By Alister Sneddon, Genuine Impact
It is hard to believe that the Game of Thrones (GoT) saga is coming to a close and we’ll soon find out who’ll win and take the Iron Throne.
Finding a winner relates to the quest to pick stocks and shares too. Just as we’ve analysed the characters in GoT, and made our assessment of their strengths and weaknesses, we can assess a stock by looking at its Quality, Value, and Momentum.
Based on these three criteria, here are some stock picks for three favourite GoT characters:
Jon Snow
Jon has a lot of backing and support from the public. He has also proven he can withstand even the most unexpected of events. There is a spark of innovation to be found: joining forces with the enemy of my enemy turned out to be an excellent move against the Night King’s army, but is it a cursed alliance joining forces with Daenerys?
Paddy Power Betfair PLC
Paddy Power and Betfair now operate as a single company having joined forces in 2015. Coming together brought them back from infighting to concentrate on ruling.
Paddy Power Betfair is an excellent Quality stock. The company has a strong balance sheet and plenty of cash. Jon isn’t cash rich, but he has resources: endless people to call upon when required. Paddy Power Betfair’s cash reserves, make them resilient to any new gambling regulations or other changes.
A company’s value is based on today’s price per share, versus how much money the company generates. The higher the value the cheaper it is to buy this company now compared to how much money it’s bringing in i.e. the money being generated will grow into bigger profits (and returns) in the future. Paddy Power Betfair scores highly for Value. They bring in a lot of revenue compared to the stock price today. If they can convert this money into bigger profits there’ll be higher returns for investors. If you’d invested in Jon before you knew about his true heritage, you’d be collecting rewards now! Investing in Paddy Power Betfair has potential for more to come.
Finally, a company’s Momentum. Momentum takes views from industry experts, e.g. big banks and financial institutions, and aggregates them. Do the experts believe this company will barely beat expectations or perhaps completely exceed everyone’s wildest dreams? Paddy Power Betfair is very average in terms of future Momentum. They’re hitting or beating their targets. The industry feels positive, without expecting anything amazing soon.
Assessment
Quality Score: High
Value Score: High
Momentum Score: Low
Arya Stark
Arya is a force to reckoned with, she is still human and makes mistakes, but there is no doubt she will keep on going. While Arya might not want the Iron Throne, she is capable of taking it. Thankfully she is happy with her own path and continues to influence the world around her.
Taylor Wimpey PLC
One of the largest house building companies in the UK, Taylor Wimpey is often used as a barometer for the Brexit impact. Like Arya, Taylor Wimpey is a force unlike anything else.
Taylor Wimpey is no stranger to scandals or scraps. Unlike Arya however, Taylor Wimpey has the cashflow to make its problems and challenges negligible. Regarding the Quality score Taylor Wimpey has a lot of purchasing power, but housing market regulation is prone to change and Brexit has shaken us, so they are keeping an eye on their war chest.
What about Value – the future potential based on what you pay today? Taylor Wimpey scores extremely well for Value; the company generates a lot of income compared to its current share price. If it can convert the incoming revenue into higher margins the results will be impressive.
For Momentum, the industry experts seem to agree. There is plenty of potential upside in the future. Once the Brexit air clears it will be business as usual, and like Arya, Taylor Wimpey will show up ready to fight.
It’s a promising outlook across the board, however starting from such a strong position means it’s tough to exceed expectations.
Assessment
Quality Score: High
Value Score: High
Momentum Score: High
Night King
Terrifying, unyielding, and never-ending. There has never been a threat as serious and all-consuming as the Night King and his army of the undead. It doesn’t matter how many you kill or how far you run, he will always be there.
Sports Direct International PLC
Very much like the Night King, Sports Direct picks up dying companies and recruits them into the Sports Direct family, giving them new life
Buying up assets and companies on the cheap is still expensive. So, Sports Direct doesn’t have the happiest of balance sheets. The Quality score is very low, cash in the bank is not the strategy here. It’s spending money to make money.
In terms of Value there is potential. Sports Direct’s current share price is lower than expected when compared to the amount of revenue and income they generate. The Value is lower than expected, but not enough for this company to be labelled a deep value long term buy and hold.
With worse than expected accounts, even with the company being offered “at a discount” (medium Value) experts don’t have high hopes for the future.
However, Sports Direct has proven they’re experts at navigating the unknown. The ratings are more a reflection of the feeling that there will be hardships for the time being.
Like the Night King, Sports Direct hasn’t given us an incredible show yet but hopefully, unlike the Night King, it’ll be part of our lives for many years to come.
Assessment
Quality Score: Low
Value Score: Medium
Momentum Score: Low
Disclosure, Alister does not hold positions in any of the stocks mentioned.
