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Basket of big-cap shitcos


valuedontlie
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Markets in free-fall!!

 

Throw a few bucks at a few cheap(ish) looking cos?? (all figures assume you believe guidance...)

 

ADS -- Trading at ~6.8x 2018 EPS, set to sell or spin one (or more) business units

DXC -- $50 stock, guiding $8 in 2018 EPS and $12+ by 2022... EPS mostly = FCF

DLX -- 6.6x earnings They make checks... the kind you get at the bank... stock is flat from 2013 yet cash flow up 35%, share count down, net debt flat...

AGN -- $47bn cap... $4.3bn FCF next year... paying down debt, lapping product cliffs... 2019 down from 2018 but looks good beyond that!

BBBY -- Crappy retailer... 7x earnings... nearing guided LT crappy op margins of 5%

MYL -- 5x earnings; New product launches mean solid earnings growth for next 2-3 years... Int'l business is big mix... softens the "US generics suck" theme

WDC -- Earnings falling off a cliff (but so is stock!)... 5.5% dividend, hardly levered at all, easily <10% FCF yield even with earnings cliff from hard drive weakness...

CHTR/CMCSA -- Take your pick, cable cos both 5-year dogs...

FLEX -- 7x trailing FCF... trade war could be a problem... contract manufacturing a cyclical biz but trying to do more "value add" stuff whatever that means... have been buying back tons of stock for years now... dumb dumb's...

 

Happy holidays...

 

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Markets in free-fall!!

 

Throw a few bucks at a few cheap(ish) looking cos?? (all figures assume you believe guidance...)

 

ADS -- Trading at ~6.8x 2018 EPS, set to sell or spin one (or more) business units

DXC -- $50 stock, guiding $8 in 2018 EPS and $12+ by 2022... EPS mostly = FCF

DLX -- 6.6x earnings They make checks... the kind you get at the bank... stock is flat from 2013 yet cash flow up 35%, share count down, net debt flat...

AGN -- $47bn cap... $4.3bn FCF next year... paying down debt, lapping product cliffs... 2019 down from 2018 but looks good beyond that!

BBBY -- Crappy retailer... 7x earnings... nearing guided LT crappy op margins of 5%

MYL -- 5x earnings; New product launches mean solid earnings growth for next 2-3 years... Int'l business is big mix... softens the "US generics suck" theme

WDC -- Earnings falling off a cliff (but so is stock!)... 5.5% dividend, hardly levered at all, easily <10% FCF yield even with earnings cliff from hard drive weakness...

CHTR/CMCSA -- Take your pick, cable cos both 5-year dogs...

FLEX -- 7x trailing FCF... trade war could be a problem... contract manufacturing a cyclical biz but trying to do more "value add" stuff whatever that means... have been buying back tons of stock for years now... dumb dumb's...

 

Happy holidays...

 

A few of these are on my list...I've also got some anecdotal information on a couple of others...

 

WDC, very "cheap".  In the consumer SSD space, SAMSUNG has been taking market share from everybody.  SAMSUNG builds a great product and sells it at a good price.  At my wholesaler, SAMSUNG drives outsell WDC ssd's by at least a 10x1 margin.  WDC drives are OK, but not quite as good as SAMSUNG.  To take market share, WDC would have to be substantially cheaper...not sure how profitable they would be if they were 10%+ cheaper than SAMSUNG?

 

FLEX: At this point in time, I think contract manufacturing is just a bad industry to be in.  The easy money was made 10-15 years ago.  Manufacturing is probably going to be leaving China in the future and going back to USA OR to other SE Asian countries (Vietnam, Malaysia)?

 

I've been looking at BBBY.  I can remember when that was a Wall St. darling.  Now they are in the dog house.  Management is trying, but they always seem to be reactionary and can't get ahead of things.  If they can slim down the company (exit some leases, close bottom 5 to 10% of stores?), stabilize sales & margins, then this could be a multi-bagger easily.  Got to get stabilized first though, not sure if they can do it?

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I wouldn't touch BBBY it's one of those things that looks like it could work out but they never actually do.

 

I'll take a closer look at FLEX. It looks a bit like a dog's breakfast but it has a lot of cash and working capital so the valuation looks statistically quite cheap. May be worth throwing some money at it.

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