Posts filed under: Videos

An Income Opportunity for the Long-Term


open road ahead

(CC image by peterichman
on Flickr)


Check out the video below, which is from my live stream for traders and active investors, to learn why I like Ford Motor Company (F).


 

As I explain in the video, Ford is the most forward-looking of the major automakers.  (Tesla is not a serious automaker yet – don’t believe all the hype.)  Ford has been willing to take a chance on future mobility technologies because their largest voting shareholder, the Ford family, understands that if a company doesn’t innovate, it dies.  The tech titans of the world, like Google and Apple, would love to sink their teeth into the auto industry.  And they are already trying to do it.

Wall Street has frowned upon Ford’s approach, so they’ve pushed the stock price down so far that the dividend yield has reached 5.3%.  Why?  Wall Street tends to have a “value-extraction” mindset instead of trying to build long-term value.  For instance, activist investors and private equity firms constantly push for more debt, buybacks, and acquisitions to drive short-term value.  They are less concerned with the company’s cash flows over a period of many years, and more concerned with rewarding companies like GM that churn out gas-guzzling trucks and SUVs with no regard for tomorrow.  But if you want to build wealth over your lifetime, like I do, you should love a company like Ford that has the courage to take control of its future instead of waiting until it is too late.   They have begun to transform Ford into a company that will not just build cars as we know them today, but will provide various forms of transportation that meet society’s needs in 2020 and beyond.  In February, they invested $1 billion into Argo AI, a startup focused on developing technology for self-driving vehicles.   Learn more about Ford’s initiatives around future mobility.

As with any investment, make sure to review the company’s annual report and other SEC filings to get a good understanding of the company before investing.  Pay particular attention to the disclosures of potential risks in those filings.  You can find investor info for Ford here.  Just because this company is right for me right now doesn’t mean it is necessarily right for you.

I own shares of Ford Motor Company as of the publishing of this post.  View other important disclaimers on this page.


Be Selective

Most stocks are priced at lofty valuations right now, so we’ve got to be selective.  While the bull market may last a bit longer, stocks whose values have grown out of line with their true cash flow potential will suffer a hard landing as deflationary pressures resume.  So, don’t just blindly buy the market index.

I’m still on the hunt for long-term portfolio holdings that can give me a reliable yield and are fairly valued or undervalued – so stay tuned for future Dividend Stock of the Month posts.

In case you missed it, here’s the last dividend stock I highlighted.  It’s had a nice run since I released the video!


The Torpedo Trading Live Stream

Watch more live streams like this at https://www.twitch.tv/torpedotrading and interact with me in real-time.  Follow the channel, and you can receive notifications when I go live.

If you miss a stream, highlight clips like this one can be found at my YouTube channel.


Continue Reading →

A Long-Term Income Play in Korea, Available to US Investors!

 

Disclosure: I own shares of KT Corporation as of the date of this posting.

I’ve already got a Dividend Stock of the Month for May 2017, so I’m calling this my “Investment of the Week!”  But let me be clear, I intend for this to be a long-term investment.

In this video, I explain what this company does and why I selected it from a long list of dividend-paying stocks in the telecom sector.  The stock has gone up by about 5% in the two weeks since I released the video – so far, so good!

 


Shortly after I made this video, Moon Jae-In won the Korean presidential election.  As I anticipated, he is already talking tough on the chaebol conglomerates, one of which is KT Corp.  Should we be worried?  Just the opposite – we should be excited about this!

Korea’s chaebol are generally well-managed, conservatively-run companies that are built for survival over the long run.  What they lack are high dividend yields, big stock buybacks, or fully transparent management.  Therefore, many institutional investors have not given as much weight to Korean stocks in their portfolios as they should.

After the recent scandals involving Samsung’s Lee Jae-yong, impeached president Park Geun-hye, and others, the new President Moon finally has the momentum he needs to push for reform of these massive conglomerates.  The main goal of the reforms will to be to increase transparency, which will help these companies gain trust and attract more capital from abroad.  Sure, they’ll probably create some extra compliance costs for KT and other chaebol, but I expect that negative to be far outweighed by the benefits of more capital rolling in.  I think we’ll see the dividend payouts increase as part of this process too.  After all, KT is sitting on over $8 billion of cash.  In Korean won, that’s something like 88 zillion.  (Just kidding)  Note: Most Korean companies pay dividends annually, not quarterly, and they are variable from year-to-year.

Here’s another point I forgot to make during the video: Like many Korean companies, KT Corp is a good value relative to its earnings-per-share.  Here are the trailing and forward P/E ratios for KT Corp relative to its biggest peers in the US telecom sector, even after the recent rally (data from Yahoo Finance):

  • KT Corp: 12.6 trailing, 11.8 forward
  • AT&T (T): 18.7; 12.9
  • T-Mobile (TMUS): 34.7; 27.8
  • Verizon (VZ): 15.2; 11.8

As I always say, due your own due diligence before investing and don’t rely solely on my conclusions.  Other necessary disclaimers can be found on this page.

I’m still on the lookout for good quality dividend-paying stocks that can withstand market turmoil, so stay tuned to the live stream and YouTube channel to discover them.

 

 

Continue Reading →

An Income Opportunity for the Long-Term


Check out the video above, which is from my live stream for traders and active investors, to learn why I like this company and non-traditional REITs in general.

If you’ve followed the live stream lately, you know I’m bearish on the stock market.  Most stocks are priced at lofty valuations right now, and it’s likely we’ll see a hard landing as deflationary pressures resume.  Therefore, I’m currently net short the market.  I’ve sold short more stocks than I own.

Despite the bearish forecast, I’m still on the hunt for long-term portfolio holdings that can give me a reliable yield.  Real estate investment trusts (REITs), with the exception of certain commercial REITs (retail and office buildings), will outperform the market going forward.  I also feel I’m personally underinvested in real estate.  I recently found a company in this space that I liked enough to take a position in: Iron Mountain REIT (IRM).

You may have seen Iron Mountain trucks driving around your town, or their secure storage bins in your office.  This company is in the business of storing, protecting, and managing records, both physical and electronic, for their business clients.  Iron Mountain owns or leases space in over 1,400 facilities across the globe.  They lease this space out to other businesses for storage of their data and records.  They also provide information management services to diversify their revenue base beyond simply lease payments.  What’s more, they’ve picked up some fine art storage facilities to meet the specialized needs of art investors and wealthy individuals.

Document retention is a secure business with good prospects for growth as well.  Companies are required to maintain physical and/or electronic records by law.  Not to mention, it’s a vital part of any firm’s disaster recovery and contingency planning.

This company is more like a traditional stock than a REIT, but it adopted a REIT structure in 2014.  Therefore, it must pay at least 90% of its taxable earnings back to investors as a dividend.  This is great news for investors seeking income.  The dividend yield on IRM is currently 6.2%.

Whenever you see a yield over 5%, you’ve got to do extra diligence to figure out why the yield is high.  In other words, why is the price low when compared against the dividend?  In the case of IRM, I think it is simply because of the company’s high debt levels.  They’ve issued a substantial amount of debt in the last year to finance their international expansion.

I usually avoid highly indebted companies, but I’m not worried about this one because:

  • They acquired another company, Recall Holdings, in 2016.  Recall has a similar business to Iron Mountain, but in Australia.  The integration costs hit earnings in the last several quarters, but Recall will provide significant cost savings for Iron Mountain.
  • Along these same lines, Iron Mountain has been financing international expansion.  This expansion has diversified Iron Mountain’s revenue base, enhancing the stability of the company’s total revenue and net income.
  • The company’s debt is at reasonable rates and its maturities are mostly after 2020, so there is limited risk associated with rolling over the debt at maturity in the event of a near-term credit crunch.
  • A significant portion of the debt is denominated in currencies other than the US dollar.  This reduces the company’s exposure to foreign exchange risk.  If they had financed overseas growth with US dollar-denominated debt, we’d have to worry about a rising dollar making those interest payments more expensive.  Not an issue here.
  • They recently hiked the dividend from 48 cents per share to 55 cents per share, which is a huge increase.  Management would not have done this if they were not highly confident the dividend could be maintained at this level, or grown further.

As long as they don’t start to over-reach in their acquisitions of other companies, Iron Mountain should be exactly the kind of long-term holding I’ve been hunting for.

As with any investment, make sure to review the company’s annual report and other SEC filings to get a good understanding of the company before investing.  Pay particular attention to the disclosures of potential risks in those filings.  You can find investor info for Iron Mountain REIT here.  Just because this company is right for me right now doesn’t mean it is necessarily right for you.

As I disclosed above, I own shares of IRM as of the publishing of this post.  View other important disclaimers on this page.


The Torpedo Trading Live Stream

Watch more live streams like this at https://www.twitch.tv/torpedotrading and interact with me in real-time.  Follow the channel, and you can receive notifications when I go live.

If you miss a stream, highlight clips like this one can be found at my YouTube channel.

Continue Reading →

This week’s trade of the week comes to you from Tuesday’s live trading stream on Twitch:

 

I recommend sector trading as a great place to begin when implementing active trading strategies for the first time.  Researching individual stocks, as you always should before placing a trade, requires browsing through the annual statement, financials, and other investor resources of that company.  It’s extra work, which many traders simply don’t have time for.  Why not start trading sector ETFs instead?

Continue Reading →

An Income Opportunity for the Long-Term


Check out the video above, which is from my live stream for traders and active investors, to learn why I like this company and residential real estate in general.

If you’ve followed the live stream lately, you know I’m bearish on the stock market.  Most stocks are priced at lofty valuations right now, and it’s likely we’ll see a hard landing as deflationary pressures resume.  Therefore, I’m currently net short the market.  I’ve sold short more stocks than I own.

Despite the bearish forecast, I’m still on the hunt for long-term portfolio holdings that can give me a reliable yield.  Residential real estate is an area that should hold up much better than most commercial real estate (especially retail and office buildings) going forward.  I also feel I’m personally underinvested in residential real estate.  I recently found a company in this space that I liked enough to take a position in: Bluerock Residential REIT (BRG).

This company owns interests in many apartment complexes, most of which are in the southeastern United States.  They also own a bunch of developments that are currently under construction.  Their target areas for investments are premium locations in and around “second-tier cities”: those that are smaller than New York, Los Angeles, etc. but big enough that they are attracting substantial corporate investment and/or residential demand.  We’re talking Austin, Houston, Charlotte, Atlanta, and Orlando, for instance.

The company is structured as a real estate investment trust, or REIT.  Find out more about investing in REITs on this episode of my free investing podcast.

They’ve got several series of preferred stock with different yields and terms attached to them.  I actually chose to invest in the common stock though.  The common stock pays a yield of 9.2%, whereas the preferreds are in the 7%-8% range and two of the three series are priced at a premium over par.

Whenever you see a yield over 5%, you’ve got to do extra diligence to figure out why the yield is so high.  In the case of BRG, I think there are two reasons:

  • They plan to internalize their management in 2017, which may involve an up-front payment.  The managers are currently employed by Bluerock, not by the REIT itself.
  • The recent trend in earnings hasn’t been stellar, but I see this as largely a byproduct of rapid growth.

Upon reviewing the financials, I believe that the majority of the dividend is secure going forward.  Maintaining the dividend is a stated priority of the management team.  Although a slight reduction is possible (along with a temporary disruption in the quarter during which they internalize management), I think they are well-positioned overall to deliver on their goal of maintaining the full dividend.  If you’re more concerned about this than I am, consider buying the preferreds instead.  Preferred stockholders have to be paid before common stockholders, plus the preferred dividends accumulate forward if they are not paid.

As with any investment, make sure to review the company’s annual report and other SEC filings to get a good understanding of the company before investing.  Pay particular attention to the disclosures of potential risks in those filings.  You can find investor info for Bluerock Residential REIT here.  Just because this company is right for me right now doesn’t mean it is necessarily right for you.

As I disclosed above, I own shares of BRG as of the publishing of this post.  View other important disclaimers on this page.


The Torpedo Trading Live Stream

Watch more live streams like this at https://www.twitch.tv/torpedotrading.  Follow the channel, and you can receive notifications when I go live.

If you miss a stream, highlight clips like this one can be found at my YouTube channel.

 

Continue Reading →

Treasury Inflation-Protected Securities (TIPS) and real estate investment trusts (REITs) are two of the best asset classes for long-term oriented investors.

They also work quite nicely in a retirement account, generating interest and dividends while we wait for bargains across other areas of the market.

Here are two chart studies, one on TIPS and one on the real estate sector:

 

 

 

For more videos like these, subscribe to my YouTube channel.  You can also watch my live trading stream on Twitch.tv and interact with me in real-time.

 

Continue Reading →

Today I did a complete top-down and bottom-up analysis of commodities.  You can view the full recording in the two YouTube videos shown below.

Key takeaways:

  • Long-term trend towards lower inflation and/or deflation remains in place
  • Rising USD may provide a short-term impetus for commodity decline
  • I expect base metals (e.g. copper) to be the weakest of all commodities going forward
  • Recent rallies in gold and oil seem driven by fear and geopolitical concerns; likely to be reversed.

For more videos like this, subscribe to my YouTube channel at http://www.youtube.com/c/Torpedotrading1

You can watch these sessions live and interact with me at https://www.twitch.tv/torpedotrading

 

 

 

Continue Reading →

 

Check out these videos I posted last week.  You can watch live at https://www.twitch.tv/torpedotrading.

 

Here’s a highlight clip from the live stream where I updated the big-picture view on some of the major financial markets:

 

I give analysis & insight into the precious metals and mining stocks:

 

 

I explain why the utility and telecom sectors are the best bets in today’s market:

 

 

Nice short-side setup in the XLB!  Here’s a quick analysis of the charts:

 

Web Directory

Continue Reading →