Selasa, 31 Desember 2024

A Value Meal for Investors

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EDITOR'S NOTE

You're in for a treat today... Our friend Alpesh Patel could be one of the most famed investors to ever appear in Liberty Through Wealth.

He started his own hedge fund... is a bestselling author and entrepreneur... and is a Dealmaker for the King of England. When you ask him what the key to his success is... he'll point to his proprietary GVI algorithm that rates stocks based on growth, income, and value.

Below, he shows you how it works with a hugely undervalued stock that's flying under the radar... but poised for a big move.

Even better, he details a trio of AI plays that just "aced" his GVI system. You can hear everything about them here.

- Nicole Labra, Senior Managing Editor

THE SHORTEST WAY TO A RICH LIFE

A Value Meal for Investors

Alpesh Patel, Trading Champion, Manward Press

Alpesh Patel

Sometimes the best investment opportunities come when Wall Street isn't paying attention.

While tech stocks and artificial intelligence plays dominate the headlines - and the Nasdaq continues its stunning ascent - there's a 100-year-old business trading at a significant discount to its intrinsic value.

I'm talking about SpartanNash (Nasdaq: SPTN), a food solutions provider and grocery retailer that serves independent grocers and military commissaries across the United States.

Now, I know what you're thinking... With the Nasdaq soaring and all eyes on artificial intelligence plays, why look at a food solutions provider? But as I always tell my GVI Investor subscribers, it's not the narrative that matters - it's the numbers.

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It starts with my Growth-Value-Income - or GVI - system. This is my proprietary algorithm that evaluates companies based on valuation metrics, profitability, revenue growth, and dividend yields, and assigns scores from 1 to 10.

I use my GVI system to narrow down the thousands of publicly traded stocks to the ones worth a deeper look.

SpartanNash scored a 7, clearing the minimum threshold that I require for investing.

With $9.6 billion in annual revenue, the company is no small operation. Yet the market seems to have overlooked its potential, creating an opportunity for value-conscious investors.

SpartanNash's business model is particularly attractive because it combines both retail and wholesale distribution - what in the olden days we called "vertical integration." This diversification provides multiple revenue streams and helps stabilize earnings through different economic cycles.

But here's what really caught my eye: SpartanNash is trading at just 9.9 times forward earnings. That's remarkably cheap both in absolute terms and relative to its sector peers.

Even more compelling is the fact that the stock appears to be about 60% undervalued based on discounted cash flow analysis. While this math can be sensitive to underlying assumptions, even a conservative estimate suggests a fair value around $47 per share - substantially higher than current levels.

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The technical picture is equally intriguing...

The stock is testing multiyear support levels. The MACD (moving average convergence divergence) suggests there could be significant momentum to the upside. The last time we saw a movement like it, shares nearly doubled from $12 to $24 in just 12 months.

Chart: SpartanNash
View larger image
 

Now, some skeptics might say, "Couldn't this just be a false upward breakout that falls back again?"

It's a fair concern. However, what I'm seeing in the MACD - a key measure of momentum - suggests we could be on the cusp of a significant move higher.

If we get anything close to recent highs or even two-year-old highs in the next 12 months, we're looking at substantial upside potential from current levels.

This technical setup, combined with the fact that the stock is approximately 60% undervalued on a discounted cash flow basis, suggests a potential move toward $47 per share.

While discounted cash flow calculations can be sensitive to underlying assumptions, we don't need anything close to that level to generate attractive returns from here.

However, investors should note that the company's CROCI (cash return on capital invested) isn't currently where I'd like to see it - where it would make the cut for my GVI Investor subscribers.

The negative reading indicates the company isn't generating positive cash returns on its invested capital at the moment - which helps explain the beaten-down share price.

But this could be precisely why the opportunity exists. Markets often overreact to temporary setbacks, creating opportunities for patient investors willing to look beyond short-term challenges.

Get Paid to Hold

Moreover, the stock offers something that's become increasingly precious in today's market: low volatility. In an environment where many stocks swing wildly from day to day, SpartanNash's relative stability is refreshing.

Did I mention it pays a dividend? In a market where many high-flying tech stocks offer no yield at all, this provides another reason for income-oriented investors to take notice.

The company's century-long history suggests it knows how to navigate different economic environments. There's something to be said for businesses that have survived and thrived through many economic cycles.

The high GVI score, attractive valuation metrics, and strong business fundamentals add up to the potential for significant appreciation.

When a stock scores well on multiple measures - both quantitative and qualitative - it's often a signal worth heeding.

If you're looking for a combination of value and stability in today's somewhat frothy market, SpartanNash deserves a closer look.

The company's strong revenue base, diversified business model, and attractive valuation metrics suggest significant upside potential with relatively modest downside risk.

While SpartanNash's CROCI isn't quite where I need it to be for my GVI Investor subscribers, it's exactly these types of overlooked opportunities my system helps identify every week.

In fact, this systematic approach just flagged three new companies that DO meet my strict GVI criteria - including exceptional CROCI scores that could signal explosive upside potential.

These aren't household names, but they each combine the perfect mix of growth, value, and income that's helped my subscribers book gains like 250% in 3 days on W.R. Berkley and 100% in 7 days on Duke Energy.

Just recently, we closed another 100% winner on a pure stock play in less than 2 months with Kingsoft Cloud Holdings.

Want to know what my GVI system is flagging right now?

Get all the details here.

Happy hunting,

Alpesh

OXF Seven

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