UPDATE

Happy Holidays!

By The MARK IT. Team

🌤️ Good morning, and happy Tuesday. Welcome to the first newsletter for the year 2022! Thanks for being here and starting this journey with us. We’re hoping to dive right in for today’s edition and as the weeks go by and we hear some feedback, we’ll be tweaking our newsletters so that we can settle into our style.

WEEK IN REVIEW

Image by Michael Daddino, Source: Flickr

Last week, Friday especially, was one of the hardest days in the market with the S&P 500 index dropping 1.1% by market close. The sharpest part of the day’s decline happened between the market opening at 9:30 and 10:30 am EST leaving some of us yelling “holy heck look at Apple!”

• Increasingly as the day went on, stock prices fell mostly due to what we attribute as over-selling after the Fed raised interest rates another .5% this Wednesday. We also saw the Relative Strength Index (RSI) on a number of our watchlist stocks like Apple, Google, and JPM dip into the ’30s, again indicating these companies' shares are on the verge of being oversold. What is the RSI?

WEEKLY WATCHLIST

This week’s edition brings two pretty well known stocks in their respective industries that we think are currently undervalued and worth a look.

STOCK #1

Ford Motor Company (F)

The reason we’re on the lookout for Ford as a potential buy is its promise of increased EV rollout in the coming years. With the Ford Mustang Mach-E and F-150 Lightning, Ford can operate comfortably in the US EV market and compete with the likes of General Motors and Tesla (especially in the pickup category). Automakers by market cap.

• The past two days of market opening (Friday 12/16 and Monday 12/19) were the hardest days for Ford, putting to an end the bullish run that began in early October for the stock price. Friday saw the price open at $12.86 per share but close at $12.16 per share—a brutal 5.4% decline. Monday morning wasn’t any less unforgiving which saw an opening price of $12.14 per share but a close of $11.69—another sharp 3.7% decline.

BY THE NUMBERS

🛑 Decreasing cash flows: Ford's cash flows seem to increase and decrease in waves. As of right now, Ford seems to have decreasing cash flows—something value investors should be cautious of.

✅ Healthy dividend: Those looking for high-paying dividend stocks for passive income or a reinvestment plan may want to keep an eye on Ford with a 4.27% yield. However, the dividend yield is subject to change as the amount paid out has decreased in the past.

✅ Undervalued according to DCF: According to our discounted cash flow calculation, a single Ford stock priced at Monday's close of $11.69 is between 25-30% below its intrinsic value.

🛑 High debt: According to Ford’s balance sheet, the company has 129.76B in debt but 47B in total market cap. With higher debt than market cap, value investors might want to do more research before buying—despite the attractive price.

IN THE NEWS

The leading cause for the decline of Ford’s stock price in the last two days is likely due to the price of the F-150 Lightning (pictured below) getting its thrid price hike this year.

WMrapids, CC0, via Wikimedia Commons

STOCK #2

Canadian Pacific (CP)

Canadian Pacific has caught our eye in recent weeks as a great value stock because of the simplicity of its business and future utility. According to the US Bureau of Transportation Statistics, in 2018 “rail moved $15.7 billion of freight, up 2.0 percent compared to June 2017” BTS.gov

• As for the stock price, CP stock has seen a whopping 8.33% decline in the past 5 days, from $81.14 per share to $74.38 at the market close this Monday.

BY THE NUMBERS

✅ Increasing cash flows: Canadian Pacific looks like it has steadily increased free cash flows since 2013 with some dips.

⚠️ Dividend, but small: If you’re looking for a high-paying dividend stock, this might not be a stock for you. With a 0.74% yield, it’s lower than the US average.

⚠️ Slightly undervalued according to DCF: According to our discounted cash flow calculation, a single Canadian Pacific stock at $74.30 may be 10-15% under

✅ Low debt: Looking at the balance sheet Canadian Pacific has approximately 14B in total debt compared to its overall market cap of 69.369B.

vxla, CC BY 2.0, via Wikimedia Commons

ONE MORE THING

Keep in Touch

• For general announcements or updates on what we're working on, follow Abbas on Twitter 👉 @RealAbbasAkhtar

• Also, we want to hear your feedback! Send any comments or suggestions to [email protected]

Thanks again for reading!

Nothing MARK IT. publishes constitutes professional and/or financial advice, nor does any information published by MARK IT. constitute a comprehensive or complete statement of the matters discussed.