Best Undervalued Stocks to Buy This Christmas

Summary

In this holiday edition of the Widemote Show, Brad and Nick share their stock picks for 2026. Brad favors Extra Space (self-storage REIT) and NNN REIT for their strong fundamentals and growth potential. Nick, once skeptical, now buys Netflix after its announcement to acquire Warner Brothers' content, seeing potential in its strengthened media position. However, Nick warns against investing in gold, citing its lack of growth and urging viewers to focus on high-growth, dividend-paying stocks. A festive and insightful discussion about smart investing strategies for the year ahead.

Takeaways

• 😀 The stock market is experiencing low valuations, particularly for high-quality companies, presenting opportunities for growth, especially if companies meet growth expectations.
• 😀 Netflix has been a standout performer in the streaming industry, with a strong business model and a major acquisition of Warner Brothers potentially boosting its market position.
• 😀 REITs (Real Estate Investment Trusts) have been performing well historically but have faced challenges recently due to interest rate hikes and the pandemic, which caused a dip in valuations.
• 😀 Despite the tough environment, REITs are now showing attractive valuations and have strong fundamentals, making them a good investment for the long term.
• 😀 Extra Space Storage is highlighted as a strong investment, with a solid market share in the self-storage industry and consistent growth in revenue and occupancy rates.
• 😀 NNN REIT, focusing on retail properties with long-term, stable leases, is a solid choice due to its strong financial position and discounted stock price relative to its fair value.
• 😀 REITs like Extra Space and NNN have strong growth potential, and their discounted prices relative to fair value suggest a good buying opportunity.
• 😀 The importance of looking beyond short-term market sentiment is emphasized, with long-term investment strategies focusing on undervalued assets like REITs.
• 😀 Netflix’s acquisition of Warner Brothers, if finalized, will significantly enhance its content library and production capabilities, making it a more formidable player in the media space.
• 😀 Gold is considered an unattractive investment for 2026 due to its lack of growth potential compared to stocks with growing earnings and dividends. It’s seen as a 'shiny metal' with no real income-generating capability.

Q & A

What are some of the highest performing years for REITs mentioned in the script?

REITs performed very well in the years following the Great Recession, specifically in 2010, 2011, 2012, 2014, 2015, and 2021.

Why did REITs thrive during the period of ultra-low interest rates after the 2008 crash?

REITs thrived because low interest rates encouraged economic activity, and since REITs tend to perform well when interest rates are low, investors flocked to them during this period.

What happened to REITs in 2020, and why did they perform poorly that year?

In 2020, REITs underperformed because the pandemic and subsequent lockdowns caused real estate properties to shutter, leading investors to flee the sector.

How did the Fed's rate hikes from 2022 affect REITs?

The Fed's rate hikes in 2022 led to an increase in the cost of capital, making REITs less attractive, which contributed to their underperformance in the following years.

What is the future outlook for REITs in 2026 according to the script?

The outlook for REITs in 2026 is positive, as the script predicts that REITs will perform well, with rate cuts potentially acting as 'rocket fuel' for the sector.

What makes Extra Space Storage a standout REIT investment?

Extra Space Storage is a standout investment due to its strong market share, high occupancy rates, strong balance sheet, and sophisticated pricing model powered by technology.

How does NNN REIT differ from other types of REITs?

NNN REIT specializes in freestanding properties, primarily in retail, and focuses on tenants with a strong ability to thrive across various economic cycles. Its business model relies on long-term lease agreements, with an average lease term of 10.1 years.

Why is Netflix considered a potential 'stocking stuffer' for 2026?

Netflix is considered a potential 'stocking stuffer' because of its strong growth and recent acquisition news. Despite Brad's previous bearish stance, Netflix's solid performance and strategic acquisitions, like the Warner Brothers deal, make it a compelling investment.

What is the significance of Netflix's potential acquisition of Warner Brothers?

If Netflix successfully acquires Warner Brothers, it would gain valuable intellectual property like DC Comics, Harry Potter, Lord of the Rings, and other popular franchises, enhancing its position in the media space.

What is the main reason Brad and Nick consider gold a 'coal' investment for 2026?

Brad and Nick view gold as a 'coal' investment because, while gold has seen a rise in 2025, they believe it does not produce earnings or dividends, unlike growing companies like Netflix. They prefer investments that generate growth rather than just maintain value.