2 Quality Stocks to Buy Near 52-week Low?

Summary

In this video, the reviewer discusses two quality stocks trading at 52-week lows, LVMH (LVMUY) and a recently spun-off company from Johnson & Johnson. They analyze LVMH's current valuation and potential future performance, suggesting it might be overvalued at 22 times earnings. The second company, Kenvue, is considered fairly valued at 15.8 times earnings, despite facing competition and growth challenges. The reviewer provides their personal opinions on whether these stocks are good buying opportunities.

Takeaways

• 📈 The video reviews two quality stocks trading at 52-week lows, assessing if they are good buying opportunities.
• 💼 The speaker is not against quality investing but warns against overpaying for quality stocks, similar to their stance on growth stocks.
• 💡 The notion that you can't overpay for quality because a company will grow into its valuation is challenged, citing examples like MSCI and MasterCard.
• 👜 The first stock discussed is LVMH (lvmuy), a popular luxury brand known for its various high-end brands.
• 📉 LVMH's stock has declined by 20% over the last year, and the speaker previously bought and sold it at different price points.
• 💼 LVMH's last quarter showed a 3% organic growth, which is considered good in a slower economic environment.
• 💰 The speaker believes LVMH is somewhat overvalued at 22 times earnings, preferring not to overpay despite its quality.
• 👟 The second stock discussed is Kenvue, a spin-off from Johnson and Johnson, trading at $18 per share.
• 🚫 Kenvue faces challenges, particularly in the skin health and beauty segment, where it has a 6.9% volume decline and weak organic growth.
• 💳 Kenvue has a strong balance sheet with $1.1 billion in cash and manageable debt, making it an attractive dividend stock with a 4% yield.
• 💹 The speaker sees Kenvue as fairly priced at 15.8 times earnings, considering its strong brand recognition and potential for improvement.

Q & A

What is the main focus of the video?

The video focuses on reviewing two quality stocks trading at 52-week lows and determining if they are good buying opportunities.

What is the speaker's stance on quality investing?

The speaker is not against quality investing but is against overpaying for quality stocks, similar to their stance on overpaying for growth stocks.

What is the first stock discussed in the video?

The first stock discussed is LVMH (symbol LVMUY), a popular luxury goods company.

What is the speaker's current opinion on LVMH's stock valuation?

The speaker believes LVMH is somewhat overvalued at 22 times earnings and would personally not pay more than $140-145 for it.

What is the expected earnings per share growth for LVMH according to the speaker?

The speaker would not bet more than 8% in terms of earnings per share growth for LVMH.

What is the second stock discussed in the video?

The second stock discussed is Kenvue (formerly a spin-off from Johnson & Johnson), which includes popular brands like Tylenol, Neutrogena, and Band-Aid.

What is the current financial situation of Kenvue according to the video?

Kenvue has a significant amount of debt (around $7 billion) but also has strong cash flow, with $1.8 billion in 2024 expected to recover to $2.3 billion in 2025 and $2.6 billion in 2026.

What is the speaker's view on Kenvue's stock valuation?

The speaker believes Kenvue is fairly priced, trading at 15.8 times earnings, and sees potential for a 10% to 14% annual return.

What are the challenges Kenvue is facing according to the video?

Kenvue is facing challenges in the skin health and beauty segment, with a 6.9% volume decline and competition from companies like e.l.f. Beauty.

What is the speaker's strategy for investing in these stocks?

The speaker is waiting for a potential overreaction in the market to get a better buying opportunity, specifically looking for a price of $140-145 for LVMH and considering Kenvue as fairly priced.

What is the speaker's final recommendation for viewers interested in these stocks?

The speaker suggests that viewers consider the stocks based on their personal investment strategies and valuations, but emphasizes that the video is not financial advice.