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Made several Buys today which I consider both value, long term survivors, consistently generate FCF (and EBITDA), pay a nice dividend (good coverage) and are selling at a discount to their future FCF.
As a side Note I watched this video on Ray Dailio's very long term view of a monetary 'Reset' (100 year cycle; Dutch, Brits & even as far back as Romans). His conclusion is a $US 'crash' as much as 50% (already off 10%), no more fiat money but a transition to hard assets (ie gold) and companies that generate cash (FCF, EBITDA consistent and long term)
Dollar Crash Prediction - When & How it will happen according to Billionaire Ray Dalio
As a result, decided to start buying more of these companies that I have had on my value buy list, and sell other stocks that do not fit this theses. I also continue to be over weighted in 'hard' assets based companies that own commodities (gold miners, industrial mining BHP, Oil CVX) and pipeline companies which generate lots of FCF.
Buys today include:
IBM increased by 110%; Low PE, 5.8% div (14.24% payout ratio), generates good cash flow, Debt higher than I want but if $US crashes easy to pay off w/ cheaper dollars. Business services also migrating to cloud platform a high margin business. Price/cash flow= 6.3
SJM increase by 110%; low PE compared to $SPX (now at 28x), 3% dividend payout ratio 16%, low debt/equity; price/cash flow 8.77
INTC 30% add to current position (NOTE reflects current quarters financials & price); low pe of 8.5x; ROE and ROA very nice but may not reflect next 18 months; low debt, 2.7% div and 9% payout ratio; generates nice EBITD w/ over 60% of revenues from edge cloud Azure Virtural Machines Networking FPGA 5G (Data Center Group revenue of $7.1 billion was up 43% from the prior year).. Lots of FCF $7.7 Billion FCF for Q2 (almost $1.80/share for the quarter)= Price/Cash flow 6.7
One investor has calculated INTC's discounted future cash flow at $90/share. That assumes that in 18 months - 2 years they are innovative and continue to have products customers want & need. ------------------------------------------------------------------------------------------------------------
R. Dalio has 5 things you can do to protect your $US holdings from a 'crash'; like move your $'s into foreign currencies, open foreign bank accounts; none I found too piratical. You can own asset rich companies and companies that generate a lot of recurring cash.
In a zero or even negative interest rate environment, the last two ideas I find helpful and have targeted my value search to these types of companies. I do hold 25% cash in my local credit union so plan is/was to invest that into a real estate project. REITs might be another good place to own real property assets which generate FFO. May move money into the Vanguard REIT fund (Vanguard Real Estate Index Fund Admiral Shares (VGSLX)) yields about 3%.
Interesting Times call for targeted Value strategies.
