- Enbridge is my best buy
- Swedish investments firms trade at an attractive discount
- Intrum Justina and Oaktree Capital seem like good choices
- Swedish banks are priced quite nicely
Living While Saving
Before we move on the watchlist, I wanted to include the Living While Saving part which I always include in my dividend income reports. I do this because I just got back from a trip with my girlfriend to Seoul, South Korea and there are a few things I want to share.
The adventure started with going to the DMZ -Demilitarized Zone (which ironically is militarized) between the border to South Korea and North Korea.
What you see here is the border. There’s a small river which separates the two countries along with a bridge. One thing I found very interesting is the difference between the infrastructure and how the variation between the two colour perspectives. On the south side, the bridge is quite green and nice, but on the north side, it’s dark, heavy and in many ways, just sums up the situation in the country.
The following days were used to try a lot of the local food and go hiking. If you ever go to Seoul, you have to check out the national park. It offers an amazing hike with great views.
Stockles enjoying the view
July 2018 Watchlist
A few months ago we saw a general market decline in consumer staples, REITs and utilities. I wrote that I thought it was smart to pick up high-quality consumer staples and utilities when they were trading at somewhat great attractive prices. Now, most staples, such as KMB and HRL are moving upwards again and utilities such as Dominion and Southern have bounced back.
However, I still find value in this market. Here’s what I’m looking at
A la carte Appetizers
As appetizers, I think one should look at the Swedish investments firms. As you could see in my latest dividend income report, most investment firms trade at a significant discount to NAV. What happens when you buy these firms essentially is you buy the Swedish Index at a discount. You can find a few of the firms holdings in my Seeking Alpha articles about the top Nordic companies (on the right sidebar).
I just added $3,000 to my position in Investor AB B and would not mind adding Latour or Industrivaerden.
A la carte Main Courses
Enbridge is now up more than 18% since my first watchlist (neglecting the 6% dividend payment which gives a 24% total return). Is Enbridge done? No. Not at all.
My confidence in Enbridge just got stronger. Here’s why:
The Minnesota Public Utilities Commission voted on two important subjects which affect Enbridge’s outlook.
- They got a Certificate of Need (5-0 votes) which means Enbridge can move forward with their Line 3 Replacement Project.
- Enbridge Inc. got the green light (3-2 votes) to follow their own strategic plan.
- Enbridge Inc. sells all of its western Canadian natural gas plants for CAD 4.3 billion.
In total, to keep things short, this means that Enbridge will be able to meet their very attractive dividend growth targets and they can continue with their plans at the proposed pace. Few things are as important as cost control and reaching targets on time. I’m very happy that Enbridge Inc. can move forward and I still see at least 20% upside, and that’s with a nice margin of safety too.
The other stock I want to highlight is Starbucks. SBUX now trades at a 23.65% discount to my previous target price (will recalculate with respect to lower growth in the US and China, but there’s still value in SBUX). I’m planning to write a Seeking Alpha article on this topic because I don’t think people understand Starbucks’ plan or position in Asia. I’ve been to every country in South-East Asia, and I’ve seen with my own eyes (as well as talking with Nespresso’s CEO, Starbucks management, and attending presentations) that things aren’t what most people think. Will elaborate on that in my next article.
A la carte Desserts
For desserts, it’s worth mentioning two great companies which focus on distressed debt. Take a look at the following image. It shows national debt around the world.
My thesis is that people spend too much money which they don’t have, and companies and countries do the same. At one point, the debt burden will become a problem (Japan, Italy, Argentina) and some companies who focus on distressed debt will earn a lot of money. I choose to highlight Oaktree Capital (7.5% of my portfolio) and Intrum Justina as two great high-quality companies in this sector. The first one is far less risky, but investors focusing on dividend income should stay away. This is not an income stock, but rather a value plays on a great high-quality company.
Now back to you
What do you think? What are you looking at? Why do you look at this stock and do you have any special plans for the following year? Please do tell!