5 Stocks We Like & The Price To Buy Them | STOCKS TO BUY NOW?

it's a business with higher margins than most Grocers and is growing like crazy the bigger and bigger companies get they tend to have to compress their margins the best deals happen in great companies and they have short-term problems five stocks that we think are very interesting now we're not going to disclose where we're buying what we're buying Etc but we're going to go evaluate these stocks from a 500 foot view a high level view talk about some positives talk about some negatives going forward first stock Sprouts Farmers Market a year ago we went to Arizona for my dad's 70th birthday and we kept shopping at Sprouts it was nice they didn't have pop oh one of those places at that time I don't know if it's still the same they didn't have normal pop they had the hippie stuff yes but it's a business with higher margins than most Grocers and is growing like crazy they have a lot of potential they have great homemade cookies they have great homemade cookies they had great chips too so let's take a look at them um 3.5 billion dollar market cap obviously a little more debt the difference between Enterprise Value and market cap is debt um profit margin 3.8 percent five year profit margin 3.9 as an example let's pull up Kroger are they about two percent if I remember it's about one or two percent let's see so 1.3 is the five year average 1.7 or all so they're trying to be more Niche now like the fact they're smaller because the bigger and bigger companies get they tend to have to compress their margins especially if they can't support the big growth 14pe 14 5-year PE not bad I like this return on invested Capital yeah that's very nice they're doing a good job of investing the money back in the business and I think this is probably lower than it should be basically because they're growing and they keep reinvesting they just got their CEO who was the guy from the 99 cent store so we like that's a lot analyst estimates have them growing consistently not a ton small company three and a half billion dollar market cap reasonable growth nothing crazy easy they're also talking about buying back shares when it makes sense Revenue growth also growing from 6.8 billion according to analysts to nine and a half in the future um Mo should we do a stock analyzer tool on this one you want to well we have five stocks to do the question is which one we do stock analyzer tools no let's not do it on this one um if you go to my screen real quick though the buying back of shares in 2021 they had 118 million shares outstanding now they have 103. okay 103.8 so so next shares at the right times remember low lower PE with growth potential High return on invested Capital it could be a cheaper business let's go to the next company ready T row price let's check out this t-row price stock and here's why guys and by the way if you want to run the stock analyzer on sprouts just sign up for the software it's seven dollars seven days one dollar per day don't be cheap try it out what are you doing yeah literally if I asked you to venmo me a dollar right now you would do it every day for the rest of your life you never blink an eye just do it this is going to change your life give me a break everythingmoney.com sign up now T Rowe Price Mo look at this fall 224 to a low of 93. it's currently at 106. it's uh it's down by near covid levels right now yes it is wow is it really neat oh my God you're right I didn't even think well I got to I got like 70. lower but I mean it's around that hover in there look at this return I'm at the capital now yeah it's huge so the question is how can they reinvest their Capital get higher rates of return listen they're still they're a great 401K business very well known those businesses are very sticky which we like a lot the other thing I like 24 billion dollar market cap a 24 billion dollar Enterprise Value okay five year five year PE is 11. one year PE is 17. guys their revenue and profit will be subdued as the market goes down that is an absolute absolute fact it's going to fluctuate so they just reported their quarterly they did 1.54 billion and that was down almost 20 from the year before 1.54 versus 1.86 same quarter a year ago why what happened that time Revenue Market went down therefore Revenue goes down so running it through stock analyzer tool let's look at analysis okay actually first off let's look at the eight pillars okay eight pillars net income's down as expected because the revenue is down right but everything else is a check mark and don't forget if you have our software you can customize your eight pillars to have up to 12 different pillars up to four quadrillion different variations this is your tool um buying back shares which in the past at these higher prices probably didn't make much sense Mo I don't know and honestly though they haven't really been buying back I mean oh this is quarterly I'm sorry yeah go back to let me go to four quarters let's see what they're doing here yeah they've been aggressive yeah they have and especially going through 2020 when they were at astronomical levels still buying back shares yeah so again we don't like that but this is a company but generate some really oh yeah really good dividends four percent dividend 4.6 4.6 dividend it eats up 1.1 billion of their two billion dollar average free cash flow but last year they did 1.5 billion dollars in free cash flow so it's eating up a big chunk of their free cash flow which tells me they don't see a use in their they don't have debt basically right and all they can do basically is make Acquisitions buy back shares pay down debt well can't pay down debt pay dividends so you look at it going okay yeah makes sense yeah so let's run a stock analyzer tool on this one okay I kind of do let's see what anal assessments are actually I was taking a peek at that real quick EPS growth is very low 691 to 844 Revenue growth very low again so it's not much growth there but it's a stable company with I think a good brand name mo why don't you do a 10-year analysis I'm gonna do a 20-year analysis okay and we're going to talk through this I'm going to talk through this now guys I do expect Revenue to be oh look at that revenue is down 20 and what was the market down last year NASDAQ was basically down 20 yeah so I'm going to look at 20 years and I'm assuming Revenue growth for the next 20 years mo why don't you do a five-year announcement be a little smarter okay I'm gonna do 20 year okay profit margin has been subdued okay let's do 18 24 30 hire free cash flow 22 22 26 30 PE 15 16.5 18 50. so guys as you're watching this you have to sit there and get comfortable with how you look at these companies the more you do the stock analyzer tool the better there's a reason why I was used 1.3 million times last year by our users it's because it's such a popular tool that once you get the hang of it you're going to become addicted to it I could this tool alone is worth several dollars per day give me a break I've already used this probably five times today outside of the videos yes easily now deserve any return I'm gonna go 11 12 and a half and 14. now remember the desired return is essentially your margin of safety yeah the higher you desired return the lower the stock price better margin of safety Mo what were your assumptions so I went one three and five for the next five years oh actually that's aggressive well I think five is aggressive I think one and three are reasonable five is just if I were you I'd put negative three zero and three Mo if you expect stocks to be down for the next 10 years that means the next three to five are gonna be awful all right Let's do let's let's do negative 2 to 0 and 2. how about that was profit margin I think that profit margin is too high 29. look at their last the last year's profit margin and free cash flow um I'm really trying to beat this up I want you guys all see I'm really trying to beat this up to show you the difference between short-term investing and long-term investing go ahead and do whatever you want to do okay 29 32 35 Jesus Christ I want to sell this guy my business all right go ahead 24 26 28 precautions 15 16 17 for PE wonderful and same for Price free cash flow and return 10 12 and 14. I'd be doing 18 25 and so not kidding now you guys heard what I did and here are my values let's see look I have read at the bottom 65 to 80 166 in the top and one it's basically green right now so even with the discounted cash flow margin that I put in we're still not holy cow yeah yeah so you're still not all right I thought it's me all red I thought your highest price is gonna be like 60 bucks I'm actually surprised by that Mo yeah wow good for you so there we go all right so interesting now I do think the question is do you want to time things if you believe the Market's going lower there'll be better times to buy T row but it's your call completely of course all right all right next stock Generac yep guys Generac this is big in the world of generators generator now I want to make one note about Generac two notes first all-time high 517 dollars a share back in November of 2021 and it's currently at 1 10 with a 52-week low of 86. that's erratic in one year and in one year and one month it went from 517 to 86 for anybody who tries to tell me that this is that this is normal shove it yeah here's the income statement look at this Revenue it's skyrocketed oh yeah skyrocketed now it's stabilized but let's go look at quarter to quarter because they just reported and they jumped up big but look at their revenue look at this Revenue drop sorry it's falling 887 1.14 why is there a difference between their operating Revenue in this Revenue when all the other years were the same oh you're right either way I'm gonna look at their revenues 887 versus 1.14 that's a drop of 25 I don't know whatever it is they argue that that could continue to fall 30 not 30 yeah and I would argue that's gonna fall still as people put less less money in their home I have no idea I have not listened to their calls let's see their free cash flow are you on the free cash flow yeah how's our free cash for looking negative 42 and a half million oh this is uh quarterly yeah okay let's see there are eight pillars a lot of access here so you're probably like well Paul what do you like about Generac well the reason I like Generac is I think they're the leader of generators when I look at generators out there I see 70 80 of them are Generac and I like the the small name probably not much hype even though it's a 517 dollars a share yeah it's only 6.3 billion dollar business as for its market cap yeah at one point was a 437 billion dollar business well I think we should do a stock analyze on this one all right you do five years again okay I'll do 20. and look at this return invested Capital over 10 years 13.2 it is decreasing but that's likely to happen when your profit's decreasing as well it's okay okay I did Revenue growth of 369 profit margin of eight nine and a half and eleven and the reason being they're pretty consistent the 10 to 11 range so I'm gonna give them a little bit of buffer here because as things slow down a little bit maybe their profit goes down remember you don't want to Value everything based on their best years and we've had a boom market for residential in the last 10 years the hard part is in this Revenue growth this assumes they stabilize if they go down this is useless yeah all right so free cash flow margin should go lower here I'm gonna do seven nine seven eight point five and ten p e I'm gonna do a little bit lower on PE to factor in that drop in Revenue I'm gonna do 13 15 and 17. because they still have to drop their revenue a little bit I think that revenue is still going to continue to drop and that's something to factor in when you're looking at things and I want to understand their free cash flow issue in the last year desired annual return and go with 11.5 13 and 14.5 okay Moe why don't you tell me your assumptions go on most screen so I did negative two zero and two for Revenue growth okay okay profit margin five seven and nine Wowzer okay special margin the same okay PE for 14 15 and 16. same for price to free cash flow and for my return I did 11 13 and 15. the only thing I different I would have done I liked all your numbers I would have done 10 12 14 on desired return because you already beat it up with negative two however I did but there's a lot of uncertainty out there you're right so what'd you get your numbers at yeah so let's see 38 dollars to 75 Middle Ground 56. okay now he did a five-year return Yes I did 20 years I have a low of 60 to 70 a high of 130 to 140 a middle price of 88 to 100. I have in my watch list of 75 I got to change that actually because I don't like that price so I'm actually going to add it to my watch list at 90 bucks and this doesn't mean I'm buying it at nine dollars what it means is I'll probably start selling puts at lower prices and if you like that idea all the more reason to join our community you can learn how to make money while waiting for stocks to fall to the prices you want them to surprisingly volatile stock well isn't it I mean to go from 517 to 86 and in 13 and a half months like every day I look at this thing it's up eight percent down three percent well they just reported earnings oh very recently and they were up like 15 that day okay and then all so look at the if you go look at the chart look at their one month chart it's insane because this is a I mean look at this our friend Darnell sends us all the time this is a sub 95 and then it hit like 115 like literally a week later they reported earnings right here and it's skyrocketed okay all right all right next company NeXT Tyson Foods they just reported and they got slammed speaking of stocks that got beat down okay so Tyson Food fell oh my gosh okay it fell 10 bucks 16.4 after hours I mean during the day what happened so they reported earnings their estimate was 79 cents earnings per share they came in at negative four cents Jesus what happened to their cash flow was there one time we have to look at that I don't know uh and then they reported 1.13 billion in Revenue estimation was 1.6 or 13.6 so they must wait a second what was their revenue reported 13.1 okay you said 1.3 okay so 13.19.1 13.6 was the estimation missed that too half a billion dollars yeah on top of the earnings per share thing let's see what actually happened with the earnings per share thing now guys usually when you see that big of a difference between or there was like a one-time right off charge like I sat there and said listen we made this investment it was terrible we're writing it off and it caused us to lose 80 cents per share yeah 80 cents for how many shares out of team do they have 80 cents per share is a big Miss they have 360 56 million so 80 cents a share all right it actually makes sense their gross margin is very low I mean look at this business guys 10 gross margin four and a half percent Bottom Line This is a tough business 21 billion dollar market cap 38 billion Enterprise Value I'm already sensing a lot of debt here I don't like that let's see where their debt ratios are based on the eight pillars so look right there there's an X right here they have seven times their average free cash flow in the last five years debt level that's a lot their average five-year free cash flow is 1.6 billion dollars so they have seven times that amount debt can be harmful very much on companies especially with lower margins the current Enterprise value of the business that means the market value and the debt essentially is 38 billion and the market cap is 21 16 billion dollars in debt on a 21 billion dollar market cap business that's a lot instead of operating income of 418 million down 84 from the year prior wow earnings per share of 60 months what the hell is going on here look at their price of sales ratio 0.4 their five year return invested capital is eight percent I mean what do they look at their dividend look at their dividend yield they can afford this dividend well they're eating up a lot of their free cash flow last year but it's less than half of their five-year average let's look at their cash flow in the last five years what's happened with that oh man interesting guys look at these free cash flow numbers 1.8 1.25 2.7 2.6 750 786 remember if you don't have our software you got to do this all by hand so get our software you get it all right here for you done the math math done for you but look at previously Mo ready for this one I don't like it yeah why why why go any deeper now before I talk too stupidly I mean the PE is nine quarterly numbers the PE is nine I mean they have a pretty stable business Mo they have Jimmy Dean Hillshire Farm ballpark Sara Lee I mean they're they're the big player in that space there's no doubt about that wow what's with all the debt I think you gotta understand the debt of this business because a company with a lot of debt a lot so their long-term debt is seven times or five year free cash flow which means their long-term debt is about 11.3 billion dollars okay if the rate goes up by two and a half percent that's a total of 200 and what is that 80 million dollars a year that's a big chunk of their cash flow that's already getting depressed right now I don't know it it could be okay but it's a lot of debt it's a lot of debt yeah for such a low margin business it's all about the volume here right what about suddenly have salmonella poisoning at some point and that's going to really rip things it shouldn't be negative about that because anything can happen a lot of businesses but businesses with a higher margin can accommodate that much better yeah absorb absorb it much better this is low margin this is 10 gross margin what does that mean it means that every dollar they sell extra 10 goes to paying they can now pay taxes and overhead with that number the bottom line up to text and overhead the average five year is 5.6 and their trailing 12 months is 4.4 all right last stock Southwest Airlines I'm gonna talk about this one high level Mo here's why I like Southwest Airlines I think it's getting beaten up quite a bit and here's why there is their income statement over the last quarter let's go quarterly okay cost of goods sold has basically in the past before coat well so we should look at cost of goods sold let's look at an annual actually let's look at the the four quarters guys cost of goods sold is the direct cost to sell a product or service okay that's what creates the gross margin Revenue minus your cost of goods sold is your gross margin gross profit and the margin is the gross profit divided by the operating Revenue now let's look at it here 2017 30 something like that not 30 percent yeah thirty some percent um 2018 30 percent 2019 30 skip 2020 2021 because the all the garbage 22 25 23 20 and if you look at the quarter by quarter numbers gross profit look at this 16 two quarters ago last quarter what is that 13 percent 12 it's garbage yeah there's been a lot of issues with their services they saw the breakdown and I'm sure they're still coming off of the technical shutdowns I think this is a company that's getting beaten up because of that and I think they were a great operated business for the years before covid I don't think that's changed there's just some issues at the work through and I'm going to take advantage of that in my opinion to buy it at lower prices that's my thesis on Southwest they've started to stabilize their debt look at their balance sheet we'll go quarter to quarter on balance sheet look at their long-term liabilities oh well it's still higher than it was before but they've paid it down from quarter to some the trend is going lower even though it jumps up a little bit look at oh that's current liabilities to disregard that total liabilities okay it's pretty stable it's down from its peak but it's pretty stable look at their long-term liabilities Momo it's going down it's coming down for sure they're paying down their long-term liabilities okay now they have a lot of deferred liability the um the payables and things like that total current liabilities are increasing or the same so I'm looking at going okay they've got some Kinks to work out but Southwest has been well known as a great operator was profitable like 48 years in a row before covet happened I'm still a believer in stuff are you worried about shared dilution at all well that was an issue I mean it was for a reason yes it was for a reason so it's not like it came out of nowhere and it stabilized in the last year or so if you look at this 591 to 594 since March of 2021 so it's been very little very very little and their average diluted shares outstanding has decreased so again Southwest is working through its problems but if you can value Southwest based on historical numbers but look at the revenue by the way historical Revenue um look at their annual look at the quarter four quarters Revenue I believe is that a record that is a record it's record 24.83 that's the highest they've ever been next closest was 22.17 right before the year before coven the last full year before covid listen say what you want but remember the best deals happen in great companies and they have short-term problems I think Southwest is an example of that I could be wrong I was wrong on Carnival Cruise Line uh I got lucky making money on Carnival Cruise Line but it wasn't anything other than luck literally it covered calls took stocks away from me at 30 or 28 and then it fell I started buying again at like 14 or something like that so who knows what happens here but I'm a Believer in southwest and I'm going to um I have some puts on Southwest at lower prices so guys thanks very much again 1 dollar every day seven dollars a day for the software everythingmoney.com check it out [Music]

Channel: Everything Money

Views: 32,290

Keywords: stock market, stocks, everything money, value investing, stocks to buy now, paul gabrail, stock, investment, how to invest, finance, financial education, cash flow, inflation, money, market crash, everythingmoney, 5 Stocks We Like & The Price To Buy Them | STOCKS TO BUY NOW?, 5 Stocks We Like & The Price To Buy Them, Stocks We Like & The Price To Buy Them, Sprouts Farmers Market analysis (SFM), Generac stock review (GNRC), GNRC stock price prediction, Tyson Foods (TSN) stock analysis

Id: ij8o4mLNrJc

Length: 21min 14sec (1274 seconds)

Published: Fri May 12 2023