Stocks aren't all the same. There's no real basket that makes sense to me. Sure, we all buy into the idea of index fund. They are a low-cost way to get exposure to the asset class. They capture the entirety of every member and obscure the good work that's done on behalf of you, the shareholder.
But I like to focus on individual stocks and what drives them because they can be observed and be acted upon.
Take last week. We did a two part segment with Boeing (BA) , where CEO Dennis Muilenburg told you the company was having an extraordinary year, that it was spewing cash and made it pretty darned clear that this was the healthiest Boeing has ever been and that it wants to reward its shareholders.
Today Boeing boosted its dividend by 20% and announced an incredible $18 billion buyback. Boeing isn't standing still. Muilenburg isn't a static CEO. He comes on air, he says that things are fabulous, and then he rewards you.
Or take the stock of Walt Disney (DIS) . It's done next to nothing this year but lately it's been rallying. Why is that? Because he will soon by many of the assets of Fox (FOXA) including its regional sports network as well as it studio and library. You get Avatar. You get the rest of the Marvel characters.
Why does this matter? Because it changes the narrative, that's why. Right now the only thing the analysts seem to care about is cord cutting and the loss of ESPN subs. It doesn't matter than theme parks are on fire, that China's making a ton of money and all the technology you can buy at the parks add to their tremendous profitability. It doesn't matter that they have hit after hit after hit at the box office. That the next Star Wars is money in the bank like all of the rest of them. That the Marvel franchise is so much fun and such a winner. It doesn't even matter than Disney got BAMtech on the cheap and it is the ideal platform to watch regional sports. Fox's regional sports network will slot right in.
All that matters is that darned ESPN fall-off which may not even be that bad if we just cared about the device we watch it on.
However, if Bob Iger buys these Fox assets, even if he has to pay close to $30 billion to get them, it's a fabulous move because overnight the story changes. Who wouldn't want shares in the ultimate entertainment powerhouse with a hammerlock on all regional sports you like that can be watched anywhere. Who wouldn't want to own all of Marvel or Avatar, which, you know, will be an annuity stream and a fabulous new attraction at the parks. ESPN doesn't become an asterisk but it sure won't dominate the conversation about the stock.
I know right now the company's been buying back stock like mad and it's really not doing a thing. But spending on new content that can be so additive and so easily swallowed? Holy cow what a windfall. People will be buying the stock of Disney hand over fist.
Drug stocks have been in the dumps because of a lack of new discoveries and because of endless patent expirations. Plus they are all afraid of being too visible when it comes to raising prices. They fear the tweet.
But there is one drug stocks that's hitting high after high after high: Valeant (VRX) . Yes, the once-disgraced Valeant that Joe Papa took over a little more than a year ago. This stock was at $8 back in April. Why? Because investors were worried about that hideous balance sheet. I had been highly critical of Valeant under its previous CEO but if you recall, Joe came on Mad Money and he said before he did anything big he would fix that balance sheet and refinance all of the near-term debt that everyone was so worried about. I am sure many of you rolled your eyes even about the possibility that any debt could be paid down. Yet that's exactly what happened. Papa saved this company. And now he's taking it to levels that seemed impossible six months ago.
It's true that companies aren't living breathing organisms. But today Inge Thulin, the CEO of 3M (MMM) put on an incredibly positive show that made it clear that numbers are too low and analysts are going to have to raise those numbers when they talk about it tomorrow. Inge's not standing still. He's improving margins, introducing new products to compete in OLED, and in devices for the electric car. Sure, the stock is up 33% for the year but the only takeaway you could possibly have is that this stock deserves to be higher.
Many people wrote off Caterpillar (CAT) a long time ago. They said it was hostage to China, that it had made a horrible acquisition in the coal mining business that it has lost its way. But Jim Umpleby and his predecessor Doug Oberhelman, took incredibly tough action and let go a huge number of people and closed plants and fixed an unruly dealer network. The result? The stock of Cat's up more than 50% and is giving no sign that it will stop here now that the world's a better place. Sure Oberhelman made his share of mistakes, but when things got tough for them and common parlance had it that this one had a lot of room to fall, executive suite action put the company on solid footing and good stead. It's doubled from when things were most dire and analysts fled the darned thing. The company didn't fix itself. The CEO did.
We all know how challenged the food group is. We see their stocks bumping along the 52 week low list or trading darned near it. They are pretty despised because they keep missing numbers. And then there's Pepsico (PEP) Its stock is less than two dollars away from an all-time high. You think that's random? I don't think so. I think that's CEO Indra Nooyi's doing. She never sits still. Innovating and innovating and innovating once more. Same with Steve Easterbrook at McDonald's (MCD) . He came in 80 points ago he's been crushing it ever since.
And that's really the point. People who look at this market and worry about taxes, or the investigation of President Trump, or North Korea or any of a host of problems don't realize that there are value creators all over the place.
Weren't we told that athleisure was on its last legs, that it was bust as you will hear when LuluLemon (LULU) reports. Well maybe CEO Laurent Potdevin just didn't get the memo because the stock is still screaming higher, just a few points away from its ultimate peak. How come? How about ingenuity. How about being mindful and in the present. If you are laughing I am laughing at you for not taking this stuff seriously like he does.
There are companies in every one of the industries with stocks being shelled daily. There are no givens. But when you look at stocks in a basket you get not only these incredible value creators-and obviously I left some out-but also some dunderheads who bring down the averages.
I am saying that the person at the helm is who matters and we've got some fabulous ones working for you every day of the week and weekend. They are who you are investing in and you need to embrace them for what they can and have done for you.
