Looking for Laggards 2: STOR (Why not? It's a Warren Buffet stock.)

April 9, 2020

Since the Zoom meetings and previous posts that encouraged trading on insiders with MACD cutting, we are fortunate that almost all of the stocks have surged, with the S&P500 also climbing into the 200 wk average.

 

Valuetronics, WFC, DK, VST, LNC, XOM, PLNT, NOV (posted 2 weeks ago) and most recently SPG (few days ago) and NRZ have all gone up since we first alerted you to those. Most have gone up more than 20%. SPG is up 28%, and NRZ around 50%. 

 

What now?

 

I can't say for certain how long this cycle will last, so to increase your chance of gain, and minimize your chance for loss, we look to laggards. Here's one.

 

For those who still want to get some skin in the game for the long term, here's a stock that is lagging the most of them, and so I bring it to your attention.

 

This will be short.

 

It has the criteria of coming off a double bottom, with insider buying. Note that the insiders were willing to buy it at higher prices than now.

 

STOR

 

 

STORE Capital Corporation (STOR) is a triple-net lease REIT that went public in late 2014. STORE Capital is run similar to that of fan favorite Realty Income (O), in that they acquire buildings and enter into sale-leaseback transactions directly with tenants. It's also a Warren Buffet Stock.

 

Mark Ruissen does a good job describing the investment case here.

 

In their recent CEO letter in 18 March, STORE concluded 2019 with nearly $100 million in cash and an unused $600 million fully committed line of credit. In January, we addressed our equity capital needs for the quarter by issuing approximately $150 million in new shares at a weighted average share price of $36.

 

They looked to have liquidity to last this year. This is the most important to me.

 

Please read the CEO letter and Mark's posts for the valuation thesis.

 

If you compare STOR and SPG, you'll see that SPG has already broken out with an obvious double bottom. STOR's double bottom started but hasn't broken out yet.

 

 

 

Considering that insiders were willing to buy their stocks between $28-$30, I would say there is a good chance that the price may get there.

 

Once again, if you have a long term perspective, you can consider this for your portfolio,

 

To keep yourself from making bad decisions, always try to assign a probability that we have seen the bottom, or that we might make a lower bottom (personally, if we do make a lower bottom, I suspect it wouldn't be that much lower at this point, unless the COVID goes longer than expected or that it causes an actual financial crisis).

 

Then invest your money, but keep some cash just in case. 

 

For example, an investor could invest 70% of his money now, and keep 30% cash just in case prices goes much lower.

 

But others would look at stock like XOM and say, "XOM has never given 9% dividends ever." If I buy it now for the long term, I don't see myself losing money. They might put in more than 70%.

 

Whichever you choose, make sure you can live with the decision, or else the volatility or good/bad news yoyo will knock you out. 

 

If you must have a stop loss if you are a short term trader, an idea would be to sell when the daily MACD finally cuts downward.

 

Stay safe everyone!

 

Ken

 

 

Love Gifts: If these posts have blessed you and you would like to send a love gift or tithe, do send an email to Ken@quantzombie.com to let us know! We would be so happy to know that you have chosen to sow into this ministry. Singaporean donors can use PayNow: 98777219. For international donors, please use Paypal: paypal.me/kennethwkkoh.

 

 

Disclaimer: This site has been designed for informational and educational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any security which may be referenced upon the site. Please consult your own financial adviser to determine what trade is appropriate for you. See our full disclaimer here.

Please reload

Featured Posts

Market Update: We've surged more than 25% on the SPX since our bottom call. Is it time to sell now?

June 13, 2020

1/10
Please reload

Recent Posts
Please reload

Archive