Showing posts from July, 2020

IB Net Payout Yields Model

AMD: Another Intel Gift

Intel just delayed key manufacturing technology another 12 months. AMD should finally grab substantial market share gains in key server chips. My EPS target for AMD is now set at ~$4 based on the chip company reaching 25% market share off a $79 billion TAM. As  Advanced Micro Devices  ( AMD ) continues to prep for market share gains in semiconductor chips,  Intel  ( INTC ) provided the company the best gift ever. Not only was AMD on a path to maintain technology leadership, but also Intel announced they plan on allowing AMD to expand that leadership in the next couple of years. While the COVID-19 shutdown has potentially delayed some massive server transitions to Epyc chips, my  investment thesis  remains very bullish on the stock as analysts have to now raise financial models previously based on limited market share gains. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Snap: Not Worth The Premium

Snap reported mixed Q2 results. The company guided towards highly disappointing Q3 DAUs at only 243 million. The stock is the most expensive in the social media sector and should be avoided without leading financial results. Snap   (NYSE: SNAP )  is amongst the cohort of technology stocks priced for perfection when the company is imperfect. While plenty of stocks trade as if the economy doesn't recover to previous levels, Snap trades at levels suggesting a return to strong growth in 2021, despite the company still forecasting a tough ad market in Q3. With the company still losing substantial amounts on a quarterly basis, my  investment thesis  remains negative on the stock up in the $20s with a market cap topping $40 billion prior to the earnings report. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Out Fox The $treet - July 16, 2020

Yext is a buy at $16. Aurora Cannabis is a buy on weakness to play a potential deal with 50% upside. Out Fox The $treet to launch soon! Stocks to watch on Thursday: Yext ( YEXT )  The digital knowledge management company should see a surge in demand as retail stores constantly shift open hours and services offered in store due to COVID-19. The stock has struggled to break strong resistance in the $17-18 range. A break would easily signal a run to previous highs.  Investors need to keep in mind that Yext should return to 30% revenue growth rates once the economy normalizes. Even the worse case scenario in FY21 (January) includes 18.5% growth. The stock has constantly bounced off $16 offering another gift entry point.  The Out Fox model remains highly bullish on the stock.  Aurora Cannabis ( OTC:ACB ) As mentioned in the  my research  today, the Canadian cannabis stock is a buy on any deal with  Aphria  ( OTC:APHA ). The key is the C$200 million synergies from

Aurora Cannabis: Promising Consolidation

Aurora Cannabis was in talks with Aphria on a merger of equals. The deal was estimated to generate C$200 million in synergies. The stocks could have had up to 50% upside on a merger. Over the last week,  Aurora Cannabis  ( ACB ) and  Aphria  ( APHA ) apparently discussed a  merger  with talks falling apart. A merger would've made the new entity into a global giant in the cannabis space after the Canadians have lost a ton of market leadership to U.S. firms in the last year. The synergies alone could make this a no brainer deal as Aurora Cannabis already had made an impressive transformation on costs making the  long-term investment thesis  on the stock more bullish. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

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.