4 STOCK I OWN - JUNE 2018
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Today I share the 4 stocks I own the most of going into June 2018. This is my favorite series even more than 3 stocks to watch. I hope you enjoy learning about why I am buying these stocks.
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For stocks I own June 2018 edition welcoming guys today I tell you my four biggest investments as of right now going into June 2018 Hope you guys really enjoy this as always, basically what I’ve done today is I’ve done 10 different categories Okay.
So instead of just kind of taking you through like the reporting and whatnot I usually do I basically created 10 vital categories that when I look at a stock I want those stocks to have and we’re going to basically answer these with a yes or no okay.
Not only am I going to tell you my four biggest investments but I’m also going to tell you if they meet these criteria based on a yes or no answer there’s no like middle ground here there’s no like old maybe they do or whatnot. It’s either yes or no all these stocks get so.
I really hope you guys enjoy this as always, by the way make sure if you’re newer to the stock market you check out that third link in the description that’s my 11 part and stock market investing mastery course that goes into everything.
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There’s so much value to be gained in that group you got to get in there guys. Alright, let’s get into this so my number four these investment of all as a company named Toll Brothers Toll Brothers is my fourth biggest investment right now they’re a luxury home builder.
All right, so let’s look at the the category so understandable this first category What that means is can I fully wrap my head around the business? It’s like circle of competence. I can you fully understand the business Toll Brothers case? Absolutely.
Without question, okay. By the way, I will never ever like this always has to be a yes understandable category like I would never ever touch a stock that did not meet this criteria. It’s just not worth it guys as to if you can’t understand the business like don’t be in that stock pay short term growth.
Those Toll Brothers have short term growth. Yes, they do. They’re pretty much growing everything across the board. If you look at just about every single metric they’re growing at right now, long term growth over the next three to five years.
Does this company have long term growth going forward? Yes, they do. They would meet that criteria. Okay. And last one huge long term growth. This is in relation Obviously, I’m talking mainly about revenue net income and I’m talking about long term growth.
This one’s huge. So what I mean by huge long term growth is I’m talking over the next three to five years. Can this company realistically double or more their revenues in profits? In my opinion.
Yes, they can unless we have some type of massive recession over the next three to five years Toll Brothers is a name that I could definitely see doubling their net income doubling their revenue over the next three to five years based upon how much growth that company has going for it and moving forward. Okay.
Next one is in relation to balance sheet. Okay, so do they have an okay balance sheet? I would say yes, they do have an okay balance sheet is just Okay. Do they have a great balance sheet and Toll Brothers.
No. Okay, they do not have a great balance sheet. Now mainly when I grade balance sheets, I grade them on industry. Okay, so a home builder, I’m going to grade their balance sheets differently than I might know great semiconductor play semiconductors are highly volatile.
You know, a company could drop them or something like that and the business could be devastated. Those companies almost need to have a great balance sheet okay. So I graded based upon each industry separately.
Alright, low forward p e ratio, what I mean by low for P e ratio is it under what the market is trading? I think right now the market somewhere around a 16 ish on a low on a four p e ratio basis.
Toll Brothers is at somewhere around a seven or eight guys. So do they meet that criteria of being a low 40? Yes, I love for pee because that’s basically telling me what the net income is expected over the next 12 months versus.
What that market cap is gives you an idea of valuation how overvalued or undervalued a stock is in relation to what their actual earnings are. All right. Great management team. Absolutely.
Our Toll Brothers one of the best management teams out there. I would say that the definitely the best in homebuilding my personal opinion. They’ve been there for a long time, they really know what they’re doing and the way they’ve grown that business over the past decade.
Coming out of the recession, not only getting the business through the recession and not having them go out of business or something and they came out of the recession pretty strong.
But then the way they’ve grown it since the end of the recession around 2009 2010 it’s been phenomenal you look at their earnings growth over the you know, the past, you know, let’s say 789 years.
It’s phenomenal guys, so absolutely great management team there is Myers coming so Myers coming What that means is is like a there’s a villains Michael Myers in the Halloween movies, okay, serial killer that comes up behind people and then takes them out. Okay.
So is Myers coming. This basically means for a company, is there someone coming behind them that’s going to knock them out that’s going to come take their market share, that’s gonna force his business to lose market share.
To lose revenue to lose net income and maybe go out of business someday, in Toll Brothers case? Absolutely not. There’s no Michael Myers coming for them. Okay. You know, there’s just there’s no one out there that’s really like, you know, a big competitive threat to Toll Brothers.
And then does the company pay a buyback or dividend you know, do they have some type of basically capital return structure going for investors? Absolutely. They do. They have a very big buyback going right now.
So yes. So needless to say, Based upon all this you will see why I’m pretty excited about Toll Brothers guys coming in a stock number three is a company named Eli. Well really the company is named as Calloway ticker symbol is Eli Callaway golf.
It’s a golf company. They sell golf clubs. They sell golf balls, anything that’s in relation to golf. They also have some, basically clothing lines. I actually have a Travis Matthews hat over here. Travis Matthews is a clothing brand that’s owned by Toll Brothers also and ojio.
They also have 15% ish investment in Top Golf, which is, you know, expanding all around the United States. A lot of exciting stuff going for that business. Alright, so let’s talk about this. Is it understandable business.
Yes. Without question. All these are going to be yes. Okay. Short term growth. Does Callaway have short term growth? Absolutely. Their short term growth is unreal right now. I think they grew revenues 30 something percent last quarter.
They they upped basically, what they expect to make for ETS for the rest of the year, like a lot of short term growth with the company, long term growth over the next three to five years. Yes, absolutely. I see a lot of long term growth with this company. Okay.
Huge long term growth. Can I see this company doubling their revenue and doubling their epcs? within the next three to five years? I would say no, I would say barely. No, I can see them definitely, you know, increasing quite dramatically from here.
But can I see them necessarily doubling or more over the next three to five years? No. I think if they did that, it would be a surprise even to me, I definitely see the business growing but not like that type of growth. All right, although they do have phenomenal growth right now. Okay, balance sheet.
Yes, they do have an okay, balance sheet, great balance sheet. No, I wouldn’t put it in the category of a great balance sheet, low four p ratio, no, this company, I think on the Ford p e ratio right now, somewhere around 21 or 22.
But this company is a company that has, you know, good long term growth going forward. And phenomenal short term growth growing going for it right now. So when you factor that in, a lot of times, those type of companies are going to get a little higher for P e ratios.
And then when you factor in the fact that they got this investment in Top Golf, which is probably worth somewhere around $400 million now. And going forward, probably more and more as Top Golf continues to get built out.
And as they continue to get bigger and bigger profits, like when you take that into account, like that’s a lot of money, especially with a company that I think has a market cap of less than $2 billion we’re talking about they got an investment just chillin over those were 400 million plus right now, guys.
So you’re going to command a higher four p e ratio, and you got all that going for you great management team absolute, this company is so phenomenally run over the past few years, they’ve really turned around the business in a big way.
Even in a weak golf environment that really, you know, crept in 2014 15 and 16. They still you know, kept the business on tracking data to a place where it could grow. Is Myers coming. No, I do not see Myers coming for them.
They’re the same competitors. They’ve been in a long time in the golf game isn’t the Nikes of the world. There’s title list and all those type of brands. They’ve been around for a while. So do I see Mike Myers coming.
No, I do not. And yes, they do. They actually do a buyback and a dividend this company. So needless to say you can see why I like Eli homing in on my second biggest investment as of right now is a company named cruzi doozy, otherwise known as Cirrus Logic ticker, ticker symbol c r u s crews.
So crews basically makes a ton of audio components that go into your smartphones, their biggest customer by far as Apple, they also have Samsung as a customer, although they’re much smaller customer.
Basically, they have to do with the whole audio signal chain of devices. All right. And voice is growing to be a bigger and bigger thing where whether it’s people you know, talking to their smartphones and you know, scheduling things.
Whether it’s people with a Lexus in their home or Google Home or an apple homepod or people wearing devices, you know, that are wireless devices in their ears and they can talk to them and whatnot.
Everything voice is a big, big gray category that is growing right now. And a direct beneficiary of all this growth is Cirrus Logic. Okay, so a company I’m very excited about, needless to say, understandable.
Absolutely. It was a company that took me a long time to understand this. Like I’ve been in and out of Cirrus Logic many times since like 2012 or 2013, somewhere around there, I found the company and it’s definitely a company that’s going to take some work for you to fully understand.
Like their business is not like some type of simple business or something. There’s a lot that goes into it. But now I’ve gotten to the place where I fully understand the business and that’s great short term growth this company does not have short term growth going for it right now.
Basically, they’re changing some parts with Apple and whatnot. Sometimes you know, Apple can, you know, take down suppliers inventory while they’re waiting for the next supply to come in for the next iPhones and whatnot.
So right now, Cirrus Logic does not have short term growth right now, it looks like the company is shrinking in the short term, long term growth, absolutely long term growth over the next three to five years without a doubt with all the things they got going for him.
The huge long term growth 10 the company double or more absolutely, within three to five years, when you look at voice biometrics, what that can do for the company. We look at you know the all the different features that can add into smart codecs.
When you look at Samsung possibly becoming a huge customer of CMOS logic once again, okay. All these different factors when you look at voice category growing and getting bigger and bigger and bigger, and devices needing more amplifiers, microphones and all this stuff is playing right into Cirrus Logic sweetspot.
When you look at Cirrus Logic expanding into the microphone business and you know, as phones have, you know, sometimes three, four or five microphones is a business Cirrus Logic that I really start expanding into over the next year or two.
It’s just, it’s just a ton of growth out there. So absolutely, I can see this company doubling or more revenue and profits over the next you know, three to five years. Okay. Balance Sheet. Yes, absolutely.
They have a great balance sheet. Okay, their balance sheets phenomenal, no debt on that company a lot of money in cash and investments. It’s pretty much as good as you can get a balance sheet, low four p e ratio.
Yes, I think the four p e ratio, if I recall uncruise right now, I want to say is a 10 or 12, something really low. It’s a very low four p e ratio, great management team, unbelievable management team, when Jason road took over this company, in 2000, was around 2007 2008.
This was like a $5 stock company. Okay, this was a $5 stock. Their revenues were somewhere around $175 million, when he took over this company 170 $580 million. And this is a company that will do you know, easily $1.5 billion in revenue this year.
Maybe even close to $2 billion, depending on how the back half of the year growth goes. And long term as a company over the next three to five years should be you know, somewhere around three four or $5 billion company as far as revenues coming in.
So it’s he’s changed the entire game the CFO and him have changed the entire game. So great management team. Absolutely. And they you know, got in with Apple at the right time and Vinod able to keep Apple like this, you know, very close relationship there is Myers coming Absolutely not.
There’s no one that’s coming in Cirrus Logic space if anything, Cirrus Logic kind of represents Michael Myers to all companies competing in the audio chain and competing in audio in general.
They’re kind of the Michael Myers if anything, and buyback or dividend they don’t pay a dividend, but they do have a buyback on right now. So they do, they are focused on capital returns. So needless to say, I’m very excited about Cirrus Logic.
This was my number two stock. And lastly, my number one biggest investment and this one’s my biggest investment by far is lb ticker symbol lb, which stands for Elle brands, they own Victoria’s Secret bath and Bodyworks paint, they own a few other smaller brands and whatnot.
And this is a position that might be my fastest growing position I’ve ever had in terms of me funneling new money. Like I don’t even think I had any money at all invest in L brands. And if I did, I had like very small amount.
And we’re talking about three months ago, over the past one to two months I have stuck. Phenomenal, ridiculous amount of money into L brand stock over the past month or two is now by far my biggest investment guys.
So understandable. Yes, absolutely. This might be the most this might be the easiest business to understand. Like they sell underwear and bras and lingerie and some clothing like that is not accomplished.
Like no matter who you are or what level you’re at with a with no stock market investing, like Elle brands is probably a business I represents one of the easiest businesses to understand out there. Okay.
Short term growth that this company? Well, it’s kind of a Yeah, we’ll give it a no, because the net incomes not growing right now. But the revenues are growing with this company. But we’ll give it a no since net incomes not growing at the moment long term growth in three to five years.
Yes, I definitely see long term growth for this company, what they’re doing in China, the expansion they can do, they’re hopefully getting Victoria’s Secret back on track and expanding that brand.
I absolutely see as business as a long term growth company over the next three to five years. Do I see huge long term growth with Victoria’s Secret as far as them doubling up or more their revenues and profits within three to five years.
No, I don’t think this is going to be a business that, you know, three years from now, four years from now, five years from now is going to have double the net income they have now double the revenues.
They have triple the revenue. Like I don’t see that with this business. So it’s a really solid company. Okay. Okay. Balance Sheet. Yes, I would give them an okay, balance sheet, great balance sheet.
No, I would not give them a great balance sheet. They have quite a bit of debt on their balance sheet is much less than many retailers and they also have a ridiculous amount of cash. I think they have something around $2 billion in cash on that balance sheet.
So I would not give them a great balance sheet. I was given an okay balance sheet for their industry. Low for P e ratio. Yes. There’s somewhere around a 10 for P e ratio on that company right now. Great management team.
I really want to give this one a yes, I really do. But for one reason I’m going to give them a no. And that’s because the person that’s in charge of Victoria’s Secret right now. I don’t think they’ve done a very good job.
They they’ve not been able to grow physical store sales of Victoria’s Secret. They have been able to grow direct online sales with Victoria’s Secret brand, but they have not been able to grow the physical stores. All right.
And that’s no excuse because guess what? Victor Alvarez owns another company named bath and Bodyworks right? They’re growing physical retail stores as far as the same store sales very strong right now. Okay, so there’s there’s no excuse for Victoria’s Secret brand to say oh.
We can’t grow physical store sales right now. When bath and Bodyworks has phenomenal growth Victoria our bath and Bodyworks had around 5% same store sales growth over the past quarter. Okay, that is very strong why Victoria’s Secret had around negative 5% same store sales in the physical retail retail stores.
So for that reason, I can’t give them a great management team if I had a category for good management team absolutely because what Lex West’s Wexner and the guy that’s running bath and Bodyworks right now, some of these guys are phenomenal.
It’s just the particular CEO in charge of Victoria’s Secret. I’m not a big fan of right now because they’re not growing calm store sales. I got to really see them start growing calm store sales, again, as far as physical retail sales go to really give them a great management team.
Next up is Myers coming. No, absolutely not. Who who’s coming in lingerie who’s coming in? You know, underwear sales, or bra sales or any of that type of stuff? In my opinion, no one are there tons of places to sell underwear and bras and lingerie and stuff like that.
Yes. There’s always been that that’s always been the case. Going back throughout time, but any woman that has any type of you know, decent money chunk of change to spend the Victoria’s Secret guys, so is Meyers coming.
No, there’s no one in particular coming out there and buyback or dividend. Yes, they pay a ridiculously big dividend which I wouldn’t mind I would love them to cut that dividend and up the buyback more if anything, or spend more money on on stores and whatnot.
But yes, they pay a dividend and they also do have a nice buyback on right now. So that is why I love l brands there. Let me know if you guys own any of these four stocks. I would love to hear from you guys. Those are my four biggest investments going into June 2018. Thank you for watching. Have a great day.