Investors Alley

Everyone loves a single-digit priced stock.

This is despite the fact that academics tell us there is no advantage to buying a low-priced stock; instead, they say, a move from $5 to $8 is the same as a move from $50 to $80.

That is not exactly true: much of the time, it takes less dollar volume to push the lower-price stocks from $5 to $8. But real-world inflation like that rarely infiltrates the ivory towers of academia.

Academia also ignores the appealing physiological aspects of buying low-priced stocks. It is a lot more stratifying to be the owner of 1000 shares of a $4 stock than it is to own 10 shares of a $400 stock.

There is a secret to making money in low-priced stocks. My own affection for value investing has led me to own, and profit from, many low-priced stocks over the last three decades.

Let me show you…

Close-up Of Person Hand Holding Small Plant On Stacked Coins

Wall Street firms also hate low-priced stocks. Many will not let you trade them in your account. And having been a broker for years, I understand this: in addition to loving low-priced stocks, far too many people love the tantalizing combination of a good story and a pipe dream. But when the pipe dream inevitably turns into a pipe bomb that destroys the value of their portfolio, adventurous dreamers tend to become litigious pests. Lawyers at most big brokerage firms are far too busy defending the firm against much more serious charges and have little time for these claims.

As more people have become active investors and the pile of institutional money has grown into the trillions, the stock markets have become relatively efficient.

The companies in the S&P 500 have hundreds, in some cases, thousands, of analysts, pundits, and research services studying their every move. For these stocks, there are only bargains to be had when the market turns ugly or huge surprises create a short-term opportunity to buy a good business at a bargain price.

That changes when you get to the low-priced stocks with a smaller market capitalization.

Wall Street is not paying as much attention to these companies. The hedge funds do not care that much, either. Many of these companies are too small to matter to them—if you are trying to be the big boy on the block with billions of dollars under management, you must focus on bigger stocks with more liquidity.

Over the last thirty-plus years, I have discovered the secret to making money in low-priced stocks: you must be in the waste disposal business.

There is a lot of garbage among low-priced stocks. You have to get rid of those companies with bad balance sheets, and that are struggling to keep the lights on. Cash-burning biotechs with odds of success that make playing keno look mathematically more attractive need to be dumped. Businesses that need to issue stock to stay alive must be hauled away.

You want to narrow the universe down to those small-cap, low-priced stocks that have good business with excellent fundamentals and strong balance sheets.

The “take out the trash” approach lies at the heart of the approach in both The Takeover Letter and The MVP Report. Both add some valuation and quality parameters, but the process starts with taking out the trash. And today, I want to give you a quick look at a company that passes the trash can tests.

Iteris Inc. (ITI) is a solid company with a great business selling traffic management systems that help cities and towns develop smart mobility systems that move traffic around more efficiently.

The company uses cloud computing, high-tech sensors, and artificial intelligence to help cities manage traffic. It sells hardware and software to all levels of government, including cities and towns, states’ departments of transportation, and the federal government.

Iteris is growing, generating free cash flow, and has a solid balance sheet.

There is little-to-no chance this company will face any financial distress in the foreseeable future.

Small-cap investing still works very well and is one of the best ways to build wealth using a patient, aggressive approach to investing.

You just have to learn how to take out the trash.

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For dividend investors, an excellent yield combined with regular dividend increases is the holy grail of wealth building. Dividend growth produces share price appreciation, so an income investment that grows dividends will almost certainly produce tremendous compounding annual total returns.

Today, I want to show you my favorite ETF that does just that.

In January 2023, the InfraCap MLP ETF (AMZA) increased its dividend by 9.1%—its first increase since the pandemic forced a deep dividend cut. As we went through 2023, I told my Dividend Hunter subscribers to expect another 8% to 9% dividend increase in 2024, and on January 24, the folks at InfraCap announced the 2024 dividend, which included an 8.3% increase. Nice!

AMZA pays stable monthly dividends and, if this trend continues, will be announcing a new higher rate each January going forward.

As the name states, AMZA invests in energy sector master limited partnerships (MLPs). Over the last seven years, the use of the MLP structure has decreased, and the number of energy midstream corporations has become the majority of companies in the sector.

The MLP group is now concentrated into a handful of companies. The good news is that these are very well run, with businesses that generate a lot of growing free cashflow. AMZA’s top five holdings account for 79% of the fund’s assets. Each company is an MLP I would happily own as an individual stock.

Investors tend to steer clear of MLPs because of the tax reporting issues: an MLP investor receives a Schedule K-1 for tax reporting as a limited partner, requiring much more work on your tax return than reporting Forms 1099. And owning K-1 investments in a qualified plan such as an IRA can cause massive tax problems.

Investing in AMZA eliminates the K-1 challenge. AMZA sends investors a Form 1099 for tax reporting, making the ETF safe to own in your IRA. The fund also passes through the tax advantages of investing in MLPs.

Since the end of 2020, AMZA has returned 137% to investors. While I don’t expect 33% annual returns in the future, the current 8% yield combined with high single-digit annual dividend growth means investors can expect close to 20% on average annual returns going forward.

The mining sector’s largest company by market capitalization is BHP Group Ltd. (BHP). And, unlike its peers, this mining giant is growing by sticking to its proverbial knitting.

BHP is using its healthy balance sheet both to buy smaller miners and to build organically, but the company has kept to well-traveled paths. This year’s $6 billion OZ Minerals buyout, for example, has added copper reserves near the company’s Olympic Downs mine in South Australia. And, BHP is also getting out of dead-end assets like coal. The company plans to sell its stakes in two metallurgical coal mines in Queensland for $4 billion, following the spin-off of its oil and gas assets into Woodside Energy Group Ltd. (WDS).

With its reshaped and more focused portfolio, BHP’s recent share price weakness offers an opportunity to own a company that will be more compelling later this decade—not to mention one that still pays out a healthy dividend.

Near-Term Pain

Even with a relatively strong iron ore price, investors have shied away from BHP over the past year. The stock is down 13%, with most of that drop occurring in the first weeks of 2024. This points to skepticism that a price of more than $120 a ton for iron ore can hold, given the shakiness in the Chinese construction sector.

Bear in mind, though, that most of the price of iron ore is gravy for BHP. In the 12 months leading up to the end of June 2023, BHP’s costs were less than $18 per ton at its Western Australian operations, which it boasts is the most efficient of the major players.

BHP’s latest results were okay. Operationally, the company had a solid first half of its fiscal year. Western Australia iron ore production was up 5% quarter-on-quarter, while first-half copper production rose 7%. This reflected a record half at BHP’s Spence mine in Chile as well as ongoing strong performance and additional tons at collected at Copper South Australia mines. Despite this, BHP has reduced its dividend payout to its shareholders from 75% of its earnings to around 65%.

Nevertheless, BHP’s future looks bright. Here’s why…

BHP’s Three Focus Areas

BHP is becoming a more focused company, emphasizing three core areas: iron ore, copper, and potash.

Nickel had been an emphasis as well, but this is changing due to the collapse in the price of nickel—down 45% over the past year due to oversupply thanks to a flood of nickel exports from Indonesia. It would not surprise me to see a potential writedown of BHP’s Nickel West division. That would not be overly material to the company, as the metal forms a small part of its overall portfolio.

BHP’s iron ore assets are industry-leading and accounted for nearly 60% of the company’s 2023 fiscal year cash profits. BHP remains well placed to continue its low-cost production and increase output with minimal expenditure, thanks to its efficiency.

BHP enjoys a $5 more per ton in free cash flow than that reported by its largest competitor. Expansion is planned for its key Pilbara iron ore complex, with output on route to medium-term capacity of 305 million tons, and eventually 330 million tons.

Regarding copper, the outlook here is even brighter. Few mines have been built in recent years, and demand will climb thanks to electrification worldwide. This will result in a significant supply deficit by 2027, when prices should average $10,000+ per ton, up from the current $8,250 per ton. BHP’s growing copper output therefore looks well timed, thanks to the aforementioned OZ deal. If approved, the acquisition could add around 200,000 tons of copper a year by 2030.

Finally, there is potash. BHP’s next mega-mine for this mineral compound is the Jansen fertilizer project in Saskatchewan, Canada. The company expects production at Jansen to begin in late 2026; once fully ramped up, Jansen will become one of the world’s largest potash mines, producing approximately 8.5 million tons per year. In the latest quarter, construction of the Jansen mine in Canada was ongoing and there was approval of Jansen Stage 2 ($4.9 billion), which doubles planned potash production capacity.

While the return of Russian and Belarusian exports to the market this past year pushed potash prices down, they are still well above BHP’s forecast production price of $115 per ton at the new mine. There are some worries in the market that the huge new mine will depress prices, but it is likely Russian supply drops—due to geopolitics—as demand rises.

Buy BHP

Free cash flow in the 2023 fiscal year was $12.0 billion, after record highs of $25.2 billion in 2022 and $20.1 billion in 2021. In the 2024 fiscal year, I expect $11 billion to $12 billion in free cash flow.

My forecast is for fiscal 2024 dividends of $1.80 per share, about 6% higher than last year. BHP stock is a buy around $60, giving it a 5.5% yield.
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The term goldilocks has begun to make the rounds in economic circles early this year, as unemployment remains low, interest rate cuts appear to be on the horizon, and companies are gearing up for a soft economic landing. And, as we move away from recession fears, it appears that oil could be bottoming out as well. A great reason to take a look at energy stocks early in 2024.

And one oil stock that is aggressively putting its house in order for a run higher in the new year, is Amplify Energy (AMPY – Get Rating). Amplify is a U.S. based oil and gas exploration and production company. The company’s properties primarily consist of operated working interests in producing and undeveloped leasehold acreage and in identified producing wells in North America. Amplify also owns non-operated working interests in producing and undeveloped leasehold acreage.

Amplify is currently employing a three pronged strategy to ramp up profit for shareholders. First, it is divesting underperforming assets and has engaged an investment bank to sell those assets. The company hopes to put the assets on the market this quarter and realize a return for shareholders soon thereafter. 

Second, the company is bringing certain oil field services in house. In an effort to reduce costs and increase efficiency, Amplify is forming an internal oilfield services company, Magnify Energy Services. Assuming the successful standup of Magnify, Amplify hopes to expand the services it performs on its own wells over time, recognizing additional cost savings. 

And Third, Amplify is increasing operations in its Beta field. If it can drill and complete wells for approximately $5 to $6 million, the company expects internal rates of return (IRR) to exceed 100% at current oil pricing. And these returns should be higher if oil actually is bottoming. 

The stock, which looks like it is putting in lows along with oil, is trading at extremely low valuations right now at only 0.6x earnings, 4.2x projected earnings, 0.7x sales, and 2.3x free cash flow. This with operating margins running at over 44%.

With those valuations, not surprisingly Amplify is an A rated stock on our POWR Ratings Value component. It actually has a score in the  99th percentile of all the stocks we track in that component. 

So, if it takes a little longer than expected for oil to turn higher here, Amplify is trading at levels that look like a bargain even with oil trading at current levels. A move higher in the oil complex could get Amplify trading back toward $10 from its current level of just over $6.

What To Do Next?

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For dividend growth-focused investors, the 2020 coronavirus pandemic-triggered shutdown threw a monkey wrench into dividend income expectations.

In response to the shutdown, companies stopped increasing dividends, cut dividend rates, or suspended dividends entirely. Four years after the shutdown, it’s time to see how dividend policies have changed…

And where the next big dividend growth opportunities are to be found.

At the pandemic’s start, companies suddenly faced a very uncertain future. Making changes to dividend policies was appropriate, depending on the individual company and industry. However, we are now four years past the pandemic’s start, and many companies have not resumed their pre-covid dividend policies. This is a trend that does not benefit investors.

There were some good reasons for, and results from, the reigning in of dividend growth. Companies have used excess cash flow to reduce debt loads. Cash flow growth increases coverage of the current dividend rates.

Companies have also focused more on buying back shares rather than increasing the cash dividends paid to investors. A stock buyback lowers the number of shares outstanding, which mathematically increases the net earnings per share. I am not a fan of buybacks that are not paired with dividend increases.

Here are several stocks that changed their dividend policies due to the pandemic and have not yet returned to their pre-COVID practices.

Before the pandemic, EPR Properties (EPR) was an outstanding income REIT. The company paid monthly dividends, increased its dividend by 7% per year, and typically yielded near 7%. EPR owns movie theaters and other experiential properties, so it was not a surprise the company suspended dividend payments in May 2020. The dividend restarted in June 2021 at 70% of its pre-pandemic rate. My biggest issue with EPR is that the company has not returned to annual dividend increases. This month, it announced another $0.275 dividend. The rate has not changed since October 2021.

Pre-pandemic energy infrastructure company ONEOK Inc. (OKE) had a dividend policy of quarterly increases totaling high single-digit annual growth. At the start of the pandemic, ONEOK stopped increasing its dividend and did not increase its payout again until January 2023. Last week, the company announced a 3% increase and stated that 3% is the target dividend growth rate going forward. The company wants to put greater emphasis on stock buybacks. A 5.5% yield combined with 3% dividend growth is not an appealing combination. I will soon look to replace ONEOKE in my Dividend Hunter-recommended portfolio.

Plains All American Pipelines LP (PAA) has done much better for investors coming out of the pandemic. Plains cut its quarterly dividend by 50% at the start of the pandemic. It restarted dividend growth in 2022 with a 21% boost to the payout. The dividend increased again in 2023, by 23%. This year, the PAA dividend got a 19% increase. The company has stated that it will continue double-digit dividend growth for at least several years.

In general, I am disappointed with how many companies have treated investors regarding dividends paid since the pandemic. Many seem to have forgotten their histories of rewarding investors with growing dividend payouts. As we get deeper into 2024, I will be looking for more companies like Plains All American Pipelines.
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Right after last week’s article was posted extolling the virtues of investing in one of the most geopolitically unstable regions in the world, I received the latest updates on global valuations.

Turkey is still on the list of ultra-cheap stock markets.

Turkey has a lot of risks, but with the market indexes trading with a CAPE ratio of less than half the world’s more developed markets. More importantly, the CAPE is a 10-year average PE adjusted for inflation, and, as low as it is, it is much higher than the current trailing 12-month PE of just 7.

The PE of the iShares Turkey ETF (TUR) is less than 5. The market is due for some mean reversion.

But the cheapest CAPE ratio in the world right now isn’t Turkey – instead, it’s to our south. Let’s take a trip and see if we can find some deeply undervalued stocks…

The prize for the country with the cheapest stocks goes to Colombia, where stocks trade with a CAPE PE of just 7.8.

The 10-year price-to-book value ratio is also the lowest in the world at just 0.7.

That makes perfect sense, given all the cocaine drug lords and worlds that run the place.

While that is still the perception for many, it is simply not true. This image has made for some excellent movies over the years, but that version of Colombia has all but disappeared. The Colombian government took an aggressive approach to ending the drug trade, and it is not a significant issue anymore.

To be clear, that does not mean that Colombia is risk-free.

There are parts of the country that only the most adventurous and incautious individual should visit. As is the case throughout much of South America, the chance of kidnapping for ransom is genuine.

Colombia is one of the oldest democracies in South America, but its elections have tended to be messy affairs with high levels of associated violence in recent years.

In the 2022 election, the nation turned to the left by electing Gustavo Petro, a former rebel.

He moved towards the center and rode a wave of disgust with existing leadership into the Presidency. All has not been peace and light.

Petro has a hard time getting his initiatives passed by the legislature. In local and regional elections in November, his party did not fare well. Center and right-leaning candidates scored easy victories.

Politically, we have a country with a great deal of unrest and occasional gusts of violence.

Combined with a low multiple of earnings and asset values, that sounds like a perfect combination for investment success.

Colombia is a middle-class nation with the fourth-largest economy in South America.

Like many countries in the region, it is resource-rich. In fact, Colombia is a leading producer of several agricultural commodities, including bananas, coffee, sugar, and palm oil. It has oil, gas, and coal. Columbia is also mineral rich, including several that are in high demand to feed the global green energy machine.

It also has a thriving electronic industry and a fast-growing appliances manufacturing industry.

Despite some political unrest, there is enormous economic upside.

Naturally, an exchange-traded fund, MSCI Colombia ETF (GXG), allows you to invest in Colombia.

You can also invest in shares of Bancolombia S.A. ADR (CIB). The bank is the largest in Colombia and has offices in Central America, The Cayman Islands, Puerto Rico, and Miami.

The bank has a generous dividend policy. The payout is variable based on performance, but if this year’s payout is half last year’s, shareholders will collect a yield of 5%.

The stock could easily double from the current level if the bank earns anything close to what analysts expect for 2024.

The bank is performing at a high level, with a return on assets of 1.79% and a return on equity of almost 17%.

Interest rates in Colombia have been among the highest in the world but should start coming down this year, and Bancolombia shares will get an enormous boost as that happens.

Low valuations, high dividend yield, and massive upside potential make Colombia’s largest bank a very attractive addition to an income portfolio.

Much of the financial world has been waiting (for almost a decade) for the SEC to approve spot Bitcoin ETFs. On January 10, it finally happened.

And now we have 11 exciting new ways to lose a bunch of money. Let me explain…

A spot Bitcoin owns a portfolio of Bitcoins directly, and ETF investors buy shares of the portfolio. The structure is the same as the SPDR Gold Shares ETF (GLD), which owns physical gold, and GLD investors own shares of the GLD portfolio. GLD shares are backed by physical gold. Bitcoin holdings, not futures contracts, back the new breed of Bitcoin ETF shares.

A lot of financial services companies have jumped on the Bitcoin ETF wagon. Here is the list published on January 12 by ETF Trends:

Grayscale got the big jump on the competition because it is one of the leading crypto asset managers.

For a deeper dive, I looked at the iShares Bitcoin Trust (IBIT). The fund literature included this very interesting table:

It is fair to say that Bitcoin has caught the attention of speculative investors. Be aware that if an investment loses 75% of its value, it must gain 400% to reach breakeven.

The IBIT prospectus provides this description:

The Trust is intended to provide a way for Shareholders to obtain exposure to Bitcoin by investing in the Shares rather than by acquiring, holding and trading Bitcoin directly on a peer-to-peer or other basis or via a digital asset platform. An investment in Shares of the Trust is not the same as an investment directly in Bitcoin on a peer-to-peer or other basis or via a digital asset platform.

With one Bitcoin priced at over $40,000, the ETF shares make it easier for small investors. The funds have current share prices ranging from $12.00 to $50.00. Most have discounted their expense ratios until they hit a certain level of assets, typically $1 billion.

In the runup to the ETF approvals, Bitcoin appreciated to as much as $49,000 per coin. Once the ETFs started trading, the coin dropped to less than $43,000. Bitcoin is highly volatile. Period.

I don’t recommend any type of Bitcoin investment. It is pure speculation and not investing. However, as these funds increase their assets, I may look at them for covered call options trading.
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Merger and acquisition activity continues to sweep across the energy sector.

In the latest deal, Chesapeake Energy (CHK) agreed to acquire rival Southwestern Energy (SWN) for about $7.4 billion, in an all-stock transaction that will create the largest natural gas producer in the U.S. The enterprise value of the newly combined company will be around $24 billion.

This transaction marks the first big acquisition focused on natural gas since a deal frenzy kicked off in the U.S. energy sector at the end of last year. The deal is also the biggest natural gas-focused U.S. upstream deal in more than 10 years, reflecting confidence around the long-term outlook for U.S. liquified natural gas (LNG) exports.

Chesapeake will pay Southwestern shareholders $6.69 per share in Chesapeake stock, with Southwestern shareholder receiving 0.0867 a share of Chesapeake for each share of Southwestern they own. The combined company would be 60% owned by existing Chesapeake shareholders on a diluted basis, with the remaining 40% held by current Southwestern shareholders.

The transaction should close in the second quarter, subject to regulatory approvals. The combined firms will assume a new name after the closing.

Natural Gas Powerhouse

This deal should not come as a surprise.

While natural gas prices spiked in the year after Russia’s invasion of Ukraine, they were far lower in 2023, prompting explorers to be more conservative when it comes to spending.

Yet, U.S. LNG exports have grown in importance since the war in Ukraine began, as Europe seeks to replace gas shipped via pipeline from Russia. And with many of the best drilling locations already owned or leased, buying rivals with choice gas-producing sites has become increasingly important for companies to keep growing. As such, the logic behind the deal is pretty straightforward for Chesapeake: it seeks to feed the surging demand for liquefied natural gas exports along the U.S. Gulf coast.

The acquisition allows Chesapeake to blow past its largest domestic rival, EQT Corporation (EQT), and expands its holdings to 1.2 million acres in two key drilling regions: the Marcellus basin in Appalachia and the Haynesville basin, which straddles Louisiana and east Texas. The newly combined companies will produce about 7.4 billion cubic feet of natural gas a day, according to S&P Capital IQ, overtaking the current number-one producer EQT, which produces about 5.4 billion cubic feet per day.

The additional resources in the Haynesville are particularly important since it will allow Chesapeake to take greater advantage of the aforementioned growing U.S. exports of liquefied natural gas from the Gulf of Mexico.

Why Buy Chesapeake?

Chesapeake’s move to buying Southwestern cements its push to focus exclusively on natural gas. The merger marks the next stage in Chesapeake’s evolution, making it the largest natural gas exploration and production company in the U.S. by production, proved reserves, market capitalization, and enterprise value. The company’s decision to become more of a pure-play gas company sharpened last year when it exited South Texas and sold its remaining Eagle Ford oil assets to SilverBow Resources for $700 million.

I believe the merged company will be added to the S&P 500 soon after the deal is completed, but even if it is not, the new company will be a “must-own” stock as LNG exports from the U.S. to Asia and Europe in the coming years rise. The new company expects up to 20% of its future production will be tied to international pricing for gas.

That’s another reason for me to think this will be one of the few transactions where one plus one should turn out to be much greater than two.

And there is good news for income investors too: the combined group should see an improvement of some 20% to dividends per share over five years, the companies stated, under Chesapeake’s existing shareholder return framework. Chesapeake’s dividend yield is currently 4.7%. Southwestern doesn’t pay a dividend.

With the solid dividend background, and the booming LNG export industry giving it a strong tailwind, CHK is a buy up to $87 a share.
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When Boeing (BA) was building a seemingly dominant position in commercial aviation in the 1960s and 1970s, passengers’ faith in its relentless focus on quality inspired the slogan: “If it ain’t Boeing, I ain’t going.”

To say that the quality of Boeing’s products in recent decades has gone downhill is an understatement. That’s why, today, some passengers are saying: “If it is Boeing, I ain’t going.”

From an investment perspective, Boeing has a lot of work to do as a company if it is ever to regain its former glory. For me, that makes it uninvestable. I’d rather own the other company in the global aerospace duopoly, Europe’s Airbus SE (EADSY). Even before Boeing’s latest mishap, Airbus was clearly superior. Let me explain why.

Airbus Flies Higher Than Boeing 

The diverging fortunes of the two aircraft manufacturers, Boeing and Airbus, was pointed out clearly in a Bloomberg article by Chris Bryant.

The pandemic and the resulting supply chain difficulties did slow Airbus’s advance down. Nevertheless, currently on just about every metric, Airbus is trouncing its U.S. rival:

Deliveries: 623 to 461 in favor of Airbus.

Order Backlog: 8,000 to 5,300 in favor of Airbus.

Operating Profit ($ billion): Airbus +6, Boeing -2.

Net cash/debt ($ billion): Airbus +7, Boeing – 39.

(This data comes from the Bloomberg article.)

The deliveries number for Airbus has been updated. It likely handed over 733 planes to customers last year, according to preliminary data from Aviation Flights Group. Of those, 579 were for its bestselling A320neo family of single-aisle jets. Widebody A350 aircraft accounted for 57 units, according to Aviation Flights Group. The company had targeted 720 deliveries for the year.

U.S. investors were blinded by Boeing’s success financially. But Airbus plodded along and concentrated on actual engineering, and not financial engineering like Boeing.

The 2010 launch by Airbus of a more fuel-efficient version of the single-aisle A320 known as the “neo” prompted Boeing to rush out its response: the 737 Max. This led to design compromises that may have played a role in the two 737 Max crashes in 2018 and 2019.

The grounding of the 737 Max helped Airbus add to its lead in single-aisle jets—the cash cow of the aviation industry, since it accounts for the vast majority of demand.

Airbus was expected to account for 60% of narrow-body plane deliveries until 2026. And that was before Boeing’s latest safety issues.

The company has already stated that it will significantly increase aircraft output in 2024 as Airbus ramps up production across its model range to meet surging demand.

Airbus also said that it plans to raise output on the A350 to 10 per month in 2026. The aircraft has been a major seller for the company this year, particularly the larger A350-1000 variant that can fly the longest routes, with Airbus approaching an unprecedented 100 individual orders for the plane.

While the recovery in long-haul air travel took more time after the pandemic than shorter routes, demand for trans-Atlantic flights and trips between Europe and Asia has surged in the last six months.

In addition, more airlines are ordering planes that can fly extended routes, in part because closed air spaces over Russia, Ukraine, and parts of the Middle East have made detour journeys more common.

Buy Airbus Stock

Airbus’s stock has recouped all the losses caused by the pandemic, with the shares touching a record high recently.

With Airbus’s A320 family of planes continuing to have a substantial lead in the highly valuable narrow-body market, and the A321XLR having the potential to open new long-range routes to low-cost carriers, Airbus is a strong buy.

Additionally, the company is well positioned to benefit from emerging-market growth in revenue passenger miles and a robust developed-market replacement cycle. With net cash likely to have exceeded €10 billion ($10.9 billion) at the end of December, it’s also on the cusp of being able to return more money to shareholders.

Prioritizing investors rather than investing in quality and resilience is what got Boeing into trouble. It spent around $44 billion on share repurchases between 2013 and 2019, according to data compiled by Bloomberg.

Airbus has always been far more conservative and likes to find other uses for its cash, including acquisitions. However, I now expect Airbus to splash more cash on its investors, rewarding them for their patience.

Buy EADSY anywhere below $40.

Last week in my 48-Hour Income service, we decided to pass on a trade in bitcoin mining company, Riot Platforms (RIOT). In 48-Hour Income, the goal of the service is to generate 1% to 3% returns per week by selling 2-day puts in certain stocks. RIOT met most of the criteria for one of our