Smart Investing Blog with Brent & Chase Wilsey


Amazon & Google Compete

Dec 6th, 2017

Amazon and Google may be some of the most loved stocks over the last few years, but right now there appears to be no love for each other. The companies are battling in various businesses which include hardware, content, cloud computing, and digital advertising. As competition heats up the companies may take actions to try and increase its own reputation. In a recent example, Google is removing YouTube from Amazon’s devices. This comes after Amazon refused to sell Google’s Chromecast, Home smart speaker, and other hardware. Be careful with investments in these two companies as valuations are high and competition should continue to heat up.

Booming Economic Evironment

Dec 5th, 2017

CEOs are feeling optimistic about the current economic environment. An index measuring responses from 150 CEOs advanced to 96.8 from 94.5. This is the highest reading since 2012. Capital spending which can help drive the economy through company investment increased to 92.7 from 86.4 and produced the highest reading since 2011. CEOs indicated that labor costs were the top cost pressure. As the labor market tightens, employers have to pay more for top level employees. We believe this will continue to be a problem for employers. This is still a benefit for the economy as employees have more money in their pocket. This was the first time in 6 years that regulatory costs did not top the list of cost pressures. The economy is alive and well and it is important to find the right companies that will continue to benefit from this stock market rally.

Cuts in Oil Output Extended

Nov 30th, 2017

As many expected, OPEC and non-OPEC producers which includes Russia agreed to extend the oil output cuts through the end of 2018. This action will attempt to clear the excess surplus and re balance the oil market. The agreement did not have a major impact on oil prices as much of the news was anticipated and concerns linger about U.S. production replacing the cuts. It is also important to remember that many places in the Middle East pose risks of disruption which would benefit oil prices. We still believe long term oil prices will find a home in the $60-$70/barrel range and that there are some great value opportunities in the energy sector.

GM Strives For More

Nov 29th, 2017

General Motors has been testing self-driving Bolts in San Francisco. The reason for the location is because of the high activity in the location. GM President, Dan Ammann, says the car sees more in 1 minute of driving in San Francisco compared to 1 hour of driving in Scottsdale, Arizona (The location where Waymo has its pilot program). GM has begun to unveil its program to the public and has allowed several journalists to ride in the self-driving car. CEO, Mary Barra, will unveil more details as she outlines the strategy for autonomous vehicles tomorrow. This is not the old car manufacturing GM as it strives to provide viable transportation solutions in the future. It also trades at strong valuations and has a good dividend of 3.5%. This could be a company worth further research.

Shaky Grounds For Qualcomm & Broadcom

Nov 29th, 2017

After Qualcomm’s rejection of Broadcom’s $103 Billion bid, Broadcom is looking at different options to acquire the company. Broadcom is finalizing a full slate of candidates for Qualcomm’s board. The deadline for nominations will be December 8th. If Broadcom is able to secure enough board seats it could force the two companies to discuss the acquisition. This deal contains a lot of uncertainty and we would not want to be a shareholder in either of these companies at the current time. Not only is the uncertainty a deterrent, but many of the valuations are too expensive.

Consumer Confidence

Nov 28th, 2017

Consumer confidence is soaring at the right time. Leading into the holiday season, consumer confidence hit its highest level since November 2000. At 129.5 confidence surpassed the consensus estimate of 124.5 and last month’s reading of 126.2. This should make for a good holiday season since consumers are feeling optimistic. It is estimated the holiday retail sales excluding automobiles, gasoline, and restaurants will increase between 3.6% and 4.0% to record sales between $678.8 billion and $682.0 billion.

California Living

Nov 21st, 2017

Living in California commands a hefty premium for the location and the weather. The median list price across CA is $499,950. If you are looking for a more affordable mortgage payment and are willing to move to a different state, you may want to consider West Virginia, Ohio, or Arkansas. West Virginia has the lowest median list price in the country at $150,000 and a monthly mortgage payment of $693. Ohio came in next on the list with a median list price of $154,000 and a monthly mortgage payment of $704. Arkansas came in third with a median list price of $164,900 and a monthly mortgage of $757. If the top 3 states do not intrigue you, Indiana and Iowa rounded out the top 5. Moving states could generate a ton in savings, but is it worth it to you to give up the nice year round weather? For reference, the approximate mortgage amount for the CA house would be approximately $1,909.


Walmart Perseveres

Nov 16th, 2017

Look out Amazon! WMT isn’t scared. Walmart shares were up more than 10% this morning as the company blew past estimates. The company posted online sales growth of 50% for the quarter and noted that food was a major driver as it saw its strongest quarter in 6 years. Same store sales growth of 2.7% exceeded the expectations of 1.7% and sales growth was the highest since 2009. Walmart continues to invest in its online platform and is ready to continue its battle against Amazon. Brick and Mortar stores will continue to have a place in the future economy, but the ones that learn how to properly supplement online without overspending will be the ones that survive and thrive.


These Wings Are Soaring

Nov 14th, 2017

Buffalo Wild Wings (BWLD) soared 25% today due to a $150/share offer from Roark Capital. The stock had been under pressure as it was trading over $175/share last year and found itself trading at a low of $95/share this year. BWLD fits with Roark’s positions in Jimmy Johns, Arby’s, Auntie Anne’s, Carvel, and Moe’s. The company also recently exited a position in Wingstop. While the company has some expertise in food and recent success in wings, Roark is paying 27.4x December 2018 estimated GAAP EPS of $5.47. I would consider that a pricey multiple for wings and beer.


Looking at GE

Nov 13th, 2017

GE was trading down more than 8% to a new a 52 week low as the new CEO announced plans to simplify the business and cut the dividend in half. The CEO, John Flannery, believes the company has become too complicated and plans on reducing its focus to aviation, power, and healthcare. Based on the fundamentals and earnings, I believe this company has been too expensive since 2015 when it was around $28/share. We do not currently hold this company, but we have held it a few different times in the past.


Good Value Retailers

Nov 9th, 2017

Today was an important day for retail as Macy’s, Nordstrom, and Kohl’s all reported earnings. These reports had some mixed findings, but there were some major strengths that were found in the reports. Macy’s ended the day up 11%, Nordstrom was up 4.5%, and Kohl’s was up nearly 1%. Retailers continue to remain as a good value, but it is crucial to find the right ones.


Voting Class Stocks

Nov 8th, 2017

Looking at companies such as Under Armour, Twenty-First Century Fox, and Alphabet (Google); you may notice there are two different ticker symbols for each company. The reason for these different tickers is the voting rights that accompany the shares. The voting class shares (GOOGL, FOX, UAA) typically trade at a premium to the non-voting class shares (GOOG, FOXA, UA). When investing it is important to look and understand at what you are buying. Voting class stock may not sound that important, but it could be a big issue during a takeover bid.


Red Robin: Delicious, But Worth It?

Nov 7th, 2017

Red Robin (RRGB) missed on sales and earnings and lowered its Q4 guidance. This sent the stock plunging nearly 30% for the day. The company has a good debt position, but a current ratio of 0.55 raises questions on the company’s liquidity. Even after the pullback the company still trades at a forward P/E of 14.3. While you may enjoy a burger at Red Robin, I would still avoid buying this stock.

Broadcom Offers $103B for Qualcomm

Nov 7th, 2017

Broadcom made a $130 billion offer for Qualcomm today. This would be the largest tech deal in history and shareholders would get $60 in cash and $10 in Broadcom stock. Qualcomm is likely to reject the offer as they feel like the offer undervalues the company. The uncertainty with the Apple litigation has hurt the earnings estimates moving forward. If we look out to September 2019, estimated GAAP EPS of $2.91 would give us a target sell price of $48.02. This is well below the current price of $62.52 and Broadcom’s offer of $70.

Employment Rates Move Up

Nov 3rd, 2017

The U.S. economy added 261,000 jobs in October. This fell below the estimate of 325,000, but both September and August numbers were revised higher. This report resulted in an unemployment rate of 4.1% which is the lowest level since December 2000. Average earnings remained flat over last month but increased 2.4% over the prior year. With consumer confidence high and wages increasing, we could be gearing up for a positive holiday season.

Be Careful What You Pay

Nov 1st, 2017

Under Armour (UAA) was down nearly 24% today as the stock closed at $12.52. This comes after the company reported sales and earnings that missed estimates. The big concern is the company has now slashed its guidance for the rest of the year. It has been quite the fall for Under Armour (UAA) which was trading at $50/share last year. At that time the company had valuations that were at nosebleed levels. Whether it is retail, technology, or the other industries be careful how much you pay for a company’s fundamentals.

Regulating Social Media

Oct 31st, 2017

Facebook is set to report earnings tomorrow. One area of concern I have had with this company and other digital advertisers is increased regulation. After the recent election it was found that a Russian group posted more than 80,000 times during and after the election on Facebook. These posts reached potentially 126 million users. This has been a hot topic for congress lately and increased regulation could hinder growth and earnings for these companies.

Stick With The Fundamentals

Oct 27th, 2017

We continue to maintain our position that strong value equities are the best investment at the current time. With increasing interest rates, many investors will begin to question the safety of bonds. As interest rates increase, bond prices fall. In a recent study from Bank of America, we saw Global fund managers raise concerns over rising interest rates as 82% expect bond yields to rise in the next 12 months and 85% believe bond prices are overvalued.


Not All Bad News

Oct 26th, 2017

Nationwide Pending home sales have fallen for five of the past six months, but don't blame the economy. Inventories of existing homes continues to decline reducing the supply of homes for sale in spite of rising prices. It is a great time to be a home builder trying to add to the supply side of the equation of homes for sale. Newly built homes jumped 19% month to month.

Let's Not Get Ahead of Ourselves

Oct 25th, 2017

Social Security recipients and other retirees will see a cost of living adjustment (COLA) increase of 2.0%. This follows 2016 where there was no adjustment and 2017 where there was a small increase of 0.2%. This means that retirees will see an increase in benefits, but before you get excited it is important to note that increase will only be $25/month for the average beneficiary. Relying on Social Security or small pension plans is not a recommended retirement strategy, it is important to save for your retirement years so you can have a retirement you enjoy. There are many different options when it comes to filing for your Social Security benefits. If you are confused about the best option contact our Financial Planner, Harrison Johnson, at 858-546-4306.

Chipotle Making Its Way Down

Oct 25th, 2017

Chipotle (CMG) has reported a lackluster quarter once again and the stock is being punished as concerns over a longer than expected revival take place. The stock price has fallen below $275/share. We said Chipotle was expensive at $750 and on the way down at $500, $400, and even now under $275 we still think it is expensive. We currently have a target sell price of $165.50 and I would not be surprised to see that target price decline over the next few weeks. Another good example of why you don’t overpay for the earnings of a company....


"Bad News" Bitcoin

Oct 25th, 2017

As Bitcoin rises in price so does the number of smart investors saying to stay away. Yesterday morning on CNBC, well known billion dollar investor Prince Alwaleed Bin Talal (who has many investments in the U.S.) said Bitcoin will “implode” and related to the scam from Enron. He joins the list of smart money guys like JP Morgan CEO Jamie Dimon and BlackRock CEO Larry Fink (who called Bitcoin an index of money laundering). I know people continue to want to get in, but I too have recommended stay away. Even Jordan Belfort, the infamous “Wolf of Wall Street”, called it the biggest scam ever. Remember the saying it takes one to know one? When the music stops there will be many without chairs!


Will Oil Prices Increase in the Long Term by Brent Wilsey

Will Oil Prices Increase in the Long Term?

Oct 23th, 2017

OPEC General Secretary, Mohammad Barkindo, believes demand for oil will continue to grow. He foresees oil demand to surpass 100 million barrels per day by 2020, this is well above the current 2017 estimate of 96.8 million barrels per day. If demand continues to rise and supply stabilizes or declines prices for oil will increase.


Moving On to Bigger and Better Opportunities by Brent Wilsey

Moving On to Bigger and Better Opportunities

Oct 20th, 2017

Today we sold one of our large holdings. We have held this company for several years, but today it hit our target sell price. While we liked holding this company, we are glad we were able to raise some cash to look for a new company trading at a good value. While we believe the stock market is expensive, there still are some great value opportunities if you find the right companies. In fact, we just made a large purchase on Tuesday of a company we expect great things from over the next few years.


NFL Ratings Continue to Slide by Brent Wilsey

NFL Ratings Continue to Slide

Oct 18th, 2017

Through the first 6 weeks of the season viewership has fallen 7.5% compared to the first 6 weeks last year and 18.7% compared to the first 6 weeks of 2015. Ratings continue to fall as they are down 6% season to date. If you hold companies such as CBS, Twenty-First Century Fox (FOX), Disney (DIS), and AT&T (T) you may want to research the NFL’s impact on the company.

Netflix Priced too High by Brent Wilsey

Netflix Priced too High

Oct 17th, 2017

Netflix stock has now topped $200 after reporting growth in sales, earnings, and subscribers. The problem here is the company made just $0.37/share in the most recent quarter and trades at 93x Forward Earnings. That is way too expensive for estimated earnings and is a risk I want to avoid.

Dividends Can Help Your Portfolio  Article by Brent Wilsey

Dividends Can Help Your Portfolio

Oct 11th, 2017

Dividends can account for more than 50% of a stocks long term return. In 2016 dividends just from the S&P 500 were $404 billion. For 2017 it is estimated they will be $436 billion, a 7.7% increase. Keep in mind these are just from the 500 companies in the S&P 500. Investment tip: while I point out dividends are important, an investor should never blindly invest in a company just because of a high dividend yield.

Is Equifax sinking fast? [VIDEO]

September 8th, 2017