Stock Analysis: Darling Ingredients (DAR)

Sector Consumer Staples

Industry Food Products

Company Location Irving

Darling Ingredients Inc. develops, produces, and sells natural ingredients from edible and inedible bio-nutrients. The company operates through three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients. It offers ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries. The company collects and transforms various animal by-product streams into useable and specialty ingredients, such as collagen, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstock, green energy, natural casings, and hides. It also recovers and converts used cooking oil and animal fats, and residual bakery products into valuable feed and fuel ingredients. In addition, the company provides environmental services, including grease trap collection and disposal services to food service establishments. It primarily operates under the Sonac, Dar Pro, Rothsay, Rousselot, CTH, Ecoson, and Rendac brand names in North America, Europe, China, South America, Australia, and internationally. The company was formerly known as Darling International Inc. and changed its name to Darling Ingredients Inc. in May 2014. Darling Ingredients Inc. was founded in 1882 and is headquartered in Irving, Texas.

Historical Performance: Strong

Dividend Yield: 0%

Beta: 1.33 slightly more aggressive and volatile than the index

Fundamentals: See picture below

Intuition: A buy, small cap pick

Investing: Week In Review, as Markets Take Slight Hit Toward End of Week 1/11/21-1/16/21

This week I reallocated my assets in order to provide a tax shelter. I switched my funds and my individual stocks in to different accounts. My individual stocks are now in my taxable brokerage account and my funds are in my Roth IRA. This is because funds have underlying holdings that are bought and sold which create capital gains and a taxable event. This taxable event in a taxable account would not be sheltered as opposed to the same fund being held in a tax free account. This tax sheltering strategy will save me investment funds in the long-term and really preserve my growing investment dollars from taxes.

My individual stocks go through the five component theory of stocks and funds before qualifying for a place in my portfolio holdings. In my taxable account I plan to hold individual stocks for 40+ years and avoid taxes from selling by holding. My Roth IRA contains low cost index and sector ETFs such as VOO and FTEC. Low expense ratio, dividend yield present, strong historical performance, calculated beta are components of my five component theory that must be properly calculated and taken into account.

Market’s Previous Close:

Michael’s Largest Individual Stock Holdings:

FB

HD

AAPL

WMT

PEP

Michael’s Largest Funds:

FTEC

VOO

FNCL

FUTY

FHLC

A mix of aggressive growth stocks, sector funds, and passively managed index funds will provide capital appreciation and dividends throughout my investment career. Diversification of accounts and underlying holdings are key to my long-term investing strategy.

Cheers,

Michael Moran, LLC

Market Update 1/14/21: Biden Stimulus Proposal & the Big Tech Slide

The markets have been treating us so well lately, and it would seem that these record highs may come crashing down. The markets took a slight hit today as big tech stocks continue to decline. My big tech stocks such as AAPL and FB have been declining since the censorship drove a number of users off of the app causing a decline in ad revenue. Other large growth stocks have been mixed and overall the small cap and extended market have been performing over 30% in gains lately.

The markets have risen lately on the hopes of a $1.9 trillion stimulus package proposed by president elect Joe Biden. Biden’s tax hike proposal and government spending plans could be a burden in the future for investors and could cap equity valuations. Equities are in danger from edging off their record highs depending on how the tax reform goes, less GDP and economic output equals a lesser valued stock market.

Take a look at how the markets performed today:

Biden Says Vaccine Rollout a “Dismal Failure”

“The vaccines offer so much hope … but the vaccine rollout in the United States has been a dismal failure thus far,” Biden said, adding that on Friday he would set out his plan to vaccinate 100 million Americans in 100 days after taking office.

“Right now markets are celebrating the additional stimulus and see it as a stronger bridge to a fully reopened economy,” said Jeff Buchbinder, equity strategist for LPL Financial.

Source: BY DAVID RANDALL, REUTERS – 8:31 PM ET 1/14/2021

The best thing we can do as long-term investors is stick to our asset allocation and risk tolerance to ensure we are matching our risk profile during times of turbulence.

Cheers,

Michael Moran, LLC

Stock Analysis: Walmart (WMT)

Walmart is in my Roth IRA and I plan on increasing the weight of this stock within my portfolio due to the strong historical performance, beta, dividend yield, and fundamentals. This stock passes the 5-Component Theory with flying colors. This retailer has locations internationally and is a recession proof stock. My intuition says Walmart will be around for a while as it operates internationally and has a large presence as an e-commerce retailer with a growing net income. I bought in to this stock during the March 2020 market crash and it has soared ever since. The market has since become overvalued.

5-Component Theory

Historical Performance: Strong

Dividend Yield: 1.46%

Beta: 0.44

Fundamentals: Fair

Intuition: A Buy

Walmart is the world’s largest retailer, operating retail stores under the formats of Walmart Stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States as well as a growing e-commerce business (including Jet.com). Internationally Wal-Mart also operates locations in several countries, including Argentina, Brazil, Canada, China, Japan, Mexico, and the United Kingdom.

Company Description
12/8/2020

Michael’s Rating: A Buy, solid net income and beta less volatile than the index benchmarks. A growth stock poised for quarterly growth.

Best Regards,

Market Update: 12/8/2020 📈

US futures point to a slight dip upon opening today as COVID-19 cases increase along with further shutdowns across the United States. The markets have been setting records lately and I think red days are healthy for the market, especially with the status of our underlying economy. Like so many intelligent long-term investors say, “match your asset allocation with your risk profile” to ensure you are reaching your investment goals depending on your age, risk tolerance, and target retirement date.

Market Correction 2021?

Am I the only one who sees the market as being overvalued right now? Many quality stocks are at their 52-week high, I know “real” economic return happens in the long-run and we see the growth via the output of economics production through goods and services. I think we are due for a market correction anytime now. Again, make sure you have your asset allocation set to match your risk profile!

Federal Reserve – Bank Stress Tests

The Federal Reserve Board announced on Friday that results from its second round of bank stress tests will be released on Friday, December 18, at 4:30 p.m. EST.

Stress tests help ensure that banks have adequate capital to absorb losses so that they can lend to households and businesses even in a severe recession. For this second round of stress tests, large banks will be tested against two scenarios, each featuring a severe recession to assess their resiliency.

Earlier this year, the Board’s first round of stress tests found that large banks were well capitalized. Nonetheless, in light of the economic uncertainty, the Board is conducting this second round to further test the resiliency of banks.

Banks with more than $100 billion in total consolidated assets are subject to the Board’s stress tests.

federalreserve.gov

Stock News

https://www.marketwatch.com/story/ges-stock-gains-after-4-billion-in-actions-to-strengthen-balance-sheet-2020-12-08

https://www.marketwatch.com/story/tesla-stock-drops-after-5-billion-stock-offering-plan-11607427217?mod=newsviewer_click

https://www.marketwatch.com/story/world-watches-as-first-person-receives-pfizer-biontech-covid-shot-11607426453?mod=newsviewer_click

There is a lot going on right now between vaccine developments, shutdowns, rising COVID-19 cases, uncertainty on who will become the next POTUS and what that will mean for GDP and the overall economy. Will tariffs be reversed, will Biden pose deregulations and globalism? All of these questions will be answered in my next market update!

Best Regards,

Stock Analysis: Home Depot (HD)

Founded in 1978, the Home Depot (HD) is the leading North American home improvement retailer, with over 2,200 stores, including about 184 stores in Canada and 110 in Mexico. HD sells to both the do-it-yourself and professional contractor markets.

Company Description

Home Depot, HD: Fits my risk profile and growth strategy. A long-term stock that has performed well overtime with a strong dividend yield and beta that matches market performance (less volatility). The RSI shows a slightly overbought stock however the fundamentals are fantastic, other than being overvalued at the moment.

5-Component Theory:

Historical Performance: Strong

Beta: 1.10

Dividend yield: 2.17%

5-year Return: 120.71%

Intuition: I used to work at this company throughout college and I can tell you that their gross profits are outstanding along with expense and shrink management. I see the Home Depot as a recession proof industry moving forward and when the virus is over sales will only continue to increase throughout the years.

November 13th, 2020
November 13th, 2020

Michael’s Rating: A Buy

Best Regards,

Stock Analysis: McDonald’s (MCD)

McDonald’s Corporation. A true international powerhouse of a fast food chain. How could this company fail you may ask? It has proven to be a recession proof stock. You see it. The lines lined up to the road to get a Mcdouble. But let us explore the fundamentals and stock analysis of McDonalds corporation stock as we know it. What can we infer about the future growth of this company as we presume the company’s financials are healthier than the food it makes. Let’s plug this in to the 5 Component Theory and see what we get.

McDonald’s is the largest quick service restaurant company (QSR) in the world as measured by sales, with more than 37,000 restaurants in over 100 countries. The company’s restaurant system is mostly franchised and includes ownership or control of restaurant real estate sites.

Merrill Lynch Company Description

5 Component Theory: MCD

Historical Performance: Strong

Dividend Yield: 2.45%

Beta: 0.94

Fundamentals: Healthy Financials

Intuition: Strong fundamentals and historical performance with a beta of under 1.0 makes MCD an aggressive growth stock.

I entered a position in MCD during the famous 2020 stock market crash back in March. Now the stock is soaring and the underlying fundamentals will continue to push MCD toward future growth in my opinion. A recession proof stock, MCD is a real winner.

Best Regards,

Stock Analysis: REITs – American Tower Corporation (AMT)

Boston-based American Tower is the largest global owner and operator of wireless and broadcast communications towers. The American Tower portfolio includes approximately 170,000 sites in the U.S., Latin America, India, Europe, and Africa. The core business for AMT is leasing space on its wireless towers primarily to wireless carriers, government agencies and broadband data providers.

Yahoo Finance Description

Bullish 5-year returns and a Beta of 0.30 make for a sound investment for the long-run. The Dividend Yield is just an added bonus. A 14-day Relative Strength Index of approximately 49 indicates the stock being undervalued. With the lease space to wireless carriers and communications companies the stock is here to stay for the long-run. The monopolized nature of this industry and company checks off the box for my intuition component in the 5-Component Theory.

-Michael Moran

I am going to begin a fixed-purchasing schedule of buying this stock and keep a close eye on the research of the fundamentals along with the analysis of the stock itself. I believe it is an undervalued stock that provides steady income through a dividend yield and is less volatile than the market.

Best Regards,

Michael Moran

Stock Analysis: Apple (AAPL)

Apple Inc. (AAPL) designs, manufactures, and markets consumer electronics and computers, and has developed its own proprietary iOS, Mac OS, TvOS and Watch OS operating systems and related software platform/ecosystem. Revenues are principally derived from the iPhone line of smartphones, Services, hardware sales of the Macintosh family of notebook and desktop computers, iPad tablets, and wearables.

Merrill Lynch Company Description

If you look around you see Apple products everywhere ranging from handheld smartphones to tablets and wearables. I had been an Apple user since the first generation smartphone, and I switched to Samsung last month. Let’s first take a look at Apple’s financial performance overview otherwise known as the fundamentals:

Merrill Lynch Analysis

Strong fundamentals including Gross Profit Margin and Long Term Debt to Equity Ratio, efficient operating ratios and fantastic return on invested capital.

Stock Analysis Overview – 5 Component Theory

52 Week Range: $53.15 – $137.98

Beta: 1.12

Dividend Yield: 0.68

Historical Performance: (+314.61%) Past 5 Years

Fundamentals: Strong

Yahoo Finance 12/1/2020

Michael’s Rating: A Buy and Hold. This stock has strong historical performance and fundamentals to support the business initiatives. With the large market share and customer loyalty Apple is here to stay. The Relative Strength Index of roughly 61.35 indicates the stock is closer to being overbought or overvalued. This has no bearing on its long-term performance however. The beta of 1.35 indicates that the stock is more volatile than the market, so Apple poses more risk but greater reward. This is a perfect stock for someone who is 30+ years away from retirement.

*This is not financial advice nor am I a financial advisor

Happy Investing,

5 Component Theory of Stock & Fund Analysis

Financial analysts across the globe spend hours researching securities and have formulas for calculating risk and return. I have been investing in the US Stock market since 2015 and have been developed a 5 component theory for analyzing individual stocks and funds. This theory takes into consideration the most important factors of stock performance and risk. It is a quite simple theory and when put in to practice will yield the returns you deserve. The fund strategy is all based on risk mitigation and capital appreciation.

This data tells me whether or not a security passes the risk tolerance test. So far my investment portfolio is up over 12% for my Roth IRA and 6.50% for my individual investment account. I plan to increase my risk tolerance levels to maximize growth during my 30 year investment career. My investment strategy consists of holding passively managed and open-ended index funds along with carefully analyzed growth stocks, with a small percentage allocated toward fixed income in the form of long-term treasury bond index funds. I have a mix of small cap, mid cap, and large cap index funds along with the S&P 500 to create a “Total Market Index Fund” and capture the total US stock market growth.

The 5 component theory was created in 2019 and has been the driving force behind the “Main Fund” which is my individual investment account via the Fidelity Investments platform. A security must pass a certain level of criteria before executing a buy and booking a place in the main fund. Below are the five components:

  1. Historical Performance
  2. Dividend Yield
  3. Beta
  4. 52-Week Range
  5. Intuition

Best,

Michael Moran