In today’s briefing:
- Global Pullback Continues; Focus on Defensives: Buys in Staples, Utilities, Precious Metals Miners
- Realty Income Corporation: Diminishing Risk-Adjusted Returns
- United Rentals: This Capital Intensive Business Deserves Attention
Global Pullback Continues; Focus on Defensives: Buys in Staples, Utilities, Precious Metals Miners
- On March 2 we discussed how the pullback in global equities was in full swing as Europe/UK indexes displayed 4.5-month uptrend breaks, joining the pullback in the MSCI ACWI.
- At the time, we expected this pullback in the MSCI ACWI (ACWI-US) to move down to $86-87 at minimum, and potentially $84 (December 2022 low) or $75-77 (the 2022 lows).
- ACWI-US broke below $86 and is approaching $84. $84 will be an important support level to monitor, but if it breaks, the $75-77 level is still firmly in the cards.
Realty Income Corporation: Diminishing Risk-Adjusted Returns
- Realty Income Corporation’s sustainable growth rate has stalled, resulting in an intrinsic value below its traded market price.
- Realty Income’s market-based features, including dividend growth and low volatility, are favorable.
- However, we think the REITs valuation is a significant risk.
United Rentals: This Capital Intensive Business Deserves Attention
- The leader in rental equipment industry offers attractive returns, in spite of short-term risk of recession.
- United Rentals’ well thought out growth strategy has created an important competitive advantage.
- High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the company.
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