spinoffs
A spinoff takes place when a company decides to get rid of a portion of its asset base, possibly because it wants to focus its activities elsewhere, but is unable to sell the assets for a price that it feels reflects their value. Instead, the parent company sets the assets up as a separate company, then hands out shares in that publicly listed firm to its current investors.
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Swiss pharmaceutical giant Novartis spun off Alcon in 2019. As we’ve said many times before, spinoffs are the closest thing you can find to a sure thing, regardless of the market’s rise and fall.
The stock is already up over 99% from its March 2020 low, but we think it can go much higher....
The stock is already up over 99% from its March 2020 low, but we think it can go much higher....
You Can See Our Spinoff Stock Portfolio For June 2023 here.
Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:
1) The management of a parent company will only hand out shares in a subsidiary to its own investors if it’s all but certain that business, and the parent, will be better off after the spinoff.
2) Spinoffs involve a lot of work and legal fees....
A key benefit of spinoffs is the creation of pure-play firms that focus on a narrow market. Here are two medical-related spinoff situations that should benefit their investors for years to come.
LABORATORY CORPORATION OF AMERICA, or LABCORP, $217 is a spinoff buy. The company (New York symbol LH; Manufacturing sector; Shares outstanding: 90.4 million; Market cap: $19.6 billion; Dividend yield: 1.3%; Takeover Target Rating: Medium; www.labcorp.com) provides clinical laboratory services from locations throughout North America....
LABORATORY CORPORATION OF AMERICA, or LABCORP, $217 is a spinoff buy. The company (New York symbol LH; Manufacturing sector; Shares outstanding: 90.4 million; Market cap: $19.6 billion; Dividend yield: 1.3%; Takeover Target Rating: Medium; www.labcorp.com) provides clinical laboratory services from locations throughout North America....
You Can See Our Spinoff Stock Portfolio For May 2023 here.
Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:
1) The management of a parent company will only hand out shares in a subsidiary to its own investors if it’s all but certain that business, and the parent, will be better off after the spinoff.
2) Spinoffs involve a lot of work and legal fees....
Investors tend to embrace spinoffs as they create “pure-play” businesses that are easier to analyze and value.
For example, in the past two years, trucking firm XPO spun off its logistics operations and then its truck brokerage operations....
Corteva shares offer investors a number of pluses: Not only is the company at the forefront of key agricultural trends, the stock is a spinoff. Over the years, we’ve found that spinoffs are about as close as you can get to a sure thing in investing. It’s one key reason why we think Corteva has further gains ahead for investors....
You Can See Our Spinoff Stock Portfolio For April 2023 here.
Why we like spinoffs so much
We think that spinoffs are the closest thing you can find to a sure thing for two main reasons:
1) The management of a parent company will only hand out shares in a subsidiary to its own investors if it’s all but certain that business, and the parent, will be better off after the spinoff.
2) Spinoffs involve a lot of work and legal fees....
These two recent spinoffs should pay off for investors over the next few years. However, the increasing likelihood of an economic slowdown this year will depressed their share prices in the short term.
LITHIUM AMERICAS CORP. $28 is a hold, but only for highly aggressive investors. The company (Toronto symbol LAC; Resources sector; 151.1 million; Market cap: $4.2 billion; No dividend paid; Takeover Target Rating: Medium; www.lithiumamericas.com) plans to split its operations into two separate, publicly traded firms....
LITHIUM AMERICAS CORP. $28 is a hold, but only for highly aggressive investors. The company (Toronto symbol LAC; Resources sector; 151.1 million; Market cap: $4.2 billion; No dividend paid; Takeover Target Rating: Medium; www.lithiumamericas.com) plans to split its operations into two separate, publicly traded firms....
Mining firm Teck Resources recently announced that it will spin off its metallurgical coal (used for making steel) operations. It also recently sold its stake in an oil sands project.
These moves are part of its plan to focus on “low carbon metals,” particularly copper and zinc....
These moves are part of its plan to focus on “low carbon metals,” particularly copper and zinc....
TECK RESOURCES LTD., $52.81, Toronto symbol TECK.B, remains a buy for investors seeking long-term gains from the Resources sector of their portfolio.
The company now plans to spin off its metallurgical coal (a key ingredient in steelmaking) operations as a separate, publicly-traded company called Elk Valley Resources Ltd....
The company now plans to spin off its metallurgical coal (a key ingredient in steelmaking) operations as a separate, publicly-traded company called Elk Valley Resources Ltd....