Category Archives: $SAVE

Market sell off Savage – quality stocks at lower prices…UPDATE…

Revisiting some the quality stocks tweeted out at the end of August, following a savage sell off.The market is punishing stocks whose guidance is weak – $SAVE, $GPRO and NXPI…but have rewarded big cap tech stocks like $GOOG, $MSFT.
Can FaceBook join the big tech party or will it sell off following its big run this month?

Here is an update on these great companies mentioned on August 23rd:

Biotech:
$GILD (Gilead) FV = 115 vs 109 – hold out for 115.

Financials:
$MS (Morgan Stanley) FV= 39 vs 34 1.75% 14% Cheap
Reported a terrible quarter, but hold  –  stock is back to 33.4 wait another quarter!

$JPM (JP Morgan) FV=72 vs 64 2.77% 12% Cheap
Prospect for lower rates for longer has not hurt the stock – HOLD.

$HSBC (HSBC) FV=625 vs 533 5.9% 18% Cheap
Weak earnings in Barclays and a potential cash call in Standard Chartered, has not hurt the stock that much at 510. Keep a stop of 470.

Social Media/Internet Retail
$FB FaceBook – look to buy around $80 (30% 5Y Growth)
Results next week – if you got in the low 80’s take profit. 2Centview sold some of the core at 104.

$AAPL (Apple) FV = 120 vs 105
Take profit some profit here above 120.

$TWTR (Twitter) FV=28 vs 26
Terrible quarter – but stock holding up – FV Much lower as company lowers growth expectations. Exit for flat or hold if you believe in Dorsey.

$YHOO (Yahoo FV = 36 vs 33 (vs 68.2 in BABA stock)
Take profit above 36.

$BABA FV= 88 vs 68
Take some profit here at 84.

Chips
$SWKS (Skyworks) FV=92 vs 79 14% Cheap
Stock lower following NXPI results – but FV Unchanged. HOLD.

3D Printing
$HPQ (hewlett packard) FV= 36 vs 27.5 2.56% Yield – Separation could add $5 – look at EBAY/Paypal!
HOLD. FV Unchanged.

$SSYS (stratasys) FV = 25 (if you include $6 of cash) vs 28
FV lower. Exit here at $26 unless you believe 3D printing is potential growth story.

Solar
$SPWR FV=26 vs 21.7
Take some profit here at $26. Keep a core if you believe in Solar Power long term.

Oil
$BP FV=470 vs 357 yield 6.8%
FV= 400 now – lower as oil prices expect to stay lower for longer. Hold for the YIELD or take profit if you got in at 357.
$PFC (PetroFac) FV = 930 vs 789 yield = 5%
Stock did get to 940 – where 2CentView took some profit – holding a core.

Insurance
$AV. (Aviva) FV=580 vs 482 yield = 4.4%
FV Unchanged – hold for the yield.
$AIG FV = 65 vs 60 1.88% Yield
Take profit at $65 (now 63.53)

Airlines:
$EZJ (easyJet) FV= 1950 vs 1624 3.4% Yield
HOLD.
$SAVE FV = $56 vs 55
Terrible run sees the stock trade down to $35. FV $10 LOWER. 2CentView has exited the core position.
$AAL FV=$55 vs 40
HOLD. Nice rally to $46.

$SAVE(Spirit Airlines) the easyJet of the US has not found the going easy….

Beginning of this year analysts loved this stock – it has no debt and keeps costs low.

The stock has been beaten down hard all year, as competition begins to bite – even with a buoyant US Economy and low oil prices.

FV=$65 on SAVE, so the stock does look cheap here, but the US Airline Industry is a crowded market – with names like JETBLUE, Virgin America, Hawaiian Airways etc..

2CentView has held a core position in $SAVE since 2013, but as all those profits gradually getting wiped out, need to consider whether to hold or exit – results next week will be key.

Wait for results October 27th before buying $SAVE if you are not involved or have been stopped out.

2CentView has a core position in $SAVE and $AAL – looks like these 2 companies cannot co-exist so one may need to go…

Market sell off Savage – but now is to time to look for quality stocks at lower prices…

They say that all bull markets have the occasional 10% correction and last week’s Friday’s was brutal – is this a correction in a bull market or the start of a bear market?

One thing for sure, China growth is slowing – probably to around 5% – or even lower and this is what is driving stocks lower – first the commodity crash – and then companies with growth to China – which is almost every company – hence broad sell off.

The fall out of this significant market event is there could be some more selling over the coming weeks with a possibility of the SP500 hitting 1900.

2CentView is that it is not an overall bear market – the US and UK Economy are buoyant – and with interest rates and oil prices set to remain low for some time yet, this should spur growth as consumers spend. So the broader market may correct a 3-5% more then rally as the lower growth in china is fully priced in.

Mark your stocks from 1 to 3 – 1 being those you really want to keep forever, and 3 those you can sell to raise cash and buy companies you really want which were too expensive before – 2CentView has sold FitBit and Man Group.
2CentView strategy is always to take some profits when stocks hit your target – reducing the overall cost basis making to hard to lose money in volatile markets – and it is times like now when you are glad you did!

Here are some great companies to keep an eye on

Biotech:
$GILD (Gilead) FV = 118 vs 105 1.6% Yield 11% Cheap

Financials:
$MS (Morgan Stanley) FV= 39 vs 34 1.75% 14% Cheap
$JPM (JP Morgan) FV=72 vs 64 2.77% 12% Cheap
$HSBC (HSBC) FV=625 vs 533 5.9% 18% Cheap

Social Media/Internet Retail
$FB FaceBook – look to buy around $80 (30% 5Y Growth)
$AAPL (Apple) FV = 120 vs 105
$TWTR (Twitter) FV=40 vs 26
$YHOO (Yahoo FV = 36 vs 33 (vs 68.2 in BABA stock)
$BABA FV= 88 vs 68

Chips
$SWKS (Skyworks) FV=92 vs 79 14% Cheap

3D Printing
$HPQ (hewlett packard) FV= 36 vs 27.5 2.56% Yield – Separation could add $5 – look at EBAY/Paypal!
$SSYS (stratasys) FV = 33 (if you include $6 of cash) vs 28

Solar
$SPWR FV=26 vs 21.7

Oil
$BP FV=470 vs 357 yield 6.8%
$PFC (PetroFac) FV = 930 vs 789 yield = 5%

Insurance
$AV. (Aviva) FV=580 vs 482 yield = 4.4%
$AIG FV = 65 vs 60 1.88% Yield

Airlines:
$EZJ (easyJet) FV= 1950 vs 1624 3.4% Yield
$SAVE FV = $66 vs 55
$AAL FV=$55 vs 40

The American airlines valuation dilemma …4.4x 2015 EPS..

If someone offered you a business , which in 4.4 years would pay for itself based on current earnings consensus projections – but over that 4 years there is a risk earnings could be slashed by 40% due to an increased supply forcing prices lower as well as higher raw material prices increasing costs – would you buy it?

This is the dilemma facing investors of American Airlines stock.
On the surface of it, at 4.4x 2015 earnings $AAL looks very cheap….there must be a catch when something so cheap … the catch here is that investors are really concerned that Airline Industry will not control supply and their profits will be slashed…

This is the reason British Airways used to try and kill off competition in the 80’s – not always in a legal way – as the only way to be profitable was to keep it is a Monopoly. The loser being the consumer forced to pay higher prices.

So the Industry needs to keep a happy medium – we don’t want Airlines going bankrupt again – yet consumers need prices to stay low in order to be encouraged to travel.

The Airline Industry really need to work together to ensure there is this balance. Lower oil prices should be benefiting the consumer and the industry.

Airline Fair Values:

$AAL = 70
$SAVE = 85
$DAL = 50

The above fair values imply analysts have not yet cut their estimates in line with the market..

US Airlines get whacked on capacity Concerns…

$AAL and $SAVE – along with all other US airlines got whacked when SouthWest was shown no $LUV by investors after it said that unit seat miles (PRASM) would be lower than expected in Q2 – claiming the industry is adding capacity in anticipation of significant demand.

2CentView has been a $AAL and $SAVE bull from 2013 when the stocks were trading at $24 – still think they can go higher as they are cheap on a p/e basis (AAL = 6x 2016 p/e) – but there is a real concern there will be over capacity and Airlines will again go into a downward spiral like they did before…

If you believe Airlines will control supply and costs prudently this time round – BUY, if not Stay away.

FairValues:

$AAL = 70 Yield 1% [weakest balance sheet of the 3]
$SAVE = 85 [ no debt ]
$LUV=45 [  good balance sheet]

$SAVE (Spirit Airlines) FV=85 vs 68 – Growth at a reasonable price!

No frills US Carrier dropped 13% following results and weak guidance.

Given the success of RYANAIR in Europe, which has given investors a 300% return over 3 years, if $SAVE can replicate the business model in the US the market cap could also treble over 3 years.

2CentView has a core position in $SAVE acquired in 2013 and added a trading position at 68, take profit target 85.
Current stock price imples sub-10% growth over 5 years vs. expected growth of between 12 and 15% (in line with RYANAIR).

FV=85. SAVE has no debt and around $500mm in cash.

$SAVE (Spirit Airlines) – they easyJet of the US – reported good quarter….FV Higher..

Spirit Airlines reported a good quarter yesterday and stock rallied 5 bucks.

FV = $100 now, assumes $5 of Cash. 5Y implied growth = 18% vs. 25% expected, giving the $100 Fair value. Hold if you are long.

Airline stocks are very oil price sensitive, but this company will do well even if fuel prices rise again.

Great job Ben!

2CentView has a core position in $SAVE.

2CentView performance in 2014…

The 2CentView portfolio was up 12% fo the year, which matched the S&P500 but well above the FTSE100 (flat).

The portfolio ended the year 75% US and 25% UK 0% Europe – mainly because the US was the only market showing real jobs growth and a rising stock market – the model also showed many more opportunities in the US than outside the US. The exposure to USD/GBP exchange rate is also something to keep an eye on – sterling strength representing a buying opportunity for US Stocks – but can go the other way!

Where it did badly:
2 Core positions were savaged – Blinkx (down 90%) and $TCG (thomas cook) which cost the portfolio nearly 6% – need to do a better job managing zero cost core positions – where you can take your eye of the ball.

Europe and US House & Autos  continued to underperfrom and took losses in Deutsche Bank, HSBC and $USG and $GM – all go cut on the 25% Stops (they continued to go lower – except $GM which has come back – thanks EBOLA!)

Also took some losses in $FUEL, $GIMO, $ICPT on the rotation out of expensive growth stocks into more low growth stocks – growth positions are the riskiest and hardest to manage as moves can be savage.

Where it did well:
$AAL- American Airlines, $SAVE did very well up nearly 100%
$FB up 37%
$CELG and $ISIS – up nearly 80%
$YHOO – up 40% – easiest trade of the year!
$AAPL – up 50%
$MS – Morgan Stanley up 30%
Rite Aid and Radian also performed well (core positions from 2013)

2014 was in general lot tougher than 2013 as the market experienced volatility throughout the year – Russia/Ukraine, EBOLA, Oil price collapse – all tested the nerves – but also represented buying opportunities.
The 2CentView strategy of taking some profits, setting stops helps build low cost positions and mitigates losses from positions not working – this really helps in managing volatile markets – and helps you sleep at night – we all have day jobs!
Overall the portfolio is up 73% since beginning of 2013 when the model and strategy was first built.
Main lesson learnt from 2014 – be more selective and if a core position drops more than 30% – start to exit – even if it is because of a malicous blog!

So 50% of the portfolio was up average of 51% =25.5% on the winners
30% portfolio down 25% = -7.5% on the losers

6% loss on core positions in $BLNX and $TCG

Net=12%

$SAVE – Spirit Airlines, – the easyjet of the US…Stock at all time and going higher

Spirit Airlines reported great results last week beating expectations and reporting higher margins – and the stock has been surging.

The benefit of holding stocks for the long term is that successful companies like Spirit Airlines – which is replicating the success of EasyJet in the UK, by providing low cost air fares and balance sheet no debt, can go considerably higher, where the real returns above 200% kick in.

If you have a position, do not consider taking profit now – stock could get to $90-$100 area.

2CentView has a core and trading position in $SAVE.
2CentView FV=75 which implies 19% growth, but growth rate could be as high as 25%=>90 stock price

$GOOG celebrates its 10th Anniversary as listed company $10,000 invested..

10 years ago now worth $140,000.Google came to the market at $42.50 – it is now nearly $600 a 1400 % return over 10 years!Real gains in the stock market are made by holding great companies for the long term – Warren Buffet has proved that!

2CentView tries to get you into great companies by identifying a fair price to first get involved – as making money from the first purchase is key to making long term gains i.e. you take some profits and own the core position at low or ideally zero cost….
like $SAVE and $FB – both which were well under $30 when first tweeted as a buy and now both above $70 less than 2 years later!

FV on $GOOG = 580, including the Cash…  HOLD if you are long!