Latest news with #valueinvesting
Yahoo
3 days ago
- Business
- Yahoo
1 Value Stock on Our Buy List and 2 to Approach with Caution
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices. But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues. Identifying genuine bargains from value traps is something many investors struggle with, which is why we started StockStory - to help you find the best companies. Keeping that in mind, here is one value stock with strong fundamentals and two best left ignored. Forward P/E Ratio: 14.5x Synonymous with "dad shoe", Skechers (NYSE:SKX) is a footwear company renowned for its comfortable, stylish, and affordable shoes for all ages. Why Is SKX Risky? Constant currency revenue growth has disappointed over the past two years and shows demand was soft Estimated sales growth of 7.4% for the next 12 months implies demand will slow from its two-year trend Poor free cash flow margin of 4.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends Skechers is trading at $62.04 per share, or 14.5x forward P/E. Dive into our free research report to see why there are better opportunities than SKX. Forward P/E Ratio: 9.9x Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications. Why Are We Out on MHK? Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth ROIC of 3.5% reflects management's challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging Diminishing returns on capital from an already low starting point show that neither management's prior nor current bets are going as planned At $100.61 per share, Mohawk Industries trades at 9.9x forward P/E. Check out our free in-depth research report to learn more about why MHK doesn't pass our bar. Forward P/E Ratio: 3.7x Pioneering treatments for a devastating childhood muscle-wasting disease that primarily affects boys, Sarepta Therapeutics (NASDAQ:SRPT) develops and commercializes RNA-targeted therapies and gene therapies for rare genetic disorders, primarily Duchenne muscular dystrophy. Why Are We Bullish on SRPT? Annual revenue growth of 51.3% over the last two years was superb and indicates its market share increased during this cycle Earnings per share grew by 38.8% annually over the last five years, massively outpacing its peers Cash burn has decreased over the last five years, showing the company is becoming a more self-sustaining business Sarepta Therapeutics's stock price of $37.50 implies a valuation ratio of 3.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
Why Does Warren Buffett Love Coca-Cola Stock? He Gave a Very Clear Answer Which Every Investor Should Understand.
Buffett is known as a value investor, but choosing a great business is much more important to him than price. Coca-Cola has a well-established brand name that makes selling its products easy. It has a high return on capital, with a capital-light and agile business. 10 stocks we like better than Coca-Cola › Is Coca-Cola (NYSE: KO) Warren Buffett's favorite stock? It might be, and it's at least one of his favorites. He has praised it many times for a number of its features, and he's used it on several occasions to demonstrate what he thinks constitutes a great business. Most Buffett fans know that he has said that his favorite holding period is forever. But did you know that when he said that, he was talking about Coca-Cola stock? He's held true to that view, repeating several times that he would never sell Coca-Cola stock. He provided a clear and detailed explanation of what's so great about Coca-Cola at last month's annual shareholders' meeting, and every investor who wants to be successful should pay close attention to what he said. Berkshire Hathaway bought shares of Coca-Cola stock for the first time in 1988, making it his longest-held stock. In that year's shareholders' letter, Buffett wrote his famous quote: "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever." Buffett has called himself a "business-picker," not a "stock-picker." He tells investors to avoid short-term dips and gains and to focus on what makes a great business because a great business can withstand the test of time and will ultimately reward investors. As a Dividend King that's raised its dividend for 63 years consecutively through all kinds of conditions, Coca-Cola has certainly proven itself. This year, Buffett gave a long commentary on how Coca-Cola's model makes it such a fabulous business: It's always better to make a lot of money without putting up anything than it is to make a lot ofmoney by putting up a lot of money. And so a business that takes no capital to speak of, Coca-Cola, the finished product, which has gone through bottling companies and everything, that takes a lot of capital. But in terms of selling the syrup or the concentrate that goes to it, it doesn't take a lot of capital. So one is a fabulous business and one is a -- it depends where it is and everything like that. Coca-Cola is popular every place. But some places -- I mean, if you're in the bottling business, it costs real money. You have real trucks out there and you have all kinds of machinery and you have capital expenditures coming up. And we've got businesses that take very little capital that make really high returns on capital. Investors often think of Buffett as a value investor, but he's really the ultimate contrarian investor. If you take a look at the Berkshire Hathaway portfolio, it owns few so-called hot stocks and many stocks investors never talk about, such as Moody's and Chubb. These are cash-strong businesses with products that are always in demand, companies that are well-established and stable, and companies that don't need to put in a lot money to make a lot of money. Buffett talks about these qualities far more often than telling investors to get a good deal, recommending them to buy great companies at fair prices instead of vice versa. When explaining what makes a great business, Buffett has often focused on a company's return on capital. Being able to make a lot of money without having to invest a lot of money creates high profits and generates a robust, cash-generating business cycle. For Coca-Cola, that's tied into its brand name, which is such an important part of its moat, or competitive advantage. Coca-Cola is not in the bottling business; it makes syrups and concentrates that it sells to its bottling partners, a much less capital-intensive business. The bottling partners add water and other components to create the finished product. Most of its end-user products are made locally through this system. It sells its concentrates to local business partners who make the final products on-site and know people love Coke's beverages. Some final products are the cans and bottles sold in supermarkets and the like, and some final products are sold as drinks in dining establishments. The company has more than 200 bottling partners and calls this network the Coca-Cola system. CEO James Quincey has noted that because of the company's local production, Coke has less exposure to the tariff situation. The tariff program keeps changing, creating volatility for U.S. companies that rely on imports. But Coca-Cola has a concentrate facility in the U.S., and because it's such a large company with many parts -- it has 950 production facilities worldwide -- it has leverage with suppliers and the ability to change things to its benefit. This is the kind of resilience that Buffett prizes, and it comes from being agile instead of bogged down with capital-heavy assets. This is what Buffett means when he talks about great businesses, and these are the kinds of businesses that can last and create long-term shareholder value. Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Moody's. The Motley Fool has a disclosure policy. Why Does Warren Buffett Love Coca-Cola Stock? He Gave a Very Clear Answer Which Every Investor Should Understand. was originally published by The Motley Fool
Yahoo
5 days ago
- Business
- Yahoo
47% of Berkshire Hathaway's $276 Billion Warren Buffett-Led Portfolio Is Invested in 3 Dividend Stocks
Apple has developed an ecosystem of tech devices that its customers love and are willing to trade up to have. American Express has numerous earnings streams, and a younger cohort of cardholders is driving growth. Coca-Cola's business has proven resilient under pressure, and it reliably boosts its dividends. 10 stocks we like better than Apple › When Warren Buffett steps down as the CEO of Berkshire Hathaway at the end of this year, he will leave behind a legacy as perhaps the greatest investor of his time. As of the end of 2024, Berkshire Hathaway stock had gained an astounding 5,502,284% since Buffett took it over, and one way he turned it into a trillion-dollar company was by investing not in hot growth stocks, but strong value stocks. One feature Buffett loves in a stock is a dividend. Paying dividends suggests a company is mature, stable, and committed to rewarding shareholders -- all attributes that reinforce an investment thesis. Not all of the stocks in Berkshire Hathaway's $276 billion equity portfolio pay dividends, but most do. Its top three holdings -- Apple (NASDAQ: AAPL), American Express (NYSE: AXP), and Coca-Cola (NYSE: KO) -- all do, and together, they account for almost half of the portfolio. Let's consider what makes them such winners by Buffett's standards. Buffett only started a position in Apple in 2016, but it quickly moved into the top spot in the portfolio, reaching about 50% before Buffett and his team started selling some of it off last year. It now takes up a more reasonable amount of space, but it's still the largest position. Buffett said that Apple is an even better business than his perennial favorites, Coca-Cola and American Express, and he jested that CEO Tim Cook has made Berkshire Hathaway a lot more money than he ever has. Apple fans love its user-friendly, innovative, and tech-strong products, and it has created an ecosystem of devices and services that work together, generating loyalty and additional sales. Shoppers typically upgrade over time to newer versions of their favorite products, keeping them in the ecosystem. Like many tech giants, Apple is investing in artificial intelligence (AI), and it's developing its exclusive brand, Apple Intelligence, that offers a premium experience as part of the Apple package. Management expects AI to be an important growth driver for the next generation of Apple products. Investors have been worried about how tariffs will impact Apple's business, because iPhones are largely made in China, but management is working on long-term efforts to move more of its production to other countries to mitigate the impact of that part of the trade war. Apple's dividend doesn't have a particularly high yield -- at 0.5%, it's well below the average yield for the S&P 500. However, management has been hiking the payout slowly and steadily every year for more than a decade, demonstrating its commitment to rewarding shareholders. Buffett loves financial stocks, but American Express is his favorite. He appreciates its global brand and excellent management, and he tends to favor companies with varied earnings streams. As a bank that targets more prosperous individuals and small businesses, as well as a credit card network with fee-paying customers, American Express has several levers it can push to make money, and its excellent reputation and premium products attract affluent consumers whose finances tend to be more resilient even when the broader economy is under pressure. It has successfully captured a younger cohort of consumers who are driving its growth today and represent its future potential. Millennials and Gen Z customers accounted for 35% of its total U.S. consumer services billed business in the first quarter, and sales from that cohort increased by 14%, in comparison with a 7% overall gain. American Express continues to generate robust sales growth despite the challenging macroeconomic environment. Sales rose 8% year over year in the first quarter (on a currency-neutral basis) and earnings per share (EPS) rose 9% to $3.64. Delinquency ratios have stayed at 1.3%, with net write-offs at 2.1%.CEO Stephen Squeri credited that to the company's stellar risk management, which it has developed over its 150 years of operation, and its high-quality customers. American Express' dividend yields 1% at the current share price, and it's growing and reliable. Coca-Cola stock is currently the longest-tenured holding in Berkshire Hathaway's portfolio, and it's crushing the market this year. Investors consider it a safe stock because the company sells some of the world's favorite beverages, and people will continue to drink them even in times of economic uncertainty. With a portfolio of about 200 brands, it has something for everyone, although its core Coke-branded franchises drive its high sales. It has demonstrated strength over the past few years despite economic volatility, and after restructuring and slashing the brand portfolio from about 400 brands pre-pandemic, it has become more efficient and agile, and better able to weather the current storms. One factor that particularly favors Coca-Cola this year is that it has limited exposure to tariffs. Most of its products are produced and bottled in or near the countries in which they are sold, so it doesn't rely as much on imports or exports. CEO James Quincey said that the impact of new tariffs would be minimal and that the company has many ways to offset those higher costs. This is how investors can test the company's resilience, and it's a manifestation of what Buffett has long praised it for. The dividend is a major part of that, too. Coca-Cola is a Dividend King with 63 years of consecutive payout increases, a streak that's hard to top. At the current share price, the dividend yields 2.7% -- more than double the S&P 500's average yield. Coca-Cola isn't a growth stock, but it offers incredible value, reliable passive income, and protection for challenging times. Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 American Express is an advertising partner of Motley Fool Money. Jennifer Saibil has positions in American Express and Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. 47% of Berkshire Hathaway's $276 Billion Warren Buffett-Led Portfolio Is Invested in 3 Dividend Stocks was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Entrepreneur
26-05-2025
- Business
- Entrepreneur
Doubt the Market? 3 Stocks to Rideout Fear, Uncertainty and Doubt
While the market has rallied off its April lows, uncertainty continues to dominate investor sentiment. To avoid the volatility, consider these three stocks. This story originally appeared on MarketBeat Lately, the market has been delivering more plot twists to investors than a season of Severance. Solid tech earnings come in tandem with pulled guidance from public-facing companies like airlines and retailers. Economic data points to consumer and job market resilience, yet public sentiment continues to sour, and business surveys show inflation expectations continuing to creep higher. And of course, erratic tariff policy looms over stocks like a storm cloud, threatening to puncture profit margins across a wide range of companies and sectors. The S&P 500 has rallied more than 15% off its April 8 low following President Trump's reciprocal tariff pause, but uncertainty keeps the February all-time high at arm's length. When the future becomes cloudy, the search for growth must be balanced with security. Value investing pioneer Benjamin Graham emphasized the 'margin of safety' when picking stocks, which means searching for assets and trading for less than their intrinsic value. Searching for Safety Amidst Market Volatility Investors tend to flock to less volatile assets like blue-chip stocks when the only certainty is more uncertainty. Blue chips often meet Graham's margin of safety definition through their large market caps, strong sales growth, market dominance, and a history of dividend increases. Today, we'll look at three stocks built to ride out a storm of uncertainty. These stocks were chosen based on fundamental factors like valuation, earnings potential, and dividend strength, along with technical metrics like beta that measure volatility in relation to the broader market. If you remain unconvinced by this recent stock rally, consider these three companies for further inspection. Philip Morris International: Foundations for a Smoke-free Future [content-module:Forecast|NYSE:PM] Tobacco companies like Philip Morris International Inc. (NYSE: PM) are often popular stocks in uncertain periods thanks to their generous dividends and minimal volatility; PM fits both categories with a 3% yield and 0.52 beta. However, the firm is also ahead of the pack in future growth plans thanks to its priority on smokeless products. Philip Morris manufactures the popular ZYN nicotine pouches, along with other smokeless products like IQOS that heat tobacco to create an aerosol instead of burning it to produce smoke. Smokeless products are seen as a healthier alternative to cigarettes and vaporizers, and PM generated more than 40% of its Q1 2025 revenue from smokeless sources. ZYN was an especially hot seller, with shipments increasing by more than 50% in the quarter. The company aims to sell 100% smoke-free products by 2030. PM shares have jumped to new all-time highs in 2025, posting over 40% year-to-date gains. The valuation is loftier than that of competitors like Altria Group Inc. (NYSE: MO), but PM is better positioned for the smokeless transition ahead, which explains the stock's outperformance. PM expects earnings growth of more than 10% over the next 12 months (while MO's decline), and the dividend payout rate is projected to drop to a manageable 68% in 2026, likely preceding an 18th consecutive annual payout increase. Cardinal Health: A Bright Light in a Sunless Sector [content-module:Forecast|NYSE:CAH] The healthcare and medical sectors have been lagging behind the broader market for years, but Cardinal Health Inc. (NYSE: CAH) has been one of the few healthcare stocks that have shown strength. The stock punched through a new all-time high in early 2024 and continues to rally, with shares up more than 25% in 2025. Cardinal Health has a strong dividend with a DPR under 35% and a 29-year track record of payment increases, but the earnings strength is what has investors taking notice. The company reported fiscal Q3 2025 earnings earlier this month and posted a solid beat. EPS exceeded analyst estimates by 9% and showed year-over-year growth of over 13%. Revenue slightly missed expectations, but the firm raised full-year 2025 EPS guidance from $7.90 to a $8.05 to $8.15 range. Following the report, analysts at Morgan Stanley and Robert Baird boosted price targets to $166 and $170, which would indicate an upside potential of 9% to 16% from current levels. Alphabet Inc: Growth at a Value Price [content-module:Forecast|NYSE:CAH] Google-parent Alphabet Inc. (NASDAQ: GOOGL) might not be what investors first envision when thinking of blue chips, but it's not 2017 anymore, and Alphabet has an enticing valuation to match the growth potential of mega-cap tech. The stock trades at less than 20 times earnings, the first time since 2012 that GOOGL shares have traded with a sub-20 P/E. With a beta of 1.01, its volatility is nearly even to the S&P 500, and the company even paid its first dividend last year, indicating future emphasis on rewarding shareholders along with R/D reinvestments. Alphabet has been the subject of recent DOJ investigations, and comments by Apple's Eddy Cue about AI replacing traditional search have negatively impacted the stock this month. However, the company posted strong top and bottom-line earnings on April 25, and the average price target amongst analysts covering the stock is $199, representing potential upside of over 15%. Strong Earnings and Safe Dividends: An Elixir for Market Uncertainty Investing in blue chips is a great way to limit downside risk in volatile markets, but it's not a replacement for due diligence or personal risk tolerance analysis. Always research specific companies before buying shares to ensure they fit your investment plan. Use resources like MarketBeat's dividend calculator to aid your decision-making, and always consult an advisor before making any changes to your portfolio. Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now... See The Five Stocks Here
Yahoo
24-05-2025
- Business
- Yahoo
Top investor Bill Smead: 'This is maybe the most dangerous market of my career'
Bill Smead advises against investing in the S&P 500 as momentum fuels the rally. "I don't trust the S&P 500 farther than I can throw it," Smead told BI. Smead's fund has underperformed recently, but he's enjoyed long-term success. Bill Smead was driving around Northern Alabama on Thursday, pitching potential clients on why it's an optimal time to buy into his Smead Value Fund (SMVLX). He knows it may not be an easy sell. His energy and homebuilder holdings have gotten hammered recently, and the fund has had a rough 12 months. Since May last year, it's down 11% while the S&P 500 has risen 10%. But to Smead, that's the point. Every investment discipline has its hard times, and it's during those periods when investors make money. The opposite is also true, he argues: When an investment is soaring, the likelihood that the outperformance continues decreases. That's why Smead is warning against investing in the S&P 500, which remains just below its all-time highs. "Even though the index has been a really good idea from 1981 to now in a rising market, every investment discipline goes through cold stretches," Smead said. "The longer it goes on making people rich, the more likely it is for a catch-up period." One would probably expect Smead, a value manager, to question the merits of investing in a growth-led index like the S&P 500. But he has the long-term track record to lend him credibility — over the last 15 years, he's beaten 94% of similar funds, according to Morningstar data. In 2021, Smead crushed the market by returning 40% by betting heavily on unloved economic reopening stocks and ignoring pandemic darling tech stocks. Valuations also support Smead's concerns. The Shiller cyclically adjusted price-to-earnings ratio, which measures the current price of stocks relative to a 10-year rolling average of earnings, is at one of its highest-ever levels. According to a March report from Invesco, from 1983 to 2015, the Shiller CAPE ratio has explained 78% of the S&P 500's forward 10-year returns. When valuations have been high, returns over the next decade have been low, and vice versa. Smead also points to the momentum factor as a source for his unease about the S&P 500. Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management, noted earlier this year that while the S&P 500 rose 23% in 2024, the momentum factor was up 58%. That shows that a FOMO attitude is driving the market, she said, and prices are surging at a pace well ahead of earnings growth. Steve Sosnick, the chief strategist at Interactive Brokers, said in a client note on Thursday that we've seen "one of the most powerful momentum surges that I can remember" in the weeks since Trump's "Liberation Day" tariffs were paused. But market conditions have more or less been momentum-driven since the Great Recession stock-market bottom in 2009, Smead said. Eventually, he warns, things will turn in the other direction. "The momentum of the last 15 years is the biggest momentum market in US history — bigger than the roaring '20s, bigger than the go-go '60s, and bigger than the dot-com bubble in a wide variety of ways in measuring it," he said. "I don't trust the S&P 500 farther than I can throw it." "This is maybe the most dangerous market of my career, and that includes 1987's crash, that includes the savings and loan debacle market of the early '90s, that includes the 1999 to 2009 lost decade in the S&P 500 in the dot-com bubble," he continued. "This is the most difficult market of my 45 years." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
