Amazon.com, Inc. (AMZN) – Buy

I added to my position in Amazon.com, Inc. (AMZN) today at $1,757.76. It is now our 3rd largest position at this time.

Most of the same reasons for my previous purchases still stand.

We did quite well selling products for our Wondermugs business on Amazon.com and have increased our advertising spending to get our listings rank higher in Amazon’s shopping searches.. We expect to sell significantly more mugs this year than last year.

Some overall threats to Amazon are:

  • Amazon.com’s will have more margin pressure from increased investment/competition from competitors such as Walmart, Costco, and Target.
  • International expansion holds no guarantee of matching success as the US Market
  • AWS is facing increased competition from strong competitors such as Google and Microsoft.
  • Government pressure due to size and influence.

However, the positives are:

  • Amazon.com dominates the overall e-commerce market with sizeable international growth opportunities for it’s marketplaces, advertising and devies
  • Strong growth in devices to help keep and bring in new customers.
  • Strong favorability with Generation Z.
  • Increasing number of shoppers initiating their searchers with Amazon instead of Google
  • Increasing advertising share and signups from 3rd party sellers on their platform, which helps the ability for Amazon to increase profits while reducing costs/burdens of selling inventory directly.

The stock currently trades at a PEG of 1.1 which is quite good and makes for a good buying opportunity.

Carrols Restaurant Group, Inc. (TAST) – Buy

Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) today at $6.56 now making Carrols my largest position.

What I mentioned in the last post with my last purchase mostly still stands: (updated value per stored to $314k each)

The continued price drop is a great opportunity. The price drop is just making the company very cheap. At today’s price, the market is valuing the 1081 stores at only $314,000 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.

The current price to book value is about half what it has averaged over the last 5-10 years. Carrols, is constantly increasing gross revenue and book value and future earnings potential while sacrificing short term net income, which I feel many investors are focusing too much on.

Adding the Popeye’s brand is also a great potential growth driver for the business especially with the popularity of the new new chicken sandwich. And Burger King’s Impossible Whopper seems to be doing quite well as well.

Some are thinking the economy is going negative. If that’s the case, people will still want to go out to eat. Carrols provides good food at great prices.

Here is my previous analysis: Carrols Restaurant Group, Inc. (TAST) – Buy

Carrols Restaurant Group, Inc. (TAST) – Buy

Once again, I added more to my position in Carrols Restaurant Group, Inc. (TAST) at $6.90 now making Carrols my 2nd largest position.

The continued price drop is a great opportunity. The price drop is just making the company very cheap. At today’s price, the market is valuing the 1081 stores at only $287,122 each. To start a brand new store, you are typically looking at an initial investment of $1,200,000 to $2,800,000. These are mostly proven stores with excellent management in place.

The current price to book value is about half what it has averaged over the last 5-10 years. Carrols, is constantly increasing gross revenue and book value and future earnings potential while sacrificing short term net income, which I feel many investors are focusing too much on.

Adding the Popeye’s brand is also a great potential growth driver for the business especially with the popularity of the new new chicken sandwich. And Burger King’s Impossible Whopper seems to be doing quite well as well.

Some are thinking the economy is going negative. If that’s the case, people will still want to go out to eat. Carrols provides good food at great prices.

Here is my previous analysis: Carrols Restaurant Group, Inc. (TAST) – Buy

Sold Portions and All of Various Positions to Raise Funds

A portion of my position in Hanesbrands Inc. (HBI) and my entire positions in Live Current Media Inc. (LIVC), Micro Focus International plc (MFGP), DXC Technology Company (DXC), Toyota Motor Corporation (TM), L Brands, Inc (LB), (WAB), Hewlett Packard Enterprise Company (HPE), HP Inc. (HPQ), Perspecta Inc. (PRSP), General Electric Company (GE), Community Bank System, Inc. (CBU).

While many of these positions I felt comfortable existing, the main reason was to raise funds. I will most likely rebuild positions in Community Bank System, Inc. (CBU) and add back to Hanesbrands Inc. (HBI)  at some point.

Facebook Inc (FB) and Altria Group, Inc. (MO) – Buy

  

Once again, I added more to my positions today in Facebook Inc (FB) at $132.76 and Altria Group, Inc. (MO) at $48.79.

Facebook is now my 3rd largest holding and Altria is my 9th largest holding. Rankings for top holdings are located here.

FACEBOOK

I’m very bullish on Facebook at these prices. I’ve been waiting a long time for the opportunity to get shares this cheap. Trading at a PEG of only .6 and a forward PE of 18.01! I believe that Facebook is one of the greatest ways to grow a business now. My monthly expenditures on ads on Facebook and Instagram for my own and client’s businesses have continued to grow. Facebook and Google are the best opportunities for lead/sales generation. Increased privacy regulation will only make them stronger as smaller/new entrants will have difficulty keeping up just as tobacco legislation helped Altria remain dominant. I would continue to add to your position if it continues to go down. I’ve bought a few times so far and plan to add more making it one of my largest positions.

ALTRIA

I agree with their strategy to pivot towards cannabis and vaping. I think this is very smart considering declining tobacco-based product sales. Their acquisition interests in JUUL and Cronos help with this concern and get them in to two high growth categories related to their market. Altria can use it’s vast distribution network and experience with government regulation to help expand vaping and cannabis products worldwide.

The increased debt to make the purchases is a bit concerning, but necessary to ensure the future of the company. Assuming they get a rate of around 4% on the loan and the cost reduction plan they mention in this release would cover the majority of the interest and a portion of the principal for JUUL. Cronos is relatively small in comparison.

The dividend yield is also great at 6.16%. I really nice income stock to have in your portfolio during a volatile market.

Valuation

  • PE of 8.7
  • Price/Book of 5.9
  • Dividend yield is 6.16%

Threats

The biggest threats I see to Altria are declining sales of tobacco and increased regulation. There will most likely be more regulation on vaping and as marijuana is legalized it will come come with a heavy load of regulation as well. Also, there is a current proposal to ban methanol. However, concerns over this seem to overblown. Also, Altria is experienced in dealing with government regulation. In fact, I believe government regulation is responsible for their success. The intense regulations of the tobacco industry ensured their dominance for many years and could do the same with vaping and marijuana. I would say that anyone interested in getting exposure to marijuana investing should definitely take a look at Altria to get the exposure with minimal risk.

Here is my previous analysis on all three:

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