The Software-as-a-Service company we review in this report has a lot of attractive qualities, including a leadership position in a large total addressable market (“TAM”) where growth is being driven by increasing cloud-based connectivity (i.e. the Internet of Things (“IoT”)). It’s also a “smid” sized company ($2.7B market cap) and trades at a compelling 3.1x forward sales. In this report, we review the business, the growth opportunity, the valuation and the risks. We conclude with our strong opinion on investing.
Ares Capital: Big-Yield BDC, Fortifying for the Storm
Ares Capital is a popular big-dividend (9.7% yield) BDC. It has a long track record of success in providing capital (financing) to diverse middle market companies. However, on a go-forward basis, you cannot feasibly underwrite all 490 portfolio companies Ares works with. Fortunately, Ares does it for you, and they’re good at it. Also fortunately, you do have the ability to assess the current market environment (i.e. the big macroeconomic challenges that are coming) and how it will affect Ares’ unique business (we also do this for you in this report). And after reviewing Ares in detail (i.e. the business, the financials, the risks), we conclude with our strong opinion on investing.
Quick Note: Non-Mega-Cap Chip-Stock Data
Quick Note: A lot of mumblings about mega-cap stocks due for some mean reversion and underperformance in 2024, following an amazing 2023 (so far). In the semiconductor space (i.e. chip stocks), mega-caps like Nvidia and AMD have dominated, and for good reason (i.e. their tie in to explosive growth in data centers related to Artificial Intelligence demand for chips). In this quick note, we share data on 60 chips stocks (including large, mid and small caps), and some thoughts on which names could benefit in 2024.
Quick Note: 100 Big-Yield REITs, Down Big
Quick Note: Sharing data on over 100 big-yield REITs, sorted by industry group. As you can see, performance has been horrendous over the last two years, for some groups more than others. The unusual 1-2-3 punch or rising interest rates, an uncertain economy and the winds of secular change (for example, work-from-home and online shopping) have all played a big part.
Quick Note: Big-Yield CEFs, Watchlist Data
Quick Note: Briefly sharing some updated data on big-yield CEFs on our watchlist. You’ll note a few standout for bigger than normal discounts and smaller than normal premiums (as per z-scores). Returns have been healthy for equity CEFs, but weak for bond CEFs (as interest rates have been rising). However, the interest rate environment is changing, and so are the opportunities going forward for bonds.
Eli Lilly: Despite Big Risks, Business is Strong
Indianapolis-based pharmaceuticals company, Eli Lilly (LLY) is a great business firing on all cylinders. Over the last five years, the shares are up over 400% and the dividend has more than doubled. And looking forward, the FDA’s new approval of diabetes drug, Mounjaro, to also address weight loss, gives Lilly added upside. However, the company faces a few big risks. In this report, we review the business, its blockbuster drugs, the dividend, share repurchases, valuation and the big risks. We conclude with our strong opinion on investing.
Visa: Big Dividend Hike, Massive Share Repurchases
Technology-driven payment processor, Visa (V), recently announced another big dividend hike (15.6%) and a massive $25B share repurchase program. And this industry-leading company is benefiting form the enormous digital payments secular trend. It also has one of the most impressive net profit margins you’re ever going to see. In this report, we review the business, the market opportunity, the valuation, the dividend and the risks. We conclude with our strong opinion on investing.
Realty Income: Only the Strong Survive
Realty Income shares are down 15% this year while the S&P 500 is up 15%. Aside from the strong performance of the “Super 7” mega-cap stocks that have driven the index higher, Realty Income (and REITs in general) have been plagued by higher interest rates and a changing real estate landscape. In this report, we review Realty Income’s business strategy (i.e. growth through acquisition), the big macroeconomic and secular headwinds the industry faces, dividend safety, valuation and risks. We conclude with our strong opinion on investing.
Top 10 Growth Stocks: Fear Creates Opportunity (November Update)
The market is turning ugly. Stocks are down as investors fear higher rates, and the fed remains petrified over inflation. However fear brings opportunity, especially as a few massive secular trends (such as digitization, the great cloud migration and Artificial Intelligence) remain fully intact. In this report, we share data on over 50 high-growth stocks (many of which are recently down big), and then briefly review the macroeconomic environment (including rates, monetary policy and secular trends). Finally, we rank our top 10 growth stocks, starting with #10 and counting down to our top ideas.
Top Performing Stocks YTD, Sorted by Market Cap
AGNC: Tempting 18.5% Yield, Know the Big Risks
AGNC is a mortgage REIT that offers a tempting 18.5% Yield. We typically don’t invest in mortgage REITs (because of the risks), unless they offer a particularly compelling opportunity, like AGNC seems to be right now. In this report, we review the business, the market environment, the current valuation, dividend safety and risks. We conclude with our strong opinion on investing.