Forget GME Stock: Buy These Five Stocks Instead | Fintech Zoom
It’s additionally extremely risky.
As I write this, GME inventory is up 1,112% year-to-date, however up solely 8% over the previous six months. Consequently, anybody who purchased in at its most up-to-date highs in early June is sitting on unrealized losses of 31%.
You should purchase one share of GME that generates $86.1 million in trailing 12-month (TTM) free money circulate (FCF), or you should buy these 5 shares for a similar value and generate 10x the free money circulate.
It’s as much as you.
The $60 Purchase As a substitute of GME Inventory
Comcast (NASDAQ:CMCSA) is the primary of 5 shares to purchase as an alternative of GME. It at the moment trades round $61 and generates $13.9 billion in TTM FCF. Assuming GameStop has 76.8 million shares excellent, it has a $1.12 in TTM FCF per share. Comcast has $3.03 TTM FCF per share primarily based on 4.59 billion shares excellent.
When it comes to information, Comcast’s mid-August announcement that it’s partnering with ViacomCBS (NASDAQ:VIAC) to create a European streaming service known as SkyShowtime that pulls collectively a number of completely different tv and film libraries.
Anticipated to launch in 2022, it would have greater than 10,000 hours of content material, making it a formidable drive in European streaming. ViacomCBS inventory jumped more than 5% on the information.
The three way partnership is smart for either side.
The $50 Purchase
Acushnet (NYSE:GOLF) is the second of 5 shares to purchase as an alternative of GME. It at the moment trades round $50 and generates $391.0 million in TTM FCF. Acushnet has 73.91 million shares excellent for $5.29 TTM FCF per share. It trades at 9.5x TTM FCF in comparison with 185.7x TTM FCF for GameStop.
Golf, the sport, not the image, grew to become standard throughout the pandemic as a strategy to get outdoors whereas social distancing. Acushnet has benefited from this surge in curiosity. It makes golf gear, golf balls, and golf put on beneath the Titleist brand and golf put on and footwear beneath the FootJoy model.
Because of greater participation charges, Acushnet’s been in a position to cut back its debt ranges from a leverage ratio of two.3x in Q2 2020, initially of the pandemic, to 0.7x on the finish of Q2 2021. That’s an unbelievable turnaround.
Consequently, it’s not shocking that GOLF inventory has a one-year whole return of 43.9%. Acushnet provides you illustration from the buyer cyclical sector to associate with Comcast’s contribution to the communication providers sector.
The $40 Purchase As a substitute of GME Inventory
Edgewell Private Care (NYSE:EPC) is the third of 5 shares to purchase as an alternative of GME. It at the moment trades round $41 and generates $215.0 million in TTM FCF. Edgewell has 54.36 million shares excellent for $3.96 TTM FCF per share. It trades at 10.4x TTM FCF in comparison with 185.7x TTM FCF for GameStop.
Edgewell is greatest recognized for its Schick and Edge shaving manufacturers, Hawaiian Tropic solar care, and Playtex female hygiene merchandise.
Within the first 9 months of 2021, sales and earnings elevated by 5.7% and 209.1%, respectively, over the identical 9 months in 2020. So it doesn’t have huge development on the highest line, nevertheless it’s coming alongside properly on the underside.
It’s a client defensive inventory value contemplating to your portfolio.
The $30 Purchase
The penultimate inventory choice in my group of 5, Cricut (NASDAQ:CRCT), at the moment trades round $32 and generates $53.27 million in TTM FCF. Cricut has 222.23 million shares excellent for $0.24 TTM FCF per share. It trades at 133.3x TTM FCF in comparison with 185.7x TTM FCF for GameStop.
I hadn’t heard of Cricut till doing this train. Apparently, it has ridden the craft wave that’s sprung up on account of the pandemic. In mid-August, it reported its tenth consecutive worthwhile quarter whereas income elevated 42% over Q2 2020, and paid subscribers jumped by 77% to 1.8 million.
“We efficiently launched two new linked machines, a brand new line of Good Supplies, added new options and performance to our software program platform, and noticed sturdy development from our high worldwide markets,” acknowledged CEO Ashish Arora in its Q2 2021 press launch.
As gross margins climb, so too will Cricut’s general profitability and free money circulate. Consequently, that is essentially the most attention-grabbing purchase of the 5, in my view.
The $20 Purchase As a substitute of GME Inventory
The ultimate inventory in my group of 5 is Tronox Holdings (NYSE:TROX), an organization that mines, manufactures, and sells titanium dioxide (TiO2), which is used for paints and coatings.
It at the moment trades round $21 and generates $397.0 million in TTM FCF. It has 143.64 million shares excellent for $2.76 TTM FCF per share. It trades at 7.6x TTM FCF in comparison with 185.7x TTM FCF for GameStop.
The corporate has had a robust run over the previous 12 months. YTD by means of Sep. 7, it’s up 43% and nearly 124% over the previous 12 months.
Tronox reported report income of $927 million on the finish of July resulting from greater TiO2 and zircon common promoting costs. In Q2 2021, it generated a report FCF of $150 million.
The corporate believes that it’s nonetheless early within the cycle and that demand stays very sturdy. Representing the fundamental supplies sector, Tronox is an attention-grabbing strategy to play the housing market.
The Backside Line
Including up the 5 share costs, I get $205, about $3 lower than GME. Including up the TTM FCF of the 5, I get $15.28 per share, or nearly 14x GameStop’s TTM FCF per share.
GameStop could be the inventory to purchase to impress your Reddit associates, however you are able to do rather a lot higher by spreading out your bets somewhat extra with out sacrificing funding high quality.
The good investor will take the trail much less traveled to revenue from their investments.
Is that you just?
On the date of publication, Will Ashworth didn’t have (both straight or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications the place he’s appeared embody InvestorPlace, The Motley Idiot Canada, Investopedia, Kiplinger, and a number of other others in each the U.S. and Canada. He notably enjoys creating mannequin portfolios that stand the take a look at of time. He lives in Halifax, Nova Scotia. On the time of this writing Will Ashworth didn’t maintain a place in any of the aforementioned securities.
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