STOCK SELECTIONS
April 16, 2024
Overview
GIS (General Mills) is a manufacturer of many well-known consumer foods that are marketed mainly in North America. Cereals include Cheerios and Wheaties, baking products such as Betty Crocker and Bisquick, Mexican (Old El Paso) and snack foods (Haagen-Dazs ice cream). These product lines now make up about 50% of sales with snack foods the leading category. Other growth areas are pet foods (Blue Buffalo) and convenience meals. GIS has been able to manage cost effectively even in challenging environments and as a result has steady cash flow generation. The processed food industry is highly competitive but GIS has generated steady growth in sales and earnings over the past 10 years and its efforts to support its brands are designed to maintain its dominant position going forward.
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Earnings and Yield
GIS has exceeded expectations in the last four quarters and estimates have been stable for the past 30 days. Dividend is 3.6%
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Valuation
Trailing PE is 14 compared to an average 16.5 and forward PE is 15. PE/growth is 2.3. The industry median is 16.5. P/S is 14 compared with a 5 yeat average 16.4 and current industry value of 16.5.
Technical
Simple MA:
5day 67.44
10 day 68.66
20 day 69.01
50 day 66.38
100day 65.56
200day 66.97
PSAR SELL since March 26
ADX (14) 25.1 and falling
DI + 24.5 and falling
DI – 23.6 and rising
MACD (12,26) 0.56
SMA (9) 1.53
OBV Above its 20 day MA which has been rising.
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Prices
Close 67.84 on April 16
52 wk hi 90.89
Ave target 71
Summary
General Mills’ stock price has traded in a narrow range since October despite strong financial results. It is well below its 52 week high and average target price. GIS is slightly undervalued and has a good dividend. The stock has fallen with the rest of the market this past week but increased April 15 despite an overall market decline. This could prove to be a good entry point.
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GIS is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
April 19, 2024
Overview
PFE (Pfizer) is a major pharmaceutical manufacturer of a wide range of drugs and vaccines. Over the past few years it has divested its consumer and generic products and acquired a number of focused biotechnology companies. This was largely funded by profits from its COVID vaccine and treatment. As a result, PFE received a record nine drug and vaccine FDA approvals in 2023. Notable products include an RSV vaccine adults as well as products focusing on immune and oncology indications. A number of similar medications are in late stage development and expected to receive approval soon. The pipeline is projected to provide consistent growth through the rest of the decade.
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Earnings and Yield
PFE exceeded expectations in the last four quarters but earnings were much lower than the previous year because of the loss of COVID product revenues. The stock price has dropped consistently over the past year after each earnings release. It now appears to have reached a bottom and is starting to recover. Dividend is very high at 6.4% and should provide downside protection against significant further declines.
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Valuation
PE is 14 compared with an average of 12 and forward PE is 11. The median PE for the industry is 20. P/S for the company is 2.5 and the industry average is 7.1.
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Technical
Simple MA:
5 day 25.68
10 day
20 day 26.70
50 day 27.11
100day 27.73
200day 30.74
PSAR SELL since April 4, 2024
ADX (14) 16.7 and rising
DI + 32.3 and stable
DI – 23.8 and rising
MACD (12,26) negative 0.82
SMA (9) negative 0.51
OBV Below the 20 day MA and both are falling
Prices
Close 26.00 on April 19, 2024
52 wk hi 40.37
Ave target 34.80
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Summary
PFE is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
April 3, 2024
Overview
MOS (Mosaic) is a major producer of potash, phosphate and fertilizer. It has a stable supply of raw materials in Canada and the United States for all of its major products and should benefit from a growing global demand for fertilizer. It is working to reduce costs by shutting expensive facilities and to lower its debt which this should improve margins over time. Although earnings are driven by labile fertilizer prices, the long term trend should be up because of demand and MOS becoming a lower cost producer.
Earnings and Yield
MOS has missed expectations for the past four quarters but estimates are increasing. Dividend is 2.5%.
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Valuation
PE is 9 compared with an average of 12 and forward PE is 11. PE/growth is 1.6.
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Technical
Simple MA:
5 day 32.08
10 day 31.89
20 day 31.65
50 day 31.47
100day 33.44
200day 35.30
PSAR BUY since February 22
ADX (14) 20.5 and stable
DI + 23.7 and rising
DI – 13.4 and falling
MACD (12,26) 0.49
SMA (9) 0.55
OBV Above the 20 day MA and both are rising
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Prices
Close 32.55 on April 3, 2024
52 wk hi 48.92
Ave target 39
Summary
MOS had a poor year in 2023 and the stock price dropped significantly. It is now undervalued and growth prospects are good. Technical factors are positive and the recent price recovery could continue.
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MOS is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
April 8, 2024
Overview
PVH (PVH Corporation) designs and markets a wide range of clothing and accessories around the world. The iconic brands Calvin Klein, Tommy Hilfiger and Coach provide over 90% of sales. The future looks strong with efficient brand management to improve marketing including linkage with cultural events and personalities, improved financial control and increased operating leverage. It has sold a number of Heritage brands, paid down debt, and will be returning the money through share repurchases. PVH stock price dropped after the recent quarterly report, even though it exceeded expectations. Guidance for the upcoming year was less than expected and some analysts reduced their target price. In response, the price dropped over 20%.
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PVH is undervalued at its current price as shown by both trailing and forward PE as well as P/S below industry average. This appears to be a classic short term overreaction to bad news. The macroeconomic environment probably improve as consumer spending has remained unexpectedly strong and interest rates should drop over the course of the year. We anticipate that PVH stock price will recover. Rather than trying to catch the proverbial falling knife, there is a good chance that the knife has now reached the floor.
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Earnings and Yield
PVH has exceeded expectations for the last four quarters. Estimates dropped after the latest guidance. Dividend is 0.1%.
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Valuation
PE is 10 compared with an average of 13 and forward PE is 10. PE/growth is 0.6. The median PE for the industry is 16. P/S for the company is 0.9 and the industry average is 2.1.
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Technical
Simple MA:
5 day 107.71
10 day 123.01
20 day 127.91
50 day 129.08
100day 118.98
200day 99.58
PSAR SELL since April 2, 2024
ADX (14) 29.5 and rising
DI + 12.8 and stable
DI – 43.6 and falling
MACD (12,26) negative 4.68
SMA (9) negative 1.75
OBV Below the 20 day MA and both are falling
Prices
Close 109.33 on April 8, 2024
52 wk hi 141.15
Ave target 130
Summary
PVH is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
March 27, 2024
Overview
KHC (Kraft Heinz) is one of the largest packaged food and beverage companies in North America and sells products in more than 190 countries around the world. It has a number of well-known brands, several of which generate more than 1 billion in annual sales. The strong brand loyalty allows robust pricing which improves sales and maintains margins. KHC plans to focus on manufacturing its most valuable product lines and also to expand into higher margin channels such as hospitality and schools. Management is organizing the company around six major consumer need states. Productivity will be enhanced using the Agile Innovation Engine Program.
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Earnings and Yield
KHC has exceeded expectations in the last four quarters. Estimates have been stable for the past 90 days. Dividend is 4.4%.
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Valuation
PE is 12 compared with an average of 16 and forward PE is 12. PE/growth is 2.8 The median PE for the industry is 17. P/S for the company is 1.6 compared with an average 1.8. The industry value is 1.5 and average 1.5.
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Technical
Simple MA:
5 day 36.11
10 day
20 day 35.21
50 day 36.00
100day 35.87
200day 35.01
PSAR BUY since March 22
ADX (14) 26.9 and falling
DI + 30.7 and rising
DI – 19.4 and falling
MACD (12,26) negative 0.07
SMA (9) negative 0.32
OBV Above the 20 day MA and sharply rising while the MA is flat
Prices
Close 36.53 on March 27, 2024
52 wk hi 41.47
Ave target 39
Summary
KHC has successfully integrated the merger between Kraft and Heinz and is now focused on growing the company both in sales and profits. The dividend is extremely attractive at 4.4% which provides a downside price protection. Technical factors are trending positive. The stock is considerably undervalued based on trailing and forward PE.
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KHC is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
March 28, 2024
Overview
TSM (Taiwan Semiconductor) is the largest dedicated chip factory in the world with a 60% market share. Going forward TSM will benefit from more semiconductor firms will likely choose the fabless (nonmanufacturing) business model and the Internet giants will design their own data center chips. TSM is able to consistently increase its margins because of its economies of scale and premium pricing justified by cutting and process technologies. It has consistently shown the ability to prioritize the right areas for innovation, which makes it the choice for high performance computing companies. TSM may have 90% of the third party market for advanced chips. Sales and earnings are projected to grow at double-digit rates over the next several years. TSM has a wide moat because of its cost advantage and intangible assets that are realized because of its scale and leading position in process technology.
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Earnings and Yield
TSM has exceeded expectations in the last four quarters. Estimates have been stable for the past 60 days. Dividend is 1.1% .
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Valuation
PE is 28 compared with an average of 31 and forward PE is 28. PE/growth is 1.0 The median PE for the industry is 22. P/S for the company is 10.2 and the industry average is also 10.2.
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Technical
Simple MA:
5 day 138.47
10 day 137.70
20 day 139.32
50 day 129.28
100day 114.43
200day 104.41
PSAR SELL since March 15
ADX (14) 34.1 and falling
DI + 35.9 and falling
DI – 24.8 and rising
MACD (12,26) negative 1.30
SMA (9) negative 4.50
OBV Below the 20 day MA which is flat
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Prices
Close 136.05 on March 28, 2024
52 wk hi 158.40
Ave target 137
Summary
As discussed above, TSM has outstanding prospects going forward. While it is fairly valued, increase in the stock price should be justified by growth. The price has pulled back for the past three weeks, which likely represents a retracement rather than a reversal and the current price could represent a good entry point.
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TSM is an attractive stock to purchase with the goal of gaining ≥ 5% within the next 6 months.
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Stock Wealth Safely does not provide investment advice. This site simply lists the stocks we have chosen for our investment portfolio and shows how they have performed over time. Past performance is not a predictor of future results. Individual investment results may vary. All investing involves risk of loss.