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Deep Value 0.31%
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Reviewing the Magic Recipe Stocks: #1-10

What are the best stocks in the Magic Recipe Spell?

There are a lot of stocks in there - 50 in total. Doing full reviews on all 50 would take a substantial amount of time, and by the time we were done, the list would be all different again!

So we're breaking them up into 10 at a time and doing a "Twitter" style, 160-character maximum review of each current Magic Recipe stock (140 was not enough)! In addition, I'll provide a quick "thumbs up", "thumbs down", or "neutral" OPINION of each stock's potential to outperform the market over the next 12-18 months, as well as a basic-as-possible description of the company's business.

You can find reviews of stocks #41-50 here, #31-40 here, #21-30 here, and finally #11-20 right here. Today, let's cover the final stocks #1-10. With no further ado...

#10: Buckle (BKE)

Company Description: Mall clothing retail

Outlook: Neutral.

"Tweet" Review: Classic no-moat business. BKE well-run, good ROIs, no debt, solid dividend. Rev growth seems to have flat-lined. Valuation play only, no long-term value here.

#9: MSG Networks (MSGN)

Company Description: Regional sports networks for several New York area teams.

Outlook: Thumbs up.

"Tweet" Review: Regional SNs a good biz with defensible moat and solid cash flows. Don't expect much top line growth though. Lower end of 52-wk range.

#8: Chicago Bridge & Iron (CBI)

Company Description: Engineering and construction, mostly in energy.

Outlook: Thumbs up.

"Tweet" Review: Divestiture of nuclear assets limits liability, alleviates cash flow issues. Growing backlog. Miscast as oil casualty - most work in power, LNG. Good upside.

#7: Cal-Maine Foods (CALM)

Company Description: Eggs.

Outlook: Neutral.

"Tweet" Review: Benefited greatly from higher poultry and egg prices. Pure commodity biz. Egg pricing going forward unpredictable. Well-run, mkt share over 20%. OK option.

#6: Apple (AAPL)

Company Description: You don't know?

Outlook: Thumbs up.

"Tweet" Review: Awash in cash gives plenty of optionality to expand from iPhone. iPhone still dominates profit share. Lock-in ecosystem. Big potential mkts in TV, cars.

#5: Tessera (TSRA)

Company Description: Imaging and semiconductor IP licensing.

Outlook: Neutral.

"Tweet" Review: IP licensing is very high margin and generates solid, if lumpy cash flow. TSRA debt-free, loads of cash. No real moat as patents expire, new tech takes over.

#4: HP Inc (HPQ)

Company Description: The legacy "PC and printers" part of Hewlett-Packard.

Outlook: Neutral.

"Tweet" Review: Still generating cash flow @ low margin. Heavy competition, esp. from Asia, margins perpetually falling. Not a great biz at this point, but stock is very cheap.

#3: United Therapeutics (UTHR)

Company Description: Bio-pharma specializing in PAH treatments.

Outlook: Thumbs up.

"Tweet" Review: Dominated PAH. Legacy drugs maturing, nearing patent end, new treatments should maintain revenue. Neuroblastoma and organs next leg. Some management turnover.

#2: Gilead (GILD)

Company Description: Bio-pharma specializing in HIV and Hep C treatments.

Outlook: Thumbs up.

"Tweet" Review: Dominates enormous hep C field with nearly 90% share. Dominates HIV with over 70% share. Market worried about next leg, but plenty of cash flow to develop it.

#1: Five Prime Therapeutics (FPRX)

Company Description: Clinical stage biotech, arthritis and cancer indications.

Outlook: ????

"Tweet" Review: In true "Magic" form, a lottery ticket stock at #1. In screen from a one-time milestone payment. Long way to sustained profitability. Good luck.

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