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Monday, April 22, 2024

PhilStockWorld Top Trade Alert – Nov 27 2023 – Vale S.A. (VALE) + 6

We have our Trade of the Year and it's VALE!  

See this morning's post for trade ideas on BBY, CROX, GLW, LEVI, MP and PARA but VALE is the winner of the group after a very intense selection process that began with our Watch List Review back in late September. 

In fact, let's reprint the entire narrative from the final 3 to our final selection:  

That leaves us with LEVI, VALE and GLW as our Top 3 and boy are those very different stocks!  

They all share a common theme of being things people need (jeans, raw materials and phone screens) whether the economy is good or bad. LEVI lost $127M in 2020 and VALE lost $1.3Bn in 2020 and GLW made $512M in 2020 – that may be the deciding factor. Unusual as those circumstances may be – they were certainly not something we were considering in November of 2019. 

In 2020, GLW bottomed out at $19.51 and it was down for just a month before rocketing back up to the $30s (now $28.22).  VALE hit $7.53 and back to $12 in a month but all the way until November to retake $15 (where it is now) while LEVI hit $11.14 but took 3 months to get back over $15 (where it is now).  So, GLW is lower than it was pre-Covid and recovered best and fastest post-Covid – that’s the kind of resiliency we’re looking for. 

GLW, however, has $5.2Bn in debt and let’s say it ends up rolling over at 5% more than they are paying now, that’s $260M off their $1.45Bn in profits so $1.25Bn against the $24Bn market cap is still not terrible (20x) and even when people don’t buy new phones they still need new screens (all too often) and the catalyst that I love for GLW is the new iPhone cycle with new iPads coming as well.  

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