Stocks That Almost Made 3 Stocks Im Buying Now August 2019 Edition
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Today we do a follow-up to 3 stocks Im buying August 2019 edition and talk about 3 stocks that almost made it into the video. These are the 3 honorable mentions to 3 stocks Im buying in August 2019.
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Well good day subscribers Hope you guys are having a great day out there as always if you’re new here I am Jeremy and over the course of this past weekend, I released a video on financial education to the most famous series on the main channel actually called three stocks on buying now I decided to just release it to give a little love to financial education too.
And if you saw that video then you already know what the three stocks are that made the list if you don’t know make sure you check it out after this video, but today I thought I would do three stocks that almost made the list these particular stocks came so close to making the list and I thought since this was a rare month where there were three stocks that were so so close to making that list.
I thought we just kind of go through these three stocks that will let you know about them and tell you a little bit about these companies as well. I know you guys love to hear my opinion on different stock names out there and whatnot. So I thought this was a great opportunity to talk about some more stocks hope you guys enjoy this as always.
By the way we are doing a giveaway on the becoming master the stock Mark course we’re giving away five of those the pinned comment down there as Sue entered the contest for your chance to win. We’re going to do the giveaway actually on this upcoming Sunday. Okay, so I’ll be the pin comment down there.
All right, first stock up of the three foods Nordstrom All right, j w n. This one almost made three stocks. I’m buying August 2019 edition. Okay. So Nordstrom is a company right now about a $4.5 billion market cap on it. Trailing P of 9.44 P of eight price to sales ratio of point two eight.
So from a valuation standpoint of very, very low valued company, a type of stock that most value investors would look at and say this is a good value invest, okay. And then you see this what I’m about to show you in it even takes it up to the next level. Okay, value investors love some dividend money in this stock pays about a 5% dividend yield if you buy this stock here today, okay.
Payout ratio under 50%, which is pretty low. I mean, it’s rare you ever get to see a company that pays out like a 5% yield or more and yet has a payout ratio under 50%. It is super rare in the stock market. So when you can find those type of opportunities, sometimes it makes sense to take advantage of them.
Okay, if you don’t know much about Nordstrom, basically, they have a few different businesses, okay, three kind of main businesses. One, they have their department store business, which are very high end stores, they sell very expensive things, okay, very expensive suits and pants and dresses and purses and all those sorts of things.
Very high end apparel, let’s put it that way. All right, then they have Nordstrom Rack, which essentially sells high end apparel, but at much cheaper prices, okay, stuff that might be out of season stuff that might be you know, slightly out of style. You guys know how styles always change those sorts of things.
Or sometimes you know, some of these suppliers just make too much inventory. And they need to get rid of it. So Nordstrom Rack will gladly take on that inventory and go ahead and sell it for cheaper price. And you get a lot of huge designer names as a very high end clothing for actually pretty cheap prices at Nordstrom Rack, okay.
And then they also had their trunk club business, which is a big growth business for them, which is essentially a business where you have a personal stylist online and they send you different clothing items, and you can keep those clothing items you can send them back and the stylist is basically trying to figure out exactly like what type of clothes you would like or something like that.
Okay, so very interesting business model very along the lines of Stitch Fix, but maybe a little bit of on the higher end, okay, we look at the income statement of this company, I definitely like it, okay, it’s a company that’s grown the last four years 14 point 4,000,000,014 point 7 billion, then 15 point 4 billion, then 15 point 8 billion this past year.
So I always have a company that is continue to grow their revenue, grow their top line, okay, then you kind of think about it is a really tough mall environment. When you think about their main business, which is the department store business mall traffic has been very, very weak, right.
So to put up growth in that type of environment, it’s not an easy thing to do. Okay, if we look at their growth profit, also growing from 5.1 billion to 5.3 billion to 5.5 billion to 5.7 billion this past year, that’s obviously a very positive trend to see.
So as someone that’s a value investor, and if you’re investing in a stock like Nordstrom, you’re really investing as a value play doesn’t really have stock that you expect to you know, triple or quadruple over the next three to five years.
This is a stock you plan on making a lot of dividend money and going ahead and taking that dividend money reinvesting into other stocks and hopefully getting good gains on the stock over time. Okay. And if we look at net income, so if we look at the past four years, there was one year they had a huge decrease in net income, but since that time, they have grown that income again and again and again.
So that’s obviously a very positive thing. So when I kind of look at Nordstrom, I like the business overall, I like the business model. I love that 5% dividend yield. I love that payout ratio being under 50%. And I just look at this stock is probably a stock.
I should make good money in overtime and I should make you know good dividend money in essentially as well which I’ll reinvest into probably other stocks or maybe some more Nordstrom shares we’ll just have to see and so that was one of the stocks that almost made the top three Okay, three stocks.
I’m buying now August 2019. The second stock that almost made the list was winning resorts so some of you guys that have been on the channel a long time you know, my history of Wynn resorts. It’s been one of our best stocks we ever had back In the day, you know.
if we go way back to the GoPro days like Wynn resorts really was it was like everything we had was like a GoPro and Wynn resorts was a bad time for me investing but Wynn resorts really came through and that was a stock that just went crazy for us. Okay, so Wynn resorts, I’m looking at this company right now, trailing P of 16 for P of 70.
And if you look at those numbers, you’re like, Okay, you know, decent value for a company like when, but that doesn’t really show you the true worth of a company like Wynn resorts, okay? So you got to think about Wynn resorts, they had these massive, massive properties, okay, integrated resorts is what they’re called. And these properties cost a ridiculous amount of money to build.
Okay, so something I like to think about is what is the enterprise for a company like Wynn resorts, okay. 21,000,000,020 $2 billion for the company, okay, that’s an enterprise value, which is essentially the market cap. And then you go ahead and you add basically how much debt there is compared to how much cash and when has, you know, quite a bit of debt.
So that’s how you get an enterprise value, that’s quite a bit above where the market cap is. So 21 $22 billion, is really the truthful amount on what you’re paying, if you’re buying the whole entire Wynn resorts company. Okay. So what I like to think about this is let’s, let’s just, you know, disregard the client relationships, when has, let’s disregard the brand that Wynn resorts, has the customer service levels, all those sorts of things?
Let’s disregard all that for a moment. Okay. And let’s just think about how much would it cost. If another company was trying to build, you know, pretty much look alike properties in the respective places that went half. Okay. So in my estimation, if you were to build a winning encore, the same exact properties on the Las Vegas Strip here today, the cost of that would be around $7 billion.
Okay, that basically means that huge, beautiful towers, everything that’s in those towers, all those sorts of things, cost would be around $7 billion dollars could approach a billion dollars. If you were to build that same exact project now and start that project here in 2019, it would probably take you four years, maybe five years to get the full project done.
So maybe you’re looking at a 2023 or 2020, for opening. So now $7 billion, could go all the way up to $8 million. Okay? If we think about Macau, and I’m just talking about the small wind property in Macau, in the small encore property in Macau, those properties.
Once again, this is assuming you could get the land in Macau, get the government to give you the gambling licenses and all those sorts of things. But you need a lot of connections. You need a lot of proven track records even get those type of things. But let’s say you got those things, okay, and you got all the approval, you got the land and everything.
I estimate that cost a minimum of $4 billion to build those properties here today. Okay, minimum $4 billion, probably little closer to $5 billion if you’re trying to basically build those exact same properties. Okay. So we’re adding up the numbers. Okay.
But all these numbers I’m showing you are a little more conservative. When palace K, let’s once again, this is an Cotai part of Macau. Let’s assume once again, you got the land you got the licenses Elva sorts of things. If you were to build a wind palace, same exact project here today, you were starting here today.
The final cost that project would be somewhere around $5 billion, roughly, when when built, it was about a $4.2 billion project, roughly, you were to start that project here today and finished over the next few years, it’d be at least probably $5 billion to make that same exact property here today, okay, and then the Encore Boston Harbor that project just open.
And that had a cost of $2.5 billion, maybe a little over $2.5 billion of total cost for that project. If you were to start that project here today and get the land once again, the concessions and all those sorts of things, right, you’re looking at at least a $3 billion cost to build that same property. Okay.
So what we get to hear is we get to a minimum of $19 billion minimum $19 billion to build the same exact Wynn and encore properties in Macau, Vegas, and Boston, as a company has here today. Okay. And when you think about it, in that context, the company starts to seem a lot more undervalued because once again.
We’re just assuming just to build the physical properties on the Las Vegas Strip, Macau and right outside of Boston, right $19 billion to build a competitive product with those products, right? That’s unbelievable, because we’re not talking about client relationships. We’re not talking about all the customers who love the wind properties and encore properties, and all those sorts of things.
Okay? It’s unbelievable. And once again, you’re paying 21 $22 billion for this company cost a minimum $19 billion, just build those competitive properties. Okay, so obviously, that makes it look, you know, much more affordable. Okay. Next thing I want to talk about is strengthening client relationships.
Okay, so it’s a great video, an old little interview clip out on a two minute and 43 second interview clip here on YouTube. His clip was like posted 10 years ago, it was actually posted during the Great Recession. And from the Las Vegas sun, they do a little interview with Steve Wynn. Okay, and what he talked about there was on court room rates, and basically to tell you kind of the gist of that two minute interview there.
He was explaining that the wind and encore properties are the highest of the highest end whether you’re talking about Macau, whether you’re talking about Las Vegas, okay on the Las Vegas Strip. or whether you’re talking about now in Boston, they’ve the premier properties, the nicest properties, the properties that the people with the most amount of money are going to want to go stay out.
Okay. So during that little two minute interview clip, he basically explains that they kind of set the price whatever market they’re in, because they have the highest of the highest end properties. So let’s say the economy gets weak, let’s say the average price for one of their rooms on a, you know, a decent economy is like $300 a night, okay, and the economy weakens, well, then they have to bring the prices down to maybe 250 200.
And everybody under them kind of sets their prices, oh, winds move down to there, well, obviously, winds going to fill the fastest because they have the nicest properties. They’re known for that. And they have these huge client relationships, right.
So their properties would fill first and then you know, after them awesome, Blasio has to fill an aria has to fill in the Palazzo has to fill and then after that Treasure Island, MGM Grand, and so on, and so forth, till you get to the lowest of the lowest end properties.
So that’s the real huge benefit that accompany like when encore has is they play at the top of the end of the markets they’re in and they can really dictate price for the entire rest of the market, because they will always fill first, okay, so something very important, okay.
Now, also, I love this company, because they do pay a 3% dividend yield. So you got to ask yourself, okay, why did this stock not make the list knowing all those sorts of things, okay. And here’s the thing, it’s really hard for me to average up on positions, I love to average down on positions. But here’s the thing, guys, we already own some wind shares.
All right, we own 43 wind shares in the public account. As of right now that’s available my private stock group, all right. 43 shares $115 cost basis, we’re already up over 16% on those wind shares, it’s hard for me to go ahead and pay a 16% Premium where I just started buying the shares at you know, a month ago or two months ago.
Okay? So honestly, that’s probably the reason it didn’t make the list. And when I look at it, the stock even though we’re up 16 plus percent on it, even here, if you’re looking at long term basis over the next 357 years, even here, the stock is still a deal.
Okay, so it’s one of the few stocks I’ve ever held where I’ve actually contemplated averaging up on a position where I’ve double digit percentage on that just usually doesn’t happen, but I’ve actually considered that with Wynn resorts. Okay, so those are the first two stocks. And now let’s get into the third stock, which I know you guys love this one.
Okay. The third stock of the bunch that almost made the list is good old Tesla. Okay, Tesla market cap on this one is about $45 billion. And Tesla is a real simple one for me. Okay, Tesla’s real real simple and here’s how I view tasks. Okay, so I’ve got, by the way, if you don’t know Tesla, like, Where the heck Have you been?
Okay, they sell electric vehicles and the Model S their high end luxury sedan, they have the model three, they’re more affordable electric vehicle, they have the Model X their luxury SUV, that’s all electric and model wise coming, which is an all electric more affordable SUV. Okay?
So the one question you have to ask yourself, okay, is what will the dominant electric vehicle and self driving company be worth in five years, okay, I feel that Tesla is going to be the dominant electric vehicle maker in the world, in the dominant player, when it comes to self driving vehicles over the next five years, okay.
I think they’re gonna have an unbelievable next five to 10 years in front of that company, unbelievable growth is going to be in front of that company, in my personal opinion, just kind of where I look at it. So the question is, if I believe that Okay, then where do I think Tesla’s valuation will likely go over the next five years?
Okay, let’s not even talk about 10 years from now let’s talk about five years. So in my opinion, minimum minimum of $150 billion valuation on Tesla, in five years, based upon what I look at objectively in the market, and how I see it just Tesla has a huge, huge lead in front of everybody.
When it comes to electric vehicles, electric vehicle branding, the factories they have when it comes to electric vehicles, building mass amounts of batteries, all those sorts of things that this massive, massive lead over everybody else and in self driving, they’re pretty much about a year away from having vehicles that can fully self drive and could probably do it much, much better than an actual like, like adult driver can.
Okay, so if I’m looking at all this, I’m saying to myself, okay, in five years, I can’t see any way possible. This company is not valued at $150 billion plus, and Unless Unless Okay, they give up their massively I show you guys this here, Lana Falcons in a couple of Super Bowls ago, they had a 28 to three lead late in the third quarter, and the Falcons ended up giving up that lead in the Patriots ended up pulling a miracle actually winning that game.
Okay. So if I’m looking at tests, I say there’s a slight possibility that a miracle can happen. And all these other companies can catch up. And also in over the next five years, you know, also Tesla can be like behind in the game, or right at the same place where everybody else is out when it comes to electric vehicle technology and branding, and self driving all those sorts of things, and they could somehow give up their massively.
But if I look at this, I just don’t see that happening. It would take a true miracle for Ford and GM, and VW and BMW and all these different huge players. It would take a miracle for them to somehow catch up to where Tesla’s at when it comes. into their tech around electric vehicles, the branding in the space, self driving vehicles everywhere we’re going over the next five years, it would take a miracle for all those players to catch up.
So if I’m looking at this, there’s a very low probability Tesla will actually lose that lead, although it is possible. And that’s something you always have to account for when investing investing, as always talk about what the students in my private stock group, everything in this game is risk versus reward, what’s your risk going in?
What’s your potential reward On the flip side, okay, if I’m looking at a stock like Tesla, the risk is they give up their massive lead, they somehow lose out over the next five years, and they just become like a commoditized, like electric vehicle company.
Okay, that is possible, but it’s very unlikely on the reward side with a company like tough so you’re getting a company has way out in front of everybody. When it comes to electric vehicle branding. When it comes to tech around electric vehicles. When it comes to production of NASS electric vehicles.
They’re really the only company in the developed world that is producing mass amounts of electric vehicles self driving, they’re so far ahead of so many other competitors. So if I look at this on a risk reward standpoint, yeah, as a risk that a miracle can happen, they give up their lead bond, the reward side beside I feel is likely Okay, the side that.
I feel is like an 80 or 90% probability versus over here, like a 10 or 20% probability. That’s why I put a lot of my chips to Tesla stock over the last six months, nine months or so, because I just see lots of potential there and I see a stock that just has massive, massive reward potential.
Okay, and those are three stocks that almost made three stocks on buying August 2019 edition. By the way, make sure you go check out that video on financial education too. If you have not seen the three that actually made the list. Let me know what you guys think about these three stocks.
And let me know if you like these three stocks better, or the three stocks we talked about on the August 2019 edition on financial education too. I would love to hear your guy’s opinion in the comment section. As always, thank you for watching and have a great day.