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Citigroup: Not So Bad

Citigroup easily beat analyst estimates in Q2. The bank took a $7.9 billion credit loss, but the company still generated net income of $1.3 billion. The stock shouldn't trade far below the TBV of $71.15 while offering a 4% dividend yield. For a stock trading far below tangible book value, Citigroup (C) had a solid quarter. The large financial was able to generate a large enough profit to cover the dividend while still building most capital ratios. My investment thesis remains highly bullish on the stock as a pick for the decade. Read the full article on Seeking Alpha. 
Disclosure: Long C. Please review the disclaimer page for more details. 

Walgreens: Clear Overreaction

Walgreens fell by 8% following disappointing FQ3 results. The company was hit by higher cleaning costs and weaker U.K. Boots sales. The stock now offers a 4.8% dividend yield while trading at only 7x normalized EPS estimates. Walgreens Boots Alliance (NASDAQ:WBA) has too slowly transitioned to the digital realities of the modern retail environment, but the stock drop after FQ3 results was a clear overreaction. The quarterly results weren't as bad as the stock reaction for a stock already down about 20% from the previous highs. My investment thesis is more bullish on the stock following this dip below $40, as Walgreens Boots gets more aggressive with its digital plans and expands into more personalized healthcare services after a slow start. Read the full article on Seeking Alpha. 
Disclosure: No position mentioned. Please review the disclaimer page for more details. 

American Airlines: No Other Bulls Exist

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Amazingly, Seeking Alpha is unable to find another Bull to highlight their view on American Airlines (AAL). All of the other contributors on the financial site pretty much think the airline is going bankrupt.


When just about every so-called financial expert is on the same side of a trade usually the opposite happens. Passenger traffic continues to rebound in the best signal the market will return to normal by next year.

More research: American Airlines: Stop The Bankruptcy Talk


Disclosure: Long AAL. Please review the disclaimer page for more details. 

Canopy Growth Just Admitted Massive Failures

Canopy Growth remains locked out of the major cannabis opportunities in the U.S. The Acreage deal is failing due to a lack of funding for the MSO. The company is still aggressively spending chasing smaller global opportunities in competitive markets. The stock is far overvalued here with a $6.5 billion valuation, over 16x FY21 sales estimates. On June 22, Canopy Growth (CGC) hosted a virtual investor meeting where the company discussed the future of cannabis in great detail. Whether intentional or not, the large Canadian cannabis company highlighted how the business model continues to waste too much money chasing the wrong markets. My investment thesis remains highly negative on the stock here with a market cap of nearly $6.5 billion and a long road to profits ahead. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details.
Update 6/25 Canopy Growth just modified the deal with Acreage Holdings (ACRGF) to drastically lower the …

AT&T: Negatives Of Selling Gaming Unit

AT&T is exploring selling their video gaming unit for a reported $4 billion. The company has $154 billion in net debt so the cash isn't as meaningful as the lost revenues from WBIE. The deal value is an apparent low valuation compared to public gaming stocks such as EA or Take-Two Interactive Software. The stock will suffer from the constant hit to revenues per share while the 6.8% dividend yield is covered from the extra cash. Due to the massive scale of AT&T (T) following the buyout of Time Warner, the company has looked for non-strategic asset sales to lower massive debt levels. One new target is the video game business from Warner Bros. due to the multi-billion valuation estimate thrown around by analysts. Read the full article on Seeking Alpha. 
Disclosure: No position. Please reveal the disclaimer page for more details. 

Delta Air Lines: Eliminating Disaster Discount

Delta Air Lines entered the crisis already trading at a disaster discount. The airlines are quickly approaching load factors where average flights are break-even. The stock has upside from the 52-week high of $63 due to eventual multiple expansion. Delta Air Lines (NYSE:DAL) continues to rebound from the Buffett lows as airline traffic rises off the April lows. One of the most crucial metrics for valuing the airlines going forward is the load factor. My investment thesis is highly bullish on the airlines even with this recent rally in the stock as the load factors are rising and the potential for eliminating the disaster discount coming out of this down cycle improves the long-term potential of Delta. Read the full article on Seeking Alpha. 
Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

Square: Not Pricing In Q2 Weakness

Square rallies near yearly highs after Q1 results. The company should report a large decline in Q2 payments volumes and an EBITDA loss. The stock trades at an insane 65x normalized EBITDA targets that are unlikely to be obtainable even in 2021. Despite the obvious long-term impact of the coronavirus to Square (SQ) small business customers, the stock is now back close to yearly highs. The company faces a tough road ahead with a material impact to business in the current quarter and a questionable future. My investment thesis was bullish on a rebound at the lows near $40, but the stock is no longer appealing above $75. Read the full article on Seeking Alpha. 
Disclosure: No position mentioned. Please review the disclaimer page for more details.