Investing Intel: 3 Free Stock Insights

ValueTheMarkets newsletter's new look! Plus, the Lowdown on Sonos, Molson and Andersons!

Feb 13, 2023

Happy Monday and welcome to a new-look newsletter from ValueTheMarkets! We have revamped our format and made some exciting changes, but it’s very much the same team behind this newsletter.

So, what’s new? Well, let’s start at the beginning.

This is the first edition of Investing Intel, a publication designed to offer investing ideas, as well as more insights into stocks and sentiment.

I’m sure you’d agree that even at first glance it’s a big step up.

But wait - you haven’t sampled our content yet!

This week we have packed in:

👉 3 Stock Insights

👉 A News Roundup

👉 IPO Outlook

👉 Earnings Previews

👉 Events Calendar

👉 A Final Fun Fact

You can also look forward to our super-detailed deep dives, with the first heading to your inbox later this week! But let’s not get ahead of ourselves, as there’s plenty packed into Investing Intel’s maiden edition.

Let’s kick things off with some insights, examining three stocks we like the look of:

The Stalwart - Molson Coors (NYSE: TAP)

If you toasted the New Year or enjoyed a Christmas tipple, there’s a good chance you’ve enjoyed some of Molson Coors’ (NYSE: TAP) products this winter.

That’s because the company is one of North America’s largest producers of beer, owning brands like Coors, Miller, Molson, Blue Moon and Carling. Unlike us, the company also looks beyond beer too, dabbling in hard seltzers, kombuchas and canned cocktails.

Beer is still very much the name of the game though. It always has been for the company, which saw its story start 237 years ago when John Molson delivered his first ale. For reference, that was before the US Constitution was penned.

John Molson’s first ale cost just $0.05 per bottle, a fact which has inspired us to start constructing a time machine.

The Molson Brewery operated independently for more than two centuries before merging with the Adolph Coors Company in 2006 to become Molson Coors.

That’s a precis of the company’s story, but what is it that gives the stock potential to be an attractive investment?

What really appears to play in this stock’s favor is the possibility of economic hardship. Some projections have the US avoiding recession, while others say it’s already there. Either way, we can be certain that this year will be challenging.

It’s a myth that alcohol stocks are recession-proof, but they are somewhat resilient to harsh economic conditions. However, discerning customers are still likely to opt for cheaper options.

The company has had a mixed performance over the last year, with its most recent quarterly update showing net sales climbing by 8% but earnings lagging behind expectations.

However, the business remains profitable and holds a more than 20% share of the US beer market. Its next quarterly release is scheduled for next week, so it’s definitely a good time to swot up on this stock.

It’s also worth bearing in mind that this is a dividend stock, having made payments to shareholders of $1.52 over the past year. This represents a dividend yield of 2.95%.

As such, this stock looks like a steady earner with a history of success and the right conditions to succeed over the coming year.

Cheers!

Taking on a Titan - Sonos Inc (NASDAQ: SONO)

You probably know Sonos Inc (NASDAQ: SONO) for its speakers.

The first big tick in the company’s favor is the quality of its products. Electronics specialist publication Wired says the company’s products are all “high-quality and deliver consistent, appealing sound”. The company’s suite of speakers, radios and soundbars are designed to work together within a single system.

Along with the quality of the products, this synchronized system appears to incentivize the acquisition of a suite of Sonos goods, rather than just a single speaker set or soundbar.

There’s no dividend here though, so if you’re looking for regular income this might not be the stock for you.

Sonos’ share price hit a high of around $43 in April 2021 but has since declined to $19.33. The period has seen the company dealing with faltering demand and several missed sales estimates.

However, with the news that the United States and Europe could avoid recession in 2023, things are looking more positive for consumer discretionary stocks like Sonos.

I like Sonos Inc because of the quality of its offering, but the eye-catching story surrounding the company right now is its gripe with Google's parent company Alphabet (NASDAQ: GOOGL).

A jury trial slated for May 2023 is the next step in the long-running patent fight between the two parties.

Indeed, ‘fight’ might not be an all-consuming enough word to describe the back-and-forth wranglings.

In fact, Sonos has already beaten Google in the courtroom on another occasion, with the US International Trade Commission ruling that the search engine giant had infringed on five Sonos patents in its own series of smart speakers. The specific infringement involved tech to control audio levels in speakers across multiple rooms.

But that was just one battle in the ongoing patent war between the two outfits. It’s not quite the stuff of an Oscar-winning courtroom drama, but it’s an interesting tale nonetheless.

There’s more to like beyond the conflict with Google.

Last week saw Sonos’ first-quarter earnings beat expectations as the business noted that it had gained market share “across key geographies and categories”. Some highlights include revenue rising by 1.2% year-over-year to $672.6m, versus expectations of $600.7m. Additionally, the release saw EPS of $0.79 topping expectations of $0.39.

Sonos’ income declined from $123.5m to $75.2m, but the business attributed $27m of this hit to changes in rules for reporting R&D spending.

With solid financials, a strong brand and the potential for courtroom success against a tech giant, there’s a lot to like about Sonos. Its fortunes appear to be on the turn, and it looks like there is significant room for the company’s share price to grow.

The Dividend Stock – The Andersons Inc (NASDAQ: ANDE)

The Andersons Inc (NASDAQ: ANDE) is no youngster, but it doesn’t quite rival the 237-year lifespan of Molson Coors’ story. The business started a mere three-quarters of a century ago with the opening of a grain terminal in Maumee, Ohio, just south of Lake Erie.

If you’re not agriculturally minded, you might be wondering what a grain terminal is. Just picture it as a grain silo equipped with a conveyor or elevator where the produce can be weighed, inspected and stored. If you’re looking for an even simpler image, just think of an all-purpose grain distribution center.

The company has evolved significantly from these humble beginnings, diversifying into an agricultural business with a hand in the commodity merchandising, renewables and plant nutrient sectors.

This stock appears worth a look for several reasons.

First off, the business’ financials are heading in the right direction. Here are some figures from the nine-month period that ended on 30 September 2022:

Sales and merchandising revenues up by 43% to $4.2bn.
Increasing revenues across all business units.
Gross profit jumped by 29% to $514.1m.
Net income more than doubled, climbing from $73.5m to $151.9m.
Diluted earnings per share stemming from continuing operations rose from $1.99 to $3.02.
Cash and cash equivalents stood at $140.8m.

The business’ next earnings are coming after the market close on Tuesday 14 February. But will this be a Valentine’s Day to remember for the company?

Consensus forecasts have EPS pegged at $0.40, according to NASDAQ.com. However, the company beat EPS estimates on three of its last four quarterly earnings updates.

Additionally, the business’ P/E ratio of 9.54 and P/B ratio of 1.06 are both lower than agribusiness competitors like Archer-Daniels-Midland Co (NYSE: ADM), Bunge Limited (NYSE: BG) and MGP Ingredients (NASDAQ: MGPI). This indicates that ANDE stock could be underpriced. The one key concern about the business is its high total debt of around $1.3bn.

Beyond headline numbers and financial metrics, there’s more to like about The Andersons Inc.

That’s because they are backed up by significant expansion with recent acquisitions. The last six months or so have seen the business snap up Mote Farm Service and pet food ingredient specialists Bridge Agri Partners.

Along with Andersons’ sale of its railcar repair business, the acquisitions signal the business’ intent to focus heavily on grain and fertilizer operations.

The agribusiness also seems to try and do its best for the planet, which is nice to have in the back pocket. Its annual sustainability review examines its ESG initiatives and credentials, including work to develop and promote sustainable wheat, corn, and oats production.

Its UK-based subsidiary, Feed Factors, has even won a Queen's Award for Enterprise recognizing its contributions to sustainable development. That’s right: royal recognition!

Finally, like Molson Coors, there is also the pleasant bonus of a dividend. Andersons has an annual dividend yield of 2.2% which is not huge but is a nice bonus on top of an already promising stock.

All told, The Andersons Inc looks like an accomplished business boasting strong underlying numbers, growth momentum and a stellar ethical reputation.

News in Brief

Inflation Anticipation. Investors are holding their breath as they await inflation data tomorrow, hoping that it continues to slow. However, Fed chief Jerome Powell cautioned last week that the fight still has some way to go, dampening investor sentiment.
Strong Start. Despite the looming specter of inflation, US markets enjoyed a positive start to the week. The DOW, S&P500 and NASDAQ all advanced early in the day to erase some of last week’s losses.
99 Spy Balloons. The Chinese spy balloon saga has continued, with US authorities downing several more suspicious floating craft over recent days. China continues to deny involvement but the incident appears to be damaging the already terse relationship between the two superpowers.

This Week - Dates in the Diary

Tuesday 14^th – US inflation (January)
Wednesday 15^th – UK Inflation (January) / US Retail Sales (January)
Thursday 16^th – US PPI (January) / US Manufacturing (January)
Friday 17^th – UK Retail Sales (January)
And remember, US stock markets are closed on Monday 20^th February for President’s Day.

Did You Know…?

Pirates in Somalia formed their own system of investment based on a stock exchange. The exchange, which the Wall Street Journal claims was formed in the town of Harardheere in 2009, allows people to back piracy expeditions with money or equipment.

And these pirates didn’t bury their treasure.

Some reports suggest there were cases where locals made tens of thousands of dollars and achieved ROIs of more than 3,000%. That’s exceptionally good going, but not quite enough to ignore all the murdering, kidnapping and thievery.

Pirate activity off the Somalian coastline has declined in recent years and it’s unclear if this eccentric stock market is still operational. As such, it might be wise to stick to slightly more conventional investments for the time being, even if you managed to suppress any moral qualms with a bottle of rum.

Notorious though he might be, it’s unclear whether Captain Jack Sparrow ever attempted an IPO (or float, if you will) on a piratical stock market…

A Final Farewell

Thanks for sticking with us until the end of this first edition of Investing Intel!

If you’d like to subscribe or refer Investing Intel to a friend, click here, or perhaps you’d like to visit our parent website at ValueTheMarkets.

See you next time.

Investing Intel