Your Latest Buy, Sell, or Hold Now Available (Transcript Inside)
Shah Gilani|April 15, 2022
This week, Twitter, Delta, and JP Morgan Chase have all been in the spotlight – and many of you are asking: What should we do with these stocks?
Buy? Sell? Or hold on to our shares?
Well, in today’s BS.H, I answer just that. Click the video below to watch my full analysis of each headling stock, or…
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04/15/2022 Buy, Sell, or Hold Transcript
Hey everybody, Shah Gilani here with your Friday BS.H, as in Buy, Sell, or Hold.
You guys sent in some killer stocks for me to comment on, so I’m going to take the three that I think are really “top of mind” because they’re front-and-center news wise. Let’s take it away.
First up… Of course, you guessed it. Twitter Inc. (TWTR).
Bad news people. It’s a sell. Why? Because Elon Musk is a clown in terms of his bidding for this company, offering $54 a share.
Guess what? He doesn’t have the money. He’s gonna have to sell shares of Tesla or some of his other companies… Raise the money that way. He doesn’t have financing lined up. He’s basically put out there that he wants to do nothing. He was a passive investor. Then he wanted to be an active investor. Then he was gonna be on the board.
Now he’s not… He doesn’t know what he’s doing. I saw him on a TEDx interview. He didn’t really have a plan, you know. His very broad statements were unconvincing at best as to whether he was really committed to this. He was committed to the idea of which Twitter should be. But as far as the financing? He doesn’t have it lined up, isn’t the necessarily gonna get it, and I don’t think anybody else is gonna come in behind him and bid it higher.
So, he wants to pay $54 a share of the stock. The stock closed on Thursday at $45.08. So that’s a 20% higher price than here. Why would you wanna buy it for a 20% gain that may not happen?
I don’t think another suit is gonna to come in. Why? Because [TWTR has] a negative profit margin. Yeah. Profit margin is -4.36%. Yes. It’s got nice revenue ($5 billion), but it loses money on that. The net income available to common shareholders (my favorite metric, as far as profitability) is negative. -$225 million.
So, $5 million revenue. They can’t make any money on that. So there’s no dividend, obviously no chance of a dividend. It’s never gonna happen. Never say never, but why would you wanna own Twitter? It looked good down in the $30s when it was potentially consolidating to maybe make a move higher, but where’s it gonna go? I don’t really see an increase in revenue. I don’t see how they’re gonna expand the profit margin. There’s stuff that they can do that they haven’t done. So why haven’t they? Is Elon Musk gonna do anything about it?
No, he he’s probably gonna sell his shares if he doesn’t get his way. Why would he stick with it?
Maybe not, but if he sells his shares, look out below. This stock’s gonna come crashing you back down to the $30s. That’s where I think you can take a shot at it, but it’s a sell here.
This is a typical Wall Street story. You buy the rumor, sell the news.
The rumor is that he was going to buy Twitter. That popped the stock. The news is, mm, no one else is coming in after him and he doesn’t have the money. He’s also probably got himself in hot water with the SEC, once again. Twitter doesn’t want him. The board are probably just laughing at him, but they now have to figure out, do they need to create a poison pill to prevent it? So the board is gonna do what it has to cuz they don’t want him. Cuz he’s a mess. He’s gonna ruin the company. And shareholders will sue the board.
Yes, they have insurance, but this is gonna get ugly. Elon Musk had just muddied the waters for Twitter. It’s not a buy. It’s not a hold. I’m sorry, it’s a sell in here. You buy it lower in the $30s and maybe take another shot at it. But Twitter, sorry folks. It’s a sell here.
Next up… Don’t to airlines. What a pop the other day. Holy Mac looks great, right? No, it’s the sell people.
I’ll tell you why it’s a sell, because of a less than 1% profit margin. Okay. Tons of revenue for sure. But guess what? Losing money… It doesn’t matter that it has a huge pop it doesn’t of that… Maybe you think, I think, the world thinks we’re coming to an end of these lockdowns and everybody is out traveling. I know that every time I go to any airport, it’s crowded. Every flight I’m on is full, but does that mean the Delta is gonna start hitting it out the park in terms of its profit? Not a chance people.
It doesn’t have a profit margin. Okay. I don’t call 0.94% a profit margin. I call that a margin on the edge of nothing. And if you wanna buy this, buy it when it’s down. Delta and all the airlines, just like the cruise lines, just like these stocks that are the turnarounds… The coming out of the pandemic stocks, the return to normal stocks, they’re just trading in a range. So, you buy ’em when they’re low, you sell ’em when they’re high.
Delta Air Lines Inc. (DAL)? Perfect example.
Delta’s trading at $42.36. Where’s it gonna go? $45. It’s got to get above $45/$46 really to breakout. And then where’s it going? Doesn’t really have much anything overhead to look for, to shoot for, with a tiny profit margin.
And, by the way, fuel is going higher. Jet fuel… There’s some scarcity there. Plus the price is going higher and higher. That’s gonna impact Delta’s costs. That’s gonna impact it’s margins.
Are they gonna pass that along? Yes.
Is that gonna mean it’s gonna make more money? No, it means it’s gonna have more revenue. It doesn’t mean it’s gonna have a better profit margin. No, it doesn’t mean that people. It just means, oh, this is a great stock to trade trades in a range.
You wanna buy it when it breaks down to like say $33 or somewhere around that vicinity. And if it gets up to $45, you sell it. This is a reversion to the mean type trade. You just buy it when it’s low, you sell when it’s high. You trade it. Don’t buy for a long-term hold. You’re not gonna get anything out of it. Save your capital. If it gets up to $45, or right in here at $42 and change. I just sell it. Especially if you bought it lower.
That’s it for Delta airlines. Sorry, but it’s a sell.
Last but not least, JP Morgan Chase & Co. (JPM).
Guess what? Earnings were out. Mm, interesting story. All kinds of stuff. Great in some aspects, terrible in others. Net guidance did not sound good to me. So, what has the stock done? It’s fallen out of bed. It was falling out of bed. It had fallen out of bed. If you look at the chart, it’s downright ugly people.
Yes, I know it has a more than 3% dividend yield. And I like that. I like it down here, but I wouldn’t buy it. If you own it a lot lower I’d hold it. If you bought it higher, just get out of it for now and take a small loss, hopefully. If you bought it a lot higher, you got an ugly loss.
You know, when a stock makes lows like this on earnings, you don’t wanna own it. All right, because there’s no clarity going forward as to what might change in terms of their future prospects.
So why would you wanna hold it here? You know, if you own it, I would sell it. I’d look to buy it lower. Really? If things get ugly for JP Morgan Chase, in terms of the stock price, I could see it down at $100. I would buy it at $100 for sure, for the dividend and for a longer-term hold — as in, yep, good appreciation. Longer term. But here right now, when a stock falls outta bed like this, you don’t buy it on it low as people that dangerous. That’s like bottom fishing once in a while, you can hit it out of the park like that, but it’s way too much danger in trying to pick bottoms. JP Morgan Chase. Sorry, but it’s a sell here.
If it gets down to $100, it’s a buy all day long.
And that’s it for this Good Friday. Catch you next week.
Sincerely,
Shah Gilani