Featured stock of the month: $CHTR Charter Communications

Charter Communications (ticker: $CHTR ) is a media sector company which provides cable services to residential and commercial customers in the United States.

It offers subscription-based video services and also provides internet services as well as other media-related services.

The company was founded in 1993 and is based in Stamford, Connecticut.

As of the end of last year it had 29 million residential and small and medium business customers.

It has a market cap in excess of 100 billion USD and can therefore be categorised as a large cap stock.

While it is currently trading at a trailing P/E of 61, it has a forward P/E of 26.6 which does not make it expensive considering that it is a growth stock with excellent track record.

In fact, based on current estimates, it is expected to grow its earnings by 45% over the next 5 years which corresponds to a 5 year expected PEG ratio of 0.84, implying that it is currently trading at a discount.

As it is a growth stock it does not offer a dividend. Despite that, it has profusely rewarded its investors over the past years, with more than a 36% capital appreciation per year in the last 3 years and a stunning 30% per year over the past 10 years. For comparison, investing in a S&P500 ETF over the same 10 years would have yielded a 9.4% annual return.

YTD the stock is actually up, sporting a 3.9% increase, while the S&P500 is down 11.8%.

Charter communications is also a primus inter pares (first among equals) as it has fared better than its peers and outperformed $XLC (a popular communications services ETF which also features the stock amongst its holdings) by 36% over the past year.

The stock has a beta of 0.8 which makes it less volatile than the stock market average.

The company reported Q1 earnings on May 1st missing expectations. However, it showed a significant rise in customer numbers as well as in revenue which made the stock go up after the earnings release.

From a technical analysis perspective, the stock is well above the Fibonacci 61.8% retracement line from its mid February 2020 highs which may indicate further short-term upside potential.

CHTR

If you want to find out which other long positions I hold in my eToro portfolio, please follow this link.

 

Featured stock of the week: #Solaredge ($SEDG)

Israel-based Solaredge ($SEDG) designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations.

The stock has shown its strength yesterday with a price increase in excess of 3% when most of the market was in red.

Its performance over the last year has been exceptional, with a peak of more than 200% and a current year-on-year capital appreciation of 148%. With this week’s move the stock is now trading above its 200 days moving average.

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But the stock is not only about momentum as it still sports an attractive valuation with PEG (5 years expected) of 0,82.

Solaredge is benefitting from its digital technology in a sector still dominated by analogue devices.

Whether it is due to favorable regulation, like the recent one dictating that in California all new houses should be equipped with PV panels, or simply because switching to solar “makes perfect economic sense” to use the words of Tony Seba, Solaredge seems well positioned from riding the long wave of solar energy.

This stock is also an example of a way of investing in a company that enables the transition towards more sustainable energy resources.

Featured stock of the week: Applied Materials

Despite the recent drop following Q1 2018 #earnings, Applied Materials, $AMAT, still looks like an attractive investment idea.

The reported earnings show very good growth in both the top and the bottom line, however the analysts were put off by the guidance provided during the conference call.

From a valuation point of view, the stock still looks cheap with a PEG ratio (5 years expected) well below unity as you can appreciate from Yahoo Finance.

Now that the stock is trading below the 200 days moving area it may be a good idea to see whether and how this sudden drop is temporary or the start of a downtrend prior to initiating any position or accumulating.

An example of an undervalued computer hard disk drive manufacturers stock

If you look at the valuation of Western Digital ($WDC) these days you will find that the stock is very undervalued. According to YahooFinance it has a PEG ratio (5 years) of 0.2 !

As regards technical performance, the stock has lagged behind lately and is currently trading below its 20, 50 and 100 days moving average:

Western Digital Technical Analysis Chart | WDC | US9581021055 | 4-Traders

Value investing requires patience: even though the stock is trading at a discount with regards to projected future earning, timing is of the essence and one would need to watch if the market recognizes the value of Western Digital before starting a position.