Brian Christopher here with you again, as Jeff continues his trek up the Appalachian Trail.
Let’s jump right into our portfolio review…
This week, our portfolio was up 3% on average. Of our 23 positions, only five were down. And one of them was basically flat, down 0.1%.
Three of our names increased double digits. Yes, in one week (from Thursday to Thursday)!
They were: National Vision Holdings (Nasdaq: EYE), Verra Mobility (Nasdaq: VRRM) and ING Group (NYSE: ING).
You may wonder what is going on at these companies.
Let’s check it out…
National Vision Holdings
First, National Vision Holdings is doing business the way you’re supposed to.
It announced a $250 bonus for all of its associates that work directly with the public.
In my opinion, every company whose employees work face to face with its customers should do this. These workers are literally putting their lives on the line every day they go to work. This isn’t just the case at EYE, but in many industries across the U.S. and the rest of the world.
You may find that hyperbolic. I don’t.
Let’s put it this way. EYE — and its shareholders — doesn’t make money without its employees. And never, in the recent history of employment, have its workers been more exposed.
So, it did the right thing. I hope more companies will do so as well.
Another reason for EYE’s success is that it broke through its 200-day moving average (200-DMA):
EYE Moves Above Its 200-DMA
(Source: Bloomberg.)
Technical market followers believe in the power of moving averages. And they trade based on them.
You can see in this chart that EYE’s 200-DMA has served as a floor for the stock since the beginning of June.
The price has dipped below it a couple times, but thus far it has come back.
Verra Mobility
Verra Mobility had a strong week as well. We’re up 58% on this position so far … in less than three months:
Verra Zooms Higher
(Source: Bloomberg.)
Contrasting Verra with EYE, it is not trading above its 200-day moving average yet.
But it’s in an insightful “pennant” pattern:
(Source: Finviz.com.)
The pennant is the two purple lines that are squeezing the stock price.
Technical analysts use it as a barometer.
You can see that Verra’s stock price is trying to move out of the pennant … to the upside.
It’s going to go one way or the other, but the trend is higher. That would be bullish.
If it does move higher, its 200-day moving average is currently $12.25. Reaching and exceeding that would be another bullish technical achievement for the stock.
Fundamentally, Verra remains free cash flow positive.
Bloomberg expects it will report earnings on August 6. Revenue will fall this quarter. The company has seen some of its programs discontinued due to the virus.
But the market already knows this. And the company has secured new deals — for example, a New York City speed camera program — to soften the drop.
And longer term, Verra benefits with the growth of smart transportation. Toll roads and cashless tolling is just one area it’s growing from. It’s a leader in road safety camera programs, too.
ING Group
ING Group was the worst performer of the three … but still, it was up 10% this week.
One way ING is seeking to ignite its share price is by investing in the future, and supporting the “reset” brought by the pandemic.
This long-term focus — coupled with community support — will bring our share price back. We’re beginning to see that today:
ING’s Share Price Is on the Rebound
(Source: Bloomberg.)
ING normally pays a dividend twice a year, once in early March and then in mid-August.
But this year, it will not pay a dividend until at least October 1, per the request of the European Central Bank.
The company is clear on this, though. It has more capital than the regulators require. Its tier 1 capital ratio was 15.8% at the end of the first quarter. By comparison, JPMorgan’s was 13.3%. When it comes to having a margin of safety to weather tough times, more is better. The nonpayment isn’t due to lack of ability.
We’ll look for these payments to resume when we have more clarity.
And we’ll also look for its current momentum to continue as it partners with the people and communities it serves.
I’m going to wrap this up here. Thank you for reading.
If you have any questions in the meantime, shoot us an email at totalwealthinsider@banyanhill.com.
Good Investing,
Brian Christopher
Sr. Analyst, Total Wealth Insider
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totalwealthinsider@banyanhill.com