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Still one of the world’s most undervalued companies

Feb 08, 2022

Good morning!

Stocks are creeping up, but the struggle is on.

Here’s my playbook.

1 – Still one of the world’s most undervalued companies

No matter how you feel about vaccines, Covid or a dozen other health-related and politically charged issues, Pfizer is still one of the world’s most undervalued companies. Q4 profits jumped more than 4X to $3.39 billion.

What catches my attention is the guidance.

CEO Albert Bourla is calling for record high revenue this year of $98 - $102 billion and EPS of $6.35 to $6.55 per share. (Read)

That’s smack in the middle of the $100 billion range I set last year and reiterated just last week in the February portfolio review to the One Bar Ahead™ Family.

Pfizer is down this morning because the boffins are upset that revenues of $81.3 billion fell short of the $81.8 billion, they’d expected. What they should be upset about is that Wall Street’s analysts got it wrong yet again.

Strikes me as a great opening – the company is on the cusp of truly customizable medicine and the markets don’t yet see that.

LowBall Orders or Selling Cash Secured Puts here could work nicely if you’ve got an appetite.

2 – PTON: Garage sale devotees get ready

I called Peloton the “short of the century” last year and have repeatedly encouraged investors to steer clear.

Now, people are going to be tempted to buy the turnaround now that there’s going to be a new CEO and expense reducing layoffs. (Read)

Don’t.

No matter what Wall Street says, Peloton is not tech.

The bikes are still expensive, heavy, and challenging to ship. And the upgrade cycle stinks because people don’t exactly fall all over themselves to buy new ones with each new release.

Garage sale devotees with a hankering for fitness should get ready!

3 – If you’re going to buy an airline

Frontier and Spirit airlines announced plans to merge yesterday, effectively creating the 5th largest airline in the country.

Neither are exactly known for their stellar service, but I think it could be one of the best choices around *if* you wanted to buy into airlines. I don’t but know a lot of people do which is why I mention it.

“Transitory” inflation isn’t going away any time soon and business travel may never return to what it used to be. Most people now simply want a really cheap way to get from point A to B. (Read)

4 – “I’m out” – Peter Thiel to Meta

Legendary investor and Roth IRA legend Peter Thiel told Facebook/Meta that he’s done. Stories are swirling that he’s going to be supporting Trump-aligned candidates and generally conservative politics. (Read)

Thiel and El Zucko are playing nice with complimentary niceties naturally because it’s appropriate in a situation like this. But as is usually the case, the gloves will probably come off soon.

I’m inclined to think Thiel simply doesn’t want to go down with the ship.

Thiel is merely the latest to bail, not the first like many think.

Deb Liu, former head of Facebook’s marketplace went to Ancestry.com. Kevin Weil who co-founded Facebook’s Novi crypto division took off nearly a year ago. Stan Chudnovsky, head of Facebook’s Messenger is leaving this year. Former chief of ads, Carolyn Everson went to Instacart where she joined Fidj Simo who was formerly head of the Facebook app to become CEO at Instacart.

Chief creative officer … poof. Technology Chief … in the wind. Workplace enterprise communications head … down the road.

Begs the question: what do they know that the public hasn’t figured out yet?

Cue the ominous music … I think Meta breaks $200.

5 – Last chance to buy if Russia invades

It doesn’t take a rocket scientist to figure out what’ll happen if Putin gives the order to invade Ukraine. Oil’s going to spike and global stock markets will puke.

Futures contracts are starting to adjust but oil has remained considerably lower than many expect as has volatility.

USO - which tracks US Oil - could be a good choice but BNO - which tracks Brent - could be better. Anybody wanting to play volatility may want to consider the VIX or VIX calls.

UVXY could be good for a quick jump but super tricky to time because leveraged funds will eat you alive if you hold ’em for more than a short period of time.