Best Investment Idea(s) for 2022

[CafeB]

4 hours ago, Spekulatius said:

For economy sensitive plays, I think car/ truck suppliers here are worth a look. They are not great business, and have been hit hard by first COVID-19 and then the semi shortage .

 

Interesting. Another beneficiary of unconstrained auto production might be upfitters, such as PLOW :

 

From 11/2 earnings call: "The big change in recent months was that chassis supply deteriorated further and we expect the second half of 2021 to have fewer chassis than the first half of the year as supply chain constraints really start to bite the truck OEMs and component and chip supply remains constrained. However, we haven’t seen and don’t expect to see orders being canceled. At Dejana, the strength of demand across our broad customer base bodes well for the future. We know we are always at the front end of the line for chassis and orders will be fulfilled, but the limited supply of chassis and components is frustrating to all. It bears repeating, with record backlog at solutions, we are well positioned for long-term success."

[no_free_lunch]

19 hours ago, Spekulatius said:

I think stuff like TPB could do very well. Seems like a good play to get into weed without getting into the weeds.

 

 

TPB is interesting, i have had it on my list but just haven't done the research.  Kind of a pick and shovel approach to pot investing, not bad at all.  I like the brand.  Do you know what happened in late October that caused the share plunge?  Was that a stock split, spinoff, disappointing quarter..  Just trying to get up to speed.

Edited January 3, 2022 by no_free_lunch

[rkbabang]

I haven't narrowed it down to specific companies yet, but I like energy, residential real estate, and banks (probably in that order). And I'm backing off a little on most tech this year although I think semiconductors specifically will have another great year selling everything they can get manufactured just to fill the current backlog.

 

[Dinar]

I own and would buy today: FB (Facebook), Safran (SAF FP), Charter (CHTR - via LEAPs), New England Realty (NEN), CP (Canadian Pacific Railroad), FND (Floor and Decor), Heineken Holdings (HEIO NA), MSFT (Microsoft - a bit conflicted on this one - cost basis 117 in April of 2019 but LEAPs are attractive), Alphabet (GOOG), Davide Campari (CPR IM), Swedish Match (SWMA SS), British American Tobacco (BTI), Aena (AENA SM), L'Oreal (bought in spring of 2017, still think that it is very attractive), RELX (RELX PLC),     Cranswick (CWK LN), Robertet (RBT FP). I own but would probably not buy today: ODFL, CRL, ALC, MNPP, Christian Dior (CDI FP), Rentokil (RTO LN) - I am miffed at the largely stock deal, Hingham Savings (HIFS), Dominos (DPZ), MSCI (MSCI Inc).  

[Spekulatius]

52 minutes ago, no_free_lunch said:

TPB is interesting, i have had it on my list but just haven't done the research.  Kind of a pick and shovel approach to pot investing, not bad at all.  I like the brand.  Do you know what happened in late October that caused the share plunge?  Was that a stock split, spinoff, disappointing quarter..  Just trying to get up to speed.

It’s a pretty decently run company  trading at a reasonable valuation. Their guidance for Q4 (published on 10/25) tanked the stock and it was probably a tax loss sale from there.

It didn’t really help that they did not get approval for the open tank vaping systems either.

[backtothebeach]

Not a "best", but a speculative idea: Leoni (LEO - IBIS, Germany)

 

Recovering, highly indebted supplier for the car industry, hampered by supply chain issues.

 

If they did not go bust during Covid I guess the risk of them going bust is very small.

 

I'm biased, because after the financial crises 2009 I rode them up from 7.50 to 60, finally sold at 40.

 

Currently a little above 10, after a pop on high volume today. I have a small position entered at ~$13, currently under water. I think this one could get volatile on good news and print above $20 in the next couple of years.

 

 

 

 

[Spekulatius]

3 hours ago, backtothebeach said:

Not a "best", but a speculative idea: Leoni (LEO - IBIS, Germany)

 

Recovering, highly indebted supplier for the car industry, hampered by supply chain issues.

 

If they did not go bust during Covid I guess the risk of them going bust is very small.

 

I'm biased, because after the financial crises 2009 I rode them up from 7.50 to 60, finally sold at 40.

 

Currently a little above 10, after a pop on high volume today. I have a small position entered at ~$13, currently under water. I think this one could get volatile on good news and print above $20 in the next couple of years.

 

 

 

 

I am old enough to remember that Leoni was a blue chip. What bother me is the high debt load and it might be getting worse, possibly due to raw material inflation, because they hold a lot of inventory (copper) where input price share rising. just taking a quick look, their cash from ops used to be backloaded with the first 2 quarter being FCF negative  and the last two quarters positive, but now I see that Q3 FCF was negative as well. That’s not a great sign. This company has a lot of operational issues.

 

I think Norma NOEJ.DE may be an easier bet, same idea, but much better balance sheet and a better business. I do think that the automobile suppliers are a good place to look for a turnaround plays in 2022.

Edited January 4, 2022 by Spekulatius

[backtothebeach]

1 hour ago, Spekulatius said:

I am old enough to remember that Leoni was a blue chip. What bother me is the high debt load and it might be getting worse, possibly due to raw material inflation, because they hold a lot of inventory (copper) where input price share rising. just taking a quick look, their cash from ops used to be backloaded with the first 2 quarter being FCF negative  and the last two quarters positive, but now I see that Q3 FCF was negative as well. That’s not a great sign. This company has a lot of operational issues.

 

I think Norma NOEJ.DE may be an easier bet, same idea, but much better balance sheet and a better business. I do think that the automobile suppliers are a good place to look for a turnaround plays in 2022.

 

Thanks Spek, that’s good info and better analysis than I have done.

[Gamecock-YT]

Nothing table pounding like I've felt in the past. I think reopening assets (IE. travel) will do well, especially if have exposure to Asia. China is going to reopen at some point...(maybe once Omicron runs its course?) and I think you are likely to see an explosion in travel like we've seen as the West gradually reopened. I'm in Thailand currently and they are absolutely hurting not having tourists here, case and point: I'm literally staying at a name-brand 5 star hotel for $35 a night - taxes included. Chinese make up their biggest tourist demographic, it will be huge once borders start reopening. Not sure what the ideal investment in the space would be, ideally something with low leverage so you don't blow up before the market turns. Just looking out my window I see 9 construction cranes, so development is continuing. 

 

In similar vein, think oil will do well as another byproduct of the reopening play described above. I've got some various small exposures that I'm basically treating like lottery tickets at this point.

 

If you are looking to eclipse the 10% hurdle mentioned in the original post, I think given the NAV discount and the start of buybacks that Liberty SiriusXM ($LSXMK) is a pretty safe place to park your capital as the discount starts to narrow. The thread on the board is really good with getting up the speed in the space.

 

Additionally, with Altria's ($MO) dividend yield presently at 7.50% and additional buybacks being announced after selling their wine business it seems like 10% is possible. They've got pricing power with inflation and potential for an additional catalyst as the lockup expired late last year in their $BUD stake. They said they are keeping the stake for now as they wait for covid to abate into a more 'normal' market.

[Aurel]

On 1/4/2022 at 2:20 AM, Spekulatius said:

I think Norma NOEJ.DE may be an easier bet, same idea, but much better balance sheet and a better business. I do think that the automobile suppliers are a good place to look for a turnaround plays in 2022.

I looked at JST.DE some time ago. (pre-COVID) They offer truck and trailer components. Selling mostly to the big OEMs.

 

Decent Management and looks like they already recover from the pandemic. But quite some debt, so not really cheap thow.

[KJP]

Hill International

IDW Media Holdings

 

Yes, this is dumpster diving.

[Longnose]

OESX 

[Viking]

Well, what a crazy first 3 days of trading to start the new year. The spike in 10 year bond yields. The rotation out of tech. Oil stocks are on fire. Steel stocks are fire. Watching CNBC i am absolutely amazed at how bullish people are on these sectors right now. People are finally talking about how much free cash flow oil, steel, forestry stocks are going to earn in 2022 (like we did not already know that). And how sustainable it is looking. And despite the run up over the past year how crazy cheap many of these stocks remain (even after the current run up). The ‘narrative’ is shifting. From hate to OK. Not like yet. Definitely not love. Simply incredible to me how this process works (the psychology of investing). It will be interesting to see where we go from here…

[Gregmal]

11 minutes ago, Viking said:

Well, what a crazy first 3 days of trading to start the new year. The spike in 10 year bond yields. The rotation out of tech. Oil stocks are on fire. Steel stocks are fire. Watching CNBC i am absolutely amazed at how bullish people are on these sectors right now. People are finally talking about how much free cash flow oil, steel, forestry stocks are going to earn in 2022 (like we did not already know that). And how sustainable it is looking. And despite the run up over the past year how crazy cheap many of these stocks remain (even after the current run up). The ‘narrative’ is shifting. From hate to OK. Not like yet. Definitely not love. Simply incredible to me how this process works (the psychology of investing). It will be interesting to see where we go from here…

Yup. Who coulda seen this coming?

 

Psychology is often predictable. And what’s interesting, is look at energy. Outside the US, most of the world is still hiding in their bunkers. Wait til they flip the lights back on. Crude futures still look highly attractive. As do many other commodities. 

[Gregmal]

[rohitc99]

15 minutes ago, Gregmal said:

Yup. Who coulda seen this coming?

 

Psychology is often predictable. And what’s interesting, is look at energy. Outside the US, most of the world is still hiding in their bunkers. Wait til they flip the lights back on. Crude futures still look highly attractive. As do many other commodities. 

@Gregmal what would be a good way to play this ? XLE ? other commodity ETF ?

[Kupotea]

10 minutes ago, rohitc99 said:

@Gregmal what would be a good way to play this ? XLE ? other commodity ETF ?

I think the oil sands producers are well positioned due to lack of capex requirements for maintaining current production. Lots of upfront capex is required for oil sands producers but you don't need to constantly invest in new wells for lost production once it's online. Lets them avoid some of the inflationary costs that will be hitting the shale/offshore drillers. Also, there's the potential tipping point when the market goes from valuing oil producers on pure cash flow to assigning value to the actual reserves. Oil sands producers have decades of reserves which have zero value under the current ESG narrative.

[Gregmal]

Just my opinion and not investment advice of course, but I’d look to take 5-10% allocation, and buy long dated ATM and OTM calls on both the commodities and the companies that are best in class and carry low risk of being mismanaged. Risk a few % to make 5-10x or more if things get nutty. 
 

The way I see it, is that most people think inflation is one of the main risks to “the market”. So essentially you are putting on a trade that can be classified as protection/insurance while also working regardless. The bigger the inflation the bigger the windfall, assuming it’s structured correctly. 

[SharperDingaan]

OBE is currently up 21%YTD net of the sell off down to CAD 6.29. Right now it's primarily o/g FOMO driving activity, but the change in attitude is just beginning ..,  

As Gregmal says: Psychology is often predictable. And what’s interesting, is look at energy. Outside the US, most of the world is still hiding in their bunkers. Wait til they flip the lights back on. Crude futures still look highly attractive. As do many other commodities. 

 

"Lot of folks still see OBE as the old Penn West, and divide by the pre split 7:1.

The attitude is 'come on .. this POS is < USD 1.00/share, it's a goddam penny stock!', and that isn't going to change. The flip side is that at USD 2.00/share pre-split 'PWE' is still very cheap to these folks - but it's a USD 14.00 OBE price for you and I, or CAD 17.75 after FX conversion; all largely because of changing perception."

 

Should OBE make the CAD 17.75 by year end ..., the 2022 YTD return is 340% 

Covid easing, and the world waking up earlier - all bonus.

 

SD

[pbi]

I think the next few years should be OK for diamond miners. I own a relatively small basket; a mid-tier producers plus two related explorers, but nevertheless the positions are highly speculative. 

 

The thesis is relatively simple, and therefore hiccups should be easy to spot. About 20% of global supply went offline last year, in part because of Rio's closure of its Argyle mine which accounted for almost half of the reduction, and the remainder due to covid. Any additional supply that can be bought on line in the near future will be incremental and from existing mines only, as there haven't been any significant finds of late. The majors have also indicated they will do more to control supply as in the past. 

 

It is worth mentioning through that De Beers has initiated a $6B expansion on its mine, and Lucara (which I own) is mid way through its $500M expansion. Rio Tinto recently settled with its JV partner regarding explorations costs that will run to around $150M, which all points to some initial positioning. Alrosa - the biggest producer by volume - has also announced plans to expand. Despite this, Bain still seems to think (and most miners have agreed) that the additional supply will not be able to keep up with demand and depletion. 

 

I own LUC because its got the best economics (financial and mine) amongst its mid-tier peers, and earns the second highest $/carat behind GEM. GEM however hasn't been able to do anything of note with its profits, whilst LUC has been able to atleast return what was initially invested in the business via dividends. 

 

In a good market it appears capable of generating $100M+ in FCF, against a MC of $270M. Obviously this will not end up in the hands of us investors in the near future given the expansion, but it will result in the mine life being extended from 2026 to 2040, so whether or not the market rewards this in some share price appreciation remains to be seen. 

Edited January 6, 2022 by pbi

[Spekulatius]

Steel stocks on fire....

[Spekulatius]

23 hours ago, Gregmal said:

 

The guys with laser eyes have become rare on Twitter....

[Gregmal]

4 minutes ago, Spekulatius said:

 

The guys with laser eyes have become rare on Twitter....

Yea but the cheese stands alone. Long live LG. 12% YTD and counting LOL

[jouni1]

On 1/5/2022 at 8:52 PM, Gregmal said:

Just my opinion and not investment advice of course, but I’d look to take 5-10% allocation, and buy long dated ATM and OTM calls on both the commodities and the companies that are best in class and carry low risk of being mismanaged. Risk a few % to make 5-10x or more if things get nutty. 
 

The way I see it, is that most people think inflation is one of the main risks to “the market”. So essentially you are putting on a trade that can be classified as protection/insurance while also working regardless. The bigger the inflation the bigger the windfall, assuming it’s structured correctly. 

Can you name some of these best in class companies or sectors to look at related to this? I was thinking miners like RIO, BHP etc. Or do you think there still value in oil?

[Gregmal]

38 minutes ago, jouni1 said:

Can you name some of these best in class companies or sectors to look at related to this? I was thinking miners like RIO, BHP etc. Or do you think there still value in oil?

Just rattling off a few but stuff like FCX, CVX, CLF, BHP, SU, etc. Its not crazy at all to expect earnings to go up at least 50-100% over the next few years and you'll also get multiple expansion which, starting from a very low base, is all you'd need for some big wins. If AAPL can ride an earnings and rerating wave over 5 years so can XOM. Just depends on which cycle we're in.