Where Is the Value, Garrett?

CLRD, SPY, TQQQ [Image](   [ARCHIVES]( LIVE]( [Twitter]( [Youtube]( [Instagram]( [Tiktok]( [Discord]( [LinkedIn]( CTRL+C, CTRL+V. If you can do this, you can make money. [Join Kenny Glick on January 5]( to learn how copying and pasting a line of code could be your most profitable move this year.   January 04, 2023 Dear Reader Good afternoon. Now is NOT the time to be thinking long-term just yet on disruptive technology or growth stocks. Cathie Wood keeps loading up on Tesla – but I wouldn’t touch it until it gets down into the $80 to $85 level – and I’d only be willing to do so as a speculative focus on energy trading in their massive battery operations. I don’t care about the electric vehicle play. I care about the batteries and electricity arbitrage. Meanwhile, oil-and-gas stocks are still extremely cheap relative to the market and to the price of oil. And people are ignoring the financials... like community banks. Then, you’ve got the industrial players in the shipping industry, which have been absolutely hammered. Banks. Oil E&P. Niche Dry Bulk Shipping. Midstream energy. Oh... and I’m going long SkyWest Airlines (SKYW). Strong F score, exceptionally low multiples (it’s trading at 3x its pre-COVID earnings and has nearly $1 billion in cash, 3.7% of U.S. market share, fair value around $44.50, a tangible book value at $47.35. It’s a natural takeover target on the back side of 2023. The only challenge for this stock is that executives need to find more pilots. SKYW operates flights for pretty much everyone under United Express, American Eagle, Alaska Airlines, and Delta Connection. And that’s why you’ll find SkyWest in our new [Flashpoint Long-Term Portfolio](. I wanted to create a portfolio with a longer outlook to provide us with unique value and income during this economic environment. The focus on these companies centers heavily on Value, Growth, and Income. These businesses have strong Piotroski F scores and are part of a major Flashpoint trend that will dominate the markets in the coming years, positioning them well for the year ahead. Flashpoint Trend: Merger and Acquisition Activity in 2024 SkyWest (SKYW) – It has been an ugly year for airlines, and the slowdown isn’t over yet. That said, SKYW is sitting on an exceptional amount of cash right now. The cash per share is $20.43, signaling that this stock is undervalued and underappreciated. The challenge moving forward for the company is the ability to find pilots. I think that this will be alleviated in the future. In addition, I think that SKYW is a natural takeover target with more than 3% of the U.S. market share. Instructions: Buy SkyWest stock at market price. Sell-to-open the July 21, 2023, $17.50 call for the best price possible for every 100 shares of SKYW you own. This covered call provides an upside of 22% through July (40% annualized) and offers a breakeven of $14.36 (the lows of 2022). This is a 24-month holding recommendation with active trading on top of it. We will continue to sell calls on top of this position for the duration of the year unless we see a move higher that pushes the stock higher than the call price that we sold. Customer’s Bancorp (CUBI) – This stock we discussed on Midday Momentum. Shares had plunged by 56% in 2022 as investors threw in the towel, with a focus on the longer-term trend. Consolidation in the banking space will heat up in the second half of 2023. The stock has a strong F score of 7, has strong net margins north of 40%, and its tangible book value is about $38.35, a 35% premium to the current stock price. Flashpoint: Global Energy Woes Blackstone Minerals (BSM) – I want a healthy combination of growth upside and income, and Blackstone provides incredible value. The energy producer has an F score of 7, a Z score of 15.5, maintains incredible margins and pays a stunning 10.1% dividend right now. Shares appear to be fairly valued in this macroenvironment, but this dividend is so attractive at the moment. Flashpoint: Global Energy Woes Imperial Oil (IMO): Fair value for IMO, according to Gurufocus, is about $65 per share for Imperial Oil. I’d be happy If the stock returns to its 52-week high of $58.50, an upside of 19%. The combination of growth and income upside for IMO is very strong. The dividend is low compared to many peers at just 2. Flashpoint: Biodiesel Transition in the United States FutureFuel Corporation (FF): The transition to biodiesel fuel will accelerate over the next few years, and FutureFuel is a protective way to take advantage of this trend. The stock has a strong F score of 9 (Perfect Score), a high Z score of over 3, and a very low EV-to-EBIT. Based on fundamentals, this is a very strong company largely ignored by large Wall Street players. Shares are currently trading around $8.10, but the fair value could be in the $15 range. We will manage these positions around momentum using leveraged ETFs to hedge during negative environments. If you would like access to the new Flashpoint Trader Long-Term Portfolio [Click Here for More Info.]( Cheers! Garrett {NAME}   IMPROVING SECTORS: Cyclicals, Real Estate, Financial, Basic Materials, Communication   WEAKENING SECTORS: Energy, Consumer Defensive   WATCHLIST: CLRD, SPY, TQQQ   [YouTube]( Did you miss the show? No worries, we’ve got you covered.   [Shhh... The Flashpoint Monthly Offer is BACK!]( Join Flashpoint Trader to receive your Flashpoint Fortunes Report highlighting the 14 crises being tracked by Executive Producer Garrett {NAME} right now. 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