Some activity for January 2025
Below are some recent Buys & Sells for the last part of Jan 2025. The goal is to scale into a few new positions and scale out on others. The 2025 Buys have tried to incorporate companies that may/could benefit from the new administration, are undervalued based on historical measures (reversion to the mean) and may see growing FCF in 2025/2026.
Buys:
ADM - now a 2% portfolio position (#11 in taxable portfolio) w/ several small adds; 11x Forward PE, low debt, 4% div; a bet on AG/commodity, reversion to mean w/ possible +53% in 18 months.
JNJ - continue to build position; This is a Dog Of The Dow for 2024 w/ legacy litigation issues that may/could be behind them. 14.45x PE, 3.23% div. Only 35% position w/ avg cost now at $145
PLYM & NNN - Triple net REITs as I continue to scale into position small sells of high cost shares and buying back 1% lower. Both see 2025/2026growing FFO while selling at a reasonable Price/FFO.
WPC & BFS - continue to scale into these two Triple Net REITs; both sell at reasonable Price/FFO; both paying > 6% div. This is an income play; 18 month expected return; WPC +36%; BFS +25%.
VSH - A new position, company supplies semiconductor & passive components; only a 0.05% portfolio position; reversion to mean w/ 30% upside; 19.5 PE; earnings out next week
FMC - An Ag science company crop protection, plant health, and professional pest & turf management. 12.7x PE, 4% div. upside expectation +64%; company has transitioned to an Ag company in 2018 w/ a new management team; In 2014, acquired Cheminova; In 2017, acquired part of DuPont's crop protection business. a 0.07% portfolio position
MTW - a small cap construction Machinery Crane manufacturer 12.7x Forward PE w/ possible 50% upside. In a cyclical business so EPS dependent on economy. 0.05% portfolio position w/ earnings next week.
CAG - a value/income Ag/food company 10.7x PE, 1.4x Price/BV; 5.4% div; reversion to the mean w/ possible upside +25%; I continue to add at/below $25.50/share
KSS - a speculation value play (based on tangible value of their real estate); 10.26x PE; high Debt/Equity at 1.26x; continues to pay a high div yield now 15%; in 2022 company rejected an acquisition offer from Oak Street & other Private Equity at $69/share. A 0.06% portfolio position w/ more adds made at/near $13/share
DOW - A new 2025/2026 Dog Of the Dow play; reversion to the mean w/ +37% upside in 18 months; 14.4x PE, expected high EPS growth w/ 1.3x PEG reflecting this is a cyclical company w/ huge potential for EPS growth during a booming economy. Only a 28% position as I continue to scale in at/below $39/share. 7% div too
CC - Another cyclical company similar to DOW; plastics and coatings, refrigeration and air conditioning, mining and general industrial manufacturing ; 9.3x Forward PE, 5.1% div as I build position. Currently only 40% as I scale into a core position adding more shares at/below $19/share. Reversion to the mean in 18-24 months w/ a +63% potential gain & price target of $31/share
UPS - small add to UPS w/ news that they want to reduce their low margin AMZN business; stock sold off 14% on that news after beating earnings; 5.7% div, 13.25x PE. Margins s/d increase but revenue growth & EPS smaller. My bet is UPS will get more USPS business perhaps resulting in higher net margins.
TER - missed on earnings, stock sold off substantially, modest guidance for 2025 but still seeing growth in AI & robotics
VZ & T - Continue to Buy/Sell both these positions w/ good earnings out last week. Added to VZ & peeled off a few T; 8x PE for VZ, 6.8% div vs 11x PE for T, 4.68% div. T & VZ combined reflect a 1.2% portfolio position.
EIX - very small adds to current position in this electric utility -55% after the LA fires. 5.87% div yield; 10x PE but still a lot of litigation risk (think PG&E Corp (PCG-X)); would like to buy in size if/when litigation is resolved and company can avoid BK.
Sells:
(Most Sells are scaling out booking profits on Value holds ranging from 2-20 years)
CUZ - bought this REIT w/ 5 Buys in 2023 at $19/share; continue to scale out at/above $31 booking 60% gain
ENB - scaling out of this Canadian pipeline company; bought in 2015 at $23 sales at/above $43 +87% 9 years & always paid an annual div 6%/year too
PLYM - selling high cost shares and re-buy low cost shares lowering avg cost/share as I build out position
CNDT - Buys in 2022/2023 avg cost at $3.30/share continue to scale out of this oversize position +23% in 12-24 months; more sales at/above $4.50/share. Company continues to build new service contracts in the automated 'cloud' payment systems w/ the potential generating consistent FCF. Therefore, I continue to hold.
PAHC - majority of Buys in Q4 2023 w/ avg price of $10/share; pays 2% div and 13.7x PE; peeled off 5% at $22.19 +122% gain as I scale out; still have a target price of $25/share; Company provides animal health & mineral/nutrient products. An Ag play
UGI - most buys in Q3 & Q4 2023 at $22/share; a LNG supplier & regulated utility; 10x PE 5% div continue to scale out w/ a 6% sell at $30.71/share +38% (+43% when counting div yield)
(NOTE: UGI Corporation, through its subsidiary UGI Energy Services, LLC (UGIES), recently completed the acquisition of Superior Midstream Appalachian through Pine Run Gathering LLC for $120 million 1 7. The acquisition was completed on January 27, 2025 9. This transaction is expected to be immediately accretive to earnings 1)
LXP - Sell high cost shares and adding low cost shares as I build position in this Industrial REIT
GNK - cut position down to a tiny tracking position after Paul's Senior experience w/ dry bulk cargo shippers
AEP - 5 Buys in March & April 2024 avg price $83/share. 16.7 PE 3.6% div; peeled off 6% at $102.71/share +24%
IP - 6 Buys in Q2/Q3 2023 avg cost at $31/share ; continue to scale out at/above $59/share w/ 5% sale in Jan at $59.67 +93% (19 months) plus 3% div; Forward PE at 18x but this could be peak earnings. Company did complete acquisition of DS Smith that expands their global footprint
PYPL - multiple Buys in Q4 2023 & Q1 2024 avg cost $59/share; 18.25x PE, PEG=1.5x; The market still questions weather EPS/Revenues can grow; SMA(200) weekly $114/share my next target; Did my first sale of 7% at $89 booking a +41% gain in 7 months on High Cost shares. This is a 1.9% portfolio position and #11 in the portfolio
CTVA - two buys 1 in 2020 & another small buy in 2023 w/ avg cost at $23.70/share. This is an Ag play; develops and supplies germplasm and traits in corn, soybean and sunflower seed markets. peeled off 20% at $63.21/share +43% (13 months) on high cost shares. 20.6x PE 1.73x PEG; 1 % div yield.
GLW - One of my longest holds from the dot,com with my buy 5/2020 (24.5 year hold) and avg cost of $5.05/share; 20% sale at $52 +940%(11.87% CAGR when you include their 2% div) compared to a 7.8% CAGR for the $SPX over the same time period.
G - This is my Q2 2024 AI play. Genpact builds & manages AI systems for clients around the world as a consultant; 15.7x Forward PE; pays a 1.25% div; avg cost $31.31/share; a 0.7% portfolio position. Peeled off 5% at $46/share +48% in 9 months. Still planning to hold 18% to 24 months; next sales at/above $50/share. AI services are growing EPS; the consensus EPS forecast for the quarter is $0.77. The reported EPS for the same quarter last year was $0.68. Earnings out next week
HR/SBRA - continue to scale out of these Health Care REITs; HR - Q1 2024 Buys avg cost $12.61/share +35% gain plus 7.4% div. I prefer SBRA for long term hold. SBRA also pays a 7% div built core position in Q2 2023 avg cost $10.6/share +57% + 7% div. Continue to scale out SBRA at/above $19/share
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As you can see the SELL decision is as important (or more important) as the BUY. Many factors go into selling: short term vs long term hold (tax considerations); EPS, Revenue & FCF growth, recent management actions (ie acquisitions accretive?), new catalysts to generate higher earnings, buy out chatter Etc. |
