Trade Idea – Intel

Intel is one of the leading players of the global semiconductor business segment. It supplies microprocessors, chipsets and other products mainly for computer manufacturers, and already established a significant footprint in cloud based solutions and IoT. It is among the few ‘traditional’ players of the tech business segment who were active on the market already in the dotcom stock market bubble. Nowadays the semiconductor market is about the competition of the two giants: AMD and Intel. 

In July 2020, Intel managed to meet the analysts’ expectations, however announced pessimistic outlook for the near future (mainly in connection with the delay in the race for the newest generation of CPUs). 

HIstorical share price performance (in USD, source: Yahoo Finance)

In a nutshell, buying Intel share seems to be having exposure to a market leader at great pricing (less than 10 P/E and close to 3% dividend yield). Taking into account that the stock became oversold, a long position has been established at USD 48.34 on 29 July 2020.

Link to the IR site of the company for more info and insights.

Trade Idea – DuPont de Nemours

Thanks to the global market turbulences the value of the position decreased a lot in March 2020. The recent unprecedented stock market recovery moved the stock price above the breakeven level and – to mitigate the risk of any furter price collaps – stop-loss limit was set. On 9 June 2020 the shares were sold at USD 55.4 resulting in appr. 6% (not annualized) return before any taxes and fees.

Trade Idea – Walt Disney

Following the rapid comeback of the share price since March it seemed to be a wise idea to secure the gain and the position was closed at USD 116.18 on 18 May 2020. The realized return in appr. 2 months is 2.57% before any taxes and fees.

Trade Idea – Walt Disney

In the 90’s Walt Disney was for its theme Parks and animated films as a global brand. Currently the company is one of the leading global entertainment market player with the ownership of very valuable media assets (such as Star Wars) and significant position in the streaming segment (Disney+).

Due to the increasing issues associated with the pandemic, the company recently closed some of its theme parks and its share price dropped significantly from the USD 130-140 range (and in terms of RSI the stock became oversold). Despite the current headwinds the fundamentals still represent long-term value on the basis of one of the strongest brand worldwide.

Long position has been opened at USD 113.27 on 5 March 2020.

Link to the IR site of the company.

Trade Idea – Royal Dutch Shell

Shell is a vertically integrated oil and gas company (covering hydrocarbon exploration, production, refining, transportation, retail, trading etc. segments of the industry) and one of the global supermajors. In the 2019 version of the Forbes Global 2000 it was ranked as the 9th largest company in the world.

Key financials (source: IR presentation of the company)

Pros

• The company is rapidly investing into green sectors and from this perspective it is well ahead of its US peers.
• More than 7% annual dividend yield with the already announced policy to increase it.
• Large-scale share buyback programme until the end of 2020.
• Strong organic free cash flow generation, it is expected to be able to cover majority of the CAPEX.

Cons

• The expected USD 24-29 bn CAPEX pointing to the execution and consutruction risk (especially new ventures and transformational type of projects).
• The profitability of its 1.4 bn boe hydrocarbon production is largely dependent on the development of oil and gas prices and the macro environment. The company estimated its business plan for 2020 using 65 USD/bbl crude oil prices.
• Potentially increasing tensions related to climate change and emissions against oil and gas companies.

Historical share price development (in EUR, source: Yahoo Finance)

Due to the decreasing oil and gas prices, the Anglo-Dutch energy company reported decreasing 2019 full-year net profit (more than 20% compared to the 2018 figures) resulting in significant decline in its share price. In light of the above listed mid and long term advantages, such short term headwinds might represent a solid investment opportunity.

On 31 January 2020 a long position (GB00B03MLX29, RDSA) has been opened at EUR 23.84.

Link to the IR site of the company for more data and insights.

Trade Idea – DuPont de Nemours

DuPont de Nemours was formed as the result of the merger of Dow Chemical and DuPont in 2017. The combined entity was globally the largest chemical player in term of sales figures. After the merger it was split into three publicly traded companies: (1) Corteva was established for the agriculture segment, (2) Dow focuses on with focuses on materials science, and (3) the specialty products division was transferred under the name DuPont.

Historical share price development (in USD, source: Yahoo Finance)

The reported earnings met the analysts’ expectations however the updated giudance for 2020 was disappointing causing rapid decrease of the share price into the oversold territory.

Long position has been opened at USD 52.23 on 31 January 2020.

Link to the IR site of the company for background data and insights.

Trade Idea – Expedia

After capturing certain gain from the recent recovery in Expedia shares, on 6 January 2020 the long position was closed at USD 108. The realized return during appr. 2 months is 14.67% before any taxes and fees.

Trade Idea – Expedia

Following the announcement of the latest quarterly results, Expedia’s shares showed a historical record intraday decline (appr. 27%). The company – previously owned by Microsoft – globally offers different travel and accomodation services via its online platform.

Historical share price development (in EUR, source: Yahoo Finance)

I expect some recovery from the current price level over short or mid term therefore long position has been opened at USD 94.18 on 13 November 2019.

Link to the IR site of the company for background data and insights.

Trade Idea – Anheuser-Busch InBev

On 20 June 2019 the ABI position has been closed at EUR 79.24. The realized profit is 2.05% before any taxes and fees.

Trade Idea – Anheuser-Busch InBev

If you like beer what would be the best choice to spend EUR 78? Obviously buying 16 pints of good beer and drinkig them now. On the other hand, taking an equity position in Anheuser-Busch can offer a better upsides for the near future as the shares of the company trade under this price level.

Anheuser-Busch InBev is a multinational drink and brewing holdings company based in Belgium. The current corporate structure of AB InBev was formed through different mergers of global brewers: Interbrew (Belgium), Ambev (Brazil) and Anheuser Busch (US); and the combined group became a global leader in the FMCG segment. In October, the company officially annouced the acquisition of its global competitor, SABMiller, at a full price of more than USD 100bn. In 2015 Financial Times referred to the deal as the world’s most expensive. Following the fulfillment the requests of the competition office (SABMiller sold to Molson Coors full ownership of the Miller brand portfolio outside of the US and Puerto Rico for USD 12bn), the deal has been closed in October 2016. As a result of the completion, Anheuser-Busch InBev SA/NV became the largest brewer globally with appr. 30% market share and many well-known brands. In 2016 ABI sold some brands and the Hungarian, Czech, Polish, Romanian and Slovakian operations of SABMiller to Asahi Breweries Group. In 2017 the company announced establishing a 50-50 JV with Anadolu Efes by merging both of their Russian operations.

From profitability point of view, ABI reported solid figures on earnings: revenue growth of 4.7% and total volume growth of 0.8% during Q2 2018. Its net debt increased from 104.4 billion USD to 108.8 billon USD during H1 2018, which increased the level of net debt to normalized EBITDA from 4.80x to 4.87x. Similarly to the previous years the management expects that a large portion of the full-year CFs will be realized in the second half of 2018, which would lower the covenants. ABI is committed to achieve 2.00x level with certain cost saving initiatives introduced already.

Pros

• increasing dividend yield which is more than 4% p.a. currently
• extremely oversold technical picture combined with positive analysts’ outlook in connection with the company’s fundamentals
• global market leader position and solid CF generating potential

Cons

• large levels of debt and net debt to EBITDA
• challenges related to integration of SAB an realization of synergies
• potential pressure on profit margins in case of global slowdown

 

Historical share price development (in EUR, source: Yahoo Finance)

As an overall conclusion of this assessment, long position has been opened in ABI at EUR 77.65 on 6 September 2018.

Link to the IR site of the company for background data and insights.