https://geoinvesting.com/wp-content/uploads/2021/10/GeoWire-Header.png
WHAT YOU MISSED FROM GEOINVESTING LAST MONTH, AND MORE
January 2023, Volume 3, Issue 1
WE DON’T CARE IF WE ARE IN A RECESSION
We’ll be getting back to the normal Monthly GeoWire format next month, but we wanted to take this first edition of the new year to look back at everything we were up to in 2022. Don’t worry, we will be getting back to our normal video format starting in February.
This month’s GeoWire will be split up into 2 issues – one today, and the other next week. A lot happened in 2022, and we thought it was best to split it up into two separate posts to be able to put adequate focus on the themes we want to discuss.
This Week: The stock market and recession, our new Model Recession Portfolios, and still the chance to participate in our special offer for 2023. Keep reading for details below.
Next Week: GeoInvesting’s performance during the last 15 year bull market; Our Studs and Duds of 2022; What 2023 has in store for us as we prepare to outperform in the next bull market we see shaping up
With another year down the drain, we are taking a moment to reflect upon some of the things that we embarked on in 2022, as well as some of the recurring subject matter that we tracked during each passing month. It’s likely that a good deal of coverage is going to bleed into 2023, but our pipeline of new stock ideas is always robust and on the immediate horizon – ideas that our premium emails, research reports and alerts convey.
In case you missed it, we wrapped up 2022 and entered 2023 with a few new stock pitches from our research team. We believe they are timely, and highly relevant in today’s market: (year end special offer for new members is still active).
- Idea #1: Highly Anticipated Morning Briefing with Microcap Company Management
- Idea #2: Start 2023 With A Recession Proof Stock Idea – A New Top 5 Fave
- Idea #3: Our Newest Research Team Stock Pitch
We are preparing ourselves for another year’s journey into the realm of Tier One Quality microcap stocks at GeoInvesting, focusing on a growth + value investing approach, as we did in 2022.
As you surely know, 2022 was plagued by some of the highest inflation rates we have seen in the past decades. Inflation exceeded 7.5% this past year, caused by many different factors, from supply chain issues to the war in Ukraine.
Economic downturns are inevitable, sometimes even necessary, and most always lead to market corrections. While we don’t mind taking occasional bets on speculative companies, we have begun doubling down on our focus at Geo to find great Growth + Value ideas, and searching for stocks that will benefit by or be largely insulated from a weakening economy..
One thing we have learned this past year – “always expect the unexpected.”
So, we love taking a half glass full approach to investing, especially when the prevailing sentiment is so negative. We’re not going to time the market or get bogged down in the negative noise out there right now. Instead, we’re on the hunt to find great companies that fit the new environment that we’re in. Like we say here at Geoinvesting, we aim to invest through crises and not a reaction to them.
Recession Proof vs. Recession Resistant Stocks
We closed out the year with two new model portfolios that helped convey a fuller picture of how we intend to adapt to the near to mid-term evolution of the current market as recession fears come to the forefront of investors’ psyches.
Our Recession Proof Model Portfolio currently includes 10 stocks that have traits that should ensure their stability in a recessionary environment.
Our Recession Resistant Model Portfolio includes 7 companies that possess traits that offer at least some insulation from a recession.
Now that we have created these lists and will continue to add to them, our next step is to let our Premium Subscribers know which of these stocks we predict will offer the best opportunity to grow sales and earnings, even during a recession. Basically, it serves as a starting point for us to organize and prioritize our Microcap coverage universe.
We anticipate that the majority of stocks we add to our coverage universe in 2023 will be those that are extremely undervalued that have great growth opportunities, even in a struggling economy.
Stay Optimistic
As we’ve said before, investing in 2022 was a humbling experience, and we are so grateful that you decided to follow our progress and continue to read our updates and coverage of companies that we follow at GeoInvesting.
Think of 2022 as phase 1 of an absolutely necessary correction, where everything goes down, no matter how good or bad the company is. There was fear in the market, where Investors were reactionary, wanting to sell what they owned and reset.
https://geoinvesting.com/wp-content/uploads/2023/01/Shoot-first-ask-questions-later.png
Now, investors will look for great undervalued companies to buy and hold. This will allow superior companies to perform in the market, even if the market is undeperforming.
These opportunities will also present themselves in larger cap companies that are falling to reasonable valuations where growth is still intact. We are entering an environment we haven’t seen in years – one where earnings growth and valuation matter again.
It’s not just about revenue growth and a great story. It’s this same scenario that laid the groundwork at the beginning my successful investing career over 30 years ago, with a Peter Lynch book in hand.
I’ve been waiting for this moment for a long time and even though it was painful to go through a reset in my portfolio, like many of you probably have, it’s refreshing to know that good old fashioned value investing is back again.
I was a little early with the reversion of the mean Tweet back in 2016, but it’s finally playing out.
As optimistic as I am about being able to successfully invest in 2023, I do want to share with you a stat that I just came across after performing a screen.
There’s around 1000 companies still trading over a dollar losing over $20 million a quarter. For example, staffing company Shiftpixy, Inc. (NASDAQ:PIXY) is selling at around $16, has a market cap of $147 million and lost close to $40 million, per their annual report they recently filed! It is just mind-boggling that even after the correction we’ve been through, companies like this are still alive and kicking.
STARRY GROUP HOLDINGS INC (OTC:STRY) Is one of a long list of Special Purpose Acquisition Corporations (SPACs) that failed to deliver. The company is a telecom infrastructure play that is losing over $50 million a quarter and was selling at around $3.50 on August 22 (half a billion market cap) when I bought put options on the stock. Yes, you heard that right, over $50 million in losses per quarter!! With the company on the verge of bankruptcy, shares are now trading at 4 cents.
So, even though we have faith that the great companies will outperform in 2023, there will still be pain in the market for weak companies that are on life-support that still haven’t fully corrected.
Regardless, we’re still optimistic about the future. To reiterate our sentiment on certainties that we stated in out last Saturday Update:
“There are only two sure things in life: Death and Taxes.” Well, we need to add two more certainties: Stock market corrections happen and the market always recovers.
…and we believe that the companies that we highlight at GeoInvesting will reap the rewards precipitated by this recovery. We are excited to see their business fundamentals continue to grow, while we tune out the noise.
Now, think of 2023 as a time where cooler heads will prevail. Losses have been booked, tax loss selling is done and now investors are ready to deploy cash again.
Let’s be honest with ourselves and put everything in perspective for one second. Sure, we are going into an environment where the Fed is increasing interest rates.
However, even if the Fed raises its rates to its target range of a little more than 5%, it’s likely there will be ample investor appetite from those who are looking to achieve a much higher return than in money markets, savings accounts or bonds that may get you a little more than 5%.
https://geoinvesting.com/wp-content/uploads/2023/01/Keep-It-Real.png
And we think one thing is for certain – investors will flock to smaller cap stocks because that’s where you get the highest returns over time. So, if you’re going to take a risk in this market, take it in the area of the market that compensates you for taking that risk. It’s the right time to reiterate the facts that show that smaller cap stocks beat large cap stocks over the long run.
https://geoinvesting.com/wp-content/uploads/2020/11/Microcap-Compounded-Return-Shaunnessy.png
Taking Action
Our job as investors is to learn from the past and readjust our portfolios for the future. The current correction has created tremendous value investing opportunities that we believe should begin to catalyze over the next several months.
In anticipation of next week’s GeoWire highlighting GeoInvesting’s performance during the last bull market, our Studs and Duds of 2022 and what 2023 has in store for us, we wanted to continue to offer you our New Year’s Special with coupon code 42OFF, the link for which is below offering your a 42% discount to our annual rate or $599.99, so that you can join us in 2023 with access to all of our Premium Content:
- Historical archive of all our Fireside Chats and short clips showcasing important discussion points.
- Top 5 Favorite Model Portfolio
- Up-to-date, game-changing stock ideas backed by reports and updates based on in-depth coverage from our research team, sent to you via premium tweets and emails.
- Curated morning emails to get your investing day started.
- 15 Years of archived research on 1000’s of companies.
- Information Arbitrage: Market moving information that we find well ahead of other investors, giving you a competitive advantage.
- A weekly Premium newsletter with a timely feature and a recap of the previous week’s coverage, just in case you missed it.
CHECK OUT THE LIFETIME SPECIAL OFFER
2022 Progress in Review
GeoResearch ArticlesPodClipsFireSide ChatsContributor ArticlesManagement Morning Briefingshttps://geoinvesting.com/wp-content/uploads/2023/01/GeoInvesting-Progress-2022.png
WHAT YOU MAY HAVE MISSED THIS MONTH
Weekly Wrap Up Highlights, Education and More
Non-GAAP – The Pragmatic Approach to Earnings Analysis [GeoWire Weekly No. 66]
In 2016 we addressed the dichotomous approach to understanding the differences between generally accepted accounting principles (GAAP) and non-GAAP earnings. There are ways they should be scrutinized when trying to get a sense if numbers being reported by a company are a true representation of what is going on at the net income level. Non-GAAP financials are also referred to as “adjusted.” For example, “adjusted earnings per share (EPS) or “adjusted earnings before interest taxes & depreciation & amortization (EBITDA). Because we plan on delving into this subject in a Tweet thread that we anticipate will engage our investor network and extensions thereof, we feel it is a good idea to give another primer on the subject, especially since GeoInvesting’s Premium Subscriber base has grown substantially since 2016. If part of your investment strategy is executing bullish or bearish short-term stock trades on earnings report news flow, it’s extremely important to understand if the GAAP and Non-GAAP earnings per share numbers being reported in a press release are “clean”.
When Cyclical Stocks Become Relevant, Here’s A Strategy You Can Use [GeoWire Weekly No. 65]
The sales, earnings and thus share prices of cyclical stocks (cyclicals) tend to fluctuate with the overall economy and are associated with industries that are heavily affected by the economic cycle and consumer demand. (Example: stocks in the automotive, airline, hospitality, housing, building material and retail industries). Cyclicals do well when the economy is strong and consumer demand is high, and conversely, can suffer when the economy is weak and consumer demand is low. This makes them an attractive investment class for those who are skilled at identifying economic trends or when it becomes fairly obvious that an economy is peaking or bottoming.
When Operating Leverage Is Considered A Multibagger Catalyst (An InfoArb Christmas Present)? [GeoWire Weekly No. 64]
While it’s certainly been a tough investment environment in 2022, RWWI is now sitting at $20 per share, an all-time high, and 5 times its price at the time of the article. It has basically turned into a quintessential case study for putting an emphasis on operating leverage trends as a potential way to spot a multibagger in the making. Now that growth at a reasonable price (GARP) investing is back in focus, we are going to keep our eye open for these types of setups. There were other bullish factors at play, such as its recurring revenue model, its position as a prime acquisition target, and very unique relationship with Autodesk, Inc. (NASDAQ:ADSK) for which it was not only a reseller but also a developer of add-ons to extend the utility of the software it sold. So, this brings us to another stock on which we’d like to begin to put a spotlight based on operating leverage. We’d like to do a similar analysis, more comprehensive analysis like the one we put out on RWWI, but we have yet to look at additional factors that might lead us to write a full RFT.
Recession Proof and Recession Resistant Stocks in Focus [GeoWire Weekly No. 63]
In this stock market environment, think of a dividend as a welcome gift that tempers any pain you might be going through as you wait for things to come back to normal. Furthermore, we believe the company’s involvement in the healthcare services industry allows it to possess traits that make it “Recession Proof.” A little later in this post, we refer you to a forum clip where we touch upon what it means for a company to be recession proof versus recession resistant. So, we spoke with a company representative in early November to pre-qualify it for a Live Fireside Chat that will be accessible by and exclusively archived for you. We are in the process of scheduling this call, as we believe the stock has the potential to double. We’ve clipped out a section of our December 2022 Monthly Open Forum where Maj talks about the stock and the reasons why there is a potential for it to claim a spot on our Favorites list.
See All Past GeoWire Issues Here