Watchlist September 2018

It’s time for the monthly watchlist report. As always, you can find the updated info at any time here Dividend Income Spreadsheet and the Portfolio Spreadsheet. Here’s my current portfolio.

All data on nordic companies are gathered from Borsdata.se. I highly recommend them. 

Summary

The following watchlist contains my comments about the value in Short Sea Shipping, Danske Bank, Altria, Philip Morris, International Flavors and Fragrance, Southern Company, Anheuser Busch Inbev, BMW,  J.M.Smucker, Starbucks, Kopparbergs, and Europris.

I actually added to the emerging market index because I believe the recent drop might be a nice time to add. The index is down 10% this year and the Hong Kong exchange is down 20% from the top (bear market?)

Short Sea Shipping

“The modern terms short sea shipping, marine highway and motorways of the sea refer to the historical terms coastal tradecoastal shippingcoasting tradeand coastwise trade, which encompass the movement of cargo and passengers mainly by sea along a coast, without crossing an ocean” – Wikipedia

Reasons for looking into Short Sea Shipping:

  • Analysts believe  that in a  5 year timeframe, the bear case for Short Sea Shipping is -8%,  38% is mean consensus and 62% is high value target.
  • What has changed is that A) Banks are finally ready to offer loans so that they can buy ships in the Short Sea Shipping segment.
  • As by 2050 short sea shipping has a strong role in reaching the EU transport goal of reducing 60% of greenhouse gas emission generated by transport and by 2030 the shift of 30% of road freight over 300 km to other modes.
  • At last, the major Shipping firms have, due to the new climate law which forces them to pay $300 000 to meet the requirements, chosen to instead just dump the ships which has caused a massive drop in the supply.

Danske Bank

The banking sector is changing. It’s not about money anymore. It’s about technology and trust me, things are changing.

The simplest form of machine learning is RPA or Robotic Process automation. This technology is changing the way banks operate. Basically, the technology involves creating a program which replaces the easiest tasks we humans perform. Every task which is binary is being replaced by RPA. Think typing Yes or No to emails and so. The point? It is saving banks a ton of money, and the work force is decreasing fast.

Reasons for looking into Danske Bank:

https://borsdata.se/

The price of Danske Bank has dropped due to a money laundry scandal. But investigations haven’t been able to show any clear evidence.

  • P/B 0.92
  • Yield 5.9%

https://borsdata.se/

Remember Volkswagen? Somehow, scandals in the stock markets tend to be hyped, and people sell after the news is priced in. I tend to like scandals, and I am often keen on adding shares even if everyone is telling me that this going south.

Altria and Philip Morris

I think both firms are still value. I send you to my article about PM here

Recent Purchase – Philip Morris International

International Fragrance and Flowers

IFF is a wonderful company which is trading at a very interesting price. The firm just broke the SMA20 and the SMA50 and is boosting a very attractive yield a long with great dividend growth.

  • Insider Own is at 87.50%
  • ROE is 17.10%
  • ROI is 14.40%
  • Gross Margin 43.20%
  • Oper Margin 17.20%
  • Profit Margin 8.30%
  • Payout Ratio 72%

 

Anheuser Busch Inbev and BMW

Anheuser Busch Inbev is trading at a very interesting price. But the Belgian tax makes me say no this time. I encourage you to take a look

BMW is also another high quality firm. The only problem is that the industry is very cyclical, which is something I don’t like at.

Southern Company

Another utility trading at a very interesting price. The high yield along with the pretty safe dividend seems like a good option if one is looking for dividend income.

Starbucks

I really like Starbucks and operate with an intrinsic value at $71. I would like to purchase Starbucks below $60.

Read more here about Starbucks

Starbucks In Asia

J.M.Smucker, Kopparbergs, and Europris.

J.M.Smucker is trading at a forward P/E at 12.92 and yields 3%. The ROE has been high for a long time which is something I really like.

I observe that short float is 8.5% which could mean that analyst know something that the market isn’t fully aware of.

Kopparbergs is now down from the peak at around 245 SEK after the selloff due to a somewhat weak report. People though that Kopparbergs would make a ton of money because of the long warm nordic summer, and they did. But not as much as people hoped.

https://borsdata.se/

I am expecting Kopparbergs to trade around 180 to 200 SEK in the near future, and will add.

Europris is down after another weak report. The stock is trading at around 20 NOK while several investment firms believe that the stock should be valued close to 34 NOK.

https://borsdata.se/

I think the stock is oversold, but don’t like the weak reports.

That’s it.

What stocks are you looking at? Any thoughts? Let me know. Also, remember to take a look at Borsdata.se

Take Care,

Stockles

11 comments

  1. Your watchlist contains many interesting companies.
    will include Danske Bank in my watchlist as well.
    Been looking at IBM lately, P/E at 10.58 and trading at at lows.
    revenue seems to be up this year for the first time in a while.
    uncertain if thay are at the forefront of innovation any longer though….
    Have you looked at IBM?

  2. Nice watchlist! I own shares of BMW and Southern Co myself. I also like Altria and PM at current prices, although it is British American Tobacco, which made it on my recent watchlist. Starbucks is interesting, too. However, I think it’s still a little bit too expensive for my taste. Thank you for bringing Danske Bank onto my radar. I haven’t heard of the mentioned scandal before, so that might be a good chance to initiate a starter position. Or would you personally still favor Nordea Bank?

    – David

      1. Wow! I just ran Danske Bank through our stock screener and it made it under the TOP10 (out of 500) right away!

        However, when looking at the individual components of our valuation model, it’s remarkable that Danske Bank performs so well, although it only has a positive score in 1 out of 4 metrics („cheapness“).

        So, you might be right. The current price drop seems exaggerated. Nevertheless, the accusations are a bit too much for my personal risk appetite. I can handle shitstorms pretty well. But now, the US are involved and they don‘t take money laundry for a joke, especially if it’s coming from Russia.

  3. How much of your portfolio is in Nordic stocks and do you try to avoid home bias as you now live in Norway? Personally I love nordic stocks, but that is also a case of “home bias” I believe, and I have always tried to avoid having too much money invested in the nordics, as this is where my home and work has been and therefore in extension having alot of nordic stocks would be like putting all the eggs in the same basket. However, as I am now living in Asia, I am considering investing more in the nordics.

    1. Hello,

      In total, maybe something like 30-40%, but that’s okey since most of my nordic companies (especially if u include Kinnevik and Investor) operate in the global market. In so, I tend to think of them as global companies, with global pipelines, and that’s why I am not that worried about nordic vs non-nordic.

      The nordic market is also cheaper than, say, the american market so it might not be too bad to own a few shares in the nordic market.

  4. With my focus on the US market, there’s a few names that I’m not familiar with here so thanks for sharing some interesting reading. I was looking at Starbucks today and thinking it still offers opportunity at the current price, and I’m a big fan of Altria but added to my position twice last month.
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