with their own fabrication facilities. The reason why is because I personally believe the semiconductor industry will grow in the long term, and that companies with fabs will have a strategic advantage over those that don't have them. But I'm only speculating.

Here's my list along with some light DD, all of which is publicly available info:

BLAST AWAY!!!

STX Seagate Technology

Medium Cap ($17.59B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.5 Very Bullish

3.65% dividend

P/E 19.11

INTC Intel

Very Large Cap 246.787B

Equity Summary Score Provided By Starmine From Revinitiv: 9.7 Very Bullish

2.29% dividend

P/E 12.30

TXN Texas Instruments

Large Cap ($154.40B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.5 Very Bullish

2.43% dividend

P/E 28.13

AVGO Broadcom

Very Large Cap ($183.21B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.3 Very Bullish

3.2% dividend

P/E 52.22

SWKS Skyworks Solutions

Medium Cap ($28.60B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.3 Very Bullish

1.15% dividend

P/E 27.36

TSM Taiwan Semiconductors

Very Large Cap ($626.48B)

Equity Summary Score Provided By Starmine From Revinitiv: 8.1 Bullish

1.81% dividend

P/E 34.51

IBM IBM

Large Cap ($109.64B)

Equity Summary Score Provided By Starmine From Revinitiv: 6.6 Neutral

5.31% dividend

P/E 20.04

MSFT Microsoft

Very Large Cap ($1,747.65B)

Equity Summary Score Provided By Starmine From Revinitiv: 8.2 Bullish

0.97% dividend

P/E 34.52

SNE Sony

Large Cap ($128.76B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.1 Very Bullish

0.45% dividend

P/E 12.53

AAPL Apple

Very Large Cap ($2,042.68B)

Equity Summary Score Provided By Starmine From Revinitiv: 9.2 Very Bullish

0.68% dividend

P/E 32.88

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Financial Securities Transaction Taxes

Posted: 07 Mar 2021 07:49 AM PST

The current administration is discussing a few proposals for a tax on financial transactions. Most are in the realm of a 0.1% tax on equities and bonds and a smaller tax on derivatives. The estimated revenue from this tax varies based on who you ask, somewhere between a few hundred billion to upwards of 1 trillion over a decade.

Securities Transaction Taxes and Market Quality studies the transaction tax levied in NY in the bulk of the 1900s. It's interesting in that it studies the same market as the proposed tax, but the NY tax was local and had a side effect of pushing volumes to other venues (AMEX) which wouldn't occur in a national STT. It can be found here for download or viewing for free: https://papers.ssrn.com/sol3/papers.cfm?abstract\_id=1980185.

Results

Portfolio Volatility - results suggest portfolio does not move in opposite direction of STT levels (counter to views of tax proponents).
Bid/Ask Spreads - They use a proxy measure as bid/ask spreads aren't available for the time period, but find a positive relationship between STT and bid/ask spread width.
Volumes - In 8/9 STT changes, volume moved in the opposite direction of the STT changes when an alternative (AMEX) was available. When there was no alternative (NYSE or don't trade), 4/9 cases had a statistically significant reduction in volume while 5/9 were not statistically significant in either direction.

Generally, the study found that STTs have an inverse relationship with market quality.

Securities Transactions Taxes and Financial Markets published by the IMF is a somewhat more general paper, but for a period focuses on Sweden's experiment with STTs for about eight years. It can be found here: https://www.imf.org/external/pubs/ft/wp/2001/wp0151.pdf

Sweden:

Taxes levied were 1% on stocks and 2% on options round trip.
Revenue was disappointing, with widespread avoidance being a major reason. Foreign investors placed orders in NY and London, Domestic investors established off-shore accounts to use foreign brokers.

General Conclusions:

STTs increase price volatility
STTs increase demand for derivatives, decrease demand for stocks and bonds.
STTs decrease volumes
STTs are similar to capital controls, and both suffer from implementation and enforcement problems
STTs can obstruct price discovery and stabilization and inhibit information efficiency of financial markets.

It's relatively undisputed that the transaction taxes have a negative effect on the market as a whole, so the main question is: Is the effect on the market worth the small revenue increase?

My personal opinions are that no, there are better ways to raise that revenue without disrupting the financial markets.

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Designing a profile from scratch for the long haul

Posted: 07 Mar 2021 05:57 PM PST

In 10 years we have experienced the rise in tech, ridesharing, ecommerce, AI, EV's and more. Now as one might not know what the next 10 years would hold im curious to know what some of the communities thoughts are. If you were to build a portfolio today, with the goal of growing it over the next 10 years, what would you put in it and how would you subdivide it.

My ideas

Tech-20%

FAANG

CRM

TQQQ etf

MSFT

Paypal

Twilio

Workday

ARKK

Consumer oriented- 15%

Target

Walmart

PENN

WYNN

Verizon

At&t

Automotive-15%

Ford

Tesla

Finance/Banking- 10%

Citi

JPM

AXP

Visa

ARKF

AI-20%

Nvidia

AMD

TSM

Qcom

Crwd

PLTR

Intel

The Classics-20%

Coca-cola

Pepisco

Anheuser bush

Johnson and Johnson

PFE

DIS

Exon

CVX

Please let me know how you would do it or what you would change

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The case about Ahold Delhaize.

Posted: 07 Mar 2021 09:25 AM PST

\First things first: This isn't investment advice. This is just my personal opinion to help others do their own DD.*

I'm an employee on the regional European level of the company and I own shares, options and warrants in my personal portfolio. So while I try to be as factual as possible, I cannot guarantee that all information is 100% unbiased.

I mostly see discussion about growth stock here, which isn't abnormal. Reddit consists mostly of young people who don't shy away from some more risks. And who doesn't dream of getting early into the next Microsoft or Apple?

And when value stocks are discussed, it's usually US stock (again not abnormal). I would like to shed light on what is, in my view, an interesting, safe but undervalued European dividend stock: "Ahold Delhaize".

Ahold Delhaize was born from a merger between the Duth company "Royal Ahold" and the Belgian "Delhaize". Both strong players that merged into quite the powerhouse in the food retailing.

The group is active in multiple countries, spanning several brands, for example:

Albert (Czech Republic)

Alfa Beta (Greece)

Albert Heijn (The Netherlands)

Delhaize (Belgium & Luxemburg)

Food Lion, Giant (Food), Hannaford, Stop & Shop, Peapod, Bfresh, Fresh Direct (United States)

Maxi (Serbia)

Mega Image (Romania)

Super Indo (Indonesia)

There are some more, but these are most important and most known ones.

Stock facts

Market Cap: around 24 billion (euro)

Share price: €22,49 (at time of writing)

Let's start with the numbers (2020).

Revenue: 75 billion euro (up 12.8% - please note a big part of this was the pandemic)

Underlying operating margin: 4.8% (up 15%)

Net profit: 1.4 billion (down 21%)

Free Cash Flow: 2.2 billion (up 19.3%)

Now, why am I making a case for them?

Some good:

Margins:

Major issue in food retailing is margins. You can imagine you need to sell A LOT of tomatoes before hitting 1 billion in revenue. I think we all know these are not the products with the largest margins.

Ahold Delhaize has focussed strongly on their margins in the previous years, and is nearing the 5% mark. This all why still growing revenue. This is extremely healthy. Regular supermarkets you are looking at the 2-2.5% region which is seen as normal to good.

Growth:

The group is still working on organic growth in the markets where they are present, but they are not afraid of targeted acquisitions when opportunities arise.

Some 2020 examples is the acquisition of 62 BI-LO & Harvey stores. In november they announced taking over Fresh Direct (an online supermarket in New York City specializing in fresh produce), and are recently they acquired DEEN is The Netherlands (80 stores).

E-Commerce:

Ahold Delhaize is investing strongly in e-commerce.

They own bol.com, the biggest e-commerce platform in the netherlands & belgium (ahead of Amazon). In the US they own for example peapod which is a frontrunner is grocery e-commercing and have recently aqcuired fresh direct which is a online supermarket focusing on fresh produce.

In the US, online sales increase 105.1% to 2 billion. In Europe it increase 57% to 5.6 billion. This is 10% of total group revenue! Some e-commerce growth companies are hyped when they achieve 10% of these numbers.

Health focus:

I cannot speak for all the brands (because I just don't know them all in detail). But more and more of them are focusing on "healthy eating = healthy living" concepts.

They are positioning themselves as a healthy and quality brand, which is resonating with younger audiences (historically speaking difficult for several of the brands as they are not really competing on price, but offer higher quality, which is typically linked to an older audience).

Environment:

A lot of companies talk the talk, but Ahold Delhaize delivers:

They score an 83 on the Dow Jones Sustainability Index, up 20% from last year. Industry average 31. Regulations regarding ecology and sustainability will no doubt become stricter over the coming years. Ahold Delhaize is years ahead of several competitors

Alright, high level this sounds pretty good right? There are other good things (everyone can find good things about a company they like) but I want to focus on potential downsides and risks most people point out to me, and why I think the future is looking bright.

2 things keep coming back recently:

First up: 2020 was an amazing year for food retail, so how come profits are down to a year before? All other numbers look very nice, but this makes me doubt if this company really is a good bet.

Valdi remark, there are in my opinion actually 2 very good and clear reasons for this:

Covid related costs were about 680 million euro's. In Europe (and I assume the US) the group prioritized customer and staff health. This led to highers costs in additional (temporary) staffing of 40.000 people. But also disinfectant, customer counters, higher amount of sick days, ...
Ahold Delhaize used the exceptional year 2020 to cover the risks to pensions in the US. This was about 577 million euro's.

This put a 1 billion euro brake the group's profits for 2020.

I do believe a strategical decision was made regarding the covering of pension risks: In the EU there are "talks" about having companies that profited from the pandemic pay additional taxes to support business that suffered.

The group's CEO was in the media to point that Ahold Delhaize had lower, not higher profits. Fact of the matter is that the pension risks in the US had to be covered at some point. Covering most (if not all) in a year of exceptional earnings makes sense. From a PR PoV it's also quite good as you don't appear to be profiting from this situation while you actually did.

Is there really a future in food retail companies like Ahold Delhaize, especially with growing e-commerce where Amazon is a mastodont.

This point is correct, Amazon is a threat to AD. But I've been hearing this for years now, but Ahold Delhaize keeps growing it's revenue, profits and margins nonetheless.

As mentioned earlier, in the EU the group has a company "bol.com", which is by far the biggest ecommerce platform in BE/NL. Ahead of Amazon. Amazon is moving more into these markets, however management is not concerned at this time.

In the US they have a strong presence with Peapod, which (to my understanding) is doing quite well and keeps growing. And new acquisitions have been done to strenghten e-commerce presence.

I'm not saying Amazon is not a threat (don't get me wrong). I'm making the point that from an e-commerce PoV, there is A LOT of inhouse knowledge compared to at least their direct competitors.

Now. You read the apparent good, and some risks. Perhaps you can identify other risks and I'll try to answer them. But let's go back to some numbers first.

Dividend:

Well, it's a value company, not a growth one, so first thing you look to is dividend.

Yearly they aim to payout 40-50% of it's underlying income from continuing operations. To me this is a healthy amount.

First full year after the merger (2017) this was €0.57. This has grown every year until it's payout for fiscal year 2020 (€0.90). This is an increase of 58% in 4 years.

At current stock price, this equals a dividend of 4%

Buybacks:

Ahold Delhaize (and it's predecessors) had a strong culture of stock buybacks. Since 2017, every year they did a buyback of minimum 1 billion euro.

The company started with around 1.3 billion outstanding shares post merger (2017), Since then about 255 million have been bought back and destroyed. This is roughly 20%

Current buyback program (for the year 2021) will most likely remove an additional 30-35 million. Leaving just over 1 billion outstanding shares. 22.5% down post-merger.

So all in all, they are paying roughly 2 billion euro per year back to investors in some capacity.

As the company is doing very well, and is (in my view) strongly positioned for the next 3 to 5 years, I expect buybacks to continue and dividend to gradually increase in the following years.

Growth of share value.

I feel the company is undervalued at this time.

Post merger the price for 1 share was about 20-21 euro. In the +- 4.5 years since we've seen a low of +- 15 euro (september 2017) to a high of +- 26.5 euro (august 2020).

I have little to no doubt profits will increase again in 2021. Assuming we go back to the 2019 level of 1.75-1.8 billion. The absolute minimum we should see is a market cap of 22 billion.

At end of year we'll have just over 1 billion outstanding shares, at current prices this makes a market cap of 22.5-23 billion. Does this mean I believe it will shoot up 25-30% this year? Perhaps not, while I do feel it's undervalued (it's being valuated as a traditional grocer, leaving out the fact that it has very strong e-commerce presence). I don't expect this to change. But I would expect seeing a minimum 10% increase to 25 euro. Analist tend to agree as the consensus of 27 analysts is 25,59 euro. With a maximum of 30 euro.

Why would I recommend buying this stock?

It has great fundamentals, strong finances and is doing what it needs to do in the e-commerce areas.

It's creating value for shareholders.

It's a company in a safe sector, which is creating value for shareholders and has 10-15% upside potential in the foreseable future.

The guys who took the time to read this all.

First of all: Congratulations.

Secondly: Apologies for any spelling errors, I typed this on my home laptop without spellcheck, and I'm not a native English speaker.

Third: In case you have questions, don't hesitate to ask. If you disagree, you can also let me know. As said, this company is a core element of my portfolio, so if I'm missing something because of personal bias. I would like to know!

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Golden cross screener (preferably in thinkorswim)

Posted: 07 Mar 2021 12:57 PM PST

Does anybody have experience with setting up a screener for the golden cross points? Specifically, what time period do you use in the scanner for the golden cross (50/200SMA): 1 hr, 2 hrs, 4 hrs, 1D, etc.? Also, when you look at a stock on a chart, what time period do you use the there: 1D:1H, etc.?

I am looking at SMA50/SMA200 cross and how to automate it in thinkorswim or similar tool.

I am looking to get a watchlist with a list of stocks that have the golden cross happening. It will be even better to see a list of stocks where the cross is about to happen (where SMA50 is approaching SMA200 within 1-10% and it is an uptrend.

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Janus International (JIH) – under the radar SPAC combination positioned to benefit from rotation into the building products cyclical boom. 50%+ upside

Posted: 07 Mar 2021 09:06 AM PST

As everyone knows, the last two to three weeks have seen speculative EV and pre-revenue SPACs get hammered. Nearly every SPAC sold off in tandem, including JIH, which is under definitive agreement to acquire Janus International, a manufacturer of doors and access control systems predominantly focused on public storage applications (e.g., wifi/internet enabled access control, doors, mezzanine structures, etc). The public storage market is seeing accelerated growth due to long term structural shifts coming out of COVID and is undervalued relative to lower growth, more cyclical peers. The merger is expected to close in Q2.

Current trading price: $13 (14.5x 2021 EBITDA)

Price Target: $20 (20x 2021 EBITDA)

Note: my previous calls on PRPL and OAC/HIMS have delivered (see prior post history). Hopefully this will make 3/3.

The thesis breaks down along the following lines:

Attractive valuation: the SPAC combination puts Janus at a valuation of 14-15x 2021 EBITDA of $162MM (that's right, it's already profitable with a solid base business). The comps trade for 20x+ 2021 EBITDA, including public storage companies (Janus's customers), building products manufacturers with similar growth and cash flow profiles, and others.
Market leadership position: Janus holds the market leading position in its category with 50%+ share and by far is the largest, which gives it pricing power and is most poised to benefit from market growth given its scale
Track record of organic and inorganic (M&A) growth: over the last five years, the company has doubled in size through 10% annual organic growth and the remainder through acquisitions. There is upside to future growth due to the company's acquisition of Noke, which makes the market leading technology for connected access control (think of Ring but for self storage units).
Institutionally backed platform: the company is backed by Clearlake Capital, a successful private equity platform with $25B AUM and experience building scale platforms. This differs from founder/owner businesses that have less accountability and focus on systems, processes, and people.
Growing market: the self storage market will continue to grow driven by increased utilization of storage spaces due to COVID disruption. As people are needing more space to work from home as well as the increased home buying, renovation, and moving activity is driving utilization rates of storage across all geographies (this will drive spend to renovate and expand existing storage locations and develop new ones)
Recession resistant: note that during cycles, recessions typically lead to more disruption and need for public storage as people have to downsize, are displaced, etc.

Valuation: public storage comps including PSA, SELF, CUBE, LSI and others trade between 19-21x NTM EBITDA. These companies are Janus's customers, so while not a perfect comp, they do indicate a positive outlook for the market. These companies have projected long term growth of 4%, many with capital spend projected to grow faster over the next couple of years.

Looking at the company's investor presentation (p36-38), the comps show support for a similar valuation range, especially when factoring in relative growth, margins, and profitability compared to them. I'd not consider companies like Azek and Trex as comparable since they have megatrends toward composite materials and other dynamics.

Market dynamics – some interesting data points from publicly traded storage companies that indicate the public storage market is entering an accelerated period of growth, just a few excerpts here which give a pulse on the industry and Janus's key customers:

PSA FQ4 Conference Call in Feb:

"By Q3, we saw pronounced customer activity emerge as a result of both traditional and new drivers of demand. In the fourth quarter and into this year, we have seen sustained demand that has lifted the traditional seasonal slowdown in our business, resulting in historical occupancy and move-in rate growth."
"We reached fourth quarter occupancy of 95.2%, a record for this time of year."
"In 2020, one of the areas that was more pronounced was customers needing more space at home."

LSI Life Storage FQ4 Call in Feb:

"Though we continue to see robust demand throughout our network, a few regional highlights include our Metro New York City, New England and Boston regions, which were each up more than 500 basis points in occupancy and 900 basis points in revenue in the fourth quarter year-over-year. Also strong were Saint Louis, Sacramento and Tampa."
"I think we've said it for the last couple of quarters now, it really has been coast-to-coast in terms of strength. I mean, even our lowest markets in terms of move-ins, Atlanta and Miami, we're up 11% each. So that gives you a sense of just how robust the whole industry has been. So it really is a matter of who are the best performers versus where the weak ones are because there really is no weakness. It's been pretty strong since obviously things started to reopen in September, October, and it's remained that way."

What's Next for the Self Storage Sector? (cpexecutive.com)

What the Long-Term Progression of Coronavirus Means for Self-Storage (insideselfstorage.com)

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Why I like TEVA especially at this price point.

Posted: 07 Mar 2021 08:06 AM PST

Related images:

https://imgur.com/a/ulccS5D

Teva is grossly undervalued. The CEO restructured the company cutting all the dead weight in the last couple of years making it profitable while it's making more billions in revenue than its current market cap. Teva is saving lives by making cheaper, generic product of expensive medicine that would otherwise not be affordable. Unlike other huge pharma companies already worth 100s of billions of dollars, Teva market cap is low by comparison with an extremely low P/E ratio and has potential to 10x in value. Unlike recent stocks that already increased 5000% in a couple months where people are fomoing in at the top, this ship has not sailed yet. Its price is the lowest it has been in decades so getting in now has lower risk but a huge upside.

The price right now is %80+ lower than all time high which was ~6 years ago. It has spent more time in the last 2 decades at more than double this price and is gravitating back to the 20-30 range in the near future, especially when considering inflation. Its last stock split was in 2004 where its price was around $28 and only increased in following years until 2016. Inflation since then till now is %40+, meaning if it kept up with inflation the price now should be at around $40 but it is available for $10.5.

There is also a decent amount of shorts trying to keep the price down during this period of consolidation so people (and some huge investors) will lose interest and sell the bottom while the shorts can eventually load up their bags at such low prices on the way back up. However, there is starting to be a lot more interest and traction for the price to increase in the last year as it sets a new trend to make a come back.

Disclaimer: I hold some Teva because I like and believe in it. However, unlike some shills I am not saying I like the price point After it increases 10x in a short time period and saying it is a safe, low risk high reward buy at that price point.

Lastly, Teva literally means nature and who doesn't like nature.

This is obviously not financial advice.

submitted by /u/bestzec
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Supercharing your Portfolio with Tesla

Posted: 07 Mar 2021 04:58 PM PST

Fundamental

I have concluded that the fair value of Tesla is $700B, which implies $730 per share. This only accounted for it being a dominant EV manufacturer. Adding the autonomous technology subscription, the solar roof, and other aspirations, one can easily make an argument that Tesla is worth much more than that.

Key assumptions:

· Discount rate = 10%

· EBITDA margin will continue to expand. Tesla has a mature manufacturing capacity. It allows the company to continue to lower the cost of manufacturing while maintaining a competitive price. Keep in mind that the machines you need to build an EV are different from the ones you need for an ICE. So good luck to them. Press F to pay respects.

· SG&A will continue to increase but shrink relative to sales as it keeps expanding. Tesla's SG&A to sales ratio will continue to shrink because of its direct-to-consumer retail model, the popularity of Elon Musk, and the network effect of Tesla.

· No margin expansion from Level 5 Autonomy. I have not accounted for Tesla achieving Level 5 Complete Autonomy because of government hurdles. I never doubted Tesla's ability to achieve L5 autonomy. But unless Tesla can achieve 99.99999% safety, it would be difficult to convince regulators that it is sufficiently safe to roll out on a national level.

· I assumed that Tesla to deliver 13 million cars in 2030. Back in 2019, some analysts expected 2020 delivery to be 2.5 million and the market will grow at an annual rate of 28.6% through 2030. The global EV sales in 2020 turned out to be 3.1 million (24% higher than the estimate). This happened during a freakin pandemic when total passenger car sales dropped 14%. Based on that number and the growth rate of 28.6%, the number of total EV delivery is expected to be 39m in 2030. Assuming Tesla taking one-third of the EV market, that would imply 13m cars in 2030. Compare that to the annual delivery of 0.5m in 2020, that's 39% CAGR. 39% annual growth is conservative compare to Tesla's own guidance of 50%.

Why I Like the Stock

Good Management

Elon Musk can be unpredictable, but he is able to attract some talented people. Zach Kirkhorn is the perfect person for the CFO position. If Elon is the alpha chad, then Zach is the math guy that does all the homework. He came in during the most difficult times of Tesla and he was able to turn it around by utilizing a series of successful capital raises. He also demonstrated greater accounting discipline and provided a more conservative forecast. He turned Tesla into a force to be reckoned with.

Leader in EV

Of all the "Tesla Killers" out there, NIO may be the only one that has even come close to Tesla. But it is expected to remain in its domestic market in the coming few years. For the rest of the world, a simple google search will tell you that neither the ID.4 from Volkswagen nor the Mach-E from Ford is a real threat to Tesla. Tesla is better in terms of price, range, technology, and overall efficiency. Think about Over-the-air Updates, Supercharging Network, Scheduled Departure etc etc. For the new players in the space, as we learned from Tesla, designing the car may be easy, but ramping up at scale is the real difficult task.

More importantly, the EV market is still expanding. It does not necessarily have to be a zero-sum game between the current EV players. The EV market is big enough for all these companies to thrive. Companies such as Nio, Lucid, and Rivian have huge potentials, but Tesla will continue to be the leader in the segment.

Subscription-Based Full Self-Driving

FSD is becoming more mature. I am not even talking about the autonomous taxi network because I think that's still years away from becoming a reality. I am talking about the subscription-based FSD service that is coming later this year. Currently, Tesla is charging $10k for the service and many Tesla owners are hesitant. But the adoption rate would be through the roof once they roll out the subscription-based model. Tesla will be able to generate a recurring, reliable software-driven revenue with a high EBITDA margin.

Healthy Balance Sheet that can Withstand the Economic Uncertainties

In the past 6 months alone, Tesla has raised $10 billion dollars in two share offerings. Tesla is sitting on over $19 billion in cash and they are successful in generating consistent free cash flow. In Q4 2020, they reached a record $1.9 billion while continue spending heavily on growth and investment. It has a quick ratio of 1.49 and a current ratio of 1.87, which suggests it can withstand any short-term negative impact from economic uncertainties.

https://imgur.com/fDd9e6J

Many Untapped Revenue Drivers

Currently, less than 14% of revenue comes from sources other than their automotive revenue. The revenue from these sources, such as Solar Roof and energy storage solutions, is expected to grow in the coming years. Tesla Insurance is another key potential revenue driver that is often overlooked. Currently, it is only available in California, but it is expected to expand to other states soon. Based on the data collected by Tesla, I believe they can offer a more competitive price for consumers while maintaining a high margin for their insurance business. Other potential ideas are autonomous network, in-car entertainment, and many more.

More Than A Car Company

I expect Tesla to benefit greatly from the Biden Administration's push towards renewable energy. Tesla is more than a simple car company. Tesla has so much to offer on the renewable energy front. Powerwall, Solar Roof, you name it. Their in-house development of battery technology will be a key to their future development success.

Why I Less Like the Stock

Unnecessary Risk Exposure to Cryptocurrency

It recently announced that they have purchased $1.5 billion dollar worth of Bitcoin. Regardless of my view on cryptocurrency, an investor in an EV/Car/Renewable Energy company should not be exposed to the unnecessary risk of cryptocurrency.

Overreliance on Chinese Market

One-fifth of Tesla's sales are from China. China is the biggest EV market in the world, and EV sales are expected to continue expanding with the huge push from the Chinese government. While demand is still stronger than the supply, but as Chinese competitions keep arising, there is a legitimate concern that the Chinese government may favor domestic companies over a foreign entity. China has done it many times across different industries. For example, between 2004 and 2009, China increased tariffs on import auto parts and assemblies and, at the same time, heavily subsidized the use of domestic carmakers. While the EV market is still expanding, it may not be in the best interest of Tesla to rely too much on the Chinese market.

Technical

From the data from the past 5 years, you can see that pullbacks of this magnitude (around 30% off-peak) are common and are usually short-lived. We are currently around 34% off-peak. Interpret this information however you like.