- Last week, I told you about my friend Greg Canavan and his Royal Dividend report.
The premise of Greg’s report is that now is the time to be hunting cheap stocks in the market that pay out good dividends.
I heartily endorse this idea because there’s just so much latent value out there.
Take one of Greg’s dividend picks as an example here, which we can’t name as it’s currently a live trade. It is a US-based fund manager.
On Monday, the company said that funds under management have grown $US5.6 billion in the last month. It now manages more than US$100 billion across its various strategies.
The stock rose 3% on Monday when most stocks were getting battered.
Let me put some context around this…
It listed on the market in October 2021.
In hindsight, that was a terrible time to get going. Sentiment has done a swan dive ever since.
The stock hit an early high of more than $2 per share after it first listed.
It’s been a grind ever since.
The share price fell to as low as $1.30 back in May. That was more than 30% down from the IPO price.
Here’s the kicker though…
When it came to the market, it had about US$85 billion under management. As above, it now has more than US$100 billion.
It has grown assets during a tough time for stocks in general.
This is how you can make a bear market in stocks work for you.
Clearly, as a business, it is doing something right. It makes more money the more assets it has under management.
And yet, you can buy it cheaper now than when it first came to the market.
And the 5% yield is hefty for Aussies because its earnings are in US dollars.
You get a kick from the currency conversion as well.
And why can’t the company keep growing?
If you’re bullish long term on US stocks, and markets in general, it has a nice runway to keep growing earnings — and dividends!
Are there risks? Of course.
There’s current yield of nearly 8% at yesterday’s close and the current exchange rate.
These types of opportunities are all over the market.
It’s hard to describe how difficult the market has been over the last 18 months.
There are bargains galore, in my book, begging to be picked up.
Don’t think of today in terms of the current troubles. Think of your account in 2024 or 2025.
That’s what other shrewd operators in the market will be doing.
Make sure you check out Greg’s ideas on this theme in his report here.
- Here’s another example of the current market…
I did my own ‘bargain report’ earlier in the year for my small-cap advisory, Australian Small-Cap Investigator.
One of the stocks I’ve been recommending is mining services company MLG Oz [ASX:MLG].
For about a year, the stock did nothing. It just grinded along on low volume.
This is a stock run by a founder and current CEO, not to mention major shareholder too. I also knew that mining insider Bill Beaumont was a shareholder and best buddies with the boss.
All you can do is play the odds in the share market.
The odds look great to buying this business at a dirt-cheap valuation earlier in the year.
When the payoff would come — that I didn’t know.
But somebody in the market has suddenly started paying attention…and bidding on the stock.
MLG is up 80% this year. I bet you’ve never even heard of it.
Why has it suddenly taken off? Why not six months ago?
Beats me!
All I know is that its main markets are gold and iron ore. And both those sectors are still minting money.
Some of the previous issues plaguing the industry are cooling off (labour, inflation, COVID).
That’s the kind of potential out there now. There are cheap stocks…and all you need to do is start planting some of them in your portfolio as seeds of future growth.
Don’t try and get too cute on the timing. And be prepared to sit through the current volatility and endless negativity.
But the potential payoffs are there.
Eight months ago, gold shares were languishing after a two-year bear market.
Yesterday, gold speccy Bellevue Gold went up 15%…in a day!
Sentiment can change on a dime in the market, whatever the sector.
Make the most of the depressed values I say!
By the way, that bargain report featuring MLG is still available. The other four ideas are still buys today too. You can check it out here.
- I took my eight-year-old daughter to see Harry Potter and the Cursed Child on the weekend. That was her birthday present. She loved the show!
I took this photo before the actors started appearing…
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My daughter Ema had the aisle seat, eight rows from the stage.
Little did we know that Lord Voldemort (the scary, big, bad guy of the story) would come off the stage and walk right down the main aisle to the back of the room.
As Voldemort passed us by, Ema’s reaction was to dive for the cover of darkness…and out of his way.
Hilarious!
Best wishes,
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Callum Newman,
Editor, Money Morning
