Facebook is now my 3rd largest holding and Altria is my 9th largest holding. Rankings for top holdings are located here.
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.
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.
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:
Once again, I added more to my positions today in Facebook Inc (FB) at $144.41, Carrols Restaurant Group, Inc. (TAST) at $9.60, and Amazon.com, Inc. (AMZN) at $1587.31
The continued price drop in all three of these are a great opportunity. Retail sales are strong and Amazon and Facebook will benefit from this. Amazon with actual sales and advertising, and Facebook with advertising on Facebook itself and Instagram.
Amazon has been very aggressive with increasing it’s share of holiday sales and we are seeing that personally with our Wondermugs business. We have sold over twice as many mugs on Amazon this year compared to last year. With Facebook, we are personally spending significantly more this year on ads as well as for our clients of Advantage Creations.
With Carrol’s the price drop is just making the company very cheap. At today’s price, the market is valuing the 828 stores at only $729,773 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.
Some are thinking the economy is going negative. If that’s the case, people still need to buy goods, will still use social media and go out to eat. Amazon and Carrols provide great prices on products. Facebook/ Instagram will still be used.
There are of course other pressures on these specific companies. Facebook with it’s privacy concerns, Amazon with other retailers getting more competitive and Microsoft with cloud services and Carrols with McDonalds, but I believe at these prices all of these concerns are priced in and then some.
Here is my previous analysis on all three:
I added more to my position today in Facebook Inc (FB) at $157.73.
Now my 7th largest holding. I still think at this level, it’s a great opportunity.
The recent pullback again brings the price to lower than my previous purchases. I imagine this is due to recent issues with hacked accounts, more spending on security/privacy which will lower earnings in the short term and of course the data leak scandal. I believe the fears are overblown and this poses a good opportunity.
I mentioned in the my previous post/purchase that if the price should continue to drop, I would consider adding more and that I would be willing to double my then current position. That’s what I just did today. This purchase doubles my total holdings in Facebook.
I added more to my position today in Facebook Inc (FB) at $160.32.
Now my 8th largest holding. I still think at this level, it’s a great opportunity.
The recent pullback again brings the price back to near my first purchase. I imagine this is due to the earnings release coming out later today and fears over the impact of the news feed changes and data leak scandal. I believe the fears are overblown and this poses a good opportunity.
As for the newsfeed changes. I feel that reducing page based content should help boost revenue/earnings in that pages will need to rely on paying to have their posts shown.
However, if they should have made an impact the price continues to drop, I will consider to add more at lower prices depending on the severity of the news and impact to the business. I would be willing to double my current position from here.
I initiated a new position today in Facebook Inc (FB) at $159.80.
I’ve been following Facebook for some time as I’m a regular user and I utilize their advertising platform for our own and client businesses. I feel their advertising platform is a very good value and great for targeted campaigns to build awareness. I also use Google for advertising more for campaigns targeting those ready to buy or with a specific need in mind. I have higher budgets with Google than I do for Facebook campaigns. However, Facebook & Instagram (which Facebook owns) campaigns have been steadily increasing in share of total budgets. Most recently have I have been using Facebook’s remarketing campaigns which is where you target people that have already visited your site. You then place ads to encourage them to come back to your site. These are particularly powerful as these visitors have already shown interest in your offer. Both Facebook and Google do this well. However, overall I think Facebook’s ability to target within their advertising system is better than Google’s at this time and the value is better.
Reason for current opportunity
The share price for Facebook has been under a lot of pressure due to the recent scandal involving a data breach with Cambridge Analytica and the Federal Trade Commission’s announcement of an investigation into the company’s abilities and willingness to protect user information. It has been said that the negatives of this are overblown and that any downside is already well priced into the current stock price. The platform is still very strong and there doesn’t seem to be any signs that revenue/income will not continue to grow.
Facebook is the largest social media company in the world with more than 2 billion monthly active users. They have continued growth in users and user engagement. Their platform provides advertisers an extremely valuable tool to target customers. They have been successful where most of the peers such as Twitter and Snapchat have not. They have the capital and earnings power to continue to innovate and acquire firms that may supplant the flagship Facebook.com website in the future, as they did with Instagram.
Facebook currently trades at a 22.2 forward PE and PEG of 1. The PEG payback in years is 7.9. They have impressive margins and revenue/earnings growth. I feel at this price, there is little risk and a high probability the value of the company will be much higher years from now.
I believe the current stock price drop represents a great opportunity for those not currently invested or with a small position in Facebook. If the price should continue to drop, I will most likely add to this initial position.