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Here’s our Spinoff Stock Portfolio for July 2024

You Can See Our Spinoff Stock Portfolio For July 2024 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....

1 min read

Pat McKeough

Spinoffs

This IPO doesn’t inspire us

WAYSTAR HOLDING CORP. $21 is a hold. The company (Nasdaq symbol WAY; Manufacturing sector; Shares outstanding: 167.4 million; Market cap: $3.5 billion; No dividend paid; Takeover Target Rating: Lowest; www.waystar.com) makes software that helps hospitals and doctors manage their finances....

1 min read

Pat McKeough

Spinoffs

Keep our stock updates top of mind

BECTON DICKINSON & CO. $234 is a buy. The medical device maker (New York symbol BDX; Manufacturing sector; Shares outstanding: 283.9 million; Market cap: $66.4 billion; Dividend yield: 1.6%; Takeover Target Rating: Medium; www.bd.com) has agreed to acquire the Critical Care product group of Edwards Lifesciences Corp....

2 min read

Pat McKeough

Spinoffs

Alcoa’s split still has two survivors

To unlock value for investors, on November 1, 2016, the old Alcoa Inc. split into two separate companies—Arconic Inc. (focused on manufactured aluminum products) and spinoff Alcoa Corp. (focused on bulk aluminum). For every three of the old shares investors held, they received three shares in Arconic and one in Alcoa.

Arconic Inc....

2 min read

Pat McKeough

Spinoffs

Regulators forced this spinoff

ILLUMINA INC. $108 is a hold. The company (Nasdaq symbol ILMN; Manufacturing sector; Shares outstanding: 159.3 million; Market cap: $17.2 billion; No dividend paid; Takeover Target Rating: Medium; www.illumina.com) makes laboratory equipment that helps medial researches sequence and map genomes, and screen for various diseases.

In August 2021, the company acquired Grail, which specializes in cancer-detection technology....

1 min read

Pat McKeough

Spinoffs

Both are down, but one is a buy

On August 3, 2021, the old L Brands holding company (old New York symbol LB) split into two separate firms: Victoria’s Secret and Bath & Body Works. Investors received one new share of Victoria’s Secret for every three shares of L Brands they held. L Brands then changed its name to Bath & Body Works.

Victoria’s Secret is now down roughly 60%, while the former parent has dropped 30%....

2 min read

Pat McKeough

Spinoffs

Southwest’s drop attracts Elliott

SOUTHWEST AIRLINES CO. $28 is a hold. The company (New York symbol LUV; Manufacturing sector; Shares outstanding: 598.5 million; Market cap: $16.8 billion; Dividend yield: 2.5%; Takeover Target Rating: Medium; www.southwest.com) provides low-cost air travel to 121 destinations in 42 states, as well as 10 international countries.

Despite the rebound in travel volumes in the wake of the pandemic, Southwest’s shares have dropped 50% in the past three years....

1 min read

Pat McKeough

Spinoffs

Elliott invests in these three companies

Activist investor Elliott Management has a long history of improving value at undervalued companies. The firm is now targeting these three companies. We agree with its opinion on Texas Instruments and Johnson Controls but would avoid Southwest Airlines.

TEXAS INSTRUMENTS INC....

2 min read

Pat McKeough

Spinoffs

Lower costs should lift these two

Apparel maker VF has dropped about 80% since its spun off its jeanswear business (Kontoor) in May 2019, while the new firm has gained over 65%. We still like VF, as it is now aggressively cutting its costs. That should lift its profits and stock price. A new restructuring plan should also push Kontoor’s shares higher.

VF CORP....

2 min read

Pat McKeough

Spinoffs

Spinoff spotlight: Aaron’s Company

AARON’S COMPANY INC. $10 is a hold. The company (New York symbol AAN; Consumer sector; Shares outstanding: 30.6 million; Market cap: $306.0 million; Dividend yield: 5.0%; Takeover Target Rating: Highest; www.aarons.com) sells furniture and electronics through 1,220 company-owned and franchised stores in the U.S....

1 min read

Pat McKeough

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Investors Association of Canada
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Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.