Category Archives: stocks to avoid

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Berkshire Hathaway – an inferior stock pick now

Risking to be accused of blasphemy with this Weekly by one or the other Buffett-fan, nonetheless I decided to have a look at the stock of Berkshire Hathaway. Warren Buffett’s investment holding has achieved a tremendous performance and beaten the markets by a wide margin since its inception. However, this was not the case in the younger past. Growth constraints are one reason. But there are quite a few other aspects that do not make this conglomerate appear to be the ultimate must-own stock.

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Warm-up for 2025 – better expect the unexpected

Despite having done a combined review-and-outlook Weekly already, I decided to write another one with the focus solely on the outlook for 2025. Over the last weeks, I have gathered new ideas, but also brought my thoughts in order during the days that I took off. There are a few other things I wanted to share. What could the next investing year have in store for us?

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Swiss Re – next reinsurer to make a new high?

Most stocks of the world’s biggest reinsurance companies have made new all-time highs, surpassing their decades-long tops. One rare exception is the world’s number two, Swiss Re. With the painful zero interest rate period being over and despite what it looks like another rate lowering cycle, the business is benefiting in two ways: higher insurance premiums as well as higher yields on investments. Is an all-time high for the stock only a question of time?

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Nvidia joined the Dow Jones – a bad omen?

Joining the famous Dow Jones Industrial Average is a prestigious honor. The 30 constituents are the crown jewels of what America offers in stock investments. While not all of the biggest companies are part of the Dow for different reasons, it is safe to say that from an international, outside perspective the Dow is seen as the trophy-collection, containing most of the key blue chips. Recently, Nvidia joined this group. While it could be understood as the final proof of Nvidia’s quality and undisputed standing, historically speaking, this is a clear red flash – a warning that the party could be over soon.

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Antitrust has come into fashion – Capri Holdings after its 50% crash

Back in May, I wrote about the stock of Capri Holdings, the owner of wannabe-luxury fashion brands Michael Kors, Versace and Jimmy Choo. My assessment was that despite looking like a bargain, the stock was too risky due to its weak execution on a business level with deteriorating fundamentals. Capri and competitor Tapestry were appealing the blocked takeover attempt by Tapestry which now has been called off for good by the Federal Trade Commission. Capri crashed by 50% in response to the announcement of the deal-freeze. Is the stock now cheap enough?

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Smooth ride or highway to hell for Harley-Davidson?

When a company announces a big buyback (percentage-wise, I don’t care about big headline numbers), I usually start to get interested, provided the case is overall solid. Harley-Davidson on the surface checks several boxes like a famous brand, a loyal customer base, a rock-solid balance sheet, relatively stable earnings and cash flow generation paired with a low valuation – and on top now also a new aggressive buyback program of the equivalent of no less than 20% of stock outstanding. Is this now an incredible contrarian opportunity?

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Uncle Sam as tenant – part III – prison stocks

Five months ago, I published two articles, each about a company renting out different facilities to US government agencies like the FBI, the postal service or the Department of Veteran Affairs. Both were REITs with seemingly safe tenants and high occupancy ratios. I was not convinced of these stocks, though, due to either high debt and / or the financial well-being of some tenants. Today, I am discussing in this third article the two big private prison stocks.

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Estée Lauder – after –75% still not pretty + dividend in danger

A common misconception is that lower stock prices are akin to cheaper shares. Without much explanation, it is logical that this can only apply when the underlying business has at least been stable. Otherwise it is possible that a stock even becomes more expensive! While this is not the case at Estée Lauder, despite a 75% drop from its all-time high, the stock is still looking ugly valuation-wise. A decent downside risk remains. On top, the likelihood for a dividend cut or even entire suspension is significant.

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Flow Traders – it was right to cut the loss

My longer time readers and members will be familiar with the Dutch company Flow Traders as it once was one of my stock ideas (my very first report I published since launching my blog). In late September 2023, now ten months ago, however, I closed this case at a small loss of –10% (including dividends). It was not an easy decision as this was more an unconventional stock idea (basically a hedge against a market crash). Looking back, this was absolutely the correct decision to cut the small loss, because it would be a bigger hole now…

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After raising big money during the mania – is Gamestop a buy now?

Over the last weeks, the stock of struggling gaming retailer GameStop has been making big waves for a second time after 2021. Fortunately, management made use of the mania and raised an insane ~4.3 bn. USD via two equity raises. With such a huge cash pile and no debt, GameStop is not in danger of going bankrupt anytime soon. As the stock is down again significantly, is it now worth a look?

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