Investment Opportunity 1 – Is the Market Paying Attention?
Investment Opportunity 1 is a holding company with several businesses. For many years, the shareholders were not happy with how they were treated by the management. A big portion of the company’s profits were going to pay the CEO. There were also corporate governance issues. After one particular fund pushed for changes, things improved. In addition to that, the financial performance has been impressive during the first six months of 2015, making the company undervalued.
Investment Opportunity 2 – Undervalued Due to a Confusing Capital Structure
Usually it is easy to tell how the market is pricing the entire company. You simply look at the stock price and you multiply it by the number of shares. This is how you arrive at the market capitalization. Because such a calculation is so straightforward, most financial websites provide you with the market capitalization figure without requiring you to go through it yourself.
This is not the case with Investment Opportunity 2. Google Finance thinks the company has one market cap while Yahoo Finance thinks that it is completely different. This is because everybody is confused about the company’s capital structure. Consequently, the majority of investors simply skip this company and put it into the too-confusing pile, leaving it undervalued.
Investment Opportunity 3 – Apple Watch? I Don’t Think So
Investment Opportunity 3 is a good company with growing revenues and profits. It also has an incredibly strong balance sheet. Despite that, the stock is trading very cheaply. Why? Because Apple developed Apple Watch, which could potentially disrupt the luxury watch market. I believe that such a threat has no legs. Apple might be a cool company, but it is unlikely to succeed in the luxury watch market which means that this company will keep performing as well as it has been for many years. Eventually, the stock price will have to return to normal.
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