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Spinoffs

Our stock updates help protect your gains

KAR AUCTION SERVICES INC. $14 is a buy. The company (New York symbol KAR; Manufacturing & Industry sector; Shares outstanding: 115.8 million; Market cap: $1.6 billion; No dividend paid; Takeover Target Rating: Medium; www.karglobal.com) sells used and salvaged vehicles at physical auction sites in the U.S., Canada, Mexico, Europe, and the U.K.

On June 28, 2019, the company completed its spinoff of IAA Inc....

2 min read

Pat McKeough

Spinoffs

Buy JNJ ahead of next year’s spinoff

Pharmaceutical giant Johnson & Johnson still plans to spin off its consumer operations in 2023 as a new firm called Kenvue.

Even though Kenvue’s products are less profitable than prescription drugs and medical devices, it owns some of the world’s best-known brands and generates steady cash flows....

2 min read

Pat McKeough

Spinoffs

Expect more spinoffs from IAC

IAC INC. $48 is a buy. The company, formerly called IAC/InterActive Corp., (Nasdaq symbol IAC; Manufacturing & Industry Sector; Shares outstanding: 89.2 million; Market cap: $4.3 billion; No dividend paid; Takeover Target Rating: Lowest; www.iac.com) owns several online businesses, including U.S....

1 min read

Pat McKeough

Spinoffs

The parent remains the better choice

Internet media company IAC (see box) has a long history of spinning off its smaller businesses as they mature. Two of its latest spinoffs—Vimeo and Match Group—are well off their recent peaks during the current market turmoil. We think they’re worth holding, while IAC remains a solid pick for aggressive investors.

VIMEO INC....

2 min read

Pat McKeough

Spinoffs

Takeover offer may be on tap

CANO HEALTH INC. $4.50 is a hold. The company (New York symbol CANO; Manufacturing sector; Shares outstanding: 485.9 million; Market cap: $2.2 billion; No dividend paid; Takeover Target Rating: Medium; www.canohealth.com) operates 143 medical centres in the U.S....

1 min read

Pat McKeough

Spinoffs

Not all activist targets are buys

The broad stock market drop this year has prompted activists to seek out companies perceived as particularly undervalued, such as the two we analyze below. However, their immediate prospects don’t inspire our confidence.

TAKE-TWO INTERACTIVE SOFTWARE INC....

2 min read

Pat McKeough

Spinoffs

Third Danaher spinoff adds more value

Danaher is a great example of how a company can unlock value for shareholders with spinoffs. Since 2016, the conglomerate has completed two separate spinoffs and recently announced a third.

In fact, the stock has jumped 184% in the past five years, compared to the 44% gain for the S&P 500 Index.

Meantime, Danaher continues to acquire smaller businesses....

2 min read

Pat McKeough

Spinoffs

Spinoff spotlight: XPO Logistics Inc.

XPO LOGISTICS INC. $45 is a spinoff buy. The company (New York symbol XPO; Manufacturing sector; Shares outstanding: 115.0 million; Market cap: $5.2 billion; No dividends paid; Takeover Target Rating: Medium; www.xpo.com) has two businesses: North American LTL offers freight brokerage, last-mile logistics for heavy goods, less-than-truckload (LTL) services and intermodal operations; and Truck Brokerage helps firms place their cargoes with qualified carriers.

The company now plans to spin off the truck brokerage business as a separate firm called RXO Inc....

1 min read

Pat McKeough

Spinoffs

Spinoff creates takeover appeal

NCR spun off its data warehousing operations in October 2007 as new firm Teradata. Both stocks slumped shortly after that due to the 2008-2009 financial crisis, but by 2013 each had regained most of its losses. However, Teradata is now down 40% since the split, while its former parent has dropped 55%.

Part of NCR’s decline came when it ended discussions with potential buyer Veritas Capital, a private equity firm....

3 min read

Pat McKeough

How To Invest

Q: Pat, what do you think about the Evolve Global Healthcare Enhanced Yield Fund? It’s a health company-focused ETF. Thanks.

A: Evolve Global Healthcare Enhanced Yield Fund, $20.63, symbol LIFE on Toronto (Units outstanding: 8.7 million; Market cap: $179.5 million; www.evolveetfs.com), aims to track the Solactive Global Healthcare 20 Index Canadian Dollar Hedged Index.

LIFE invests primarily in the stock holdings of that index....

2 min read

Pat McKeough

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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.