Tag Archives: IP

Top Undervalued Stocks To Watch Right Now

We’re now just past the halfway mark of the year, which means businesses will soon be announcing second-quarter 2018 operating results. But investors don’t necessarily have to wait for management teams to hop on quarterly earnings conference calls to know if a stock is a buy this July.

Sometimes a high-yield stock gets punished without good reason, Sometimes an industry leader is quietly positioning itself to exploit a market rebound, and sometimes it’s just tough to pass up a global energy leader boasting a 6% dividend yield while it transitions to renewable energy fits that bill. Here’s why they’re my top stocks to buy in July.

Top Undervalued Stocks To Watch Right Now: International Paper Company(IP)

Entering 2018, International Paper stock had kept pace with the total returns of the S&P 500 over the previous three years. But shares are down 11% year to date just past the halfway mark. That sets up an intriguing opportunity for long-term investors with an appetite for dividends, as the stock currently yields 3.6%. Management has big plans for increasing that over time.

As one of the leading manufacturers of cardboard and with a stable of low-cost production facilities in North America, International Paper has expertly exploited the growing trend of online shopping in the last decade. In the last five years, the business has averaged $1.9 billion in free cash flow. Management intends to deploy 40% to 50% of that in efforts to create shareholder value, either through share buybacks or dividend increases (or lately, both). 

While a massive deal to acquire peer Smurfit Kappa was abandoned in early June, there are still other long-term growth opportunities for investors to look forward to. For instance, International Paper owns part of a joint venture in Russia called Ilim, which just delivered record equity earnings of $92 million in the first quarter of 2018. That compares to $183 million in all of last year. Throw in continued portfolio optimization efforts, together with low-cost production, and the company is poised to keep making progress on its near- and short-term goals while rewarding investors with a hefty dividend.  

Top Undervalued Stocks To Watch Right Now: Weight Watchers International Inc(WTW)

Weight Watchers stock has rallied tremendously in the last few years. However, trading at a forward price to earnings ratio of 27, WTW stock is still priced at a reasonably level.

The company reported significantly better than expected first-quarter results, citing strong recruitment trends. Its membership reached a record 4.6 million, and its total paid weeks jumped 27% year-over-year last quarter. Furthermore, the company predicted that its overall revenue would surge almost 20% in fiscal 2018.

A number of analysts were very enthusiastic about the outlook for Weight Watchers in the wake of the results.

For example, SunTrust analyst Michael Swartz started coverage of WTW stock with a $90 price target and a “buy” rating on May 15. According to the analyst, who was upbeat about the company’s strategy, Weight Watcher’s products are “one of the first stops” for someone considering a structured weight loss program, The Fly reported.

Also starting Weight Watchers stock with a “buy” rating was Bank of America’s Olivia Tong. The analyst, who placed a $95 price target on Weight Watchers stock, wrote that the company “has a proven operational model and sustainable momentum,” The Fly noted.

Finally, Craig-Hallum’s Alex Fuhrman expects the company’s summer ads to cause its recruiting trends to accelerate, The Fly noted. He kept a $120 price target and a “buy” rating on Weight Watchers stock.

WTW has excelled at recruiting well-known, highly respected celebrities to endorse its products. Of course, the company has convinced Oprah Winfrey to invest in Weight Watchers stock and tout its products in ads. More recently, the company signed up music producer DJ Khaled and actor Kevin Smith in an effort to appeal to more young people and males.

Judging by Weight Watcher’s first-quarter results, that effort seems to be bearing fruit.

Top Undervalued Stocks To Watch Right Now: Aphria Inc. (APHQF)

Aphria is one of the Canadian marijuana stocks that has experienced a miserable year so far. Its stock is currently down 39% since the beginning of 2018 — and that reflects improvement over the last couple of months.

However, most of the same catalysts for Canopy Growth also apply to Aphria. The company should be a big winner from recreational marijuana legalization in Canada. Aphria is on pace to produce 225,000 kilograms of cannabis annually by early 2019. The company also has a solid retail distribution network thanks to its recent deal with Southern Glazer’s, the largest wine and spirits distributor in North America.

Like Canopy Growth, Aphria has targeted the global medical marijuana market. If U.S. laws change to prevent interference with states that have legalized marijuana, Aphria should be in great shape to jump into the U.S. market because of its relationship with Liberty Health Sciences. It’s even possible that Aphria could join Canopy by moving into the cannabis-infused beverage business: Reports surfaced recently that Molson Coors Brewing is in discussions with Aphria and three other Canadian marijuana growers about a potential deal.

Top 5 Warren Buffett Stocks To Invest In 2019

In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio’s Jason Moser, Hidden Gems Canada’s David Kretzmann, and Total Income’s Ron Gross about the companies they’re most intrigued by this week and why.

Top 5 Warren Buffett Stocks To Invest In 2019: AbbVie Inc.(ABBV)

If you typically don’t invest in healthcare, you might not know that shares in the biopharma giant AbbVie fell out of favor last month, following disappointing news on its solid-tumor cancer drug, Rova-T.

AbbVie had hoped definitive midstage trial data for Rova-T could allow it to file for accelerated approval from the Food and Drug Administration, but unfortunately, the data wasn’t good enoughfor that to happen. Instead, the company will need to wait until results from future trials are available before it submits Rova-T for approval, and that could mean a wait of a year or more.

The setback caused AbbVie’s shares to fall by more than 20%, but it’s far from a deal-breaker for the company. Importantly, the sell-off could be creating a great opportunity to add this top dividend stock to your income portfolio.

AbbVie inherited Abbott Labs’ dividend track record when it was spun off in 2013, so it’s considered a Dividend Aristocrat. It appears to take that badge of honor seriously, because its quarterly dividend has increased to $0.96 from $0.40 since its initial public offering.

Following the drop in its shares, its forward dividend yield has increased to almost 4%. That’s a healthy dividend for any company, but what really makes AbbVie an interesting buy is that its dividend could continue climbing because of double-digit revenue growth. In Q1 2018, sales grew 21% year over year. And since generic biosimilars to its best-seller, Humira, aren’t expected in the U.S. until 2023, there’s plenty of opportunity for investors to own AbbVie and pocket increasingly larger dividend checks.

Top 5 Warren Buffett Stocks To Invest In 2019: Berkshire Hathaway Inc.(BRK.B)

Warren Buffett’s Berkshire Hathaway is already worth nearly a half-trillion dollars. But it’s not crazy to think that the stock could double over the next 10 years. A doubling over a decade requires a compound annual growth rate of just about 7.2%. That’s a little more than one-third of the historical growth rate of both Berkshire’s book value and its stock price.

In other words, Berkshire doesn’t need to hit home runs for the stock to double from here. It just needs to keep doing what it’s been doing. Under Buffett’s leadership, the conglomerate has built up a collection of high-quality businesses with durable competitive advantages that should throw off increasing amounts of cash as time goes on. That cash can be invested in even more high-quality businesses, picked by Buffett or his eventual successors.

Of course, if the broader market goes nowhere over the next decade, perhaps because valuations today are historically high, Berkshire could follow suit and fall short of doubling. But Berkshire’s earnings will likely rise substantially over that time, making the stock more attractive and planting the seeds of future gains.

Top 5 Warren Buffett Stocks To Invest In 2019: Leju Holdings Limited(LEJU)

Leju Holdings Ltd (ADR) (NYSE:LEJU) has gotten some attention over the years because it’s one of China’s largest online and offline real estate companies.

When real estate was hot in China, and the tech firms were rolling out like donuts off a Krispy Kreme line, LEJU was one of the speculative darlings that were getting a fair amount of attention in the U.S.

It still has a $149 million market cap, which isn’t huge, but is decent for a tech start-up.

However, the real estate boom is China has cooled and the government is looking to keep things on the cool side moving forward until it can sort out the strength of the recovery. LEJU is off 65% in the past year as a result.

There are plenty of better ideas out there now to take advantage of China’s long-term growth.

Top 5 Warren Buffett Stocks To Invest In 2019: PDL BioPharma, Inc.(PDLI)

PDL Biopharma stock is up 18% over the last 12 months, a performance that beats the S&P 500index of large-cap stocks. Like Novavax, though, PDL was up a lot more at one point. An attempt to buy Neos Therapeutics that was later abandoned contributed primarily to the stock pullback.

It wasn’t long ago that PDL Biopharma claimed one of the biggest healthcare dividend yields on the market, with the company receiving royalties from blockbuster drugs including Avastin and Herceptin. However, the company’s patents expired, its royalties dwindled, and PDL was forced to eliminate its dividend and try to reinvent itself.

That reinvention effort resulted in PDL Biopharma investing in income-generating opportunities. In 2016, the company bought Noden Pharma, picking up blood pressure drug Tekturna with the deal. PDL’s long-term success hinges on its ability to make more strategic deals that generate solid returns.

PDL Biopharma claims one distinction that few companies can: Its cash stockpile is roughly the same as its market cap. The company reported cash, cash equivalents, and marketable securities totaling $405 million at the end of the first quarter. At the time of this writing, PDL’s market cap is $407 million.   

Top 5 Warren Buffett Stocks To Invest In 2019: International Paper Company(IP)

Despite the misconception, the paper industry is one of the most environmentally friendly and energy efficient industries on the planet. Most pulp is sourced from responsibly managed forests, fibers are often recycled into new products, wastewater is often managed efficiently, and wood liquid wastes from the pulping process provides most of the energy needed for industrial mills. In fact, wood products and wood liquids generated nearly as much electricity in the United States in 2017 as utility scale solar facilities.

International Paper (NYSE: IP) wants to take things even further. The company, a leading producer of cardboard that’s cashing in on online shopping trends, has a laundry list of efficiency goals aimed at helping the business and the environment. That includes increasing fiber recycling an additional 15% (the United States boasts a 64% recovery rate), improving energy efficiency of purchased power by 15% (it generates 75% of its energy from wood wastes on site), and improving water management.

The cost-saving moves should help bolster the company’s already-strong $2 billion in annual free cash flow — cementing International Paper as a blue chip dividend stock.