I sold my entire position in CSV, here is why…

In the first newsletter, I detailed the overview and analysis of Carriage Services (CSV). Overall, the quality of the business was great, and the fundamentals were there. I acquired six shares over the past three weeks, building a strong position at $27.5 average. The night of Wednesday, June 28, the company announced its intention to sell CSV to a buyer or merge with another company. Immediately on Thursday, June 29, shares shot up ~27% at their peak. I ended up selling for an almost ~27% return (pictured below).

This was not expected for me or my portfolio. I live by the vision of long-term value dividend growth investing. I only sell companies when something fundamentally has changed. With CSV announcing its intention to sell or merge with another company, that goes against the reason I purchased the shares in the first place.

The unknown is scary, and I am not sure what CSV will do. They may get bought out for more than I sold for. I figure a nice ~27% return is more than great, considering fair value for the business was only a 20% upside. Investors should be aware and cautious when investing. This was my first unexpected major stock event where shares rocket higher than I ever expected. I purchased CSV for their acquisition speed, quality of business and boring nature of the business that they carry. It is apparent that those values will not exist if they sell or merge. For those reasons, I sold my shares.

A monster waiting to be unleashed: ALB

By: Holden Sauve, Guest writer

Overview:

Albemarle Corp $ALB is an attractive medium cap ($27.61B as of 7/15/2023) chemicals stock that offers a safe but conservative dividend while also being one of the best positioned companies to continually benefit from the shift to a green economy.

ALB’s products are an ever present but often overlooked staple to the modern world between its three market segments: lithium, bromine and catalysts.

All three segments offer significant upside, and I am particularly bullish about the economically transformational nature of lithium. Recently Elon Musk (CEO of Tesla $TSLA) said, “Lithium refining is a license to print money” due to the high margins and high demand of lithium for the high-end batteries necessary to produce electric vehicles (EVs) (your cellphone and laptop likely have lithium batteries as well). With market and regulatory forces coalescing around increased EV market share, it is hard not to see green in this silvery-white metal.

ALB has a very attractive max performance of ~3,090% since IPO in 1994. The past five years, the stock is up ~145% beating the market handily.

Financials and dividend information:

ALB 2023 Q1 results show the power of green with the company experiencing net sales of $2.6 billion, an increase of 129%; adjusted EBITDA of $1.6 billion, an increase of 269%. Adjusting 2023 guidance to reflect current lithium market pricing, net sales are now expected to increase approximately 35% to 55% year-over-year and adjusted EBITDA now expected to range from 5% to 15% year-over-year. Their fundamentals should encourage you to see the green it will bring to your portfolio.

Within the last twelve trailing months (TTM), ALB has garnered a massive $31.18 EPS compared to the $6.42 EPS Chemical industrial average. ALB’s price to earnings (PE TTM) ratio sits at a comfortable 7.54 compared to the Chemical Industrial average of 19.53.

**ALB offers a conservative but safe quarterly dividend at roughly 70 basis points. However, their current TTM dividend payout ratio is only 5.13%! This leaves a lot of room for them to play around with their dividend going forward, which is a nice bonus on top of the hedge for green energy and battery segments.

Valuation:

I encourage you to not be dissuaded by ALB’s $235 share price; analysts expect this stock to take off with an average target price of $260 and bullish analysts have ALB at $360 a share. With our analysis, we applied an ultra conservative growth rate of 11%, considering they’re expecting 35-55% growth this year. We also applied a 7 PE no growth and 1 for the growth multiple to allow for the most conservative approach. We get an intrinsic value of ~$534. Which leaves lots of room for you to pick up shares. An average target price of ~$384 between values. Our max buy price for this stock with a blended average between analysts and our ratings is $307, leaving lots of room to acquire shares.

In conclusion, ALB presents an attractive investment opportunity as a medium-cap chemicals stock, positioned to benefit from the shift to a green economy. With three market segments, including the economically transformative lithium sector, ALB has significant upside potential. The company's strong financial performance, demonstrated by impressive sales and adjusted EBITDA growth, further supports its potential for future success. Additionally, ALB's conservative dividend, low payout ratio and favorable valuation make it an appealing choice for investors. Considering the projected target prices and intrinsic value, there is ample room for share acquisition. With ALB's promising prospects, investing in this stock offers the potential for both safety and growth in the green energy and battery sectors.

Quick update on the portfolio

After my sale of CSV, I used the money and redeployed into two key stocks. One being Albemarle Corp (ALB), which is talked about above, and the next being Sibanye Stillwater Limited (SBSW). I have held SBSW for over a year. The company produces gold; platinum group metals (PGMs), including palladium, platinum and rhodium; and by-products, such as iridium, ruthenium, nickel, copper and chrome. I am not going to write an analysis on them, but I picked up one share of ALB, and 16 shares of SBSW. Bringing my SBSW shares to 18 (I held two shares previously). I was down some 50% on SBSW, but after my large share purchase, I am now up a total gain of ~3%. I see SBSW as a strong player that hit its bottom and is now recovering. Lots of the industrial mining sector is seeing this also. I hold four mining stocks now in the portfolio—ALB, LITOF, RIO and SBSW—and they all play a key part of my investing philosophy.

*Source: https://stockanalysis.com/stocks/sbsw/company/

Stock purchases and dividends, June 18-July 16th:

Purchases:

• ALB - 1.1 shares

• SBSW - 16 shares

• SCHW - $40

• TROW - $40

• UNH - $34

• TGT - $27

• QCOM - $27

Sales:

• CSV - 6 shares

Dividends:

• SWVXX - $12.53

• TROW - $4.59

• SCHD - $4.10

• SCHX - $3.84

• QCOM - $1.75

• SCHG - $0.81

• LRCX - $0.75

• CNI - $0.60

• UNH - $0.49

  Total in period (6/18-7/15): $29.46

  YTD Total: $180.63

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//See you in the next edition

EBS Invests 2023//

NOT A FINANCIAL ADVISOR.

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