Southwestern Energy produces mostly natural gas in the US. It also has net tangible assets (including proven reserves) of roughly $4bn (approx. $12bn assets and $8bn debt). Investment entry price was around $5bn market cap.

This business values cheaply on classic valuation metrics, when purchased the price/earnings ratio was about 1, and the price/book ratio was near there as well. The risks here are the natural gas prices and the ability of the company to maintain cash flow to cover the large debt with increasing interest rates.

Though the net tangible assets appear to present a margin of safety, the value of the assets themselves will fluctuate with the energy market, and there is no guarantee that management will maintain the net asset value going forward (the opposite may be possible given the large cash flow and relatively low profit, and their interests in acquisition).

Some books relating to SWN and its industry are:

Cinemark is a movie theatre company with roughly 300 locations in the US and 200 within Latin America, with a total of nearly 6000 screens. Main competitors include AMC and Cineworld, for size comparison AMC has almost 10000 screens, making it the largest cinema chain compared with Cinemark at 3rd.

In the cinema industry many competitors are selling the same experiences with similar economics, so dynamics for growth are unlikely to come from beating competitors. Instead, the theme is on an industry level, where viewership for movies has been recovering, with Cinemark revenue increasing from roughly 350m, 780m, 1250m in 2020, 2021 and 2022 respectively.

Before Covid-19 CNK has about a 4bn market cap, a much higher value relative to the roughly 1.5bn value at purchase, despite profit returning to the approx. 0.2bn/year rate before Covid.

Some books relating to CNK and its industry are:

Big 5 Sporting Goods is a sporting goods retailer headquartered in California, with about 430 stores, selling about 50% “hard” goods and 50% “soft” goods (soft being things like shirts and trainers). The stock is known for having a high dividend payout, though here we’re only focusing on stock appreciation.

The tangible book value looks to be roughly $200m, which though similar to the purchase market cap, has not led to a positive return as the market takes a pessimistic view on their earnings misses.

A book relating to BGFV and its industry is:

Redfin are an online residential real estate brokerage, charging 1-1.5% instead of the typical 2.5-3% fee charged by traditional competitors. Revenue has been growing quick, doubling since 2020, though net income appears to be increasing.

There is little margin of safety with this stock, though the price had fallen nearly 90% before the AI Investor picked it. The Price/Sales ratio is an astonishing 0.5, even after recent stock price appreciation. Of greatest importance to this investment is perhaps any insight into the business model and whether it will be sustainable when it reaches a steady state.

A book relating to RDFN and its industry is:

US Express (U.S. Xpress Enterprises Inc.) was a trucking and transportation company and was acquired by Knight-Swift (KNX) after selection by the AI Investor. As this was so close to stock selection the return is marked as 0 here.

At the time the assets were worth about $1b, and with liabilities about $800m a (very) rough book value might be estimated at $200m. The stock was selling at a significant discount to this, and so the AI Investor was likely to have been picking up on this.

The outstanding equity was purchased for about $324 million by Knight-Swift, a 310% premium!

A book relating to USX and its industry is:

Wolverine World Wide, Inc. designs, sources and markets shoes. It sells to 170 countries, though most business is focused in the western world (154 stores). It owns 63 direct to consumer websites.

WWW have deteriorating unit economics and increase interest expense as inflation and higher interest rates bite. Due to this, earnings are in the negative and decreasing, however revenues are increasing.

It is likely that the AI Investor is picking up on the relatively safe net asset value relative to the market cap, weighing this as more of a positive than the deteriorating financial condition.

A book relating to WWW and its industry is:

Cooper Standard Automotive Inc. manufactures components for the automotive industry, e.g. rubber sealing, transfer hoses, brake lines, etc. employing 32,000 people. They sell to pretty much all the major manufacturers: Ford, GM, VW, Renault-Nissan, etc.

Revenue looks to be recovering post covid, though the company continues to run at a loss, in contrast to their pre covid profit rate of about $100m per year. Before Covid the company was valued around $1-$2bn, vs the market cap at inception of about $300m. This stock obviously screens cheaply, though a profit will likely depend on whether the business model is still viable.

A book relating to CPS and its industry is: