OT: Stock and Investment Talk

[T2Kplus20]

I mentioned this awhile back that approval was on the horizon. Now the FAA has approved return to service of the 737 Max. Good news for BA and GE as well.

FAA clears Boeing 737 Max to fly again after 20-month grounding spurred by deadly crashes

Federal regulators cleared the Boeing 737 Max to fly again after a 20-month grounding that sparked a crisis inside one of the nation's biggest exporters.

www.cnbc.com

And the vaccine roll-out will be a huge boost for them both.

 

[rutgersguy1]

And the vaccine roll-out will be a huge boost for them both.

Yea they’ve gotten some boost out of that already so I’d think some of it is in the stocks already.

GE has been above the 200DMA for a little bit of time now so that's good sign for the stock and now hopefully should be support instead of resistance. Also the 50DMA is trending up to cross the 200DMA, a lagging indicator but again another positive sign of a possible longer term trend. I'd like to think at the very least it should be the last sniffing of the mid single digit area. Still need aviation to get back to normal before any big moves but looks like it may have finally bottomed after some years. Doesn't mean it'll shoot up like rocket though but hopefully no more big downward surprises on the horizon. At least for things within the company's control I don't expect that with Culp.

 

[tom1944]

I got out of small/mid-caps about 2 years ago, but for the past few months it looks like the returns are starting to coming back. Growth stocks are still strong and my overall "growth" allocation may only go down slightly. Russell 2000 and Russell 2000 Growth are what I am increasing now (equal buys).

Keeping it simple:
VTWO
VTWG

I just buy Vanguard's Total Market for my equity exposure

 

[mdk01]

I like it. Contrarian play. Might be a tad early. Still a lot of BKs to come.

A tad early? It's been closed to new investors for 10-12 years, but T Rowe Price New Horizons Fund is up 45% this year and an average of 21% over the last decade. I just recognized that I don't have time to really dig into researching small caps. and went with a pro. There has to be some small cap funds out there that are open and well managed.

 

[RU-05]

Yea they’ve gotten some boost out of that already so I’d think some of it is in the stocks already.

GE has been above the 200DMA for a little bit of time now so that's good sign for the stock and now hopefully should be support instead of resistance. Also the 50DMA is trending up to cross the 200DMA, a lagging indicator but again another positive sign of a possible longer term trend. I'd like to think at the very least it should be the last sniffing of the mid single digit area. Still need aviation to get back to normal before any big moves but looks like it may have finally bottomed after some years. Doesn't mean it'll shoot up like rocket though but hopefully no more big downward surprises on the horizon. At least for things within the company's control I don't expect that with Culp.

And on that news GE cracks $10. Smoking Ford which it trailed not more then a couple months back. F currently sitting at $8.80. Ford is performing well, GE just got red hot. Up about/more then 60% since late September.

 

[RU-05]

Modestly decreasing my allocation of large cap growth funds/indexes, increasing my allocation of mid and small caps (Russell 2000). No value funds/indexes yet.

Russell 2000 up about 20% from the lows in late Sept. The majors up about 10%.

 

[jtung230]

A tad early? It's been closed to new investors for 10-12 years, but T Rowe Price New Horizons Fund is up 45% this year and an average of 21% over the last decade. I just recognized that I don't have time to really dig into researching small caps. and went with a pro. There has to be some small cap funds out there that are open and well managed.

? Not sure what you talking about. Are you replying to the right post.

 

[rutgersguy1]

And on that news GE cracks $10. Smoking Ford which it trailed not more then a couple months back. F currently sitting at $8.80. Ford is performing well, GE just got red hot. Up about/more then 60% since late September.

I mentioned some time back that it was realistic that GE could get to the high single low double digits. Escaping too much beyond that area though to the mid teens or higher will likely take aviation to get back to some form of normal.

 

[RU-05]

Put my stake in the ground on Norwegian Cruise line. $20.80. Missed a 10% move since Friday, and I wouldn't be shocked to see it go back there again, but I've been waiting and missing long enough. End of the day, assuming the vacine's are legit, this thing jumps in a big way come spring and those first cruises head back out. Certainly a sector where there is pent up demand.

Also recenty bought the VIX(via VXX) and that has been a dog thus far but will continue to hold as a short term hedge. If we hit some volatilty in the short term, at the VXX jumps I'll sell here and put that into Norwegian as well.

 

[RU-05]

I mentioned some time back that it was realistic that GE could get to the high single low double digits. Escaping too much beyond that area though to the mid teens or higher will likely take aviation to get back to some form of normal.

I was on the fence on GE, saw some conflicting opinions from the talking heads, some bullish, others merely skeptical(citing the immense complexities of the companies), but given you gave the most in depth analysis of all the opinions I saw, and it was pretty optimistic, I followed your lead.

I'm up 32% in 20 days. Thus far you've been dead on on the price action. But I think momentum will see this run hotter in the short term then you expect.

 

[RU-05]

Related to my post above about the momentum of GE, there was a guy on the Halftime Report yesterday who said, given the current momentum, and the potential moves of recovery stocks within the DJI, that he could see it hit 40K by the end of 2021.

Sounds crazy, but I can see the overall logic. Companies like Exxon, Boeing, Disney, and the financials have big jumps ahead of them as the economy reopens. Some of that will be at the expense of companies like Microsoft and Apple, but I think more of the money will be new money.

 

[T2Kplus20]

I just buy Vanguard's Total Market for my equity exposure

+1
Pretty much the Russell 3000 index or S&P Completion index.

 

[T2Kplus20]

Russell 2000 up about 20% from the lows in late Sept. The majors up about 10%.

+1
Been tracking these indexes since late August.

 

[RUTGERS95]

I mentioned awhile back that approval was on the horizon. Now the FAA has approved return to service of the 737 Max. Good news for BA and GE as well.

FAA clears Boeing 737 Max to fly again after 20-month grounding spurred by deadly crashes

Federal regulators cleared the Boeing 737 Max to fly again after a 20-month grounding that sparked a crisis inside one of the nation's biggest exporters.

www.cnbc.com

in GE large just over 6/share. one of a few that I've dialed in on per my investment criteria model

 

[RUTGERS95]

And the vaccine roll-out will be a huge boost for them both.

don't forget xom, eqt, and the shipping companies that have been decimated

 

[RU-05]

So the GM-Nikola deal looks to be a go, at least in terms of building the badger.

GM is also invested in Lordstown Motors (which makes EV), and is building a new battery factory next to Lordstown current factory.

These are in addition to GM's own EV models, highlighted by the upcoming Hummer.

So:

1)GM is going big on EV

2)I wonder if the deals with Nikola and Lordstown will continue to be partnerships, or will they eventually be full acquisitions?



Edit:
I did buy NKLA on the news, they were up 10% already on the news and up 30ish% off recent lows, but given they've been as high as $92 in the past year this thing could run again. Look out for a Hydrogen partnership deal in the future as well. A deal with BP was rumored not long before the Hyndenburg article that sent this thing tumbling. If that deal comes back........

 

[RU-05]

? Not sure what you talking about. Are you replying to the right post.

I too was wondering what you meant by "a tad early". Did you mean early in terms of rotating to small caps?

 

[T2Kplus20]

Folks - get your money off the sidelines. 😀

Dow Jones could hit the 40,000-point level next year, analyst says

Dow could hit the 40,000-point level next year, analyst says

The Dow Jones Industrial Average stock index has the potential to reach the 40,000-point mark in 2021, according to Baird's Patrick Spencer.

www.cnbc.com

 

[RU-05]

Folks - get your money off the sidelines. 😀

Dow Jones could hit the 40,000-point level next year, analyst says

Dow could hit the 40,000-point level next year, analyst says

The Dow Jones Industrial Average stock index has the potential to reach the 40,000-point mark in 2021, according to Baird's Patrick Spencer.

www.cnbc.com

I mentioned that one above.

It's just one opinion, but as I mention above, there is pretty sound logic behind that opinion.

 

[RUTGERS95]

So the GM-Nikola deal looks to be a go, at least in terms of building the badger.

GM is also invested in Lordstown Motors (which makes EV), and is building a new battery factory next to Lordstown current factory.

These are in addition to GM's own EV models, highlighted by the upcoming Hummer.

So:

1)GM is going big on EV

2)I wonder if the deals with Nikola and Lordstown will continue to be partnerships, or will they eventually be full acquisitions?



Edit:
I did buy NKLA on the news, they were up 10% already on the news and up 30ish% off recent lows, but given they've been as high as $92 in the past year this thing could run again. Look out for a Hydrogen partnership deal in the future as well. A deal with BP was rumored not long before the Hyndenburg article that sent this thing tumbling. If that deal comes back........

I'd rather the parts and components companies for the EV push

 

[rutgersguy1]

in GE large just over 6/share. one of a few that I've dialed in on per my investment criteria model

I'm around the same area 6-7s and I've said I think it's going to be a slog for the company but it had a realistic shot to the high single/low double digits and GS I think came out with that call after me lol. So we're in that vicinity now but I'm really looking for a big longer term move into the high teens/20s and beyond. But I don't feel like that's going to happen any time soon.

Immelt was a buffoon but I have a lot of faith in Culp and he's done a good job slowly turning things around and getting the company right sized and reducing cost/debt and improving cash flow. If not for the pandemic whacking the crown jewel in aviation I think we might be in that mid teens or better now. Unfortunately, that part is out of the company's control. I think Culp seems like a good CEO and he's certainly incentivized to get there. I've mentioned here he'll get in the vicinity of 300MM in compensation IIRC if he can get it into high teens area (like 18 I think) and he'll deserve every penny IMO given the absolute mess left behind by Immelt.

 

[Frida's Boss]

I'm around the same area 6-7s and I've said I think it's going to be a slog for the company but it had a realistic shot to the high single/low double digits and GS I think came out with that call after me lol. So we're in that vicinity now but I'm really looking for a big longer term move into the high teens/20s and beyond. But I don't feel like that's going to happen any time soon.

Immelt was a buffoon but I have a lot of faith in Culp and he's done a good job slowly turning things around and getting the company right sized and reducing cost/debt and improving cash flow. If not for the pandemic whacking the crown jewel in aviation I think we might be in that mid teens or better now. Unfortunately, that part is out of the company's control. I think Culp seems like a good CEO and he's certainly incentivized to get there. I've mentioned here he'll get in the vicinity of 300MM in compensation IIRC if he can get it into high teens area (like 18 I think) and he'll deserve every penny IMO given the absolute mess left behind by Immelt.

I can certainly understand why GE shows up on any value screen these days, and can see upside from current earnings levels. However, the liability side of the balance sheet and other contingent liabilities are an opaque potential black hole. As such, I consider the equity to be more of a call option.

 

[rutgersguy1]

I can certainly understand why GE shows up on any value screen these days, and can see upside from current earnings levels. However, the liability side of the balance sheet and other contingent liabilities are an opaque potential black hole. As such, I consider the equity to be more of a call option.

I agree in the sense that I've always thought of GE Capital as somewhat of a blackbox prior to current management and the LTC liability reared its ugly head a decade plus after it should have been accounted for by previous management. I do think with the new BOD and Culp they've set aside for it and I think have their hands around the issue and hopefully no more surprises. I have more confidence and faith in this CEO and BOD than the previous but never can say 100%.

I've mentioned this also and it's unfortunate to say but the pandemic and its effects while it hurt aviation it might have helped their LTC liabilities.

Free cash flow is as big if not bigger metric currently than earnings in regards to the prospects for the stock.

 

[RUTGERS95]

I'm around the same area 6-7s and I've said I think it's going to be a slog for the company but it had a realistic shot to the high single/low double digits and GS I think came out with that call after me lol. So we're in that vicinity now but I'm really looking for a big longer term move into the high teens/20s and beyond. But I don't feel like that's going to happen any time soon.

Immelt was a buffoon but I have a lot of faith in Culp and he's done a good job slowly turning things around and getting the company right sized and reducing cost/debt and improving cash flow. If not for the pandemic whacking the crown jewel in aviation I think we might be in that mid teens or better now. Unfortunately, that part is out of the company's control. I think Culp seems like a good CEO and he's certainly incentivized to get there. I've mentioned here he'll get in the vicinity of 300MM in compensation IIRC if he can get it into high teens area (like 18 I think) and he'll deserve every penny IMO given the absolute mess left behind by Immelt.

I can't imagine how these total comps are even allowed but that said, I don't know about high teens anytime soon and I'm close to pulling some off the table

 

[Frida's Boss]

I agree in the sense that I've always thought of GE Capital as somewhat of a blackbox prior to current management and the LTC liability reared its ugly head a decade plus after it should have been accounted for by previous management. I do think with the new BOD and Culp they've set aside for it and I think have their hands around the issue and hopefully no more surprises. I have more confidence and faith in this CEO and BOD than the previous but never can say 100%.

I've mentioned this also and it's unfortunate to say but the pandemic and its effects while it hurt aviation it might have helped their LTC liabilities.

Free cash flow is as big if not bigger metric currently than earnings in regards to the prospects for the stock.

The LTC liabilities are certainly one of the areas that are concerning, but so is the pension liability.

 

[RUTGERS95]

I can certainly understand why GE shows up on any value screen these days, and can see upside from current earnings levels. However, the liability side of the balance sheet and other contingent liabilities are an opaque potential black hole. As such, I consider the equity to be more of a call option.

amen to that, options are an underutilized tool by investors.

 

[jtung230]

I too was wondering what you meant by "a tad early". Did you mean early in terms of rotating to small caps?

Yes

 

[mdk01]

I agree in the sense that I've always thought of GE Capital as somewhat of a blackbox prior to current management and the LTC liability reared its ugly head a decade plus after it should have been accounted for by previous management. I do think with the new BOD and Culp they've set aside for it and I think have their hands around the issue and hopefully no more surprises. I have more confidence and faith in this CEO and BOD than the previous but never can say 100%.

I've mentioned this also and it's unfortunate to say but the pandemic and its effects while it hurt aviation it might have helped their LTC liabilities.

Free cash flow is as big if not bigger metric currently than earnings in regards to the prospects for the stock.

GE Capital and LTC go back to Jack Walsh.

 

[rutgersguy1]

I can't imagine how these total comps are even allowed but that said, I don't know about high teens anytime soon and I'm close to pulling some off the table

I think this area is a sensible place to do that...never go broke taking profits.

 

[rutgersguy1]

GE Capital and LTC go back to Jack Walsh.

Yea but they spun off Genworth in the mid-late 2000s IIRC and in the vicinity of that is when you should handle all these issues. This crap shouldn't rear its head a decade plus later. A lot of the underwriting for LTC was poorly calculated for the industry as a whole not just GE but my point is the problem shouldn't be festering for 10+ years to rear its head. Take care of it, set aside appropriate reserves and move on.

 

[rutgersguy1]

The LTC liabilities are certainly one of the areas that are concerning, but so is the pension liability.

Yup I'm aware of that too I think it was in the vicinity of 30B some time ago, it may be somewhat lower now. I think they can manage that too with time but exactly why controlling costs and improving cash flow is very important and I think they're on the right path under Culp.

I think they reserved 15B for LTC to be very conservative IIRC.

 

[Frida's Boss]

Yup I'm aware of that too I think it was in the vicinity of 30B some time ago, it may be somewhat lower now. I think they can manage that too with time but exactly why controlling costs and improving cash flow is very important and I think they're on the right path under Culp.

I think they reserved 15B for LTC to be very conservative IIRC.

Could be. Those liabilities, though, are somewhat unboxed, and make GE A tad too risky. I can see why putting some money to work in the low single digits makes sense, though.

 

[rutgersguy1]

Could be. Those liabilities, though, are somewhat unboxed, and make GE A tad too risky. I can see why putting some money to work in the low single digits makes sense, though.

I mentioned this also in one of these threads that it may sound strange when referring to a GE but I took it as a somewhat speculative play. If it comes through like I think it has the potential to then great and if not I’m okay with loss.

 

[RU-05]

Yes

Your thoughts on my post above regarding the relative moves of the Russel2K vs the majors?

 

[RU-05]

FCELl stays on fire.

 

[jtung230]

Your thoughts on my post above regarding the relative moves of the Russel2K vs the majors?

Not sure which post you are referring to. Generally, IMHO small cap will have more issues due to credit. Risk/reward doesn’t make sense yet. Majors still have legs.

 

[RU-05]

Not sure which post you are referring to. Generally, IMHO small cap will have more issues due to credit. Risk/reward doesn’t make sense yet. Majors still have legs.

Russell up 20% since Sept lows. Majors up about 10% during that time.

 

[jtung230]

Russell up 20% since Sept lows. Majors up about 10% during that time.

To my point about risk/reward. I personally think S&P and the Dow will outperform the small cap into the 1st Q. After that happens, it’s time for the rotation.

 

[T2Kplus20]

To my point about risk/reward. I personally think S&P and the Dow will outperform the small cap into the 1st Q. After that happens, it’s time for the rotation.

Let's see what happens. I'm tracking the S&P 500, Russell 1000, and Russell 2000.

 

[RU-05]

So what does a 10x P/E, a .31x Price/Sales, a 2.88 price to cash flow, but a 71x price to book tell you?