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What are you buying today?


LowIQinvestor

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5 hours ago, Spekulatius said:

Bought a starter on LEVI again. Maybe not the cheapest consumer stock, but one of the most durable brands. I also like management. They have done an excellent job to during the epidemic etc.

Followed you back into LEVI. Only jeans i have ever bought (yes, i know dumb reason). Also bought a little Nike (just bought a pair of runners). Also bought GOOG today… some days my hours watching Youtube is starting to rival my time watching regular TV (if i exclude sports). This weekend i will be spending time reviewing my buy list… JPM just hit a new 52 week low and BAC is within a whisker of $30 - both are trading close to where they were 4.5 years ago. 

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@Viking I take that you like $LEVI as a vindication. Anyways it’s a small position for me and I traded it twice before with success. I followed the company since they IPO‘d. I know them ,one enough and remember when they went private decades ago.

 

Anyways, I like what I heard so far. Demand collapsed during the epidemic as everyone was Zooming along in their underwear apparently, but hey never lost much monos, emphasized DTC and stayed cash flow positive. The stock hung out around $12 and a bit blow and I bought some shares and sold them at $17 in one of these bounces after the vaccine. Too early as it turned out.

 

So, ingot interested again at $16 when the stock dropped despite much better fundamentals and even though their Q2 2022 result looked solid. They showed some rise in inventory, but nothing extremely out of line if you consider revenue growth. Now, I think they might get hit too by the consumer recession, but I can’t see this being as bad than the epidemic by a long shot. The stock is now at $14.5, go figure.

 

Net debt is almost zero and what shows up is just  LT lease liabilities, so balance sheet is not is not issue. I guess there are many other stocks like this, but LEVI is one I know and it‘s an easy business to understand.

 

FWIW, I agree on BAC and JPM, but my bank of choice amongst the large caps is USB. I also own a bit of CASH and COF.

Edited by Spekulatius
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22 hours ago, Spekulatius said:

Bought a starter on LEVI again. Maybe not the cheapest consumer stock, but one of the most durable brands. I also like management. They have done an excellent job to during the epidemic etc.

 

I like the returns on capital, I don't like SBC being ~10% of FCF and repurchasing of shares "to offset dilution".

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On 9/30/2022 at 11:17 AM, Castanza said:

What's the thesis on this? Balance sheet doesn't look good, Sales down 60% Cashflow going negative? Is the divy sustainable? Seems like it could drop a lot more. 

The company has earned 70% of its market capitalization in the last five years.

 

Sales were down 26% quarter over quarter due primarily to a decline in sales in their Hawthorne segment (cannabis) due to oversupply.  We'll have to wait and see if that is a temporary factor or not.  The consumer segment, which is by far the largest, saw sales decline 13% in the quarter.  Many businesses saw spikes in sales during the pandemic as people focused on home.  This could be just a cooling off.  I still think people will take care of their yards.

 

As to the balance sheet.  They have a strong current ratio of about 2.5.  Debt to equity is high, but that is because the company has paid dividends of $1.3 billion and retired shares (net of issuances) of $892 million over the last 10 years (a total of $2.2 billion, which approximates today's market cap).

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Yes somewhat. I don’t believe 4% long term yields are sustainable so either the FED tips their cards and the entire curve flattens down or within the next year we see the long duration stuff invert as things start to break. Seems like a good risk reward bet at this point. My only fear would be if the FED pivots so hard that inflation rips higher but that’s a pretty low probability event in my opinion.

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Started a position in PCYO after watching it and doing some digging for the last several months. So far I have only had a partial fill for my limit order at $8.05.

 

Also bought a lot of 3-9 month T-bills today, 3 different cusips, some short term TIPS, and a TIPs bond maturing in 2044. 

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