Smart Investing Briefings with Brent & Chase Wilsey


Netflix Priced too High by Brent Wilsey

Netflix Priced too High

Oct 17th, 2017

Netflix stock has now topped $200 after reporting growth in sales, earnings, and subscribers. The problem here is the company made just $0.37/share in the most recent quarter and trades at 93x Forward Earnings. That is way too expensive for estimated earnings and is a risk I want to avoid.

Dividends Can Help Your Portfolio  Article by Brent Wilsey

Dividends Can Help Your Portfolio

Oct 11th, 2017

Dividends can account for more than 50% of a stocks long term return. In 2016 dividends just from the S&P 500 were $404 billion. For 2017 it is estimated they will be $436 billion, a 7.7% increase. Keep in mind these are just from the 500 companies in the S&P 500. Investment tip: while I point out dividends are important, an investor should never blindly invest in a company just because of a high dividend yield.

Concerns About An Expensive Market  Article by Brent Wilsey

Concerns About An Expensive Market

Oct 10th, 2017

Over the last 20 years, the Dow Jones has gained, on average, 1.32% the first 9 months of the year and delivered 5.46% in the fourth quarter. This year the Dow has far exceeded the average over the first 9 months and has produced a YTD return close to 15%. Earnings season kicks off this week with big banks reporting. Can the markets continue to march higher through the end of this year?

Not So Super Savings with Costco  Article by Brent Wilsey

Not So Super Savings with Costco

Oct 6th, 2017

Even with an earnings beat, Costco stock has fallen $10 today. Concerns over an aging membership group, margins, and Amazon seem to be the source of the fall. We still feel that valuations are too high on this company. We have a target sell price of $116.33 and would not hold it in our portfolio.

S&P 500 Moves Up  Article by Brent Wilsey

S&P 500 Moves Up

Oct 5th, 2017

The stock market continues to reach new heights and the Forward P/E on the S&P 500 of approximately 19, sits comfortably above its long term average of 16.5. This may not sound like a big difference, but if the S&P were to revert to its long term mean, that would be a 13% drop. It is important to remember it is not a stock market, but rather a market of stocks. The companies we are buying at Wilsey Asset Management have an average forward P/E of 11.3. Finding good value takes time and research, but over the long term, it benefits you as the investor.

How Puerto Rico’s debt crisis could impact you!  Article by Brent Wilsey

How Puerto Rico’s debt crisis could impact you!

Oct 4th, 2017

How Puerto Rico’s debt crisis could impact you! If you invested in Franklin or Oppenheimer tax free bond funds, you may want to look closely. These two mutual fund companies are large holders of the Puerto Rican bonds that have fallen 60% from par value and that may become worthless in the future. Check how much of these high-risk bonds your fund holds.

Can Nike ‘Just Do It’ for your Portfolio?  Article by Brent Wilsey

Can Nike ‘Just Do It’ for your Portfolio?

September 27th, 2017

Nike missed on its sales expectations and now sees it stock down 13% from its 52 week high. While Nike is one of my favorite brands, I have avoided the stock for years because high growth expectations have made the stock expensive. Even with the recent pullback I would not be buying the stock as it still trades at a Forward P/E of 19.4. I’d rather buy a company with a Forward P/E of 10-12.

DOW 1,000,000? Article by Brent Wilsey

DOW 1,000,000?

September 21st, 2017

Warren Buffet said he expects the DOW to be above 1,000,000 in 100 years and that investors should not bet against the US in the long run. While the number sounds unfathomable, consider how investors felt nearly 100 years ago when the DOW was roughly 81. It is important to not forget the magic of compounding and how it affects larger numbers. With this in mind we wouldn’t be surprised to see the DOW above 1,000,000 before 100 years. If the DOW achieves a growth rate of 5.2%, it will reach 1,000,000 in 75 years. This is a modest growth expectation.

Toys R Us Files for Bancruptcy Article by Brent Wilsey

Toys R Us Files for Bancruptcy

September 19th, 2017

Toys ‘R’ Us has filed for Chapter 11 Bankruptcy. This does not mean the company will be closing its stores and in fact it has reported it plans to continue its operations. Companies can go through Chapter 11 bankruptcy and remain well known businesses. This has occurred with companies such as General Motors and Delta Airlines. Chapter 11 involves reorganizing a company’s debts and assets and a plan must be submitted to the courts to repay creditors. If the plan is not feasible, the creditors may propose a plan instead. If the creditors and courts do not approve the plan Toys ‘R’ Us provides, we could begin to see the company closing stores to pay off its debts.

Hulu on the rise? Article by Brent Wilsey

Hulu on the rise?

September 18th, 2017

Should Amazon and Netflix be worried about Hulu’s Emmy success? Hulu took home 10 total awards and was the first streaming service to win the Outstanding Drama Series award at last night’s Emmy awards. Netflix still bested Hulu with 20 total awards, but Hulu should continue to provide pressure as a competitor. This could jeopardize Netflix’s expensive stock price in the long term.

NFL Viewership Problems Continue

September 15th, 2017

Week 1 NFL ratings fell 13% versus last year. The NFL has witnessed viewership decline over the past few years. This should make investors wonder if Disney & ESPN have now overpaid for Monday Night Football rights, if AT&T and Direct TV overpaid for NFL Sunday Ticket rights, and if Fox and CBS have overpaid for their NFL deals. It will also be interesting to see how new streaming bidders will value the NFL games.

Jamie Dimon Warns Against Bitcoin

September 13th, 2017

Jamie Dimon, CEO of JPMorgan Chase, is not a fan of Bitcoin calling the currency a fraud and comparing it to the tulip bulb crisis in the 1600s. This comes shortly after China’s announcement that it is cracking down on cryptocurrencies. We agree with Dimon as Bitcoin is extremely speculative which makes it hard to decipher its true value. I’d rather buy a company that can be evaluated based on its earnings, sales, assets, and cash flow.

Starbucks Biggest Competitor? Starbucks

September 9th, 2017

Think about how many Starbucks you see driving around town. In a recent research report, it was found there are 3.6 Starbucks locations within a one-mile radius of the typical Starbucks in the U.S. This can lead to cannibalization of sales and unnecessary operating expenses. This would concern me as an investor, especially since the stock has an expensive forward P/E of 22.8.

Is Equifax sinking fast? [VIDEO]

September 8th, 2017

Best Buy Falls After a Strong Quarter

September 1st, 2017

Best Buy recently reported a strong quarter with results in sales, earnings, and comparable sales exceeding estimates. The stock however was pressured as the CEO stated mid-single digit comp sales would not be the new norm and that gross margins may fluctuate. This could have created a great buying opportunity as the company has proven it can fightback against Amazon. We have a target sell price of $70.46 on BBY.

Is Amazon’s AWS Business Set for a Decline?

August 30th, 2017

One of Amazon’s estimated growth drivers is it’s AWS, or cloud business. It has been announced that large retailers including Walmart and Target are pulling back from AWS and looking to work with new vendors. It begs the questions, why would these large retailers help their largest competitor? And if Amazon continues to try and enter new industries will they lose other AWS business? These pullbacks could hurt Amazons growth and profitability which could be a detriment to the high priced stock.

How Popular Tech Companies are Hurting Shareholders

August 25th, 2017

Since 2012, popular companies have continued to dilute their stocks. The diluted shares outstanding for NFLX have climbed by 8%, AMZN’s have increased by 9%, FB’s have increased by 36%, and TSLA’s have increased by 54%. The diluted shares tell investors how much of the company they own or how big their piece of the pie is. The problem is a pie is only so big, so as companies increased the diluted shares your piece of the pie gets smaller and smaller. We prefer to own companies that buy back stock and increase our ownership in the company.

Understanding the Dow Index

August 24th, 2017

Median Dow stock up just 2% this year, yet the index is up 11%. Be sure you are buying the good value companies!

Can Business Regulation Reductions Sur Growth?

August 22th, 2017

Besides tax cuts, reduction in business regulations also helps company profits. On an annualized basis, pages added to the federal register were only 61,300 and that is the lowest figure since the 70's. At the current rate, 2017 could be the biggest decline in regulatory actions since the federal register was introduced in 1936. In comparison 97,000 pages were added to the federal register in 2016. Ask any business person, regulation is very hard and expensive for business. Some say more expensive than taxes.

Walmart Standing Strong Against Amazon?

August 17th, 2017

Walmart (WMT) is falling after reporting weaker than expected guidance. The company did beat on sales and EPS, but the big positive was online. Volume online increased 67% and product offerings online have increased 30% since Q1 to 67 million SKUs. Walmart seems to be standing strong against Amazon.

These Two IPOs have had a Rough Start

August 10th, 2017

Snapchat and Blue Apron have early problems as public companies: Two big names that were optimistic about their IPOs, but so far this year it has not been the magical experience they were hoping for. Snapchat (SNAP) had an IPO price of $17/share and touched a high of $29.44, but after reporting poor quarterly earnings today, the stock price fell more than 15% after hours to a fresh 52-week low under $11.50/share. Blue Apron was another big name that hit the IPO market at $10/share. After increased competition from Amazon and poor results the company fell to $5.14 today. Be careful with investing in IPOs, while it may be exciting it can be very risky.

Netflix losing Disney?

August 9th, 2017

Disney movies are not just your classics such as Snow White and Cinderella. Disney also owns Pixar (Finding Nemo, Toy Story, and Cars), Marvel (The Avengers, Captain America, and Iron Man), and Star Wars. Come 2019, Disney will reduce its content on Netflix as it is preparing to launch its own streaming service. Netflix stock was falling after hours in response to the news.

Wage Inflation Set to Rise?

July, 21st, 2017

The problem is not job openings, but rather the filling of those jobs. It currently takes 31 days to fill a vacant job which is up from 23 days in 2006. Employers report the main problem is few or no qualified applicants, while the potential workers say there is not enough incentive provided by the employer. With job openings high and the labor market tight, we expect to see wage inflation over the coming years.

Chipotle Has New Problems

July, 20th, 2017

Chipotle (CMG) was once a high-flying growth stock trading close to $750/share. The company was then hit with the E. coli problem and saw its stock fall below $400/share. Now the company has reports of rodents in Dallas and a new illness in Virginia. Will this fall for CMG continue? The valuation ratios point to more trouble ahead. Be careful what you pay for a company.

Netflix Now More Valuable Than Time Warner

Netflix Now More Valuable Than Time Warner?

July, 18th, 2017

Netflix jumps nearly 15% on subscriber growth. Netflix has now passed Time Warner, which owns HBO, Warner Bros, and Turner, in market cap. Time Warner had $29.3Billion in sales and $3.9 Billion in Net Income during fiscal 2016. For comparison, Netflix had sales of $8.8 Billion and Net Income of $186.7 million. This market has been willing to pay for growth at whatever the cost may be, but learning from history we know the house of cards will come back to reality at some point.

The Importance of Disciplined Investing

The Importance of Disciplined Investing

July, 14th, 2017

Today we sold one of our large holdings. Sometimes it is hard on the emotions to sell a winning company, but when the numbers say sell we sell. There are no emotions involved with our financial decisions. We are also excited to raise some cash and look at buying another great company on sale as we expect a pullback in the near-term.

The DOW is at record highs, how did that happen? [BLOG POST]

August 8th, 2017

Boeing (BA) has been a strong performer as of late and since March has accounted for 45% of the DOW’s gain. The DOW is a price weighted index meaning the higher the price of the DOW stock, the more weight it carries in the index. At $240/share, BA carries the most weight in the index. If the company slows down over the coming months, it could hinder the overall performance of the DOW.

Poor Performance in Bonds Ahead? [BLOG POST]

August 2nd, 2017

We have been concerned about the future poor performance in the bond market. Former Fed Chair, Alan Greenspan, recently echoed this concern, “Real long-term interest rates are much too low and therefore unsustainable. When they move higher they are likely to move relatively fast. We are experiencing a bubble, not in stock prices but in bond prices.” No matter your age, if you are in bonds be wary of the potential collapse. We have a chart detailing the losses in bonds with a rising interest rate environment.

Are We in a Kid's Market? [BLOG POST]

July 31st, 2017

The market has continued to gain and we are witnessing a “kids market”. This idea comes about when “kids” who have no firsthand experience in major market downturns bid up highflying growth stocks. In the short-term they look smart, but in the long-term experience persists and outperforms.

Have You Received Your Tax Refund Yet? [VIDEO]

May 5, 2017

Is The 20% Tariff On Canadian Lumber
Really A Big Deal? [VIDEO]

April 20th, 2017

The details of overbooking flights and should you now invest in United Airlines [VIDEO]

April 13, 2017

New Levels For Consumer Confidence. Will Apple Continue To Shine? [VIDEO]

March 28th, 2017

Should You Invest In Pot Stocks? Is Amgen Too Expensive To Pay? [VIDEO]

March 24th, 2017

Will The Local Sears Disappear? Do You Have Trouble Saving? [VIDEO]

March 23rd, 2017

Where You Are Most Likely To Meet A Millionaire & How To Invest In Oprah [VIDEO]

March 21st, 2017

Lucky Facts For St. Patrick’s Day [VIDEO]

March 17th, 2017

After 8 Year Bull Market Signs: Still More To Come [VIDEO]

March 9, 2017