With interest rates likely trending lower—though how low and for how long is anyone’s guess—we believe high-quality, dividend-paying stocks trading at reasonable valuations and with the potential to grow their dividends over time could offer solid opportunities in the coming years.
To better serve our clients, this week our institutional research service, Asset Analysis Focus, released a special issue highlighting 8 dividend-paying stocks that meet these criteria.
For more details on our research or to learn more about this issue, feel free to reach out at info@boyarvaluegroup.com
Fact of the Week:
From December 31, 1999, to December 31, 2009, the S&P 500 declined by 9% and the Nasdaq 100 dropped by 48%, while the Russell 1000 Value advanced by 27% and the Russell 2000 Value surged by 121%.
The Week That Was:
It was a positive week for US equities across the board. The Dow finished up (+1.21%), the S&P gained (+1.11%), the Nasdaq added (+1.13%), and the small-cap Russell 2000 was up (+0.98%). Both the S&P and Nasdaq logged their fifth consecutive week of gains, with the S&P closing above 5800 for the first time.
Sector Highlights:
The biggest winners this week were Tech (+2.50%), Industrials (+2.10%), and Financials (+1.81%), all outperforming the broader market. On the downside, Utilities (-2.57%), Communication Services (-1.39%), and Consumer Discretionary (-0.85%) were the weakest sectors.
Update on Uber
Following Elon Musk’s April 2024 announcement about Tesla’s upcoming robotaxi (with details originally slated for August 8 before being delayed until October 10), Uber shares dropped sharply—almost 25% by the time the shares bottomed in early August—as investors feared this could disrupt Uber’s business model.
From the beginning, we expressed skepticism about these concerns, viewing them more as an opportunity to invest in Uber at an attractive price. Our July 2024 issue of Fresh Looks highlighted Uber’s strong free cash flow, growing market share, and partnerships with autonomous vehicle companies like Waymo and Aurora Innovation. We argued that Uber’s entrenched ridesharing marketplace platform would continue to thrive, even in a world where robotaxis become a reality.
As we mentioned in previous Sunday digests, we’ve consistently doubted Musk’s aggressive robotaxi timelines, having seen him miss similar deadlines before. Developing a fleet of fully autonomous vehicles is an incredibly complex task, and while Musk’s announcements make headlines, the technology is still far from mass adoption.
Fast forward to Friday: Uber shares advanced +10%, while Tesla declined by almost 9% after an underwhelming robotaxi debut. A chorus of commentary from Wall Street analysts—already generally bullish on UBER—highlighted the good news for UBER shareholders:
BofA: “The event was brief at just 19 minutes, with fewer concrete details and timelines than expected, which alleviates some concern for Uber investors."
Jefferies: “We consider the event a best-case outcome for UBER, given TSLA did not provide verifiable evidence of progress toward L3 (level 3) or quantify the number of robotaxis planned." “We expect UBER to react positively now that investors can focus on fundamentals.”
Citi: "We view this as a best-case outcome for Uber, as Tesla did not provide verifiable evidence of progress toward Level 3 autonomy or specific robotaxi production numbers." “We continue to believe Uber is well positioned to benefit from AVs given the size and scale of its driver supply and MAPCs globally and we note its more recent partnership announcements, including Waymo in Austin and Atlanta beginning in ‘25, as tailwinds.”
BMO: "Musk did not discuss unit economics or plans to scale the Cyber Cab, which keeps us cautious about these ambitions. Given its global presence, we believe Uber will remain the primary AV distribution partner"
This serves as a powerful reminder that reacting to hype can often lead to poor investment decisions. We viewed Uber’s dip since April as nothing more than market noise, unrelated to the company’s underlying value.
The temptation to follow headlines and the consensus opinion can be strong, but understanding a company’s long-term fundamentals is what matters most. Using short-term dips—especially those caused by factors that should not materially impact a business—as opportunities is central to our investment philosophy.
With Uber, we saw a company that not only has a massive, loyal user base but is also well-positioned to integrate autonomous vehicles from any partner, should the technology reach scale. Tesla, on the other hand, faces enormous hurdles in building out a self-sufficient ride-hailing network—to reach its driverless vehicle ambitions it will have to endure massive capital outlays in order to eventually mass produce steering wheel-less vehicles to supply an unproven business model that will be heavily dependent upon (waning) public trust of the brand and widespread regulatory acceptance (far from a sure thing in any foreseeable timeframe).
Friday’s market reaction validates our approach: patience, skepticism of market noise, and a focus on intrinsic value led to an attractive buying opportunity.
NEW YORK, Oct 9 (Reuters) - GXO Logistics a provider of logistics services with a market value of roughly $6 billion, is exploring a potential sale after receiving takeover interest, according to a person familiar with the matter.
GXO, which was spun off from trucking company XPO in 2021, is working with a financial advisor to field acquisition interest from suitors, which include rival logistics providers, the source said, requesting anonymity as the discussions are confidential.
Our Take:
We featured GXO in the July 2024 issue of Boyar Research when it was trading at $54 per share, highlighting the company’s strong position as the largest pure-play contract logistics provider, with a focus on automation. Despite recent stock underperformance, we saw it as a buying opportunity due to its growing market share and strategic acquisitions. Our valuation estimated GXO’s intrinsic value at $86 per share, offering a 57% upside at the time of publication. While a deal is far from assured, this situation reinforces what our founder Mark Boyar has instilled in us, if the stock market doesn’t recognize a company’s value, an acquirer eventually will.
Albert Bourla was preparing for a board off-site in Ireland this Sunday, when the Pfizer chief executive opened his email inbox to see an unexpected message. The email from Frank D’Amelio, his former finance chief who had left the drugmaker abruptly three years earlier was blank, but it copied in another recipient: a representative of Starboard Value, the hedge fund that has waged activist campaigns against some of corporate America’s biggest names, from Bristol Myers Squibb to News Corp.
Three other Pfizer board members received similar blank emails from D’Amelio in quick succession. The puzzling correspondence, which seemed to be a fat-fingered gaffe, was Bourla’s first hint of the drama that was about to engulf him. The story of what followed — pieced together from interviews with 10 of the investors, advisers and insiders involved — adds up to one of the most volatile, high-stakes activist campaigns in years.
Our Take:
The first lesson here: be very careful when sending emails! We believe CEO Bourla’s acquisition of Seagen was a sound strategic play that could generate significant long-term value, though it will take time to fully assess. Starboard is a respected activist investor, and their proposals often lead to operational improvements. We’re eager to see what they suggest.
Jamie Dimon on Bloomberg News
Our Take:
When JP Morgan Chairman & CEO Jamie Dimon speaks, we listen. The interview discusses the future of AI, capital markets, interest rates, the FTC, geopolitics and much more.
Important Disclosures. The information herein is provided by Boyar’s Intrinsic Value Research LLC (“Boyar Research”) and: (a) is for general, informational purposes only; (b) is not tailored to the specific investment needs of any specific person or entity; and (c) should not be construed as investment advice. Boyar Research does not offer investment advisory services and is not an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body. Any opinions expressed herein represent current opinions of Boyar Research only, and no representation is made with respect to the accuracy, completeness or timeliness of the information herein. Boyar Research assumes no obligation to update or revise such information. In addition, certain information herein has been provided by and/or is based on third party sources, and, although Boyar Research believes this information to be reliable, Boyar Research has not independently verified such information and is not responsible for third-party errors. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Investing in securities involves risk, including the possible loss of principal.
Important Information: Performance Information.Past performance does not guarantee future results. The reports in this sample are for informational purposes only and the performance of the stocks selected is not indicative of the performance of all the stocks profiled in Boyar Research. The performance of the stocks selected and the performance of the stocks in Boyar Research may in fact diverge materially. Additional information regarding the performance of other companies featured in Boyar Research is available from Boyar Research upon request. This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Clients of an affiliate of Boyar Research and employees of Boyar Research own shares in JP Morgan, Uber, GXO, and Pfizer.
