What’s up everyone, It’s Cody here.
I am very excited to finally upload this video to answer the request from one of my subscribers.
Because of his smaller investment account size,He would like to know what are some best
stocks to buy now around $50 dollar per share.
I think a lot of my viewers will have the same question.
So, In this video I will share with you my step-by-step analysis on these good quality stocks.
By the end of the video, you will learn my thought process on why I chose these stocks.
So If you want to know, remember to stay until the end.
I know some of my viewers follow my stock picks.
Please understand that these are not stock recommendations, do you own due diligence
before you make any investment decision.
Also, these are all mega blue chips companies with billion dollars of valuation, so no!
The stock price will not be affected If you or me or anyone decided to buy or sell these stocks.
It will take millions of Cody to make a dent.
And let me check, I currently only have 500 subscribers, so don’t forget to smash that
like button and subscribe if you like this video!
With that being that, let’s get right at it!
Before I start analyzing the stocks, I have to make sure that we all understand the difference
between Stock Prices and Stock Values.Even though I made this video for stocks around
$50, this does not mean that these stocks are currently undervalued.
Many people might think that a stock with a low dollar price is undervalued, while another
one with a higher price is overvalued.
I will be the first one to admit this.
I made this assumption when I first started investing 7 years ago.
Actually, a stock's price says little about the stock's value.
Even more important, it says nothing at all about whether this stock is headed higher or lower.
So What Does The Stock Price Tell You?
The stock price only represents how much the stock is currently trading at.
Let’s look at a quick example between Berkshire Hathaway and Microsoft.
Berkshire Hathaway's stock is currently trading around 256 thousands dollar
and Microsoft is trading at around 178 dollar.
The market capitalization, which is the company value of Berkshire Hathaway is at 415 billion,
where Microsoft is at 1.35 Trillion.
Even though Berkshire Hathaway has a much higher stock price, Microsoft actually has
a higher company valuation than Berkshire Hathaway.
The key takeaway is that the stock price only indicates its current value to buyers and sellers.
The stock's actual value may be higher or lower than the stock price.
So If the stock price is not directly related with the stock value,
why do people look for stocks with lower prices to invest in?
One of the biggest reasons is because many investors prefer buying stocks in of 100 shares.increments
A share price of more than $50 may turn off the average investors.
It requires a cash upfront of at least $5,000 to buy 100 shares.
That's a large financial commitment to make to one stock.
With all that being said, let’s move on to the fun part.
Some of my favorite stocks that are around $50 dollar.
Stock 1: Kroger (KR) Kroger, is an American retail company founded
in 1883.
It is the United States' largest supermarket by revenue in 2019.
The second-largest general retailer right behind Walmart.
The Stock price is currently trading around $33 dollar.
The 52 week range is between $20 and $37.
Kroger stock price has been steadily growing until It skyrocketed during 2013 and 2015.
The sharp stock price increase was because
Kroger bought another big American supermarket chain Harris Teeter.
The consolidation helped Kroger’s revenue grow substantially.
However, The stock price took a 50% haircut from 2016 to 2017.
Stock market is a forward looking mechanism.
Investors are usually looking for growth in future.
Even if a company meets its current revenue and earnings expectation.
If the company mentions anything about downgrading their own outlook in the future,
the stock market will react accordingly.
That’s what happened to Kroger.
Kroger adjusted it’s outlook for 2016 and 2017 to be weaker than what it generated in 2015.
As you may know, I like stocks with a good dividend history.
I will get paid regardless of the stock going up or down or going in circles.
And a growing dividend payout is also a key attraction for many investors.
Kroger has been gradually increasing its dividend non-stop since 2006.
Also, during the past 10 years, the average Dividends Per Share Growth Rate was 13.4% per year.
Currently, the dividend yield is sitting around 2%.
Even though 2% might not seem like a lot, the dividend growth rate was averaging 13.4%
for the past 10 years.
I would consider a good quality stock with sustainable dividend payout over struggling
companies with unreasonably high dividend yield.
In terms of P/E Ratio, Kroger has a P/E ratio of 16.
KR's PE Ratio is ranked higher than 65% of Companies in the Retail industry.
Compared with one of its competitors Whole Food Market’s with a P/E ratio of 30, KR’s
stock price is considered undervalued.
You might never hear of Kroger before.
big multinational retail corporations like Walmart and Amazon have taken most of the spotlights.
In February 2020, Warren Buffet went grocery shopping.
He ended up spending half a billion dollar buying out 2.3% of ownership in Kroger.
His track record certainly makes a strong case for investors to copy.
Even with Buffett's success, I wouldn’t blindly mimic his every move.
Kroger already has a stable consumer demand.
Kroger is spending a lot of money building 20 automated warehouses.
Three of them are expected to be operational next year.
Therefore, The earnings report will be negatively impacted in the short-termed.
This expansion will allow Kroger to compete with the top online grocery delivery companies.
Kroger has also ramped up curbside pickup and home delivery options.
After examining the fundamentals of Kroger.
I hold on to Kroger because of the steady growth of the company.
I know that Korger will not likely provideme with an explosive growth in stock price.
The competitive P/E ratio and dividend history help with my diversified portfolio.
Kroger is considered undervalued to its competitors at the moment.
And also, Warren Buffet’s confidence in the management and the overall health of the
company is a huge plus.
Now that I shared a good quality boring stock, I know some of you might be looking for more
explosive growth stocks.
By the way, I have created a private fb group for like-minded stock investors.
I will be sharing weekly stock market updates and earning reports I am watching closely
in the upcoming week.
So If you would like to join the discussion, click on t he link in the description after
you finished watching this video.
The best has yet to be revealed so keep watching
Here is my stock #2: Advanced Micro Devices.
If you are a serious gamer , a day trader or a computer expert, you will be familiar
with this company.
AMD is an American multinational semiconductor company.
AMD's main products include microprocessors, motherboard chipsets, and graphics processors.
And really any important components in your computer.
The Stock price is currently trading around $54 dollar.
The 52 week range is between $26 and $59.
The stock price almost doubled within a year, making it the best-performing company in the
S&P 500 in 2019.
If we look at the history of AMD stock price, It’s has been like a roller coaster ride.
The stock was at one point trading as low as $1.8 four years ago.
And now the stock price is more than 30X.
Around 2010, smartphones became popular.
People think that smartphones might replace PC computers.
AMD did not have a clear direction in the smartphone and tablet market.
This concern had really caused Investors to question AMD.
So What happened that caused the stock price to rise 30X from 2015 to 2020?
When AMD stock was at an all time low of $1.8 dollar in 2014, the new CEO Lisa Su took over the company.
Su understands that the semiconductor industry is inherently risky.
Each new product development cycle takes around three to five years,
So AMD must make sure what they're creating today will be what customers are looking for
a few years down the road.
When Su took over, some of her biggest decisions were about what not to do.
Su decided to focus on things AMD’s best at.
The company decided not to pursue building technology for mobile phones or sensors.
Instead, the company decided to make a big bet on high performance computing architecture.
The main reason for the surge in AMD’s stock price is that the company is taking market
share from Intel and Nvidia, which are two leaders in the same industry.
Since 2017, Intel has lost 10% of its PC CPU market share to AMD.
Also, In 2019, both Xbox and PlayStation consoles announced that they will be powered by AMD
graphics and computer chips.
AMD has never paid dividends in the company history.
So, for any dividend investors, please be aware of this.
Also, AMD is currently trading at a P/E ratio at 128.
AMD’s two main competitors Intel has a P/E ratio of 11 and NVIDIA has P/E ratio of 79
The current PE ratio for AMD is nearly 11x higher than Intel and almost 2x higher than Nvidia.
This is indicating that AMD is overvalued compared to Intel and Nvidia.
When a company is overvalued, It does not mean that the stock price will drop substantially
in the short-term.
Again, the stock market is a forward-looking mechanism.
I think AMD has been making the right decisions in the past few years.There is still room
for the stock price to go up but the stock is becoming more vulnerable for stock price correction.
The P/E ratio is substiantly higher than its competitors.
Also, AMD is not paying dividend so this is a stock that has more speculation.
With that being said, I would like to introduce Stock 3: INTEL (INTC)
Intel is one of the biggest AMD’s competitors.
Its currently trading at $61 dollar with a P/E ratio of 11.
Also, It has a dividend yield of 2.26% with a 10 year dividend growth rate of 7.6% per year.
So, How do we compare AMD vs. Intel While Su was turning AMD around, major rival,
Intel, was lagging.
Intel struggled to move from a 14 nanometer chip to a smaller, yet more powerful 10 nanometer chip.
Intel's challenges have allowed AMD to gain market share in key areas.
A growing number of companies look to shift their operations to the cloud and as the 5G
technology begins to emerge.
It's an industry that could present a $20 billion to $30 billion opportunity for semiconductor
companies over the next few years.
In reality, there is no perfect stock.
Just like comparing AMD and Intel.
Both stocks are global health concerns and recession proof b/c people use computers regardless.
I think AMD is an upcoming strong rival in the semiconductor industry.
It could potentially chip away Intel’s market share substantially.
However, It does not pay any dividend and the high P/E ratio is showing a sign of overvaluation.
Intel has been lagging in some key areas in the past few years.
But Intel has a great history of dominance.
It has been increasing its dividend yields with a healthy P/E ratio.
It will be up to you to decide whether you would like to invest in the rising star or
the incumbent.
I covered the best stocks to buy in 2020 today.
They are traded on the US stock market.
If you would like to learn about my top 3 Canadian stocks around $50 dollar,
I have covered this topic in my most popular video by far on my channel.
Check out the link above.
Also, If you would like to learn how to invest like Warren Buffet in 10 minutes,
don’t forget to download the free e-book in the description.
If you like this video, don’t forget to destroy the like button below, subscribe,
and click the notification bell and change it to “ALL”.
So you will not miss any video.
You can also follow me on Instagram for things I don’t cover on my youtube channel.
See you next time!