I made some changes to my portfolio today taking some profits on $AAPL $FB $JPM and $GS . I used the profits to invest in $GME and $AGN .
Today, $OIL prices continue to fall causing $PE and $CXO to drop. As for the best performer, it is $DGE.L which is recovering from the recent selloff.
3 STOCKS I'm BUYING in OCTOBER 2019 🍁
Stock prices have been falling lately with the $SPX500 moving sideways for more than a year. Everybody is saying that it is time to buy the dip but I don't really see a 3% fall as a dip. Stocks are still expensive and it is harder to find great companies. 2 of my investments in October 2019 are workouts.
1. GameStop $GME
This is a new addition to my portfolio. I became interested in GameStop when Big Short Investor Michael Burry said that he owns 3% of the company. He is acting as an activist investor pressuring the board to buyback 80% of the shares. I don't want to base my investments only on this so I did my own analysis. GameStop is the largest gaming retailer in the world. I see GameStop as a cigar butt. Benjamin Graham and Warren Buffett $BRK.B used to invest in those. A cigar butt is a cigar with a last puff left to be smoked. That's the same idea with cigar butt stocks. There is still some money to be made. GameStop is not a great company but it is a good company at an amazing price. They have a good balance sheet. Next year Sony $SNE and Microsoft $MSFT are coming with new consoles. They currently have zero goodwill after an impairment in goodwill was required due to the fall in market cap. But if you think about it, it doesn't make sense, they have 5830 stores in 14 countries, the best selling gaming magazine in the world, the brand value is still here.
2. Allergan $AGN
This one is a risk arbitrage or merger arbitrage workout. Allergan is being acquired by AbbVie $ABBV . There is right now a 10% spread on the deal. The numbers of the company do not look so good, however, they are losing a lot of money but if you think about it, it is only because of amortization. This is a pharmaceutical company and they own many patents. Those patents have a lifespan and every year, they should subtract a certain amount from the income statement and balance sheet as amortization. But if you look at the cash flow, they are still cash flow positive since amortization doesn't take money away from the business.
3. Concho Resources $CXO
This is an upstream oil $OIL and gas $NATGAS company with exclusive operations in the Permian Basin. A lot have been going on with $OIL prices lately. I see oil prices moving up in the coming months. Even if we ignore that, Concho Resources is still at a discount. They are currently trading under book value. If you discount the total cash flow they can generate from all their oil reserve at today's oil prices, they are still underpriced. Concho Resources stocks have been falling lately because the company missed earnings and is cutting productions. They also announced that they are selling some of their assets in New Mexico. They are going to use that cash to buyback shares. I see all of these actions as positive things and I believe that over the long-term Concho Resources will do great.
In all these three stocks, there is one thing they all have similar. They are at a low price. Buy Low, Sell High. Even if it is getting harder and harder to find good investments, you should always remember that somewhere in the world, there must be a bear market and an opportunity to take.
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