Jonathan Boyar's Favorite Cheap Stocks with Catalysts
The Compound and Friends Podcast Recap
Published:
Duration: 1 hr 13 min
Guests: Jonathan Boyar
Summary
Jonathan Boyar discusses opportunities for value investors in the current market, emphasizing stocks with catalysts that could drive future growth. He highlights Salesforce, Meta, and MSG Sports as examples of companies with potential value due to their current valuations.
What Happened
Jonathan Boyar, principal at Boyar Value Group, sees the current market as fertile ground for value investors due to valuation opportunities. He explains that the market environment is characterized by multiple compression, rather than an earnings growth scare, providing entry points for long-term investments.
Boyar shares that he has been buying Salesforce at a lower valuation than expected, noting its critical integration in business processes despite skepticism about software companies utilizing AI. He mentions that activist funds like Jana and Starboard are interested in Salesforce, adding to its potential value.
Meta is trading at 17 times forward P/E, which Jonathan Boyar considers reasonable compared to historical highs. He contrasts this with Tesla, which he sees as a risky investment given its trade at 190 times earnings.
Madison Square Garden Sports is highlighted by Boyar for its valuation discrepancy, with its assets, the Knicks and the Rangers, being valued at $8 billion while Forbes values them at $14.75 billion. Boyar notes the potential for splitting the teams into separate publicly traded entities as a catalyst for unlocking value.
Uber's growth in smaller cities and its investment in partnerships with Lucid and Rivian to expand its autonomous vehicle network are discussed. Boyar notes Uber's significant cash flow and market cap, but also considers Waymo's potential dominance in autonomous vehicles as a concern.
Boyar also touches on MGM's strategic moves, including its stake in a future Japanese casino and The Sphere in Las Vegas, which has been a successful project. He expresses concerns about MGM selling land to private equity despite its strong financial position.
Boyar refers to historical valuations, such as the Nifty50 crash in the 1970s, to illustrate the importance of valuation in predicting future returns. He recounts how stocks like Sears and Coca Cola took a decade to recover, stressing his belief in finding catalysts to avoid value traps.
In his podcast 'The World According to Boyar,' Jonathan Boyar has featured notable guests like Ken Langone and Bill Ackman. Langone's appearance helped boost the podcast's visibility and credibility, showcasing Boyar's ability to attract high-profile guests and insightful discussions.
Key Insights
- Jonathan Boyar emphasizes the importance of valuation in investment decisions, highlighting Salesforce and Meta as currently attractively priced stocks due to their forward P/E ratios.
- Madison Square Garden Sports could unlock significant value by splitting the Knicks and the Rangers into separate publicly traded teams, given the valuation discrepancies between internal and external assessments.
- Uber is expanding its autonomous vehicle network through partnerships with companies like Lucid and Rivian, while its growth in smaller cities is driving significant revenue, despite concerns about competitors like Waymo.
- Historical market trends, such as the Nifty50 crash, inform Boyar's investment strategy, which focuses on finding catalysts to avoid value traps and capitalize on long-term growth opportunities.