As the editor of The Prudent Speculator newsletter, I firmly believe in “eating my own cooking” when it comes to investing. This means that when stocks are recommended for members of The Prudent Speculator, I’m also investing my own money in those same companies.
Why is this important? By putting my own capital at stake, I’m not just offering my opinion, I believe in the recommendations and our strategy and principles enough to participate myself. This approach also ensures our interests are aligned, experiencing the same outcome whether good or bad.
Three stocks recently recommended for TPS members are Devon Energy (DVN), Goodyear Tire (GT) and Micron Tech (MU), all of which I opened my wallet to purchase for my personal account.
Three Bargain Stocks
I wrote about Micron in another recent Blog post, which can be found here:
Devon Energy is a U.S.-based independent energy company primarily involved in oil and gas exploration, development, and production, operations are present in several key shale basins across the U.S., including the Delaware, Eagle Ford, STACK and Powder River.
Management has strategically reshuffled the portfolio in recent years, divesting its Canadian oil sands business and exiting the Barnett Shale natural gas play. Devon generated record oil production in Q2, surpassing expectations with per-share volumes growing at 9% year-over-year.
The company announced the acquisition of Grayson Mill, nearly tripling its production in the Williston Basin and expanding its inventory for future development. Additionally, Devon raised its production guidance for 2024, expecting over 680,000 BOE per day.
I like that Devon has demonstrated effective cost management and a commitment to restraining production growth, favoring per share operating growth and shareholder returns. Since the end of 2021, Devon has paid out $9.27 in dividends per share, with the current yield at 4.4%. The stock currently trades for just 7 times estimated earnings.
Goodyear is one of the world’s leading manufacturers of tires, with operations across the globe. Despite a challenging industry environment, GT grew margins in Q2 with Segment Operating Income (SOI) reaching $339 million. Management says it will expand profitable volume segments and promote cost reduction efforts through its Goodyear Forward plan.
Goodyear recently announced the sale of its off-the-road business, marking a key step in its transformation plan. The company says it is committed to achieving its target of 10% SOI margins by the end of next year, with a continued focus on manufacturing efficiency, R&D and retail operations.
I had hoped that the acquisition of Cooper Tire would be a game changer, but so far that has not been the case, even as replacement tires have typically offered more profitability and operating consistency.
Still, with the stock off more than 40% year-to-date and consensus EPS estimates for 2024 and 2025 at $1.03 and $1.48, respectively, I can’t help but find sufficient upside to warrant buying at present levels.