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Stocks of the Week!

In this email:

• Hottest Stock You’ve Never Heard Of 👂🔥

• The Mouse Still has the Magic 🪄

The Hottest Stock You’ve Never Heard Of 👂🔥

I don’t usually do this.

But sometimes you have to make exceptions.🤷‍♂️This is one of those days.

I’ll only look at stocks with a market cap of $10billion+. They’ve got more history, stability & you can still make great gains with big market caps. (Looking at you Nvidia👀)

But this is an interesting one…introducing Betterware de Mexico!🥳 

A D2C brand that sells household items in Mexico

Why am I interested in this one?

Q1 earnings report come in hot.🔥 They reported a 56% increase in net income aka net profit.

The great part about that is that result didn’t come from a lucky cash grab or one off event. They’ve been focusing on increasing revenue, cutting their debts & increasing profitability.

That’s been done with better, laser focused marketing, an increasing product range & acquiring strong brands like Jafra.

All good things but I haven’t even told you the best part yet!🤐

They’ve been cutting the fat & getting more operationally efficient ready to…. Enter the US Market! 🇺🇸

If this goes well, they’ve just strapped their growth on to a rocket.🚀And I want to be part of it if we’re taking off.

With a proven business model in Mexico and the acquisition of Jafra (a similar company), they’re looking for even bigger markets to capture. Imagine the upside – a huge market and a familiar target demographic. 🌍

There’s also talks of expanding into Peru for 2025. Not quite as exciting but still worth noting.📝

Without the burst into new markets, I still think they’re undervalued & we’re looking at a 20-30% upside. Add to that the fact they’re currently trading at an 8% dividend yield which they’ve paid for the last 17 consecutive quarters & I think it’s worth a small part of the portfolio. 💰

And I say small part on purpose.

The US market entry could be a game-changer with huge growth potential. But, there are risks.🚨

The venture might not go as planned & their debt is smaller but still a factor.And reliance on manufacturing in China always adds a little spice to the mix.

But nothing is without risk. Being aware of the risks & making measured decisions is the best you can do so I’m going glass half full on this one! 🥂

PS Ken Griffiths at Citadel also increased their holdings of this stock by 119% last quarter. Just an FYI.

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The Mouse Still has the Magic 🪄 

I’m talking about Disney.

It hasn’t been getting a lot of love lately💔

Staff lay offs, mixed reactions over brand direction & general economic conditions

But this is exactly when you should want to be buying 🛒

When things are unloved & underappreciated we get a better deal. That’s assuming they’re worth loving in the first place so lets take a look.

Just using technical analysis, we’ve got 2 supports coming up on the daily time frame. One at the SMA (red line) and one that I’ve marked out at $90

If we bounce of the SMA on to previous highs that’d be over a 20% return. If we continue the push down to $90 before moving up to recent highs of $120 you’d be look at closer to 30%+

And if Disney can get it’s momentum back to 2021 highs you’d be looking at double your money i.e 100% returns 💰

Before we enter you’d want to break for a break above the EMA to confirm the trend is moving up again. That’s what I like to do, anyway.

But all of this is sort of invalid if the fundamentals are trash 🗑️

So how do the fundamentals look right now?🤨

Investor sentiment is miserable but the reality is a different story.

People are still flocking to Disney parks, streaming their favorite shows on Disney+ and Hulu, and catching all the sports action on ESPN. Disney is resilient. Their retention numbers are testament to that.

Disney’s mix of streaming services (Disney+, Hulu, and ESPN+) gives them a package that’s hard to beat in the streaming wars because they can appeal to everyone. They can have your little sister watching Disney princesses & you watching 2 men in their pants fight in a cage & profit from both of you.

That’s diversification.

And they recently announced their streaming services are profitable! Which they weren’t when shares were trading at $200….

They’re doubling down on experiences. That includes theme parks, resorts, and cruises. They’ve got a $60 billion plan over the next decade so if that doesn’t signal confidence for the long term, I don’t know what does 🤷‍♂️

Financial health is there too. Recent earnings call they announced their first-ever profitable quarter in streaming, their first stock buyback in six years, and a projected $8 billion in free cash flow for 2024💰

Parks have also regained their pre-pandemic operating margins 🎉

All this to say, I think Disney is a steal right now & I’ll be increasing the position size as soon as this downtrend loses steam 📉

There might be bumps in the road if subscriber numbers don’t hit expectations or discretionary spending drops dramatically but as things are, I think worst case scenario would be a 20%+ gain. I’m all for that.

That’s all! See you same time next week 👋 

P.S Hit reply & let me know what you thought of this weeks newsletter. All feedback is welcomed ❤️