September was not a good month for the markets $SPX500 but our portfolio did quite well and we're going to close in green mainly because of one stock, GameStop $GME .
Now, it is time to look for other GameStop.
The first stock which I'm buying in October 2020 is Genworth Financial $GNW . But it is only on the condition that the stock can still be traded. The largest private mortgage insurance company in the US. The company is going to be acquired by China Oceanwide but it is likely that the deal will not go through. If the deal goes through, we can make money by arbitrage. Otherwise, this is a pure value play.
Genworth is trading under book value and they generated more free cash flow last year than current market cap. If the deal doesn't go through, the stock price will most probably crash and this will be a great opportunity to buy this stock since I am bullish on private mortgage insurance in general.
That's why the second stock which I'm buying in October 2020 is another PMI, Essent Group $ESNT . Essent Group is the most effective of the PMI with the lowest combined ratio in the industry. They are also the one growing the fastest and has now matured enough to pay a dividend. Essent Group also has great management. The main drawback is that there's a premium on the stock. It is like the JPMorgan Chase of the PMI industry.
JPMorgan Chase $JPM is the third stock which I'm buying in October 2020. Betting on America's largest bank is betting on the America Economy. JPMorgan Chase stock has been struggling recently because of some scandal. They are already agreed to pay a fine. But over the long-term it won't matter much. Such a big global corporation, there are going to be bad apples. It is important to look at the big picture.
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