InvestBetterSpendSmarter (IBSS) recommended the following stocks for purchase for 2015 (see the recaps below). The record shows that these stocks gained an average of 18.6% versus the S&P 500’s -0.7% performance in 2015. The early 2016 stock market correction makes all of these picks even better buys now.
Note: Jim Tso owns shares of all the stock picks in his accounts and continues to hold them for the long-term.
December 2015: Buy Comcast (CMCSA)
A recent 5% correction in the price of the solid large-cap growth stock of Comcast (CMCSA) makes it an excellent long-term buy made even better with these additional positive investment indicators:
- Strong revenue growth (increased 11.2% compared to 2014)
- Attractive valuation (CMCSA’s Price Earnings [PE] ratio of 19.08 is lower than the industry average of 23.3)
- Excellent cash flow from operations (10.10% growth rate for each of the last 5 years)
- Solid financial structure (Debt to Capital Ratio of only 35.7%)
- Growing dividend payout each year (from $0.65/share in 2012 to $1.00/share projected for 2016 – a 54% increase in 4 years)
While Comcast is best known as one of the largest national cable providers, many investors are not aware that Comcast also owns Universal Studios, which in turn owns the Harry Potter theme parks in Orlando, Florida and the similar planned park in Southern California. The appeal of Harry Potter books and movies for children and young adults should continue to contribute to Comcast’s positive future.
Buy Comcast shares for your own portfolio, and buy them also for your kids and/or grandkids as Christmas/Holiday presents. They will appreciate this “gift” for years to come. Tell them they now “own Harry Potter” and share with them what that means. You might be amazed at the relationships you could build with your children and/or grandchildren with this gifting idea.
November 2015: SiriusXM Holding, Inc. (SIRI) – A Good Speculative Buy
We spent the last month evaluating and shopping to replace our 10-year old Sport Utility Vehicle (SUV). After visiting 8 dealerships and test driving 12 cars, I noticed that all of them were offering 3-month trials of SiriusXM ad-free radio services. This sparked me to research SIRI more since I already own some shares. Here is a short summary of what I recently found and why I believe SIRI is a good speculative buy:
- SIRI broadcasts through various channels using many different personal electronic devices (cars, cell phones, tablets, etc.)
- It produces and re-sells content ranging from music, sports, comedy, business, general news, etc.
- Its subscription-based business model is finally establishing a strong foundation after many years of mismanagement as financial results are now showing positive trends (i.e., new subscribers up 21% in the 3rd quarter).
- While SIRI’s stock has performed well (up 23% for one year and up 175% for the last 5 years), its trailing Price Earnings Ratio (PE) multiples of 41 times earnings makes it a volatile holding.
- SIRI could become a major and dominant player in mobile broadcasting if its subscriptions continue to grow significantly.
There are numerous reports available for you to further research SIRI before taking any action (i.e., Google “SIRI stock research”). I believe it is a good speculative buy at around $4.00/share and using a slow accumulation strategy between $3.80/share and $4.10/share combined with a very long-term perspective (i.e., 5 or more years).
October 2015: A Dozen Reasons to Own Disney (DIS) Now!
We believe Disney (DIS) is one of the best buys today at around $100/share for the following reasons:
- DIS stock recently experienced an 18% discount in its price (from a high of $122/share to around $100/share on September 30th).
- The drop in cable-related revenues which caused the recent decline in Disney’s stock price will be short-lived.
- Cable content is “King” and Disney is the “King of Kings” of content.
- Shanghai Disney is scheduled to open for 1.3 billion Chinese consumers in Spring 2016.
- Theme park revenues continue to grow despite high prices.
- Disney’s Star Wars franchise will add significantly to future profits with the new movie “Star Wars – The Force Awakens,” which comes out in November 2015.
- More Star Wars movie sequels coming in future years will add to profits.
- There is a great deal of anticipation that Disney will build dedicated Star Wars theme parks (with separate admissions charges) in California and Florida.
- Disney Cruises is a small but growing brand in a trendy consumer space.
- Disney will leverage its brand into many more consumer-centric services and products.
- The growing ranks of grandparents with discretionary income will play a big role in Disney’s growth for years to come.
- Owning Disney is a great way to profit from all the money you will personally spend on Disney fun times.
There is rarely a better way to own the future than by owning Disney stock.
May 2015: Buy “New” GE
For many years prior to the “Crash of 2008,” General Electric (GE) was considered the safest of safe stocks. Analysts called it a “widows and orphans stock” (meaning widows and orphans should own lots of it). Unfortunately, GE was not what many believed it to be – a strong industrial company. Instead, it was more like a financial conglomerate (a bank), and it got caught up in the financial debacle that involved most banks in 2008/2009.
With the mild recovery, especially in the financial sector, GE has also rebounded. However, GE recently announced that it will divest most, if not all, of its financial holdings and return to being a simpler, and hopefully, more profitable industrial company. Recent earnings show this to be the case. Therefore, we eagerly welcome this new development and will look to accumulate GE shares at prices below $28.00/share or better. Its current 3.2% yield also supports a long-term positive outlook.
April 2015: Buy Six Flags Entertainment Corporation (SIX): Current Yield 4.3%
As we transition from our fixed Fun Stocks Index to a flexible Fun Stocks Portfolio, we will add Six Flags (SIX) to our new portfolio “buy list.” SIX is a theme parks management company that operates 16 theme parks throughout the US (plus one in Canada and one in Mexico). Since 2010, when SIX came out of bankruptcy, it has been given a second life because it has effectively implemented a solid new strategic focus. New rides and attractions coupled with a stronger pricing strategy have resulted in positive trends in sales and earnings.
Rising consumer discretionary spending should help SIX to continue to reap profitable gains. However, if consumer spending drops due to weakness in the U.S. economy, SIX will be adversely affected. Therefore, and despite its attractive 4.3% current yield, investors should view SIX as a high-risk holding that deserves only a small allocation in their portfolios.
November 2014: Buy Cruise Lines
In mid-October, my wife and I took a very enjoyable two-week river cruise from Amsterdam to Budapest (Viking River Cruises’ Grand European Tour). Viking did a fine job and we were impressed. Unfortunately, Viking is not a public company and therefore we cannot buy its stock so that we might “travel for free.” We do, however, own shares in Royal Caribbean (stock symbol RCL and it includes cruise line brands like Royal Caribbean, Celebrity, Azamara) and we have done well with its stock (up 45.7% since our January 8, 2014 purchase).
Other cruise lines with public stock include:
- Carnival (stock symbol CCL and includes cruise line brands like Carnival, Holland America, Cunard, Costa, Seabourn, Princess)
- Norwegian (stock symbol NCLH and includes cruise line brands like Norwegian, Pride of America, Genting), and of course,
- Disney (DIS).
Although we cannot invest directly in river cruises yet, Celebrity (a Royal Caribbean brand) announced on October 20th that it will start offering ocean and river combination cruises (Celebritycruises.com/vacationpackages). Cruising (both ocean and river) are part of major megatrends, so I will be discussing these possible investment choices in coming months. One of the best ways to “travel for free” is to own the stocks of the best travel-related companies.
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