Today’s featured stocks include two new additions to the portfolios and a stock that has ostensibly become a takeover target.
Cabot Undervalued Stocks Advisor 1117
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The Verdict Is In:
Resounding Rebound in Energy Stocks
I’m so glad to have held many different types of energy stocks in the portfolios this year. Sometimes the stock market hands you an incredible gift on a silver platter, and all you need to do is (1) grab the gift and (2) say “thank you.” (I always try to be polite.)
Did the 2017 rebound in energy companies’ profitability and their share prices catch you by surprise? If so, let me tell you how I knew in advance that it was coming, so that you can identify these trends for yourself in the future.
Many investors know that I’ve been pounding the table on energy stocks since last November.
Quick background: When a stock or an industry is having a turnaround in its financial performance—presuming that it operates on a December fiscal year—I wait until October or November to recommend its purchase. At that time, even though the company is finishing up a mediocre or poor year, the stock market has turned its attention to the future. Stocks will begin moving based on the next year’s expected earnings growth. That’s why I always quote “June 2018” as the date when I will reassess Apple (APPL) shares, since Apple operates on a September fiscal year.
The big clue that energy stocks would deliver capital gains in 2017 was sitting prominently in their consensus earnings estimates, for all the world to see. Back in the May 2 issue, I said “the industry is rife with excellent companies that meet all of my investment criteria.” All I did was look up the current and next year’s earnings per share (EPS) estimates, notice eye-popping growth rates throughout the sector, and buy some of the better companies. During the last year, I recommended Andeavor, BP, Chevron, Cimarex Energy, EOG Resources, ExxonMobil, HollyFrontier, Marathon Petroleum, Occidental Petroleum, Phillips 66, Royal Dutch Shell, Schlumberger, Statoil, Total and Valero to various Cabot audiences.
You know what I didn’t do? I didn’t second guess these investments based on past industry performance nor negative news stories. Yes, of course these stocks had dismal performance in recent years. But when industries and sectors turn themselves around and the stocks are cheap, that’s when they land on my radar. It’s actually far easier to make money when entire peer groups are experiencing turnarounds, as we also saw with financial stocks this year, than it is to pick one or two gems in industries that have recently been functioning fairly well.
Lessons learned:
1. When entire industries or sectors have suffered, and their future earnings estimates reflect strong EPS growth, you’re probably going to make good capital gains by investing in their stocks.
2. Have confidence in the numbers that led to your stock selections, because you’re not going to get reassurance from most fellow investors or the news media.
The research I get from the major investment firms is an invaluable source of factual information. The analysts who create the energy sector’s earnings estimates also knew that these companies were entering a profitable business cycle. Never turn down an opportunity to have at least one account with a major investment firm (Goldman Sachs, Morgan Stanley, Credit Suisse, etc.).
There’s lots more room for energy stocks to grow. Their price/earnings ratios (P/Es) have not remotely caught up with their multi-year earnings growth rates. I anticipate continuing to feature energy stocks throughout 2018.
Stocks Retracing Highs and Creating Market Top?
Many stocks that I follow are retracing former highs. Notice that I sold Andeavor (ANDV), Dollar Tree (DLTR) and Molina Healthcare (MOH) yesterday under those precise circumstances! This is important info because when stocks rise to highs from previous years, they almost always have subsequent pullbacks, which can last quite a few months. When an unusually high number of stocks are having pullbacks due to predictable trading patterns, that can contribute to near-term market tops.
Here are my suggestions on how to navigate this stock market scenario to your advantage:
1. When I suggest selling because a stock has retraced a high from several years ago, sell the stock. This will free up capital in your investment portfolio that will otherwise not likely deliver capital gains anytime soon.
2. Redeploy some of that capital into undervalued growth stocks that are nowhere near tops of recent or long-term trading ranges, or into stocks that recently broke out of trading patterns to new all-time highs. The point is that we want our new purchases to be able to climb freely without the pressure of overhead resistance.
3. Hold some of that capital in cash, perhaps a larger amount than normal. If the stock market decides this is an opportune time for a big price correction, you will benefit from having more cash available than usual with which to buy low. Buying low is exhilarating and profitable!
A few months ago, I was so fully invested that I only had 3% of my equity portfolio in cash. Yikes! I forced myself to set aside some cash each time I sold a stock (while also purchasing new stocks), and now I have 14% in cash. Phew! Better, but I’m aiming for 20%. I really love buying low during market corrections. If a correction comes along and I’m fully invested, I feel helpless, and sort of foolish. I’m focused on positioning myself well to take advantage of both today’s bull market and tomorrow’s temporary downturn.
Send questions and comments to crista@cabotwealth.com.
Quarterly Earnings Release and News Calendar
November 7 pm: Cimarex Energy (XEC)* – 3Q
November 8 pm: Andeavor (ANDV)* and US Holdings (DK)– 3Q
November 9 am: Johnson Controls (JCI) – 4Q
November 13: General Electric (GE)* investor meeting—expect a reduction in the dividend.
Virtually all companies offer extensive information on their websites pertaining to their quarterly earnings releases, often including slide shows or webcasts.
*Not in the Cabot Undervalued Stocks Advisor portfolios, but discussed in previous issues, at the 2017 Cabot Wealth Summit or in Wall Street’s Best Daily.
Earnings Season Scorecard
Big earnings beat: Alexion Pharmaceuticals (ALXN), Apple (AAPL), Ameriprise Financial (AMP), BP plc (BP), Bank of America (BAC), Blackstone Group (BX), Boise Cascade (BCC), Goldman Sachs (GS), Legg Mason (LM), Morgan Stanley (MS), Nucor (NUE), Total (TOT), Vertex Pharmaceuticals (VRTX) and Weyerhaeuser (WY)
Slight earnings beat: Cavium (CAVM), PulteGroup (PHM) and Quanta Services (PWR)
Earnings in line with estimates: Schlumberger (SLB) and Vulcan Materials (VMC)
Slight earnings miss: Martin Marietta Materials (MLM), Universal Electronics (UEIC), XL Group (XL)
Big earnings miss: Chipotle Mexican Grill (CMG), Commercial Metals (CMC), Mattel (MAT) and Molina Healthcare (MOH)
Portfolio Notes
Make sure to review the Special Bulletins from October 31 and November 2, 3 and 6 in which I mentioned news, rating changes and/or price action on Alexion Pharmaceuticals (ALXN), Andeavor (ANDV), Apple (AAPL), BP plc (BP), Boise Cascade (BCC), Cavium (CAVM), Dollar Tree (DLTR), Martin Marietta Materials (MLM), Mattel (MAT), Molina Healthcare (MOH), Quanta Services (PWR), Universal Electronics (UEIC) and Vulcan Materials (VMC).
Buy-Rated Stocks Most Likely* To Rise More Than 5% Near-Term:
Delek US Holdings (DK)
Vertex Pharmaceuticals (VRTX)
*I can review price charts and make an educated determination about what’s likely to occur, but I will sometimes be wrong. I cannot control the stock market; I can only guide you through it.
Today’s Portfolio Changes:
Delek US Holdings joins the Buy Low Opportunities Portfolio as a Strong Buy.
WestRock Company joins the Growth & Income Portfolio as a Strong Buy.
Last Week’s Portfolio Changes:
Andeavor (ANDV) moved from Hold to Sell on November 6.
Boise Cascade (BCC) moved from Buy to Hold.
Cavium (CAVM) moved from Strong Buy to Hold.
Dollar Tree (DLTR) moved from Hold to Sell on November 6.
Molina Healthcare (MOH) moved from Strong Buy to Hold; then to Sell on November 6.
Universal Electronics (UEIC) moved from Buy to Strong Buy.
Growth Portfolio
Growth Portfolio stocks have bullish charts, strong projected earnings growth, little or no dividends, low-to-moderate P/Es (price/earnings ratios) and low-to-moderate debt levels.
Featured Stock: Cavium (CAVM)
Cavium (CAVM) – Yesterday I sent a Special Bulletin that informed investors about the potential acquisition of Cavium by Marvell Technology Group (MRVL). As this issue goes to press, there has been no additional news on the topic. The original news story seemed more substantial than a random rumor, but did not include any corroboration by the two companies.
The buyout rumor pushed CAVM as high as 80 in after-hours trading on November 3, and it closed at 75. The stock did not experience an additional run-up on November 6, but rather traded near 75. The previous all-time high was 74 in June 2015.
Ignoring the buyout rumor for a moment, it would be normal for a successful company’s stock to have a pullback once it retraces a high from several years ago. Therefore, if no buyout offer materializes, I would expect CAVM to retreat down to the 67 to 70 area, then trade for a while between 70 and 74 as it gathers steam to push past 74.
A buyout offer throws that entire scenario out the window. CAVM is an undervalued stock, so the buyout price could easily be anywhere in the 70s or 80s … perhaps even higher. These things happen, and they’re unpredictable. Some investors wonder whether they should buy CAVM for a quick potential capital gain under a buyout scenario. That’s a tough question to answer with any degree of accuracy. My general assumption is that IF a buyout takes place, the price will be somewhere between 75 and 85, so yes, there’s potential profit to be made.
If you were planning to sell CAVM quite soon because you need to reallocate that capital, then use a stop-loss order on the stock. Otherwise, whether the buyout occurs or not, you own an undervalued semiconductor growth stock. Hold your shares for future gains. Hold.
Updates on Growth Portfolio Stocks
Apple (AAPL – yield 1.4%) manufactures a wide range of popular communication and music devices. Read this November 6 Barron’s review of the Apple Watch “Series 3.” Apple reported a great fourth quarter last week (September year-end), surpassing all analysts’ expectations. Thus far, revisions in earnings estimates point to EPS growth rates of 22.4% and 6.1% in fiscal 2018 and 2019 (September year-end). The 2018 P/E is low in comparison at 15.3. I am not remotely worried about the slow 2019 EPS growth rate. If that number doesn’t improve by springtime, I’ll plan my exit strategy, way before the market begins focusing on 2019 prospects. For now, I believe there’s money to be made in the stock.
I expect AAPL to perform well between now and June 2018, but it will assuredly have plateaus and pullbacks along the way. Don’t use stop-loss orders unless you are an experienced and focused trader or you need the capital soon for other purposes. Let the stock bounce around and grow. Strong Buy.
Bank of America (BAC – yield 1.7%) is an undervalued large-cap growth stock. Banks typically profit greatly from increased economic activity, rising interest rates and lower income tax rates. Make sure you own at least one bank stock! BAC is up 21% from its September lows, and despite the bullish price action, a pullback would be normal. Buy.
KLX Inc. (KLXI) is an extremely undervalued, small-cap aggressive growth stock in the aerospace and energy services industries. I anticipate KLXI trading in the 52 to 56 range for a short while before continuing to reach new highs. Buy.
Martin Marietta Materials (MLM – yield 0.8%) is a supplier of crushed stone, sand, gravel, cement, concrete and asphalt. After a slow 2017, the company is expected to achieve 30.5% EPS growth in 2018. MLM is an undervalued mid-cap stock, recently trading between approximately 208 and 219. MLM could continue rising toward its May peak at 240, where the stock will still be undervalued. Buy.
PulteGroup (PHM – yield 1.2%) is a U.S. homebuilder, and a very undervalued aggressive growth stock. PHM is having a super year, but it’s going to need to rest eventually. Buy.
Quanta Services (PWR) provides specialized infrastructure and network services to the electric power, oil and natural gas industries. PWR is a very undervalued aggressive growth stock. The stock is having a pullback, and could fall to 34 where it repeatedly bounced during the last year. There’s 21% upside to my fair-value price target of 44. Strong Buy.
Vertex Pharmaceuticals (VRTX) is an aggressive growth biotech company that corners the market in treatments for cystic fibrosis (CF). An analyst who attended the North American Cystic Fibrosis Conference last week assessed that Vertex’ competitor Galapagos (GLPG) will not likely produce market-ready CF treatments any time soon. Vertex will present at the Credit Suisse Healthcare Conference on the morning of November 7. The latest full-year consensus EPS estimates represent 113% and 60.8% growth in 2017 and 2018, with corresponding P/Es of 82.9 and 51.5. Those are big numbers, as befitting a biotech stock, yet VRTX is still undervalued. The shares traded quietly sideways in the three months since the huge jump in July, then the price chart exhibited a double-bottom pattern in recent weeks, which is usually a bullish harbinger of a near-term run-up. Buy VRTX now. Strong Buy.
Vulcan Materials (VMC – yield 0.8%) is a supplier of construction aggregates, asphalt and concrete. After a slow 2017, the company is expected to achieve 41.1% EPS growth in 2018. This undervalued mid-cap stock is rising toward its June peak at 134, where it will still be undervalued. Buy.
XL Group (XL – yield 2.2%) is an insurer and reinsurer, and an undervalued mid-cap stock. Earnings estimates have remained very steady in recent weeks. The company is expected to take a net loss in 2017 due to catastrophe losses, then earn $3.78 per share in 2018. The corresponding P/E is 10.6. XL is in a strong financial position, with $1.4 billion in excess reserves. The stock established price support at 39 in September and October after a steep drop during hurricane season. It then began climbing, only to come back down to 39. The trading patterns appear quite normal. There’s 17% upside as XL retraces its July high near 47. Buy XL now. Buy.
Growth & Income Portfolio
Growth & Income Portfolio stocks have bullish charts, good projected earnings growth, dividends of 1.5% and higher, low-to-moderate P/Es (price/earnings ratios), and low-to-moderate debt levels.
Featured Stock: WestRock Company (WRK – yield 2.9%)
WestRock Company is a major player in the global packaging and container industry. WestRock has hundreds of business locations in 30 countries, serving consumer and corrugated markets.
In July 2015, MeadWestvaco (MWV) merged with Rock-Tenn to form WestRock. WestRock has since achieved 84% of its three-year synergy and productivity goal, which extends through June 2018.
Wall Street expects WestRock’s earnings per share (EPS) to grow 40.1% and 14.7% in 2018 and 2019 (September year-end), with margin expansion contributing to net income gains. The 2018 P/E is comparably low at 16.0. Fluctuations in currencies and raw material pricing can positively or negatively affect profits.
The company reported big third- and fourth-quarter 2017 earnings beats. Analysts currently project sizeable increases in EPS and modest increases in revenue during WestRock’s second through fourth quarters of fiscal 2018. Full-year 2018 revenue is expected to rise about 10%.
WestRock has a recent history of raising its dividend annually in the fourth quarter. The latest increase, from 40 cents per share to 43 cents, will be earned by folks who own the stock prior to November 9.
WRK is a mid-cap stock. Institutions hold approximately 90% of the outstanding common shares.
Many energy and basic materials stocks suffered greatly when the price of oil plummeted in 2015, and WRK was no exception. The stock fell precipitously through early 2016, rebounded through early 2017, and has since traded mostly sideways, with the trading range occasionally advancing higher. The stock most recently rose above a trading range in mid-October to new all-time highs, then came right back down towards 58, just in time for us to grab our shares before the price advance takes hold.
I chose WRK because it offers portfolio diversification, earnings growth, low P/E, a good dividend yield and a bullish price chart. Buy WRK now. Strong Buy.
Updates on Growth & Income Portfolio Stocks
BP plc (BP – yield 5.8%) is a European integrated oil company and a very undervalued aggressive growth stock. BP was featured last week in OilPrice.com’s The Remarkable Recovery of Big Oil and BP Boosts the Bullish Case for Oil. The articles cite successful cost cutting, and spending and debt reductions as lower oil prices become the new normal. I expect BP to continue rising toward 43, where it last traded in 2014. Hold.
Blackstone Group LP (BX – yield 7.0*) is an alternative asset manager, and a very undervalued growth & income stock. Last week, Jim Cramer commented “I’m a buyer of Blackstone. I think [CEO] Steve Schwarzman’s remarkable.” BX is slowly ratcheting toward 37, where it last traded in early 2015. If the share price temporarily dips below 33.5, new buyers can potentially earn a 10% capital gain. Hold.
*The payout varies each quarter, with the total of the last four announced payouts yielding 7.0%.
Commercial Metals Company (CMC – yield 2.5%) is a recycler and manufacturer of steel and metal products, including rebar and fence posts. Earnings estimates for fiscal 2018 and 2019 (August year-end) reflect very aggressive growth. The stock is extremely undervalued. I anticipate CMC trading between 19 and 22 in the foreseeable future. Hold.
GameStop (GME – yield 8.4%) is a retailer of games, collectibles and technology, with additional ventures in the entertainment field. Recent news includes GameStop offering customers up to $400 trade-in value for new iPhones, selling out of their XBox One X allotment and a new game subscription rental program called PowerPass.
New segments of the company have been growing rapidly, while the physical gaming business has been declining. The company is expected to earn $3.30 per share this year, making the price/earnings ratio just 5.6. The stock is dirt cheap, and investors are simply waiting for some kind of catalyst that will bring stock market attention to the low price and huge dividend yield. That catalyst could come from a product announcement or a good earnings report that continues to show growth in most business segments.
The share price has greatly suffered while the company refocuses its business divisions away from a reliance on physical game revenue. The P/E is just 5.5 and the dividend is huge. The stock is greatly undervalued and the company is solidly profitable. GME is not likely to rise past 21 until at least January, when tax loss selling season is behind us. Patient value investors and dividend investors should consider buying GME. Hold.
Johnson Controls (JCI – yield 2.4%) is a multi-industry, large-cap growth & income stock. The company will report fourth-quarter results on the morning of November 9 (September year-end). If fourth-quarter numbers and 2018 projections surprise on the upside, I might consider holding the stock longer. JCI is slowly ratcheting toward its July 2017 high near 44. Hold.
Morgan Stanley (MS – yield 2.0%) is a major U.S. investment bank and wealth manager, and an undervalued growth & income stock. The stock is ratcheting toward my fair-value price target of 59. Strong Buy.
Schlumberger (SLB – yield 3.0%) is a premier oilfield equipment and services company with a global footprint. Schlumberger is experiencing aggressive earnings growth in both 2017 and 2018, and is undervalued based on 2018 numbers. The stock has a wide trading range, and is racing upward from recent lows. Next stop: 69.5. There’s 28% upside plus dividends as SLB eventually retraces its December 2016 high near 86. Strong Buy.
Weyerhaeuser (WY – yield 3.5%) operates in the areas of timberland, wood products, real estate, energy and natural resources. Last week, the U.S. Commerce Department asserted that Canada has been unfairly dumping and subsidizing softwood lumber that’s exported into the U.S. Inside U.S. Trade reported, “Commerce said it determined that exporters from Canada have sold softwood lumber in the U.S. at 3.20 percent to 8.89 percent less than fair value. It also said Canada was providing unfair subsidies to its softwood lumber producers at rates from 3.34 percent to 18.19 percent.”
As a result of these unrelenting trade practices, the U.S. is proposing new tariffs on Canadian softwood lumber in the range of 10% to 24%. The tariffs will not be applied to all Canadian softwood lumber companies, but will be focused on those that have been participating in egregious trade practices. The U.S. International Trade Commission will make a final determination on the proposed tariffs in December.
In 2015, Weyerhaeuser was the biggest producer of softwood lumber in the U.S. Therefore, Weyerhaeuser certainly stands to benefit from an alleviation of unfair trade practices coming from Canada.
Due to ongoing strong financial performance, Weyerhaeuser has received consistent increases in 2017 consensus earnings estimates since joining the Growth & Income Portfolio, while the 2018 estimate hasn’t changed. As a result, the stock is overvalued based on 2018 numbers. The big caveat is that WY is reaching new all-time highs, which is the most bullish time to own a stock. I’m going to let it run, with the goal of selling soon if the 2018 earnings estimates don’t increase. Hold.
Buy Low Opportunities Portfolio
Buy Low Opportunities Portfolio stocks have neutral charts, strong projected earnings growth, low-to-moderate price/earnings ratios (P/Es) and low-to-moderate debt levels. (Dividends are not a portfolio requirement, but some of the stocks will have dividends.) Investors should be willing to wait patiently for these stocks to climb.
Sometimes a stock in the Buy Low Opportunities Portfolio produces good capital gains and the share price is no longer low, yet the stock remains an attractive investment. Those stocks will then be moved into the Growth Portfolio or the Growth & Income Portfolio.
Featured Stock: Delek US Holdings (DK – yield 2.2%)
Delek US Holdings is a diversified downstream energy company, with businesses that include petroleum refining, transportation, marketing, renewables (producing biodiesel fuel) and asphalt operations. The company is based in Tennessee. Its refineries are located in Arkansas, Louisiana and Texas. Delek serves approximately 300 convenience stores in the southeastern U.S. and west Texas. Asphalt operations consist of 14 asphalt terminals serving locations from Tennessee to the west coast.
Delek maintains an active acquisition strategy. In June 2017, Delek completed the purchase of Alon USA Energy (ALJ), an energy refiner with a strong balance sheet and the largest exposure to the Permian Basin of any independent refiner.
Most energy companies are having a tremendous rebound in profitability since oil prices bottomed in 2016 and subsequently turned upward. Delek booked a net loss of ($1.58) per share in 2016.
There are approximately 15 Wall Street analysts contributing to consensus earnings estimates. They expect the company to earn an average of $0.46 and $1.17 per share in 2017 and 2018, reflecting an aggressive 154% earnings per share (EPS) growth rate next year. The 2018 P/E is very low in comparison to the earnings growth rate at 23.6.
Delek is expected to report third-quarter results on the afternoon of November 8. Analysts are expecting an average of $0.64 EPS, with a range of $0.44 to $0.75. Many downstream companies have reported big upside earnings surprises in recent weeks, attributed to improving gross margins.
DK is a small-cap stock in the oil and gas industry. Institutions own 74% of the outstanding common shares. Delek has been paying a quarterly dividend of $0.15 per share for many years.
The long-term price chart on DK shows a classic energy stock that cratered in 2015 and bottomed in 2016. It rebounded to a nice degree in the second half of 2016, then traded sideways throughout 2017.
Important: I considered a dozen stocks with great earnings growth and attractive price charts to add to the Cabot Undervalued Stocks Advisor portfolios today. I chose DK because the stock just began breaking out of a year-long trading range a few days ago. It doesn’t get more bullish than that! The last thing that I would do is wait and see what the stock does before making a buying decision. If you like the company’s description and it fits in with your investment strategy, buy the stock immediately, before the November 8 quarterly earnings release.
DK has upside resistance at 32, and more resistance at 38 that dates back to early 2015. There’s about 35% capital gain potential as DK rises to 38. Strong Buy.
Updates on Buy Low Opportunities Portfolio Stocks
Alexion Pharmaceuticals (ALXN) is a biopharmaceutical company that researches and manufactures treatments of severe and rare health disorders. Many pharmaceutical and biotech stocks are down in recent days due to company-specific bad news at a few companies. However, Alexion has not had bad news, and in fact its 2017 earnings estimates continue to rise. Profits are growing aggressively and the stock is undervalued.
The price chart shows you two things: the stock moves quickly, and there seems to be good price support at 115. I normally wait for a stock to stop falling and then rest for a while before encouraging people to buy. However, ALXN might just reverse direction without resting. There’s 37% capital gain potential as ALXN retraces its April 2016 high at 160. Buy ALXN now. Buy.
Boise Cascade (BCC) is one of the largest producers of engineered wood products (EWP) and plywood in North America and a leading U.S. wholesale distributor of building products. Strong commodity pricing, increasing demand from post-hurricane rebuilding and the rising trend in single-family home starts are contributing to the company’s success. BCC is an undervalued, aggressive growth small-cap stock. The stock began a new run-up after the good earnings report. I believe we’ll see BCC rise toward 43, where it last reached an all-time high in February 2015. Hold.
Chipotle Mexican Grill (CMG) is an undervalued aggressive growth restaurant chain. After a huge earnings rebound in 2017, the company is currently projected to grow EPS by approximately 40% per year in 2018 and 2019. Clearly there’s a disconnect between the reality of Chipotle’s financial success and the dismal share price performance. CMG has very little chance of a rebound past 320 until tax loss selling season is over in January. As long as the profit outlook and valuation remain attractive, I will hold the stock for the prospect of future capital gains. Hold.
Legg Mason (LM – yield 2.9%) is a U.S.-based global asset management and financial services company with $754 billion in assets under management (AUM). LM is a very undervalued aggressive growth stock. Earnings estimates have been rising for the past four weeks. My price target is 44, where LM last traded in October 2015. Any share price below 39.5 represents a 10%+ capital gain opportunity. Hold.
Mattel (MAT) stock is performing poorly, and will not likely rise until January, when tax-loss selling is over. My suggestion is that investors hold MAT for a corporate and share price rebound in 2018. Hold.
Nucor (NUE – yield 2.6%) is a low-cost producer of a diversified portfolio of iron and steel products, and an undervalued mid-cap growth stock. NUE has recently traded between 57.5 and 60. Investors who buy below 58.5 could earn a 10% capital gain as NUE retraces its December 2016 high of 65. Hold.
Total (TOT – approx. 4.0%) is a fairly-valued French integrated oil & gas stock. TOT continues to climb toward the low 60s, where it last traded in July 2014. Hold.
Universal Electronics (UEIC) is a manufacturer and cutting-edge world leader of wireless remote control products, software and audio-video accessories for the smart home, with a strong pipeline of new products. Earnings growth has trickled down to just 3.1% for 2017. Analysts expect 21% EPS growth in 2018, and the 2018 P/E is low at 14.1. The debt-to-capitalization ratio is just 3%.
UEIC is a micro-cap stock, with Comcast (CMCSA) owning a sizeable warrant position in the company. There’s 44% upside as UEIC retraces its July high around 72, where the stock will still be undervalued. Expect volatility. Strong Buy.
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Send questions or comments to crista@cabotwealth.com.
Cabot Undervalued Stocks Advisor • 176 North Street, Salem, MA 01970 • https://cabotwealth.com//
YOUR NEXT CABOT UNDERVALUED STOCKS ADVISOR ISSUE IS SCHEDULED FOR December 5, 2017
Cabot Undervalued Stocks Advisor is published by Cabot Wealth Network, an independent publisher of investment advice. Neither Cabot Wealth Network nor its employees are compensated in any way by the companies whose stocks we recommend. Sources of information are believed to be reliable, but they are in no way guaranteed to be complete or without error. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Copyright © 2017 - COPYING AND/OR ELECTRONIC TRANSMISSION OF THIS NEWSLETTER IS A VIOLATION OF THE U.S. COPYRIGHT LAW. For the protection of our subscribers, if copyright laws are violated by any subscriber, the subscription will be terminated.
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