Month: October 2018

Top Stocks Under $10 per Share

by Fred Fuld III

If you are looking for a top stock from a value standpoint, what fundamentals would you look for? The following are the most common fundies that many value investors look for.

  • P/E [price earnings ratio] under 15
  • Forward P/E under 15
  • PEG [price to earnings growth] less than 1
  • P/S [price sales ratio] less than 1
  • Pays a dividend

Here are the stocks with the above criteria that sell for less than $10 per share:

ACCO Brands (ACCO)

Chico’s (CHS)

Ford (F)

Ferroglobe (GSM)

Manning & Napier (MN)

Unique Fabricating (UFAB)

Transforming Nokia: The Power of Paranoid Optimism to Lead Through Colossal Change

by Fred Fuld III

The average investor may not be aware of this but Nokia was a major turnaround situation. The book, Transforming Nokia: The Power of Paranoid Optimism to Lead Through Colossal Change, by Risto Siilasmaa, goes into extensive detail about how this transformation took place.

Between 2008 and 2012, Nokia almost went bankrupt, dropping in value by over 90%, primarily due to competition from Apple (AAPL). At that time, Risto Siilasmaa too over and saved the company.

But the book is more than that. The author provides ways, base on his experience, the you can use in your business to deal with business struggles and major changes.

Chapter 10, “The Golden Rules,” is an important one where he covers the principles that should be applied in any business. My favorite is number 8 which relates to formality and substance relating to meetings, in which he writes “Any meeting where we don’t laugh out loud is a miserable failure!”

I also liked Chapter 11 in which he emphasizes the importance of using scenario mapping. The chapter is called “Plan B … and Plan C and Plan D.”

If you own your own business or are the head of a company,  Transforming Nokia is a book you need to read.

How to Invest in Halloween

by Fred Fuld III

It’s time to buy Halloween candy yet for the trick-or-treaters. The candy manufacturers need your help. Other business can also benefit from Halloween holiday, such as the horror movie companies.

The biggest beneficiaries of Halloween are the confectionary makers. One example is Hershey Foods (HSY), one of the largest chocolate and candy companies in the world, with two of its most popular products being Hershey Kisses and Hershey Bars, along with Reese’s. The stock has a trailing price to earnings ratio of 20.4, a forward P/E ratio of 19.2, and  pays a dividend yield of 2.7%. The latest quarterly earnings per share were up 13.7% year over year.

Tootsie Roll Industries (TR) has an assortment of candy kids, such as Tootsie Rolls, Tootsie Roll Pops, Caramel Apple Pops, Charms, Blow-Pops, Blue Razz, Zip-A-Dee Pops, Cella’s, Mason Dots, Mason Crows, Junior Mint, Sugar Daddys, and Sugar Babies. The stock has a P/E of 26.3 and a yield of 1.15%. Earnings per share for the latest quarter are down slightly from a year ago.

Mondelez International (MDLZ) is a multinational producer of candy, along with food and beverages. Its brands include Sour Patch, Swedish Fish, Cadbury, and Toblerone. Trailing P/E is 18.5 and the forward P/E is 16.2. The yield is a tasty 2.5%.

Watching scary movies is another popular event on Halloween. Netflix (NFLX), the huge provider of videos in the US, has an extensive selection of scary movies in its collection of titles. The stock trades as 114 times trailing earnings and 72 times forward earnings. It does not pay a dividend.

A major producer of scary movies is Lions Gate Entertainment (LGF.A), which has made such films as American Psycho, Ginger Snaps, Route 666, The Devil’s Rejects, House of the Dead 2, Saw VI, See No Evil, Hostel: Part II, My Bloody Valentine 3D and many others. Lionsgate has a price to earnings ratio of 11.4, and pays a dividend of 1.9%.

Then of course, Amazon (AMZN) has plenty of Halloween costumes. Amazon has a trailing PE of 167 and a forward PE of 60.

May your Halloween portfolio be a treat and not a trick.

Disclosure: Author didn’t own any of the above at the time the article was written.

Stocks Going Ex Dividend in November 2018

by Fred Fuld III

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

This technique generally works in bull markets and flat or choppy markets, but you need to avoid the strategy during bear markets. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million, and many with yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount, and annual yield.

Signet Jewelers Limited (SIG) 11/1/2018 0.37 2.79%
Constellation Brands Inc (STZ) 11/5/2018 0.74 1.35%
Intel Corporation (INTC) 11/6/2018 0.30 2.67%
Pfizer, Inc. (PFE) 11/8/2018 0.34 3.07%
International Paper Company (IP) 11/14/2018 0.50 4.89%
KB Home (KBH) 11/14/2018 0.025 0.53%
Eli Lilly and Company (LLY) 11/14/2018 0.563 2.01%
Target Corporation (TGT) 11/20/2018 0.64 3.08%
Goldman Sachs Group, Inc. (GS) 11/29/2018 0.80 1.44%

The additional ex-dividend stocks can be found HERE . (If you have been to the page before, and the latest link doesn’t show up, you may have to empty your cache.) If you like dividend stocks, you should check out some of the other high yield stock lists HERE . Most of the lists are free.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Monthly Dividend Stock List

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written.

Get a 10% Return in 3 Months Government Guaranteed: The Perfect Investment

by Fred Fuld III

Are you looking for the perfect investment? Suppose you were offered the following:

1. A return of 10% in three months
2. The return is tax free
3. The investment may be entirely tax deductible
4. Guaranteed by the United States Government
5. Very low minimum investment
6. An easily transferable bearer investment with no registration required
7. The investment has intrinsic value
8. Provides protection against inflation
9. Can be considered a short term or long term investment

If you haven’t figured out what this investment is yet, it is the Forever Stamp, the stamp issued by the United States Post Office that is used to purchase one ounce of postage. It doesn’t matter how high the price of postage rises, even if the postage rate goes up to $10 an ounce, you can still use the Forever Stamp for one ounce of postage. The price of first class postage is scheduled to rise on January 27, 2019 from 50 cents to 55 cents, a 10% increase.

I realize that regular mail isn’t used as much anymore due to the proliferation of email, but many people still send out Christmas and holiday cards, birthday cards, and other bills and letters occasionally.

You can still buy these Forever stamps and take advantage of this ‘investment’. Over the long term, postage rates will continue to increase, especially with inflation. And since 1970, the average annual increase in the price of postage is around 5%. If you still pay some of your bills by mail, or you have a small company that does physical mailings to clients and customers (and of course, postage would be deductible), or you are with a club or organization that sends out printed monthly newsletters, then maybe it would be make sense to purchase these stamps before the rates go up.

After all, a 10% return is a 10% return.

Top Short Squeeze Stocks Might Be Worth Buying

by Fred Fuld III

The cannabis company Tilray (TLRY) jumped from 22.93 a share to around 300 a share from the beginning of August to late September. This is in spite of the fact that the company hasn’t generated any earnings. Many believe that the reason for the price rise in the stock is due to a short squeeze. When the stock rises fast for any reason, short sellers scramble to cover their positions by buying the stock, and thereby driving up the price of the stock even more.

So how can you make money on the long side from short squeezes? One technique that stock traders utilize is buying short squeeze stocks, companies have been heavily shorted. Here is a more extensive explanation of what a short squeeze is.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short sellers can be profitable, but sometimes when the stock moves against them, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Here is one example. Big Lots (BIG) is a stock that is heavily shorted. As a matter fo fact, 25.2% of the float is shorted. In addition, the number of shares shorted has increased by 1% over the last reported two week period. Finally, the short interest ratio is 11.5. That means it would take the short sellers over eleven days to cover their positions, based on the number of shares that trade each day on average.

So what stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have price for earnings ratios and forward P/E ratios of less than 15, and a price sales ratio of less than one.

Hopefully, some of these stocks will squeeze some juice out of your portfolio.

Company Symbol % change % of Float Days to cover
Bed Bath & Beyond BBBY -5% 21.6% 2.5
Big Lots BIG 1% 25.2% 11.5
Cooper Tire & Rubber CTB 4% 20.1% 20.2
Camping World Holdings CWH -1% 48.9% 6.1
Dillards DDS 2% 43.3% 21.7
Dicks Sporting Goods DKS -4% 20.7% 6.1

Where to Get Free Money

by Fred Fuld III

Have you ever wondered about those “Get Free Money from the Government” ads? Where you have to pay a fee to find out what the catch is?

Well I’m going to tell you what the catch is and how to get your free money, for FREE.

I was able to get $29 for my mother, $51 for my brother, and several thousand dollars for me (more on that later).

There is an organization called the National Association of Unclaimed Property Administrators, made up of administrators from all the states in the US, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Quebec, British Columbia and Alberta in Canada.

What this organization does is provide a way for users to check and see if the state is holding any unclaimed money for them. Where does this money come from? It could be tax refund checks that were never cashed, uncashed dividend checks, stock takeover proceeds, or forgotten bank accounts.

According to the NAUPA, based on recent data, of the over $7 billion in unclaimed property, less than half or only $3.2 billion was returned to their rightful owners. That means some of this money might be yours.

In my case, I was able to collect several thousand dollars because I held several stocks in certificate from, and when I moved, I didn’t notify the transfer agent. When notices sent to my old address were returned to sender, the shares were turned over to the state. In a couple cases, the stocks were taken over by another company and the state was holding the proceeds.

So how do you check to see if you have money owed to you? Go to Unclaimed.com and click on the state you live in, then click on the Search For Unclaimed Property link, type in your last name, first name, middle initial, and city, then click Search. If your name appears a couple different ways in records, make sure to do a search using all names that you use, and all cities you have lived in. Also, don’t forget to check all the states you have ever lived in.

Good luck. Maybe there’s some money waiting for you.

 

Marijuana Legalization & Top Pot Stocks

by Nkem Iregbulem

Although marijuana can be used recreationally, medical marijuana has become increasingly popular over recent years as a growing amount of research supports its potential health benefits. Small studies show that medical marijuana may help in treating pain, nausea, loss of appetite, irritable bowel syndrome, Parkinson’s disease, epilepsy, and multiple sclerosis. D.C. and 31 states, including California, Nevada, Maine, Massachusetts, and Washington, have legalized medical marijuana. Meanwhile, the recreational use of marijuana is legal in 9 states, including California, Alaska, Oregon, and Colorado.

On June 21, the Canadian Senate passed the Cannabis Act, which regulates the production, distribution, and sale of marijuana in Canada. These plans have set off an investment boom or “green rush” in Canada as sales of certain forms of cannabis such as fresh or dried cannabis, cannabis oil, and plants and seeds for cultivation will now become legal. Canada will be the second country, after Uruguay, to legalize the sale of recreational marijuana.

This growing interest in marijuana may compel you to invest in pot stocks. If you are looking to gain exposure to the marijuana industry, you have a number of investment opportunities: AbbVie (ABBV), Aurora Cannabis (ACBFF), Canopy Growth (CGC), Constellation Brands (STZ), Cronos Group (CRON), GW Pharmaceuticals (GWPH), Scotts Miracle-Gro (SMG), and Tilray (TLRY). The ABBV, CGC, STZ, and SMG stocks are traded on the New York Stock Exchange, and ACBFF is traded in over-the-counter markets. Meanwhile, the CRON, GWPH, and TLRY stocks can all be found on the NASDAQ.

Your first option is AbbVie, a drug company that discovers, develops, manufactures, and sells pharmaceutical products worldwide. One of its products, Marinol, is a synthetic cannabis-based drug designed to not only helps chemotherapy patients with symptoms like nausea and vomiting but also help AIDS patients with their loss of appetite. The company was founded in 2012 and is headquartered in Illinois. AbbVie has a market cap of $144 billion and pays a dividend yield of 2.3%. The company’s stock trades at 23.67 times trailing earnings and at 10.74 times forward earnings. The stock has a price-to-book ratio of 42.01, and a price-to-sales ratio of 4.93, which would put it in the overpriced range. The company enjoys a three year revenue growth rate of 12.23% and a five year revenue growth rate of 8.95%. Its revenue has been increasing each fiscal year since 2013.

Aurora Cannabis, founded in 2006, is another option to consider. The company is based in Vancouver, Canada and is involved in the production and distribution of medical cannabis in Canada and internationally. The company’s product portfolio includes dried cannabis and cannabis oil. Aurora Cannabis has a market cap of $7.54 billion and does not pay a dividend. The company’s stock trades at 546.76 times trailing earnings and at 303.03 times forward earnings. The stock has a very high price-to-sales ratio of 97.68, so it is considered overpriced. The stock also has a price-to-book ratio of 7.59. The company’s revenue has been increasing since 2015, jumping from 1.44 million to 18.07 million and then to 55.2 million over the past few years.

Headquartered in Canada and founded in 2014, Canopy Growth is a licensed producer of medical marijuana. Its product portfolio includes items like dried flowers, oils and concentrates, softgel capsules, and hemp. Canopy Growth has a market cap of $10.8 billion and does not pay a dividend. The stock’s high price-to-sales ratio of 134.27 puts it well into the overpriced category. The stock also has a price-to-book ratio of 11.71. With its revenue increasing each fiscal year since 2014, Canopy Growth boasts a 3-year revenue growth rate of 266.47% and an even higher 5-year revenue growth rate of 724.53%. Most of the company’s revenue comes from its sales of medical marijuana under two of its brands, Tweed and Bedrocan.

Constellation Brands is a large alcoholic beverage supplier in the United States that produces beer, wine, and spirits. The company bought a large stake in the previous mentioned Canopy Growth. It is currently working on creating its own cannabis-infused non-alcoholic beverage. Constellation Brands has a market cap of $40.8 billion and pays a dividend yield of 1.39%. The stock trades at 22.04 times trailing earnings and at 21.83 times forward earnings. The stock has a high price-to-sales ratio of 5.5 and a price-to-book ratio of 3.82. With its revenue increasing each fiscal year since 2014, Constellation Brands enjoys a 3-year revenue growth rate of 7.96% and an even higher 5-year revenue growth rate 22.09%. Most of the company’s revenue come from its sales within the United States.

You might also consider Cronos Group, another cannabis company involved in the production and distribution of marijuana in countries such as Canada, Germany, and Australia. It sells dried cannabis and cannabis oils under its brand Peace Naturals. The company is headquartered in Toronto, Canada and was founded in 2012. Cronos Group has a market cap of $2.36 billion and does not pay a dividend yield. The stock trades at 917.86 times trailing earnings and at 129.87 times forward earnings. The stock has a price-to-book ratio of 10.68 and a very high price-to-sales ratio of 349.40. The company has seen increasing revenue values each fiscal year since 2015.

Based in the United Kingdom and founded in 1998, GW Pharmaceuticals is a biopharmaceutical company that researches and develops cannabinoid products for use in different disease areas. One of its products, Epidiolex, is derived from an active marijuana ingredient and is used to treat various rare childhood-onset epilepsy disorders. The company primarily does business in Canada, Europe, the United States, and Asia. GW Pharmaceuticals has a market cap of $4.78 billion and does not pay a dividend yield. The stock has a price-to-book ratio of 9.36 and a very high price-to-sales ratio of 245.76. The company’s revenue has been falling each fiscal year since 2014, giving the company a negative 3-year revenue growth rate of -35.03% and a negative 5-year revenue growth rate of -24.29%.

Another option is Scotts Miracle-Gro, the largest provider of gardening and lawn care products in the United States. Headquartered in Ohio and founded in 1868, the company sells most of its products to retailers such as Home Depot, Lowe’s, and Walmart. Over recent years, the company has taken steps towards growing its hydroponics business, one of these actions being its acquisition of hydroponic equipment maker, Sunlight Supply Inc. Medical cannabis can be grown through hydroponics, so this transition has given Scotts Miracle-Gro its association with cannabis. Scotts Miracle-Gro has a market cap of $4.34 billion and has a yield of 2.82%. The stock trades at 17.96 times trailing earnings and at 17.48 times forward earnings. The stock has a price-to-book ratio of 8.34 and a normal price-to-sales ratio of 1.73. The company has a 3-year revenue growth rate of 0.82% and a negative 5-year revenue growth rate of -0.94%.

Tilray is a pharmaceutical company that researches, develops and sells medical cannabis. The company was founded in 2018 and is based in Canada. The company’s product portfolio includes dried cannabis as well as cannabis extract in the form of purified oil drops and capsules. Most of the Tilray’s revenue comes from its sales within Canada, but the company also sells its products in Argentina, Australia, Chile, Germany, South Africa, and many other countries. Tilray has a market cap of $11.99 billion and does not pay a dividend. The stock trades at 2500 times forward earnings. Its stock has a price-to-book ratio of 414.61 and a very high price-to-sales ratio of 374.42.

The cannabis industry should continue to grow as more and more states continue to legalize, and as more and more of the large blue-chip marijuana companies jump in.

The Punk Rock of Business

by Fred Fuld III

You may wonder what punk rock has to do with business. If you starting a startup, a manager, or the head of a company, it is worth your while to read The Punk Rock of Business.

The book is written by Jeremy Dale, the former Corporate Vice President of Microsoft’s worldwide retail sales, and is now CEO of an entertainment and football startup.

Dale discusses the philosophy of Punk Rock Business, “pure, stripped down, no bullshit,” and how this philosophy can be applied to your business.

The book covers in detail the eight elements of punk rock business, including.Have a Cause, Build a Movement, and Create New and Radically Different Ideas. All the elements have extensive real life examples.

My favorite chapter is Element 4: Drive Speed and Action, especially the subsection called Meeting Productivity Comes from Ruthless Cutting. The book has some great ideas about dealing with meetings, such as removing chairs from the room for in-person meetings, and utilize video meetings instead of dial-in meetings (see who’s paying attention).

If you run a business, or manage a department of a company, I recommend that you read The Punk Rock of Business.