2 Stocks to Buy, 1 Stock to Sell (Episode 11)

So I think the last time you and I talked, it was a couple of days before the Russian invasion. And I don't know if this is a time when investors have to be careful because things are changing very quickly. We've already seen just in the last week, markets have moved down very rapidly, then they've moved up very aggressively. I don't like to use this phrase, or I should say I don't use this phrase lightly, but there's this fog of war that we're all in right now, and we're trying to get accurate information. And so that's going to make stocks that much more volatile, especially in the short term, because I think what was it on Thursday night, we were all kind, the futures market was dropping significantly because there was talk that Russia had been shelling, a nuclear plant in Ukraine. And there was a lot of concern about, okay, what were we all gonna be waking up to Friday morning and hearing?

And fortunately that turned out to be not what we feared, but it could have. And so there's just gonna be a lot of volatility and it's gonna be around for a long time. But I think like you just said at the opening here, investors have to invest for how things are not for how they may want them to be. And there are sectors that are doing well. And I think investors have to invest where the growth is. And that's the two stocks I pick that I think are stocks that investors can look towards or reflect that.

I like Chevron and I'm not liking Chevron simply because of the Russia. Ukraine I've actually liked Chevron for a long time. I've liked them for about a year. I like them as a recovery play coming out. It's not so much because they have business interest in Russia or they don't have business interest in Russia. I like Chevron largely because this stock is up. I think I just was looking at it before I jumped on here. I think it's about 10% last week, a little over 10%. And that would add onto, so I think it's been up probably over 20% since the invasion on the 24th, if I'm looking at this, right. Yeah. I mean, it's fairly significantly there, right.

And the company's got, I mean, a whole lot of things to like, from their most recent earning reports, they had record free cash flow for the full year 20, 21. They've significantly paid down debt. They've been issuing higher dividends for now 34 years in a row. They have just announced on their last earning report that they're gonna be doing yet another share buyback program. And that hasn't hit yet. I don't think, but it's pretty close to that. And so, yeah, I mean, they're a strong company. That's definitely been strong in the recovery aspect of it, but they're also strong in the renewable energy market. And that's one of the reasons why I really liked it because it's, again, it's not just a Russia Ukraine play, but it's a play to the broader narrative. I think one thing was clear in the state of the union. The other night was that this administration is not deviating from their focus on clean energy.

So they're not the, as much as we might want it to be drilled here in America. They're saying they're gonna look to import oil from other sources. And they're looking for us to build our renewable capacity. That's another reason why I like Chevron. There's an article I saw in Baron's not too long ago that Chevron was acquiring renewable energy group. And so, which is something that's a little different than cuz I think prior to this, I think actually in the notes, I told you that Chevron hasn't necessarily been acquiring renewable energy. They've been investing in renewable energy. Okay. Now, so I think this is a little bit of a different strategy for them. I'll be a little bit intrigued by that because they were just paying down debt. Now they're probably adding to debt a little bit to acquire this, but we'll see how that works out.

Right? They know that there's a limited, you know, my personal view is that fossil fuels aren't going away necessarily as fast as people would like them to go away. Again. I think this is one of those times where it goes back to what I said at the beginning, you have to invest for the way things are not for the way you maybe want them to be. So even if you are the biggest devotee to clean energy, fossil fuels are gonna be here for a while. And I think you see the oil companies, the oil stocks, the traditional oil stocks are doing very well in the recovery, but I'm looking at a company like Chevron because they're generating revenue now on the fossil fuel side. But they're also heavily invested in the renewable energy future, which I think is the important distinction that investors need to make right now. Because if you're looking at an oil stock, that's just purely a play on fossil fuels. That's not something I would be looking to go long on. That's something I'd say, okay, short term, maybe that'll work. But if you're looking for companies that you can invest in as long plays, that's where I like a company like Chevron,

So here I'm like I was looking at cybersecurity and I'm looking at Palo Alto network. This is one of those that I think you could look at a lot of stocks that you can look at in this sector. I happen to like Palo Alto because of just the momentum of the stock right now. I think it's up another one. That's up approximately 15% since the invasion Morgan Stanley just listed as their top cybersecurity pick, it just reported earnings on February 21st beat on the top and bottom lines. And it has been getting those things that we love to see. The analysts are upgrading the price targets, boosting the price target. So we like that. Cybersecurity's just a sector that it's gonna be on fire. I think it already was like energy stocks. It was already strong sector prior to the invasion. And there's no reason to believe it's going to get weaker. If there's one line item on any corporate budget, that's not gonna be getting cut over the next year. So it's gonna be cybersecurity.

And that's not just for enterprise level companies. Although I do like Palo Alto because they are one of the leading security solutions providers for enterprise companies, but you're gonna be seeing cybersecurity solutions as a requirement for any business as a matter of fact. And you know, you know, in your own personal, I mean they're all advising us now to use VPNs and doing everything that we can as individuals to protect our own cybersecurity. So the sector's gonna be on fire. Probably a lot of names investors can choose from honestly. But I really do like Palo Alto here, even though it's not an inexpensive stock.

And because I think that has been sort of a mantra for some investors in the last year is, well, that stock is just, I can't buy as many shares or, but just because the stock's price is high, that doesn't mean that it's an expensive stock. And I think in this case there's more growth to come. Uh, as a matter of fact, let me look at Palo Alto.

No, I'm not. Well actually one of the reasons with Palo Alto that I'm not as concerned about it either is because they have a strong cash position.

And I'm a little bit more concerned about that. If you're talking about a company that has a high level of debt, not as concerned about that with a company that debt has a strong cash position in Palo Alto. That's

So this is one that is a little bit hard for me to say that I wish that I see people selling this one because I think probably right before the Russian invasion, I was suggesting people buy this one. And so I got a little leg on my face on this one, but it's John Deere. Okay. And it's nothing fundamentally about the stock that I dislike, but I do believe that they, of a lot of the, what you might call the industrial stocks, they do have a strong presence in Russia. They've been doing business in Russia for 130 years. And in fact, just in 2018, they had announced plans that they were gonna expand their operations in Russia.

And in September of last year, agribusiness was rated one of the most promising sectors of Ukraine's economy. Okay. And that John Deere, both countries are strong consumers of fertilizer products. So you just see that that area of the world is going to be very impacted by what's going on. I mean, Ukraine is going to be from an agricultural standpoint is it's gonna be a mess. Mm-hmm for a long time, no matter how soon this current conflict ends and in what form that takes. But so, you know, I, again, it's, I'm looking at the chart right now for deer and they actually were up last week. They dipped the week before, but they did have a good week last week, but this is one that I'm cautious of. I'm cautious of this one. As I look at the chart just over the last year, they've been all over the place.

Right. And you know, I've looked at Deere a couple of times over the past year and I've been unsure why it's been so range bound. But again, I think this is a case of investors having to invest based on what things are. And it is range bound. I'm trying to look here and see what the latest sentiment from analysts is. Okay. So analysts are still given it about 11% upside,

Well, they're gonna be significant in north America. Yeah. And, and I think that's where, you know, again, that's why I said, I don't think I dislike the company and I don't dislike the stock in general. It's one of those things I don't like it now.

And I think it's just because so much attention is on Russia and Ukraine now. And John, Deere's just a company that for better or for worse, it has exposure in that company, in that country right now, both countries. And so I think that that's going to impact them and we probably won't know until we hear from them in their next earnings report, which is gonna be in may. I think so we won't really know until then just how much this impacts them. Right. Because again, they reported right before. And the last analyst report is a couple of days before that. So they haven't had any analysts issue anything since then. So not sure what that means, but I'd be curious to see what the analyst viewpoint of it is, you know, going forward.

That's correct. Trying to see if I can find one more thing about Deere. The price earnings is okay.

So like I said, this is one that I'm looking at. And I think it's just one of those that maybe I was reacting to the way the stock chart happened right after the invasion, but it did dip and then it did come back nicely last week. But again, like you said, it still is in that range.

You have. And while we were just talking, I was looking, this is interesting. This deer stock took a really big drop in the after hours on Friday and then it immediately went back up. Huh? So I'm wondering if there was some big institutional investor that one got in and one got out or something cuz it like dropped significantly in the after hours and then it popped right back up and it has, it's basically at the same price it closed at on Friday