In bad markets nothing works no matter how hard you try. In good markets there are always multiple ways to win. Even though stocks were all over the map today, investors found still one more way to win, buying companies that have been left for dead only to see their fortunes rise up as if by magic.
To demonstrate the power of this concept I found five examples of stocks that were supposed to be finished with no hope of resurrection,
In each I want to explain what happened and the catalyst for each so you understand why I don't think it is over.
First and perhaps foremost is Viacom (VIAB) . I have been saying that this company is on the verge of a turn because of the incredible movie slate and because of its cost-cutting. How good are Paramount's movies? I literally am hoping that it rains this weekend so I can go see the sixth Mission Impossible, the one everyone's raving about.
But today I saw not the makings of a turn, but the turn itself, the one that Bob Bakish, who was named CEO in December 2016, has engineered and it is pretty incredible. Viacom positively trounced the estimates and as Bakish put it, the quarter showed "clear evidence that our turnaround is delivering results and that our evolution into a truly global, multi-platform brand and intellectual property driven entertainment company is well underway."
I interviewed Bakish this morning and I was thoroughly impressed with what he's accomplishing here. I asked him to tell me more about the value of the intellectual property that he's mining. He said it's "absolutely at the core of our turnaround strategy. That means fully leveraging the intellectual property we own -- think Mission Impossible, Jack Ryan, Double Dare and Jersey Shore and creating new IP like 13 Reasons Why on Netflix (NFLX) , the Kevin Costner series Yellowstone on Paramount Network, Floribama Shore on MTV and the new Tyler Perry movie for Paramount/BET Nobody's Fool, which will hit theaters in November"
You know what I think's most amazing about this turn? So few know that it is happening let alone being aware of what Viacom even owns. Bakish is, literally, looking at all of the programs and movies that have been successful and is reinventing them, including, for example, Top Gun Maverick, a sequel to the amazing original Top Gun that should have been done years ago but there had been no creativity at this joint for ages.
Plus he's fixing the not so hot balance sheet that had so many worried. He's making low budget movies like Quiet Place that are hits. He's teaming with Amazon (AMZN) on that Jack Ryan production, which will be 10 episodes, each one of which will call attention to Viacom. And he's making the place far more international, something that we know Comcast (CMCSA) and Disney (DIS) have been trying to do themselves because that's where the real growth is.
Now the stock rallied today a tad on earnings. But the big stories that have dominated this tale are soap operas, the family-owned nature of this company and CBS (CBS) and the personal travails of Les Moonves, the CEO of the Tiffany network. There's been a continual narrative out there that says Viacom is going to buy CBS and CBS shareholders will be crushed because it will be succumbing to the better company. After today I am not sure which is the better company. I do know that I would rather own Viacom here, though, than CBS. Much more opportunity for growth from the company everyone's given up on than the one that everyone fawns over.
How about CenturyLink (CTL) ? Talk about a hated stock, this telecommunications company has been reviled for ages. But last year CenturyLink bought Level 3 Communications and Jeff Storey, the Level 3 CEO, became the CEO of the merged company. He's done remarkable things, cutting the fat and dramatically shedding what he calls empty calorie revenues and made it so the 10% yield may be a lot safer than I thought. He's not been able to grow the business yet. But the turn is palpable because the cash flow has become voluminous.
Next up, Yelp (YELP) . Remember these guys, the ones that allow you to rate all sorts of local enterprises but especially restaurants? Unless you own a bar or a restaurant like I do with Bar San Miguel, you may not have been paying much attention to the fortunes of this one. Today you can't help it as its stock is soaring after it put up spectacular ad numbers, I mean really amazing. I don't want to say that Yelp's back because it never really went away. But the stock's been an internet afterthought for ages. No more. I think it has more room to run.
Here's one that's been a huge disappointment this year, DowDuPont (DWDP) . I have championed it for ages, own it for my charitable trust, which you can follow along by joining the actionalertsplus.com club. But you know what? I have gotten tired of talking about it because no one cares. They know it is going to break up, but they haven't seen anything of late that indicates that the heck the pieces are worth. I brought on Jim Fitterling, who will be the CEO of the new Dow, this week, and I thought he told a terrific story. But people just yawned.
They aren't yawning today. That's because yesterday after the close it came out that Ed Breen, the CEO, bought 2 million dollars' worth of stock in the open market. That's an amazing commitment but it makes a ton of sense to do now. We have talked endlessly on the show about how Breen made you so much money when he split up Tyco, perhaps the greatest money making break-up in history. Breen has said over and over again that Tyco's stock didn't take off until the Form 10s -- the technical term for the documents that explain the new pieces of the company -- came out. Guess what. DowDuPont's Form 10s come out next month. You may not believe it will take off when that happens but clearly Breen does. It's a buy right here.
Finally there is Michael Kors (KORS) , the accessory company that reported two days ago and the stock's still running. Why? Because all of the apparel is red-hot and none hotter than the accessory category. I am just shocked at how strong this group is. Kors doubled down on accessories a year ago when CEO John Idol paid $1.2 billion for Jimmy Choo. At the time it was regarded as a severe overpay. Nobody thinks that now. I like this category very much and I think that all of the analogues, including Tapestry, which reports next week -- the old Coach -- could produce some very good numbers.
Now I said there were a lot of ways to make money in this market and I don't want to limit it just to the Lazarus stories out there. I talk a lot about the subscription economy, an idea put into my head by Tien Tzuo, the ceo of Cramer-fave Zuora (ZUO) . Today Spotify (SPOT) , a classic subscription business saw its stock leap huge, I think because it is just beginning to reflect the power of the model. Another theme? Buying the stocks of companies that Amazon is supposed to be destroying. Yesterday it was the stock of CVS. Today? Roku (ROKU) , which is becoming a defector operating system for new TVs with explosive revenue growth.
There are just so many ways to win that only those blinded by a flat yield curve or a trade war that you think we can't win or inflation, no matter how benign, will fail to see.
So I say don't give up, start looking at the stocks that others have given up on. Those may be the hidden gems still left to run in this wild and wacky bull market.