Tag Archives: investing

Warner Brothers Discovery Says the Strikes Could Cost Them Up To $500 Million!

Last year, I started buying shares of Warner Brothers Discovery (Ticker: WBD). Why? Because I believed that the company was undervalued relative to its assets and intellectual properties (and still do). That decision, however, has not exactly paid off. Warner Brothers Discovery has seen multiple box office failures since I invested. While they do have very valuable IP, I did not account for them mishandling that IP as much as they have. This has, of course, made being a shareholder very frustrating so far.

WBD recently lowered their 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to $10.5 billion to $11 billion. This would be a hit of around $300 million to $500 million. They claim that this is largely due to the actors’ and writers’ strike.

While I am sure that the strikes are hurting them and is a big part of that number, I personally believe that a big reason for their losses is streaming. While streaming services can be profitable, a lot of the big studios are spending so much money on making content for their services that they are losing obscene amounts of money. Disney is having this same problem as they are spending hundreds of millions on several of their shows which is just not profitable.

The strikes were originally thought to be over by early September, and Warner Brothers Discovery CEO David Zaslav has been very into the negotiation process with the unions. It looks like the strikes are going to go on for a while more.

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Is Consolidated Water Co. Stock a Buy?

Investment research company Zacks recently reported Consolidated Water Co. (Ticker: CWCO) as a “strong buy”, but is the stock a buy?

CWCO constructs and manages water production and water treatment plants. They’re mostly found in the Bahamas, Cayman Islands, and the United States. They currently trade at a market cap of around $460 million.

The company currently has a p/e ratio (price divided by earnings per share) of 31.13 which I personally believe is pretty high. Last year, the company received $94.1 million in revenue and earned $5.86 million. The year before that they earned $66.86 million and earned around $875 thousand. The company also offers a dividend yield of 1.28%.

The reason this stock received a strong buy rating by Zacks is because they increased earnings 47.4% over the last 60 days. While that is impressive, the company does seem to be trading at a pretty hefty valuation premium still.

Looking at the stock’s fundamentals, one will find that the company currently has a price to book ratio of 2.56 and a price to sales ratio of 3.31. Both of these are traditionally viewed as very high. Looking at the company’s balance sheet, one will also find that the company has $2.38 million in total debt. This gives them a current ratio of 3.72. A current ratio this high could signal financial strength, but it could also indicate that the company is not good at investing the cash that it has.

Overall, I do believe that the company is overvalued, but most analysts do seem to place this stock between a strong buy and a buy rating. The stock is up 97.7% so far year to date at time of writing.

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The Secret to Dividend Investing

When buying a stock, I look at the company’s growth to see if I will be able to sell the stock at a later date for more money than I bought the stock for. Obviously, if the business looks like it is in the decline, then I will not buy it at a premium valuation. Another thing that I look at is if the stock is paying a dividend. If a company is growing their earnings year-over-year while offering a dividend, I like that stock because I can buy into the company and get cash flow from the company that I can use to invest into other businesses. Not only will I benefit from the eventual sale of the stock, but I will be able to grow my cashflow along the way.

Many people take this idea and then try to find the stocks offering the biggest dividends. That can be a problem though. When one finds a stock offering a huge dividend, the question they should ask is why? Why is the company offering such a high dividend? One reason is often because they have to. If a company is seeing a massive decrease in share value, they might offer a bigger dividend to keep investors from selling. If one buys stock in a business at $40 a share and receives a 10% dividend but then that company decreases in value by 20%, they’re still losing money.

I like to buy into companies that are offering a dividend, but it is important that that company is still experiencing growth or at the very least not declining in growth. I also like to put high dividend paying stocks into a Roth IRA so that I do not have to pay taxes on the dividends I receive. Dividends are taxes as income which can put a good-sized dent into one’s overall return.

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Warren Buffett Sold $8 Billion Worth of Stock. Does It Matter?

Warren Buffett’s Berkshire Hathaway has sold $8 billion worth of stock in the most recent quarter. Because of this, I have seen a ton of articles saying that this “raises fears of a crash”. Many “experts” have put out content talking about what this means or why he did it, but does it really matter at all?

While $8 billion is a lot of money, it is important to realize that that is a very miniscule amount of money for Berkshire Hathaway. As of last year, Berkshire Hathaway had $948.4 billion in assets. $8 billion is not going to make or break a portfolio like that.

I would imagine that Warren Buffett sold $8 billion worth of stock to help diversify the portfolio by trimming down a position. Either way, it doesn’t matter. If Buffett does think that the market is going to crash, selling $8 billion worth of stock isn’t really going to help him at all.

The market is very much in the green so far year-to-date meaning that a lot of people are once again trying to predict a crash. Of course, no one actually knows what the market is going to do short-term. Either way, Buffett selling a tiny fraction of his portfolio is not a clue.

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