Buy Low, Sell High
Enough politics and economics, let’s get back to thinking about companies.
This little 10% of so correction has made me pause and see what shakes out. Big cap value has been strong, but small cap value has been hammered. My performance has been solid, so there is not a screaming reason for new names. I am a little concerned about Revvity because of changes in laboratory funding coming out of Washington. I rechecked AES and Darling, and I think I can live with these “Biden” stocks for now. Tariffs are just too confusing, right now they are not effecting my investment choices.
Let’s say that I am looking for just one name. How do we find the best stock to add?
I do have some names that I had have been waiting on like Steel Dyanmics, Hasbro, and Louisiana Pacific, but let’s scan the world and see what we find.
Where do I start? My automatic first screen is all stocks over $1 billion within 25% of their 5 year low. Essentially this is the old Wall Street Journal new low list with some help from technology. Very few value investors would start here, but I always do.
What do they hate the most? This is the best list. It is not the only list, but it is the best. In a world of about 1500 non-financials, there are 179 stocks within 25% of their 5 year low. This is a nice “bite-size” group to look at.
These are my top ideas near their lows:
Gentex - do I have the courage for auto parts?, debt free, great operators
Ball - these guys have done everything right, but the stock is still hated, a little worried about soft drink sales and SNAP rule changes
Stepan - neat chemicals at book value, too tied to housing?
Papa John’s - a takeover candidate with a 4.5% yield
UiPath - there are 10-15 software companies on this list, I do not know any of them, PATH is a Cathie Wood idea in the world of “agentic” AI. They have a ton of cash and no debt, they are cash flow positive, only 20x earnings and 3x sales, still growing 15%+, Romanian founder has recently returned, but I have no idea what they do, and the conference call sounds like gobbledygook (yes that is a real word). The stock is down from $70 to $10, and now Wood is a seller. Let’s dip a small toe into the AI world.
Premier - short interest 20%+, pass but want to learn more
Estee Lauder, Coty - China issues
FMC - Nutrien is better
Polaris - Brunswick is better
Atlas Energy - Halliburton is better, maybe, these guys are a little crazy, which I like
Rogers - new management still struggling
Brown Forman, Diageo, Constellation, Boston Beer - people not drinking enough
Flowers - solid but boring
IFF - getting cheap again
Vail Resorts - winter weather was a miss again
Sensata - sensor technology, needs more work
Werner - RXO is better
Ingram Micro - more work
Northwest Natural - boring, like the REITS better
Cable One - internet not saving the day
Neogen - losing confidence?
Treehouse Foods - just terrible operators
Essential Utilities - controversial
Stanley Black Decker - balance sheet is iffy
Con Agra, Campbell’s, General Mills, Smucker’s, Hormel - just flat boring, not enough upside
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These are some obvious value stocks, near their lows, I have little interest in:
Dow Chemical - unimpressive management
Carter’s - yield, 7%+, now concerning
Advance Auto Parts - too many old locations
Madison Square Garden Sports / Entertainment - cheap but will Dolan ever sell
Energizer - not exciting
Baxter - spin done, maybe?
Global Foundries - too complex, tied to NY
Nike - hate their DTC strategy
Ziff Davis - will I ever understand?
Foot Locker - needs more work
Topgolf - terrible strategy
Leggatt Platt - maybe a tariff play???
Under Armour - too many SKU’s
Newell - boring
IAC - worried about sports gambling
Match Group - sketchy business
Sonoco - boring
Reynolds Consumer - boring
Paramount - leveraged
Skyworks - tied to Apple
Viatris - winner or a loser in generics?
Pfizer - vaccine issues
Target - Kohl’s better is soft goods, Kroger better at grocery
Tootsie Roll - going nowhere fast
Dollar General - potential regulatory pricing issues