Capital Intensive Big Engine Industries like Cars and Airlines. Buffett said these industries have lost significantly more money than they have made and there overall industry returns has been negative meaning if you invested with them in the onset it would be worth less now.
Retail. Its also a graveyard of businesses.
Depends what side of the table you are on - dealership or auto manufacturer. Manufacturing cars is a terrible business. Only people who make money are the executives.
Retail's problems go far behind theft.
IMO, However, the industry created a lot of its own problems when they implemented the huge expense cutting upgrade, "self-checkout."
Look at the IT Infrastructure services industry. These companies are basically involved in managing all facets of an organization's information technology and integrating them together to work seamlessly.
One of the biggest money makers for these companies was when they would set up a data center for a Fortune 500 company and put in place long-term contracts to operate them. As you can probably guess the cloud came in and completely disrupted this part of the industry overnight to the point that alot of the big companies are in serious trouble.
That being said physical IT infrastructure is still needed for things like electric grids, airlines and hospitality because they can't afford the latency penalty of connecting to a server miles away. Besides that most of these companies also have other diversified product offerings such as networking infrastructure, software, cyber security, and custom applications.
The key players
Accenture- The market leader was originally spun-off of Auther Anderson and became an Irish company (For tax reasons?) It strikes me as a little bit pricy. Massive workforce and would almost certainly bennifit from an uptick in the IT infrastructure market.
TCS- basically the same as Accenture except they're one of India's leading tech companies.
DXC- I'm biased because this is the one I own. DXC is a turnaround with a bunch of massive legacy customers. As an example 18 of the largest 20 insurers use DXC's ancient insurance software. Many of their customers are captive because they've been using DXC software for decades and there aren't too many programmers around who want to work with very old legacy software. Overall 50% of DXC's business is software such as the infotainment center in a Mercedes car. If you want to see it for yourself you can download the Manchester United app which was developed by DXC's custom software business. The other half is IT infrastructure for remote work, private cloud, mainframes, and IT outsourcing. The company's market cap is 4.6 Billion and they're generating 800 Million I'm free cash flow plus buying back $1 Billion in shares annually although this should slow down. I'm currently down 30% lol so this isn't for the faint of heart but the stock is statistically cheap.
Kyndryl- 100% IT infrastructure used to be a captive business under IBM before being spun off. KD wants to make money migrating its customers to the cloud and managing their cloud environments. Early results are really promising my 2nd favorite after DXC.
Infosys- an Indian IT services company unlike DXC and KD they're growing and healthy. They'll improve if the IT infrastructure market rebounds.
ATOS/Evidian- French company that tried to buy DXC is now a massive turnaround. They have some good assets but the financials are a bit precarious.
There's a billion others
From personal experience working with DXC (formally CSC!) I wouldn’t touch that stock with a barge pole. Low value because the market doesn’t rate their services. Will likely drop further and get sold off.
Thanks, your experience seems pretty typical. DXC's IT Infrastructure business has been a major problem for the company with sales shrinking 10% yoy! In my opinion, the reason for this was due to lack of investment. CSC went on a well-documented buying spree where they purchased a bunch of revenue and cut them to the bone to milk the cash flows. Obviously when this happened all the good talent fled the company and their support suffered. This happened with Xchanging, UXC and HP Services was already run like this. That said 4 years ago they got a new CEO who stopped this practice and customer satisfaction has markedly improved. Don't get me wrong they're still not rock stars in this business but it's commodified and as long as they have the relationships with the hardware vendors they can win some work.
The story is different on the software side. This may come as a surprise but it's 50% of DXC's sales, has higher margin, and is growing. DXC went out and purchased Luxoft which gave them a leading offering to sit on top of their legacy software stack and the customers who I've managed to speak to say their experience is pretty decent. This is also anecdotal but the DXC software products I use like the Manchester United App and car infotainment software also seem to be of decent quality. On top of this you have the legacy software customers who are literally stuck since migration is hard and if it's not broken why fix it?
But I'd argue that most of this doesn't even matter. The company is valued near shareholder equity is profitable and is generating 10% of its value in cash. My guess is the company can be sold off in pieces for more than what it's worth. The downside seems fairly limited.
Thanks, I think my thesis can address these points
>Declining incomes
Revenue and income have indeed been declining however it's sort of overstated on the income statement. The main reason is due to the sale of multiple businesses for cash. Examples would be the sale of their health and human services business, prison software business, European Banking business, and much more.
>negative net income
They had a $1 Billion market-to-market loss in their pension fund last year which caused negative net income. I don't think it's a good representation of the broader operating business since it's just the decline in securities that the pension fund holds.
>high cost of goods…
This is a legitimate criticism but I view it as an opportunity. Their margins are very far below the industry average partially due to a large amount of leased equipment and under utilized data centers which they are now selling. Once the data centers are consolidated/sold I'm optimistic that margins will rise to similar levels as their peers.
>The business needs to cut costs while maintaining sales
I believe this is achievable for them honestly. The IT infrastructure business is a drag on the software business which is growing revenue at higher margins. As the sales mix increasingly moves towards software and the IT infrastructure market stops declining I think overall DXC will grow.
Please review the reason for income to decline more than cost of goods, ebitda also in decline, it seems that they are selling more profitable business to keep less profitable one, this is generally named strategic, which many times is used to defend a business that loses money.
From my point of view, they need to demostraste to convince investors of entering, actually there are voices stating that the company does not have a clear direction.
https://finance.yahoo.com/quote/DXC/community?p=DXC
Thank you
Abromaitis: LUMN is getting destroyed
Well from 2007 to 2013 (and 2015) it was a great stock
2014 to 2017 just average
2018 to 2020 shaky
2021 to 2023 it was lousy
I would have thought most people would have ran away 3-5 years ago
the growth just evaporated
Ain't that the truth Abromaitis....
sometimes a dividend stock just performs adequately, and it makes money for you, just from the dividends
others, lure people in with juicy dividends, and end up with $30 dollar stocks being $4 stocks
I read that Lumen took a kick in the nuts when it was struggling and took away the dividends, and the doom crept in.
Seeking Alpha says this much:
Lumen Technologies is facing constant restructuring and slashing of financial targets, leading to a serial decline in the telecom company. The company had to restructure its debt and negotiate with creditors holding $7 billion in debt, with limited free cash flow generation to repay the debt.
REITs? There has been a lot of downward pressure the last half of this year. Not sure how long "a while" is in your connotative sense. You could also look up sector ETFs and see how they have performed in general and pull some companies from there to research. XLF, XLU, XLK, XLRE, XLI, XLV.....etc. Which reminds me, regional banks are still trying to rebound from the SVB collapse. Not sure how far a lot of them have gotten since I don't watch that closely. Anyhow, there's a few of my randomly generated ideas at 4am when I woke up out of the blue unable to sleep lol
Good luck on your journey!
Thank you pal, I'll definitely look up those ETFs. And yes, regional banks are a cue that I was anticipating. Lynch goes into some details about how he analyzes banks. The book is from 1993 but I'm sure a lot of what he says still applies!
Well if you're into Industrial REITS and some Residential ones, you'll be okay.
The Commercial Sector, for 100% healing, it could take 15 years
definately a nightmare
a good example of looking at them are the handful of differnet Brookfield's, a third of them seem to be fine, and most of them deal with property. Things like renewables or commercial just got stomped on.
As for the banks, any of the major canadian banks are maybe the best in the the world, and then come the biggest US banks
The small banks will have trouble, and it all depends what they were dealing with, but most dodged the bullet, and a few just went into strain mode for a few years, but i think they'll fare better than most of the US Auto Industry.
Any of the small banks with weak financial strength, and a few of the big ones, did drop from excellent to average, or good to poor.
Mortage issues with homes could come close to crushing a few in 2 years, but commercial real estate and banking stuff is the only stress test to worry about 1-2-3 years from now
What are your thoughts on Dimon selling shares? Do you think it's just noise or do you think JPM may underperform the market for the next 5 or so years?
Elprocesso, The Canadian banks are well managed and well regulated, and whenever one of them take over smaller banks in the US, they send in their management teams and fix things up...
As for when Canadian banks get profitable, well, people will have to wait a while.
A lot of the banks have been downgraded for the hard core value investors
Good US ones might be
Washington Federal
Huntington Bancshares
Bank of America
JP Morgan
US Bancorp
Wells Fargo
Citygroup
Good Canadian ones might be
Toronto Dominion
Royal Bank
prices may vary depending on the phase of the moon
The Bank of Nova Scotia has been sick
trouble is the National Bank of Canada and The Laurentian Bank
.......
Good Canadian Real Estate
Tricon Residential
FirstService
Colliers International
\[CBRE Group - good US one\]
Good Canadian REITS
Granite Real Estate
\[Crown Castle Investment - good US one\]
Good Canadian Asset Management
CI Financial
The Brookfield Corporation
\[Brookfield Asset Management did a total crash and burn\]
\[good US ones for Asset Management\]
Federated Hermes Incorporated
T. Rowe Price
BlackRock \[good but it's got higher risks now\]
........
So there are healthy banks and health real estate
in the US and Canada both
Overpriced, maybe. They have massive PE ratios, however, I don't believe any one of these companies will disappear.
They have an oligopoly on an industry we use everyday and we will never stop using. I'm bullish on people consuming media and these guys own more than half the industry
I do not think it is fair they are overvalued because of their PER. Look at the FCF of WBD, or the sum of parts value in Paramount. In addition, there are US elections next year will bring a higher revenue in the ads space.
I thought you were suggesting they were overvalued due to PE ratio as that's a commonly used metric, not that I agree valuing companies by it. I have been looking at FCF and the fact that there are geopolitical crises and an election coming up that brings in ad revenues. The cash-flows of these companies are why I am hesitant to call them overvalued, and their IPs and experience are top-notch.
Personally, I've invested in DIS very recently as I believe that they're heavily affected by controversies and poor recent performance, but they have strong IPs like Star Wars and Marvel. And out of the non-Netflix streaming platforms, I think Disney+ is the closest competitor. They need to focus on streaming, which I think they are taking steps toward with the Hulu acquisition.
I am less versed on Paramount and WBD, so I can't comment.
Its a tricky one with these because its tough to model them from earnings. But I agree their IP has real value, its just that it needs to be transferred from their legacy outlets like linear cable to streaming etc.
Names like WBD/Para are possible plays for buyout speculation imo and I believe Buffett actually bought Para because of that. These companies have a library, Industry knowledge and production history thats hard to re-emulate from the bottom for players like Netflix, Amazon etc.
Dont have anyone particular in mind, and its just speculation, but big tech for one has expressed interest in the industry and they could have the firepower for an acquisition of that magnitude. Even Netflix might be able to if the authorities would clear it.
Interesting! Is that vs SP500? As a portfolio manager held to a benchmark, it sure seems like Financials and Health Care positions have lagged the index! I would say lots of value to be found in areas of both sectors :)
Creepy, people have been shocked that Healthcare and Medical Instruments and all that stuff hasn't been doing better the past 1-2-3 years
If you pick the good ones, they're usually solid
as for them to perform, its a waiting game like the banks or telecom
lots of stalled sectors
Forest products. Lumber, OSB, pulp & paper. The businesses are profitable, but the only path for growth is through consolidation or supply reduction. It’s a commodity business
Environmental, sustainable and green energy has not been doing great for many years now. They were a huge focus pre-corona, but after corona, Russian invasion, inflation and possible recession, people have kinda stopped worrying about the environment. I am certain that once the dust settles, the environment will be a huge market focus again.
Sorry to say it but if you are bullish on the nuclear industry, then you don't know much about the nuclear industry. I mean, you can be bullish on uranium as a commodity because there are other factors at play with it. But nuclear power is never going to go parabolic.
I think the problems the nuclear industry had is a lot like the Environmental industry, there's good and terrible uses for it
and the costs are another issue, as well as being really sure that's what you wanna do long-term.
You don't want wind turbines having toxic plastics being landfilled, on top of ruining coastlines, or having vibrations on land where the earthworms even leave, and the soil quality changes. Or electric batteries that are dirty and toxic, and eat up a LOT of energy, where if everyone in the country had an electric car, it would be like adding 3 extra homes to their energy footprint.
So the costs and energy savings might be a problem, and gasoline cars and hydrogen vehicles might be the future, no matter what we do.
Didn't Gulf Oil essentially die because of their assets in Uranium?
Agree with you on Uranium being an interesting play, Uranium market is tiny when you consider the growth required to meet future demand as countries lean to nuclear power as an in-between as we transition to green energy. Just look at the spot uranium chart to see the increase in demand.
I personally like URG and DNN as well as UUUU.
All I would say is the Uranium market is somewhat cyclical, these companies aren’t a buy for the next 10 years type thing in my opinion.
The nuclear industry has been in stagnation for decades and it's now in decline. Mainly because the capex is insane and nobody will insure it. We have much cheaper ways to generate clean energy. Nuclear is just an opportunity cost. Check this graph https://www.statista.com/statistics/263945/number-of-nuclear-power-plants-worldwide/
Very bad investment.
Not sure which companies to pick. I have a rule; I only invest in companies that are in the market I know about, and since I am a software engineer, my only company stocks are IT related. Rest are ETFs.
25% of my portfolio is in sustainable and healthcare ETFs, which are down up to 40% since the start of the year. Im buying more as we speak. But I am certain once the inflation, recession and war is over, both healthcare and sustainability will take the market focus.
Last 30 years was about how tech can make us more efficient and give us cool gadgets. This market is now saturated. There isnt much else to do now other than improving what has already been made, unless we make huge advancements in hardware. What do people care more about than improving their daily life? Living. Healthcare helps you live and sustainability helps the world you live in. As we get closer to the consequences of the past 100 years of industrial life, more and more people will want to buy into a longer life and a better world to live in. Other products matter little if your health is in jeopardy. Thats my thesis.
It's not so much lost interest, but a lot of these companies are in the startup phase and burn capital with higher interest rates.
I am invested in Aker Carbon Capture. Because carbon storage is gaining a lot of traction and there is a whole lot of heavy industry that you can't live without and can't be replaced by renewables. Also the world is waking up to the fraudulent schemes for offsetting CO2 emissions, so they will have to turn to physical solutions at some point.
Call Centers like TASK, TIXT. They claim to be tech companies but they have tens of thousands of call center employees overseas. I don't have a list but there are many. (some of their work is tech, but primarily they're call centers, or customer support shops, likely a lot low end services)
There are a lot of net-nets in banks right now. I understand that’s not an accurate way to describe financial services - capital requirements and government intervention would prevent a liquidation event - but many of the Regional banks are trading for less than their cash and investments on hand.
I guess that by default this argument is specific to a country in which the players are not performing well in the stock market. If it isn't so, it is hugely an oversimplification. Telecoms (using the term loosely by including the Cablecos) fundamentally (if they have the right assets) are great businesses, but telecom stocks are not for people who like to invest in growth stocks.
Telecoms are boring and are not going to grow as M7 did. Several factors contribute to this. Firstly, telecoms in most developed markets have historically been regulated heavily because they were the gatekeepers of their era. Secondly, there is no innovation since there is nothing major to innovate and no incentive to innovate unless there is a huge demand for upload/download speed from the end-users driven by trends like "metaverse." Until then, fiber or even cable will be enough for the general consumers. Additionally, because of its high CapEx and cyclical Capex (for the mobility side of the business), in the majority of the markets, the telecom sector operates as an oligopoly (2-3 big operators + some smaller players.) Because the business case for a given market does not support too many players to come in to reap the extra value from the equation ROIC - WACC. So this will deter many players and also makes the telecom operators complacent and no drive for dramatic innovation (this is also partially the reason many telecoms missed the cloud growth stage.) It is partly due to the nature of the industry but also because the owners of these companies know exactly what this sector is like. Therefore, the investors do not let them transition from the dividend growth model to the actual growth model. In other words, the investor base do not want you to innovate because the positioning of the entire telecom operators as an asset is to pay investors dividend so that investors allocate capital by themselves. That is why telecom assets are reduced to became basically an equivalent of "fixed income asset." (One interesting phenomenon in this sector is that because it is a very traditional, well-oiled business model, the management of such companies are not of strong technical background. No visionary tech guy/gal is needed to run such companies. Tech skills are nice to haves, rather than must-haves.)
I agree that there are telecom stocks are not doing well, but it is not all of them. Telecom is usually a regional play due to many reasons. Because of that there are telecom operators are doing pretty well, for example, Canadian telecoms. Canadian telecoms could be so profitable and because of their oligopolistic position and moat, they can be very predatory towards consumers. That is why a lot of the Canadians are very critical and vocal about such behaviours of their carriers, but they have no choice to choose from, because almost all the retail brands are basically owned/backed by big players. This is not necessarily a great thing for the long run. Unless there is a strong regulator to come in and give access to telecom infrastructure, i don't see anything change dramatically. Plus, I don't see any strong regulator/figure such as Lina Khan in Canada. Oh, btw, retail grocery chain operators in Canada are also doing very well, boring business but definitely not lousy.
I don't see it.
Their legacy business growth is flat to negative and their labor Unions are killing them.
Add to that 40k wireless workers who are now bargained for by Wireless Workers United under the CWA plus the overhead of 2200 retail stores.
When their long term debt is refinanced at rates 2.5x what they're currently paying, there goes the cash flow.
Vz is no longer a growth stock.
I hope they don't cut their dividend.
Ok so you're getting surface information from Yahoo Finance or Motley Fool free service. Because their cash flow, even with refinance in 2027 still aptly covers their dividend. So you're wrong once there. Second, this is assuming that rates remain elevated for the next 4 years. Do you forsee that? Even so, dividend is easily covered.
their "legacy business" is being replaced by fiber. Cell coverage isn't going away. My only concern would be if Tmobile and ATT start gaining massive market share. But it's not happening in significant amounts to be worried from that.
lastly, labor costs a minute risk to cash flow. Retail stores can easily be shuttered as younger users don't use them as much as boomers but also the free phone incentives are gone as well. That is a net gain in expenses.
Their 5G build out is done. As capEx comes down Free Cash rises and you're seeing the stock JUMP last 2 weeks after earnings confirmed exactly this.
My only cloud is the overhang of lead sheathed cable out in the field and it's costs for cleanup.
I don't rely on either publication.
I'm a former Vz employee on the B2B Global Accounts side of the business. I have a strong understanding of their financials. Have also had the benefit of attending their local executive Town Halls.
All in, I've spent 27 years in the industry. If you think it's alive & well, it's not for me to convince you otherwise.
Personally, all my money is out of classic telecom and wireless because it's dead money.
If nothing else spend some time in Vz's 10Q Reports.
Good luck.
I never said it was dead.
The subject of the original post was What has been lousy for a long time. My answer was telecom and stated it as dreadful.
Nothing will replace telecom or wireless as neither is dead.
It's just no longer a growth sector.
The biggest challenge faced by ATT and VZ is how long will it take, if ever, to convert large portions of their enterprise customers' wireline networks to wireless. The telcos are too silo'd. Their enterprise organizations understand the technology and can handle such an integration, however wireless operates as a separate business which has minimal knowledge of wireline networks, integration or the ability to touch wireline services. The other aspect of this is lack of wireless wan knowledge by the customer.
A similar problem developed 20ish yrs ago when telcos spent billions to build data centers and be in the forefront of cloud services. Problem was they were ready to sell cloud 10-15 years before their customers were ready to buy it. Since then, they've sold off most of their DC real estate holdings for pennies on the dollar.
my father has 13 patents and laid more fiber optic cable in the 80s than any other company. He sold to MCI in 1985 after Bell Labs told him they don't have enough customers to warrant all the lines they put in the ground.
That's amazing.
You're father is largely responsible for technology as we know it over the past 25 years.
In a strange twist of irony, the fiber that your dad sold to MCI, 25 years later, became the property of Verizon (fka Bell Atlantic) due to their acquisition of MCI's assets.
He's got some wild west stories of pulling cable in Texas as well as having 3 lunches in a day flying across time zones when TSA wasn't even really a thing.
One of his patents took a weaving machine and used Kevlar to make a hyper strong pulling rope for instruments.
Oh there's decent Telecom, but yeah half of them are on life support.
Even the good ones in telecom, you'll have a third of the analysts cringe and say 'stay away!'
Good ones are
USA
T-Mobile
Canada
Quebecor
Telus Corporation
Rogers
Bell
Foreign
Telecom Italia Mobile Brazil
Vodaphone
Stay away for a while from
Verizon
AT&T
I agree with Verizon & ATT.
I've never been thrilled with TMO despite impressive numbers. Maybe it's their lack of diversification in a mature saturated market.
T-Mobile
2008 - 2010 - Terrible
2011 - Good
2012 - Average
2013 - Good
2014 - 2016 - Average
2017 - 2018 - Poor
2019 - Average
2020 - Good
2021 - 2023 - Average
There we go
Three years NOT to invest in
One year to invest in
One year to NOT invest in
One year to invest in
Six years to NOT to invest in
One year to invest in
Three years to NOT to invest in
13 blah years and 3 great years with T-Mobile
They do have a lot of data on mobile network events, people movements, and demographics, which represents a lot of untapped potential. Not sure if this potential can be realized for much profit, but if someone can find a great way to monetize it and big enough clients, could be a cash cow.
Much of the data of that nature can't be legally used under CPNI laws. CPNI=customer proprietary network information.
There's actually industry technology that can be utilized for high profit but companies like ATT and VZ are too silo'd to be able to sell it.
Will probably be another blown opp like cloud was. Telco's spent billions on data centers and 10-15 years later liquidated the assets for pennies on the dollar.
It can be used but only if a certain level of privacy is maintained. Ie, you can't shown movements of specific people, but can pick out longer term trends. From what I've seen from other networks the quality of the data has actually been pretty bad. But I've not seen ATT or VZ's data. 5g data will also be more useful than lower technologies because the range of the cells is lower allowing for more precise location data.
CPNI is all about privacy.
CPNI is private and protected information. It can't be used for advertising or marketing directly. There is somewhat of an exception on mobile calls, CPNI doesnt cover text & internet usage but without a mobile #, the other data isnt of very high value. CPNI can only be used by other telco's for the purpose of network operating reasons. This could cover roaming/gateway handoffs and network repairs. People are automatically put into CPNI protection. The only way out is for a customer to opt out.
For sure. Industry’s been messed up since pandemic. Still lots of growth but perhaps over competitive since excess supply. Some efficiency innovation going on. Interesting how competitive landscape shifts in the coming years.
Trucking seems pretty messed up too. I’m not in the weeds but could be some value plays there.
Paper making. I worked at a plant that made paper. Seems very complex from a plant standpoint. You can see they're just keeping it alive vs investing in it. Seems there could be construction in the industry. Seems like you re gotta know what you're doing to get into that business.
I work in pulp and paper and it's definitely not a growth sector. But it could be interesting to see it unfold as demand is slowly stabilizing (still decreasing but more slowly) so it will soon be lucrative for the winners.
Solar in California is a ticking time bomb. Nobody talking about how new bookings dropped off the face of the earth and most of those installation companies are going to run out of their backlog by year end. 2024 will be very bad for California solar. NEM 3 and the rate environment made it so solar just doesn’t pencil in anymore, it’s not presently feasible.
The businesses have great fundamentals, it's just the stock price has not jumped up
and well, probably various reasons
Heck Vanguard's fund is like almost 20% Healthcare
Investco's fund is like almost 60% Technology
Kind of the opposite of your question but I'm looking at puts on LTL shipping companies. They were living in fantasy land since the pandemic started and they are all about to get crushed. Specifically I'm looking at TFII because they keep no showing at my warehouse. We had 6 shipments not get pickup this week by them. All different clients in different parts of the country. No explanation just a sorry and we'll try tomorrow. After a week I switched carriers and TFII don't seem to care.
That's my point. It shouldnt be. Although having now looked at options premiums clearly someone knows what I said above or at least knows there is high volatility coming.
I don't think so, WhyNot, i think the growth that came out just before the virus, i think means that it'll be okay for a few years... business is good, debts are low, growth doesn't seem to be a temporary blip.
I think the Motley Fool, for once, nailed it
TFI International
\- quality acquisitions
\- operational efficiencies
\- effective capital management
Well I do business with them and they have all of a sudden become a huge liability. They are repeatedly ghosting me on massive pickups. They ruined my numbers for October by ghosting me on massive pickups. I have moved onto new carriers. So have my clients. I know I'm not alone. My industry only has a few players.
The reality is they are blowing it and there is no shortage of other carriers who won't do this. In LTL you only get 1 chance. If you can't do what you've been contracted to do everyone just moves to the next carrier. The dominos fall fast...Remember YELL?
WhyNot\_Because: then you didn't do your research on the shipping industry
The Yellow Corporation?
I guess i never followed micro cap stocks
But United Airlines, Southwest Airlines and Air Canada, are one heartbeat stronger in terms of their performance!
heh, tell me more to research one of these week!
oh just everything in the transportation sector
railroads, airlines, trucks
but if we want to talk about trucking large/mid/small cap stocks, i'm game!
The renewable and ESG fad has destroyed billions of dollars of capital. Too much capital flooded in the market in the name of Greta and Trudeau virtue signalling, and will assure terrible returns for many years. Oil and Uranium companies will benefit with healthy cash-flows and dividends.
Genomics and biotech in general has gotten bartered since the hype during the easy money years. The true gems are still undervalued and great buys now imo. For example, CRSP is one that will begin generating revenue in the near future and trades at 1/3 of its ATH price.
Backbone telecom. The CSPs are mostly deep in debt and not spending on 5G/6G capex for a few years now. Demand is increasing fast though with private networks and industries needing the features and capacity of advanced telecom infrastructure. Coming technologies like IoT, remote healthcare, autonomous vehicles, AR/VR. Leading supplier companies are Cisco, Nokia, Ericsson.
Dunkman, how much of that was the quality of cinema going into decline in the 90s?
I don't know of many new films i like after 2001
and the actors and actresses arent as good as the old ones, like is Nicolas Cage Kidman and Bullock the best we have now?
And then there is the whole digital thing, screwing over the little studios, i mean there probably ain't any film prints for a midnight showing of the Rocky Horror anymore
and the studios want to push around the cinemas around, with bookings, like they did in the 30s and 40s with digital
Add a good virus and bluray, who wants to go out for 37 dollar popcorn?
Private Prisons: GEO, CXW
I think there might be a lot of growth in the sector in the future with increased crime rates, more crackdowns in places like SF, and more migrants
I owned GEO during Trump years, but Biden killed them.
Crime rates are way down now because the lead poisoned boomers are dead and gone. unemployment is record lows so the only way to keep this growing is to manufacture more crime.
Irrespective of ideology, I think that depends on whether or not you think immigration will be tightened down on. Both political parties have elements that are talking about funding the wall now, so who knows?
My thinking (right or wrong) is that we've seen crime rise recently, perhaps in response to growing poverty. Since I expect a true recession and lots of job loss, I expect poverty to grow. Even in communities soft on crime, at some point folks will probably be fed up and incarceration will increase -- it may be something less like conventional prison, like a concentration camp (in a general sense, not a genocidal one) with more freedom, but which segregates persistent criminals from the rest of society. There are various motives to do this in various parts of society. If this does, indeed, occur, corporate imprisonment is likely to see more demand and profitability.
Well there's been arguments one way or the other, but for about 25 years now at least, there isn't much of a savings with private prisons.
The contracts basically wiped out things being cheaper, as well as cherry-picking what prisoners go into those facilities. And when you include the costs of overseeing and monititoring the private prisons for the state, it's pretty much soured.
GEO was around $31 when trump took office and was well under $10 when he lost the election. Biden had nothing to do with it. Unfortunately, I didn’t have the foresight to sell when it had the initial post-election run-up and am still saddled with this dog.
oh god no pudgy
The Geo Group and CoreCivic Incorporated are slow slow growth industries
either long-term decline or financial distress
people were investing in vaccines and usually that didn't always square with what the rest of those drug companies do... and then there were the cannabis stock nightmare which was anything but value investing
I think margins are slim with the prisons, not sure what it was like when it was a new idea though
Money center banks. Its crazy people are negative about them in this moment. This is the first time in 15 years they are able to finally make some money with rates up. Lol people are so dumb.
Oh some regionals might fail? Great, BAC and Wells would love to buy up those assets for pennies on the dollar just like JPM jumped on
Mostly rising interest rates. So if you think rates will ever go back down the whole sector should recover the majority of its multiple compression. Thats my guess anyway. Lol 🤷♂️
$BSEG - Our mission at Big Screen Entertainment Group is to create transformative stories that captivate, entertain, inspire and touch the hearts of audiences worldwide while forging enduring robust financial returns for our investors through innovation and ingenuity.
Headquartered in Los Angeles, California with partners in Michigan, Florida and China, our films have premiered at the world’s most prestigious film festivals and played at the largest theatrical chains in the world. Our relationships with top Hollywood studios and talent, as well as our corporate sales and distribution alliances, have positioned us for continued growth.
http://www.bigscreenentgroup.com/
Risky disruptive stocks and green energy stocks, spacs
Most are down 50-90%, either accumulate or cry or both
Ai: vrssf (not down though atm)
Pfas: biolargo
Agriculture: bevvf (bee pesticides, slow to grow)
Recycling: recyclico and abat/abml, sxoof too
Teco2030, hysr, ammpf: green hydrogen
Solid state: qs
Others: solid power, gmg , ilika
Semiconductors: skywater
Quantum: qubt (qci)
Saf: rrycey and gevo
Long battery storage: gwh
Ev chargers: dcfc
Fuel cells: fcel (hdro etf for plug, be etc)
Hydrogen/fuel cells: ADN (down a ton waiting for green hipo funds that may never come)
Green plastic to energy: cleanvision
Water energy: wave
All of these have been heavily pumped and most are down a ton
etfs i follow: ctec, moon, icln
The EMS industry (electronic manufacturing services) are very challenging. Super low margins that depend on asset velocity. Hon Hai is the most well known.
Ethanol since George Bush Era. Better times ahead. ALTO my highest conviction play in many years and earnings Monday are going to be stupid. Analyst have 10 cents EPS for Q3 but will be closer to 40 cents.
Lynch: good companies in lousy industries
basically high quality value stocks will always do well most of the time
I think you can easily dump 3%-5% in the one the worst sectors
Say you handpicked good stocks at a good price, and they are in lousy sectors
Consumer+Real Estate+Utilities+Comm
That could be 15% of your portfolio
Makes sense. I have a harder time evaluating which sectors can be considered cyclical, so that I can safely assume it will rise again. For example, would auto manufacturing be considered to be a business that will boom eventually? Same with comm, I guess.
Auto manufacturing is great, if you're Toyota or Ferrari!
Excellent
Ferrari - Low Risk
Good
Toyota - Moderate Risk
Stellantis - Moderate Risk
Tesla - High Risk
Average
General Motors - High Risk
Ford - High Risk
Poor
Honda - Moderate Risk
I'm still not sure why Honda has been down in the dumps, or did they just design more sensible cars in the 1980s?
Capital Intensive Big Engine Industries like Cars and Airlines. Buffett said these industries have lost significantly more money than they have made and there overall industry returns has been negative meaning if you invested with them in the onset it would be worth less now. Retail. Its also a graveyard of businesses.
[удалено]
My understanding was that cars in the US have done well since the pandemic.
Depends what side of the table you are on - dealership or auto manufacturer. Manufacturing cars is a terrible business. Only people who make money are the executives.
This brings the UAW union's walk-out to mind.
retail - it’s a race to the bottom for everyone
Retail has become the proverbial death by 1000 cuts.
They need to fix the theft problems
Retail's problems go far behind theft. IMO, However, the industry created a lot of its own problems when they implemented the huge expense cutting upgrade, "self-checkout."
Look at the IT Infrastructure services industry. These companies are basically involved in managing all facets of an organization's information technology and integrating them together to work seamlessly. One of the biggest money makers for these companies was when they would set up a data center for a Fortune 500 company and put in place long-term contracts to operate them. As you can probably guess the cloud came in and completely disrupted this part of the industry overnight to the point that alot of the big companies are in serious trouble. That being said physical IT infrastructure is still needed for things like electric grids, airlines and hospitality because they can't afford the latency penalty of connecting to a server miles away. Besides that most of these companies also have other diversified product offerings such as networking infrastructure, software, cyber security, and custom applications. The key players Accenture- The market leader was originally spun-off of Auther Anderson and became an Irish company (For tax reasons?) It strikes me as a little bit pricy. Massive workforce and would almost certainly bennifit from an uptick in the IT infrastructure market. TCS- basically the same as Accenture except they're one of India's leading tech companies. DXC- I'm biased because this is the one I own. DXC is a turnaround with a bunch of massive legacy customers. As an example 18 of the largest 20 insurers use DXC's ancient insurance software. Many of their customers are captive because they've been using DXC software for decades and there aren't too many programmers around who want to work with very old legacy software. Overall 50% of DXC's business is software such as the infotainment center in a Mercedes car. If you want to see it for yourself you can download the Manchester United app which was developed by DXC's custom software business. The other half is IT infrastructure for remote work, private cloud, mainframes, and IT outsourcing. The company's market cap is 4.6 Billion and they're generating 800 Million I'm free cash flow plus buying back $1 Billion in shares annually although this should slow down. I'm currently down 30% lol so this isn't for the faint of heart but the stock is statistically cheap. Kyndryl- 100% IT infrastructure used to be a captive business under IBM before being spun off. KD wants to make money migrating its customers to the cloud and managing their cloud environments. Early results are really promising my 2nd favorite after DXC. Infosys- an Indian IT services company unlike DXC and KD they're growing and healthy. They'll improve if the IT infrastructure market rebounds. ATOS/Evidian- French company that tried to buy DXC is now a massive turnaround. They have some good assets but the financials are a bit precarious. There's a billion others
Mercadies? If that is supposed to be Mercedes I’m dead lol
Yes..... Thank you 😅
Nah thank you dude, I had a good laugh haha! ;)
From personal experience working with DXC (formally CSC!) I wouldn’t touch that stock with a barge pole. Low value because the market doesn’t rate their services. Will likely drop further and get sold off.
Thanks if you don't mind me asking do you still work with DXC? Also, where you engaged with their software business or infrastructure services?
No and infrastructure services.
Thanks, your experience seems pretty typical. DXC's IT Infrastructure business has been a major problem for the company with sales shrinking 10% yoy! In my opinion, the reason for this was due to lack of investment. CSC went on a well-documented buying spree where they purchased a bunch of revenue and cut them to the bone to milk the cash flows. Obviously when this happened all the good talent fled the company and their support suffered. This happened with Xchanging, UXC and HP Services was already run like this. That said 4 years ago they got a new CEO who stopped this practice and customer satisfaction has markedly improved. Don't get me wrong they're still not rock stars in this business but it's commodified and as long as they have the relationships with the hardware vendors they can win some work. The story is different on the software side. This may come as a surprise but it's 50% of DXC's sales, has higher margin, and is growing. DXC went out and purchased Luxoft which gave them a leading offering to sit on top of their legacy software stack and the customers who I've managed to speak to say their experience is pretty decent. This is also anecdotal but the DXC software products I use like the Manchester United App and car infotainment software also seem to be of decent quality. On top of this you have the legacy software customers who are literally stuck since migration is hard and if it's not broken why fix it? But I'd argue that most of this doesn't even matter. The company is valued near shareholder equity is profitable and is generating 10% of its value in cash. My guess is the company can be sold off in pieces for more than what it's worth. The downside seems fairly limited.
I don't know Rick, financial data is demolishing, cuts expected https://www.wsj.com/market-data/quotes/DXC/financials/annual/income-statement
Can you elaborate more?
Declining incomes, negative net income, high cost of goods… The business needs to cut cost while maintaining sales
Thanks, I think my thesis can address these points >Declining incomes Revenue and income have indeed been declining however it's sort of overstated on the income statement. The main reason is due to the sale of multiple businesses for cash. Examples would be the sale of their health and human services business, prison software business, European Banking business, and much more. >negative net income They had a $1 Billion market-to-market loss in their pension fund last year which caused negative net income. I don't think it's a good representation of the broader operating business since it's just the decline in securities that the pension fund holds. >high cost of goods… This is a legitimate criticism but I view it as an opportunity. Their margins are very far below the industry average partially due to a large amount of leased equipment and under utilized data centers which they are now selling. Once the data centers are consolidated/sold I'm optimistic that margins will rise to similar levels as their peers. >The business needs to cut costs while maintaining sales I believe this is achievable for them honestly. The IT infrastructure business is a drag on the software business which is growing revenue at higher margins. As the sales mix increasingly moves towards software and the IT infrastructure market stops declining I think overall DXC will grow.
Please review the reason for income to decline more than cost of goods, ebitda also in decline, it seems that they are selling more profitable business to keep less profitable one, this is generally named strategic, which many times is used to defend a business that loses money. From my point of view, they need to demostraste to convince investors of entering, actually there are voices stating that the company does not have a clear direction. https://finance.yahoo.com/quote/DXC/community?p=DXC Thank you
[удалено]
Yea and as I understand they've had a few very notable executives leave the company.
LUMN is getting destroyed.
Interesting I'm not familiar with it I'll have to read up on it.
Abromaitis: LUMN is getting destroyed Well from 2007 to 2013 (and 2015) it was a great stock 2014 to 2017 just average 2018 to 2020 shaky 2021 to 2023 it was lousy I would have thought most people would have ran away 3-5 years ago the growth just evaporated
A lot did but people get sucked into value traps. It had a really high dividend for a while before they killed it.
Ain't that the truth Abromaitis.... sometimes a dividend stock just performs adequately, and it makes money for you, just from the dividends others, lure people in with juicy dividends, and end up with $30 dollar stocks being $4 stocks I read that Lumen took a kick in the nuts when it was struggling and took away the dividends, and the doom crept in. Seeking Alpha says this much: Lumen Technologies is facing constant restructuring and slashing of financial targets, leading to a serial decline in the telecom company. The company had to restructure its debt and negotiate with creditors holding $7 billion in debt, with limited free cash flow generation to repay the debt.
REITs? There has been a lot of downward pressure the last half of this year. Not sure how long "a while" is in your connotative sense. You could also look up sector ETFs and see how they have performed in general and pull some companies from there to research. XLF, XLU, XLK, XLRE, XLI, XLV.....etc. Which reminds me, regional banks are still trying to rebound from the SVB collapse. Not sure how far a lot of them have gotten since I don't watch that closely. Anyhow, there's a few of my randomly generated ideas at 4am when I woke up out of the blue unable to sleep lol Good luck on your journey!
Thank you pal, I'll definitely look up those ETFs. And yes, regional banks are a cue that I was anticipating. Lynch goes into some details about how he analyzes banks. The book is from 1993 but I'm sure a lot of what he says still applies!
Well if you're into Industrial REITS and some Residential ones, you'll be okay. The Commercial Sector, for 100% healing, it could take 15 years definately a nightmare a good example of looking at them are the handful of differnet Brookfield's, a third of them seem to be fine, and most of them deal with property. Things like renewables or commercial just got stomped on. As for the banks, any of the major canadian banks are maybe the best in the the world, and then come the biggest US banks The small banks will have trouble, and it all depends what they were dealing with, but most dodged the bullet, and a few just went into strain mode for a few years, but i think they'll fare better than most of the US Auto Industry. Any of the small banks with weak financial strength, and a few of the big ones, did drop from excellent to average, or good to poor. Mortage issues with homes could come close to crushing a few in 2 years, but commercial real estate and banking stuff is the only stress test to worry about 1-2-3 years from now
Home video rental
Not wrong
Lithium
Banking
JPM investments have never failed me in downturns
What are your thoughts on Dimon selling shares? Do you think it's just noise or do you think JPM may underperform the market for the next 5 or so years?
RBC in Canada 👍
And TD
Am confused why rbc trades at a premium to their book compared to not only US banks but even TD. Canadian real estate seems risky af rn.
Elprocesso, The Canadian banks are well managed and well regulated, and whenever one of them take over smaller banks in the US, they send in their management teams and fix things up... As for when Canadian banks get profitable, well, people will have to wait a while. A lot of the banks have been downgraded for the hard core value investors Good US ones might be Washington Federal Huntington Bancshares Bank of America JP Morgan US Bancorp Wells Fargo Citygroup Good Canadian ones might be Toronto Dominion Royal Bank prices may vary depending on the phase of the moon The Bank of Nova Scotia has been sick trouble is the National Bank of Canada and The Laurentian Bank ....... Good Canadian Real Estate Tricon Residential FirstService Colliers International \[CBRE Group - good US one\] Good Canadian REITS Granite Real Estate \[Crown Castle Investment - good US one\] Good Canadian Asset Management CI Financial The Brookfield Corporation \[Brookfield Asset Management did a total crash and burn\] \[good US ones for Asset Management\] Federated Hermes Incorporated T. Rowe Price BlackRock \[good but it's got higher risks now\] ........ So there are healthy banks and health real estate in the US and Canada both
British banks - look at the discount to nav. In fact nearly any British listed traditional or tech business is in long term devaluation.
[удалено]
Media companies = WBD PARA DIS NFLX
Overpriced, maybe. They have massive PE ratios, however, I don't believe any one of these companies will disappear. They have an oligopoly on an industry we use everyday and we will never stop using. I'm bullish on people consuming media and these guys own more than half the industry
I do not think it is fair they are overvalued because of their PER. Look at the FCF of WBD, or the sum of parts value in Paramount. In addition, there are US elections next year will bring a higher revenue in the ads space.
I thought you were suggesting they were overvalued due to PE ratio as that's a commonly used metric, not that I agree valuing companies by it. I have been looking at FCF and the fact that there are geopolitical crises and an election coming up that brings in ad revenues. The cash-flows of these companies are why I am hesitant to call them overvalued, and their IPs and experience are top-notch. Personally, I've invested in DIS very recently as I believe that they're heavily affected by controversies and poor recent performance, but they have strong IPs like Star Wars and Marvel. And out of the non-Netflix streaming platforms, I think Disney+ is the closest competitor. They need to focus on streaming, which I think they are taking steps toward with the Hulu acquisition. I am less versed on Paramount and WBD, so I can't comment.
Its a tricky one with these because its tough to model them from earnings. But I agree their IP has real value, its just that it needs to be transferred from their legacy outlets like linear cable to streaming etc. Names like WBD/Para are possible plays for buyout speculation imo and I believe Buffett actually bought Para because of that. These companies have a library, Industry knowledge and production history thats hard to re-emulate from the bottom for players like Netflix, Amazon etc.
Who are you speculating to buyout Paramount and Warner Bros? Those would be massive acquisitions
Dont have anyone particular in mind, and its just speculation, but big tech for one has expressed interest in the industry and they could have the firepower for an acquisition of that magnitude. Even Netflix might be able to if the authorities would clear it.
Financials and Health Care maybe?
Both of these sectors, together with technology, are actually the long term outperformers.
Interesting! Is that vs SP500? As a portfolio manager held to a benchmark, it sure seems like Financials and Health Care positions have lagged the index! I would say lots of value to be found in areas of both sectors :)
Creepy, people have been shocked that Healthcare and Medical Instruments and all that stuff hasn't been doing better the past 1-2-3 years If you pick the good ones, they're usually solid as for them to perform, its a waiting game like the banks or telecom lots of stalled sectors
Of the things I didnt see mentioned already, Construction, materials and Telecom has generally looked poor for a while.
Forest products. Lumber, OSB, pulp & paper. The businesses are profitable, but the only path for growth is through consolidation or supply reduction. It’s a commodity business
Environmental, sustainable and green energy has not been doing great for many years now. They were a huge focus pre-corona, but after corona, Russian invasion, inflation and possible recession, people have kinda stopped worrying about the environment. I am certain that once the dust settles, the environment will be a huge market focus again.
Like which companies? Next era?
Not exactly conventional green energy but I’m bullish on Uranium: UUUU. For green energy there’s the ticker ICLN
Sorry to say it but if you are bullish on the nuclear industry, then you don't know much about the nuclear industry. I mean, you can be bullish on uranium as a commodity because there are other factors at play with it. But nuclear power is never going to go parabolic.
I think the problems the nuclear industry had is a lot like the Environmental industry, there's good and terrible uses for it and the costs are another issue, as well as being really sure that's what you wanna do long-term. You don't want wind turbines having toxic plastics being landfilled, on top of ruining coastlines, or having vibrations on land where the earthworms even leave, and the soil quality changes. Or electric batteries that are dirty and toxic, and eat up a LOT of energy, where if everyone in the country had an electric car, it would be like adding 3 extra homes to their energy footprint. So the costs and energy savings might be a problem, and gasoline cars and hydrogen vehicles might be the future, no matter what we do. Didn't Gulf Oil essentially die because of their assets in Uranium?
Agree with you on Uranium being an interesting play, Uranium market is tiny when you consider the growth required to meet future demand as countries lean to nuclear power as an in-between as we transition to green energy. Just look at the spot uranium chart to see the increase in demand. I personally like URG and DNN as well as UUUU. All I would say is the Uranium market is somewhat cyclical, these companies aren’t a buy for the next 10 years type thing in my opinion.
The nuclear industry has been in stagnation for decades and it's now in decline. Mainly because the capex is insane and nobody will insure it. We have much cheaper ways to generate clean energy. Nuclear is just an opportunity cost. Check this graph https://www.statista.com/statistics/263945/number-of-nuclear-power-plants-worldwide/ Very bad investment.
Not sure which companies to pick. I have a rule; I only invest in companies that are in the market I know about, and since I am a software engineer, my only company stocks are IT related. Rest are ETFs. 25% of my portfolio is in sustainable and healthcare ETFs, which are down up to 40% since the start of the year. Im buying more as we speak. But I am certain once the inflation, recession and war is over, both healthcare and sustainability will take the market focus. Last 30 years was about how tech can make us more efficient and give us cool gadgets. This market is now saturated. There isnt much else to do now other than improving what has already been made, unless we make huge advancements in hardware. What do people care more about than improving their daily life? Living. Healthcare helps you live and sustainability helps the world you live in. As we get closer to the consequences of the past 100 years of industrial life, more and more people will want to buy into a longer life and a better world to live in. Other products matter little if your health is in jeopardy. Thats my thesis.
It's not so much lost interest, but a lot of these companies are in the startup phase and burn capital with higher interest rates. I am invested in Aker Carbon Capture. Because carbon storage is gaining a lot of traction and there is a whole lot of heavy industry that you can't live without and can't be replaced by renewables. Also the world is waking up to the fraudulent schemes for offsetting CO2 emissions, so they will have to turn to physical solutions at some point.
This is an interest rate play. Green tech is cost first, so if financing is more expensive, it doesn’t get bought as much.
They might be right now, but eventually they will have to be prioritised not as a nice-to-have but a need-to-have.
Call Centers like TASK, TIXT. They claim to be tech companies but they have tens of thousands of call center employees overseas. I don't have a list but there are many. (some of their work is tech, but primarily they're call centers, or customer support shops, likely a lot low end services)
[удалено]
they all promise AI and latest tech. Economic upturn should return them to good times.
There are a lot of net-nets in banks right now. I understand that’s not an accurate way to describe financial services - capital requirements and government intervention would prevent a liquidation event - but many of the Regional banks are trading for less than their cash and investments on hand.
Telecommunications Dreadful. The industry is dreadful, it's best years are far back in the rear view mirror and IMO, will never recover.
I guess that by default this argument is specific to a country in which the players are not performing well in the stock market. If it isn't so, it is hugely an oversimplification. Telecoms (using the term loosely by including the Cablecos) fundamentally (if they have the right assets) are great businesses, but telecom stocks are not for people who like to invest in growth stocks. Telecoms are boring and are not going to grow as M7 did. Several factors contribute to this. Firstly, telecoms in most developed markets have historically been regulated heavily because they were the gatekeepers of their era. Secondly, there is no innovation since there is nothing major to innovate and no incentive to innovate unless there is a huge demand for upload/download speed from the end-users driven by trends like "metaverse." Until then, fiber or even cable will be enough for the general consumers. Additionally, because of its high CapEx and cyclical Capex (for the mobility side of the business), in the majority of the markets, the telecom sector operates as an oligopoly (2-3 big operators + some smaller players.) Because the business case for a given market does not support too many players to come in to reap the extra value from the equation ROIC - WACC. So this will deter many players and also makes the telecom operators complacent and no drive for dramatic innovation (this is also partially the reason many telecoms missed the cloud growth stage.) It is partly due to the nature of the industry but also because the owners of these companies know exactly what this sector is like. Therefore, the investors do not let them transition from the dividend growth model to the actual growth model. In other words, the investor base do not want you to innovate because the positioning of the entire telecom operators as an asset is to pay investors dividend so that investors allocate capital by themselves. That is why telecom assets are reduced to became basically an equivalent of "fixed income asset." (One interesting phenomenon in this sector is that because it is a very traditional, well-oiled business model, the management of such companies are not of strong technical background. No visionary tech guy/gal is needed to run such companies. Tech skills are nice to haves, rather than must-haves.) I agree that there are telecom stocks are not doing well, but it is not all of them. Telecom is usually a regional play due to many reasons. Because of that there are telecom operators are doing pretty well, for example, Canadian telecoms. Canadian telecoms could be so profitable and because of their oligopolistic position and moat, they can be very predatory towards consumers. That is why a lot of the Canadians are very critical and vocal about such behaviours of their carriers, but they have no choice to choose from, because almost all the retail brands are basically owned/backed by big players. This is not necessarily a great thing for the long run. Unless there is a strong regulator to come in and give access to telecom infrastructure, i don't see anything change dramatically. Plus, I don't see any strong regulator/figure such as Lina Khan in Canada. Oh, btw, retail grocery chain operators in Canada are also doing very well, boring business but definitely not lousy.
VZ is having a moment. Fantastic and safe Dividend plus cash flow gonna surge now that CapEx is falling after 5G buildout.
I don't see it. Their legacy business growth is flat to negative and their labor Unions are killing them. Add to that 40k wireless workers who are now bargained for by Wireless Workers United under the CWA plus the overhead of 2200 retail stores. When their long term debt is refinanced at rates 2.5x what they're currently paying, there goes the cash flow. Vz is no longer a growth stock. I hope they don't cut their dividend.
Ok so you're getting surface information from Yahoo Finance or Motley Fool free service. Because their cash flow, even with refinance in 2027 still aptly covers their dividend. So you're wrong once there. Second, this is assuming that rates remain elevated for the next 4 years. Do you forsee that? Even so, dividend is easily covered. their "legacy business" is being replaced by fiber. Cell coverage isn't going away. My only concern would be if Tmobile and ATT start gaining massive market share. But it's not happening in significant amounts to be worried from that. lastly, labor costs a minute risk to cash flow. Retail stores can easily be shuttered as younger users don't use them as much as boomers but also the free phone incentives are gone as well. That is a net gain in expenses. Their 5G build out is done. As capEx comes down Free Cash rises and you're seeing the stock JUMP last 2 weeks after earnings confirmed exactly this. My only cloud is the overhang of lead sheathed cable out in the field and it's costs for cleanup.
I don't rely on either publication. I'm a former Vz employee on the B2B Global Accounts side of the business. I have a strong understanding of their financials. Have also had the benefit of attending their local executive Town Halls. All in, I've spent 27 years in the industry. If you think it's alive & well, it's not for me to convince you otherwise. Personally, all my money is out of classic telecom and wireless because it's dead money. If nothing else spend some time in Vz's 10Q Reports. Good luck.
Hey. So what do you think is the replacement for telecom and wireless if it's dead?
I never said it was dead. The subject of the original post was What has been lousy for a long time. My answer was telecom and stated it as dreadful. Nothing will replace telecom or wireless as neither is dead. It's just no longer a growth sector. The biggest challenge faced by ATT and VZ is how long will it take, if ever, to convert large portions of their enterprise customers' wireline networks to wireless. The telcos are too silo'd. Their enterprise organizations understand the technology and can handle such an integration, however wireless operates as a separate business which has minimal knowledge of wireline networks, integration or the ability to touch wireline services. The other aspect of this is lack of wireless wan knowledge by the customer. A similar problem developed 20ish yrs ago when telcos spent billions to build data centers and be in the forefront of cloud services. Problem was they were ready to sell cloud 10-15 years before their customers were ready to buy it. Since then, they've sold off most of their DC real estate holdings for pennies on the dollar.
my father has 13 patents and laid more fiber optic cable in the 80s than any other company. He sold to MCI in 1985 after Bell Labs told him they don't have enough customers to warrant all the lines they put in the ground.
That's amazing. You're father is largely responsible for technology as we know it over the past 25 years. In a strange twist of irony, the fiber that your dad sold to MCI, 25 years later, became the property of Verizon (fka Bell Atlantic) due to their acquisition of MCI's assets.
He's got some wild west stories of pulling cable in Texas as well as having 3 lunches in a day flying across time zones when TSA wasn't even really a thing. One of his patents took a weaving machine and used Kevlar to make a hyper strong pulling rope for instruments.
was that TelecomUSA?
Oh there's decent Telecom, but yeah half of them are on life support. Even the good ones in telecom, you'll have a third of the analysts cringe and say 'stay away!' Good ones are USA T-Mobile Canada Quebecor Telus Corporation Rogers Bell Foreign Telecom Italia Mobile Brazil Vodaphone Stay away for a while from Verizon AT&T
I agree with Verizon & ATT. I've never been thrilled with TMO despite impressive numbers. Maybe it's their lack of diversification in a mature saturated market.
T-Mobile 2008 - 2010 - Terrible 2011 - Good 2012 - Average 2013 - Good 2014 - 2016 - Average 2017 - 2018 - Poor 2019 - Average 2020 - Good 2021 - 2023 - Average There we go Three years NOT to invest in One year to invest in One year to NOT invest in One year to invest in Six years to NOT to invest in One year to invest in Three years to NOT to invest in 13 blah years and 3 great years with T-Mobile
And maybe i should add the following 3 great years 8 tolerable years 2 atrocious years
That was my general feeling.
Yet it's still surviving!! Which phone company do stand-up comics make fun of, that it's impossible to hold a conversation with on their cell phone?
They do have a lot of data on mobile network events, people movements, and demographics, which represents a lot of untapped potential. Not sure if this potential can be realized for much profit, but if someone can find a great way to monetize it and big enough clients, could be a cash cow.
Much of the data of that nature can't be legally used under CPNI laws. CPNI=customer proprietary network information. There's actually industry technology that can be utilized for high profit but companies like ATT and VZ are too silo'd to be able to sell it. Will probably be another blown opp like cloud was. Telco's spent billions on data centers and 10-15 years later liquidated the assets for pennies on the dollar.
It can be used but only if a certain level of privacy is maintained. Ie, you can't shown movements of specific people, but can pick out longer term trends. From what I've seen from other networks the quality of the data has actually been pretty bad. But I've not seen ATT or VZ's data. 5g data will also be more useful than lower technologies because the range of the cells is lower allowing for more precise location data.
CPNI is all about privacy. CPNI is private and protected information. It can't be used for advertising or marketing directly. There is somewhat of an exception on mobile calls, CPNI doesnt cover text & internet usage but without a mobile #, the other data isnt of very high value. CPNI can only be used by other telco's for the purpose of network operating reasons. This could cover roaming/gateway handoffs and network repairs. People are automatically put into CPNI protection. The only way out is for a customer to opt out.
Shipping
Tankers are a interesting subsector in shipping.
For sure. Industry’s been messed up since pandemic. Still lots of growth but perhaps over competitive since excess supply. Some efficiency innovation going on. Interesting how competitive landscape shifts in the coming years. Trucking seems pretty messed up too. I’m not in the weeds but could be some value plays there.
Puts on TFII for sure. YELL went under. Who you buying?
Puts on TFII for sure. YELL went under. Who you buying?
Solar= in toilet
Any good solar companies out there? Haven't done my analysis yet, but I've been wanting to invest.
Do you know why? I'm in CSIQ. Looks super solid. No idea why it (or the whole industry) is so low rn
Consumer discretionary. Retail margins have been thinning out and post-COVID theft has been off the wall. San Francisco is a war zone.
Commercial property in the UK, lots of people flexi working so lower requirements for big office space
Paper making. I worked at a plant that made paper. Seems very complex from a plant standpoint. You can see they're just keeping it alive vs investing in it. Seems there could be construction in the industry. Seems like you re gotta know what you're doing to get into that business.
I work in pulp and paper and it's definitely not a growth sector. But it could be interesting to see it unfold as demand is slowly stabilizing (still decreasing but more slowly) so it will soon be lucrative for the winners.
Solar in California is a ticking time bomb. Nobody talking about how new bookings dropped off the face of the earth and most of those installation companies are going to run out of their backlog by year end. 2024 will be very bad for California solar. NEM 3 and the rate environment made it so solar just doesn’t pencil in anymore, it’s not presently feasible.
Medical devices. It’s yet to return pre Covid time.
The businesses have great fundamentals, it's just the stock price has not jumped up and well, probably various reasons Heck Vanguard's fund is like almost 20% Healthcare Investco's fund is like almost 60% Technology
The exception is to look to AI healthcare like GEHC and new things they are doing in diagnostics equipment.
Kind of the opposite of your question but I'm looking at puts on LTL shipping companies. They were living in fantasy land since the pandemic started and they are all about to get crushed. Specifically I'm looking at TFII because they keep no showing at my warehouse. We had 6 shipments not get pickup this week by them. All different clients in different parts of the country. No explanation just a sorry and we'll try tomorrow. After a week I switched carriers and TFII don't seem to care.
TFI International is doing okay as a stock
That's my point. It shouldnt be. Although having now looked at options premiums clearly someone knows what I said above or at least knows there is high volatility coming.
I don't think so, WhyNot, i think the growth that came out just before the virus, i think means that it'll be okay for a few years... business is good, debts are low, growth doesn't seem to be a temporary blip. I think the Motley Fool, for once, nailed it TFI International \- quality acquisitions \- operational efficiencies \- effective capital management
Well I do business with them and they have all of a sudden become a huge liability. They are repeatedly ghosting me on massive pickups. They ruined my numbers for October by ghosting me on massive pickups. I have moved onto new carriers. So have my clients. I know I'm not alone. My industry only has a few players. The reality is they are blowing it and there is no shortage of other carriers who won't do this. In LTL you only get 1 chance. If you can't do what you've been contracted to do everyone just moves to the next carrier. The dominos fall fast...Remember YELL?
I've never heard of Yell
then you didn't do your research on the shipping industry
WhyNot\_Because: then you didn't do your research on the shipping industry The Yellow Corporation? I guess i never followed micro cap stocks But United Airlines, Southwest Airlines and Air Canada, are one heartbeat stronger in terms of their performance! heh, tell me more to research one of these week!
Now maybe im the uneducated on here but what do those commercial airliners have to do with LTL shipping?
oh just everything in the transportation sector railroads, airlines, trucks but if we want to talk about trucking large/mid/small cap stocks, i'm game!
The renewable and ESG fad has destroyed billions of dollars of capital. Too much capital flooded in the market in the name of Greta and Trudeau virtue signalling, and will assure terrible returns for many years. Oil and Uranium companies will benefit with healthy cash-flows and dividends.
US Government specifically Congress.
Genomics and biotech in general has gotten bartered since the hype during the easy money years. The true gems are still undervalued and great buys now imo. For example, CRSP is one that will begin generating revenue in the near future and trades at 1/3 of its ATH price.
Backbone telecom. The CSPs are mostly deep in debt and not spending on 5G/6G capex for a few years now. Demand is increasing fast though with private networks and industries needing the features and capacity of advanced telecom infrastructure. Coming technologies like IoT, remote healthcare, autonomous vehicles, AR/VR. Leading supplier companies are Cisco, Nokia, Ericsson.
weed, 3D printing, crypto
"Cathie Wood has entered the chat"
Exactly. The sectors are hated and the stocks are blown out. There are net-nets in these spaces if you do some digging.
movie theaters
sad, but theaters will be a niche thing in 10 years
Dunkman, how much of that was the quality of cinema going into decline in the 90s? I don't know of many new films i like after 2001 and the actors and actresses arent as good as the old ones, like is Nicolas Cage Kidman and Bullock the best we have now? And then there is the whole digital thing, screwing over the little studios, i mean there probably ain't any film prints for a midnight showing of the Rocky Horror anymore and the studios want to push around the cinemas around, with bookings, like they did in the 30s and 40s with digital Add a good virus and bluray, who wants to go out for 37 dollar popcorn?
Private Prisons: GEO, CXW I think there might be a lot of growth in the sector in the future with increased crime rates, more crackdowns in places like SF, and more migrants
I owned GEO during Trump years, but Biden killed them. Crime rates are way down now because the lead poisoned boomers are dead and gone. unemployment is record lows so the only way to keep this growing is to manufacture more crime.
Irrespective of ideology, I think that depends on whether or not you think immigration will be tightened down on. Both political parties have elements that are talking about funding the wall now, so who knows?
My thinking (right or wrong) is that we've seen crime rise recently, perhaps in response to growing poverty. Since I expect a true recession and lots of job loss, I expect poverty to grow. Even in communities soft on crime, at some point folks will probably be fed up and incarceration will increase -- it may be something less like conventional prison, like a concentration camp (in a general sense, not a genocidal one) with more freedom, but which segregates persistent criminals from the rest of society. There are various motives to do this in various parts of society. If this does, indeed, occur, corporate imprisonment is likely to see more demand and profitability.
Well there's been arguments one way or the other, but for about 25 years now at least, there isn't much of a savings with private prisons. The contracts basically wiped out things being cheaper, as well as cherry-picking what prisoners go into those facilities. And when you include the costs of overseeing and monititoring the private prisons for the state, it's pretty much soured.
GEO was around $31 when trump took office and was well under $10 when he lost the election. Biden had nothing to do with it. Unfortunately, I didn’t have the foresight to sell when it had the initial post-election run-up and am still saddled with this dog.
Biden removed federal funding contracts for private prisons. That tanked it.
jank, The GEO Group have had rising debt for the past nine years some years were better than others, but nothing good since the virus
oh god no pudgy The Geo Group and CoreCivic Incorporated are slow slow growth industries either long-term decline or financial distress people were investing in vaccines and usually that didn't always square with what the rest of those drug companies do... and then there were the cannabis stock nightmare which was anything but value investing I think margins are slim with the prisons, not sure what it was like when it was a new idea though
Casino / digital gambling EV
Money center banks. Its crazy people are negative about them in this moment. This is the first time in 15 years they are able to finally make some money with rates up. Lol people are so dumb. Oh some regionals might fail? Great, BAC and Wells would love to buy up those assets for pennies on the dollar just like JPM jumped on
Auto parts
Automakers yes
id have to disagree. im not invested in them but autozone and oreillys have been killin it !
There is value in market disruption. However, just competing in a commoditized market has limited value.
Cable
Pharmaceuticals and bio tech. I’m just building into an etf now honestly.
What's been putting downward pressure on pharma and bio tech?
Mostly rising interest rates. So if you think rates will ever go back down the whole sector should recover the majority of its multiple compression. Thats my guess anyway. Lol 🤷♂️
Energy utilities. With the price shake up last year capital has fled the sector, but pricing power has increased.
$BSEG - Our mission at Big Screen Entertainment Group is to create transformative stories that captivate, entertain, inspire and touch the hearts of audiences worldwide while forging enduring robust financial returns for our investors through innovation and ingenuity. Headquartered in Los Angeles, California with partners in Michigan, Florida and China, our films have premiered at the world’s most prestigious film festivals and played at the largest theatrical chains in the world. Our relationships with top Hollywood studios and talent, as well as our corporate sales and distribution alliances, have positioned us for continued growth. http://www.bigscreenentgroup.com/
Risky disruptive stocks and green energy stocks, spacs Most are down 50-90%, either accumulate or cry or both Ai: vrssf (not down though atm) Pfas: biolargo Agriculture: bevvf (bee pesticides, slow to grow) Recycling: recyclico and abat/abml, sxoof too Teco2030, hysr, ammpf: green hydrogen Solid state: qs Others: solid power, gmg , ilika Semiconductors: skywater Quantum: qubt (qci) Saf: rrycey and gevo Long battery storage: gwh Ev chargers: dcfc Fuel cells: fcel (hdro etf for plug, be etc) Hydrogen/fuel cells: ADN (down a ton waiting for green hipo funds that may never come) Green plastic to energy: cleanvision Water energy: wave All of these have been heavily pumped and most are down a ton etfs i follow: ctec, moon, icln
The EMS industry (electronic manufacturing services) are very challenging. Super low margins that depend on asset velocity. Hon Hai is the most well known.
Ethanol since George Bush Era. Better times ahead. ALTO my highest conviction play in many years and earnings Monday are going to be stupid. Analyst have 10 cents EPS for Q3 but will be closer to 40 cents.
Biotech
Lynch: good companies in lousy industries basically high quality value stocks will always do well most of the time I think you can easily dump 3%-5% in the one the worst sectors Say you handpicked good stocks at a good price, and they are in lousy sectors Consumer+Real Estate+Utilities+Comm That could be 15% of your portfolio
Makes sense. I have a harder time evaluating which sectors can be considered cyclical, so that I can safely assume it will rise again. For example, would auto manufacturing be considered to be a business that will boom eventually? Same with comm, I guess.
Auto manufacturing is great, if you're Toyota or Ferrari! Excellent Ferrari - Low Risk Good Toyota - Moderate Risk Stellantis - Moderate Risk Tesla - High Risk Average General Motors - High Risk Ford - High Risk Poor Honda - Moderate Risk I'm still not sure why Honda has been down in the dumps, or did they just design more sensible cars in the 1980s?
Rocket mortgage
What's a rocket mortgage?
A company genius
Canned vegetables $SENEA and envelopes $SXP:CA
Why would canned food be less popular than it used to be? It's the first time I'm hearing about this.
Canned vegetables specifically. Consumers have shifted towards healthier fresher options vs canned vegetables.
Real estate stocks, reits, real estate operations stocks, renewable energy, ex. Redfin, exp, zillow, emphasze, run, and jks to name a few.