Stocks urgently seek purchase opportunity.
In the bygone days of Benjamin Graham, stocks were like a wild swings ride, with prices dictated by random whims. However, the original rules still apply, highlighting resilient titles that thrive amidst market turbulence. These are usually companies boasting consistent profit growth and handsome dividends, all thanks to sound fundamental analysis—Graham's legacy.
While some things remain the same, others have transformed. Lufthansa, as per Graham's estimation, is undervalued, trading between 10.80 and 18.45 euros. Although the upper end may appear unrealistic, the current low price is primarily due to Lufthansa's pension liabilities and economic concerns in Europe. Nevertheless, there's a crackling amount of untapped potential, with the previously considered spin-off of Lufthansa Technik—now valued at the company's current market capitalization—still on the table.
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The gaming is far from over. Analysts providing a nod to Graham's techniques have other names on their radar too, like Alphabet. Alphabet, Google's parent, is trading at a valuation discount, raising the possibility of a split that could amplify values. Challenges loom, though, with an ongoing antitrust case in the US, accusing Alphabet of monopolizing online searches and advertising. Since a higher power hasn't signaled a change in its stance yet, the future of Alphabet remains clouded. But you never know, a split might just awaken untapped wealth for shareholders. For instance, YouTube, the golden goose of Alphabet, is estimated to be worth over $400 billion. The larger portion of revenues stems from advertising within Google searches, which clocked in at a staggering almost $50 billion in the last quarter.
Even if a split happens, the advertising business will continue to stand tall. The specifics of the split are unknown, but the possibilities are endless. Alphabet could be parting ways with Google Chrome, its internet browser with a 61% market share, or divesting the profitable Google Services segment. Either way, the potential for a catch-up with tech peer giants like Apple, Microsoft, and Amazon is enormous. The stocks' current valuations suggest a potential 60% upside if the breakup occurs. Target price: €240.
In the upcoming issue of BÖRSE ONLINE, you'll find the whole scoop and the remaining stocks. Or, check out MSCI World with December Cracker? ETF with a new record, but watch out—a shakeup could be on the horizon!
Disclaimer: Bernd Förtsch, the majority shareholder and board member of the publisher Börsenmedien AG, holds positions in the financial instruments featured in the publication or related derivatives that might profit from any resulting price fluctuations: Deutsche Lufthansa.
Investing in Lufthansa and Alphabet offers potential returns, according to analysts drawing on Graham's techniques. Lufthansa, despite economic concerns and pension liabilities, presents an undervalued opportunity, while Alphabet, with its ongoing antitrust case, has a possible split that could unlock shareholder wealth, particularly from YouTube, its golden goose, worth over $400 billion.
