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RMCF or Rocky Mountain Chocolate Factory is not a sexy investment. They make chocolate and chocolate related products. They don’t have explosive growth or flashy new technology. Honestly they are kind of boring. Sometimes that can be a good thing.
They boast strong cash flows, a meaty 8% dividend and solid albeit not explosive growth. They are small enough to have plenty of room for growth but rarely ever use heavy leverage and take on minimal debt. If your looking for the closest thing to risk free this is probably it. (Note it’s still a stock risk of total loss exists just feels minimal.)
If you seek safety, income and the smallest amount of risk possible in the stock market Rocky Mountain Chocolate Factory is worth considering. We currently have a buy rating and price target of 10 dollars a share.
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On the surface Naked brands looks like another struggling company selling for a little over a dollar. Naked has been crushed by the pandemic forcing them to pivot and change their business model on the fly.
What is truly mind blowing is there is a real argument for a long term share price of fifteen dollars. Naked has some of the top brands in Australia, it's not a huge stretch to value these at five dollars a share, Fredericks Of Hollywood we also value at five dollars a share.
Their remaining assets include 59 million in cash and several other niche brands we gave these an estimated value of five dollars. Keep in mind none of this includes their business which is being transitioned to pure E-commerce. The potential is compelling will the turnaround be executed successfully?
We rate Naked Brands Ticker NAKD a strong buy with massive upside potential.
Disclosure Our CEO is Long NAKD stock
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Let's say you've decided you want to choose stocks yourself. Great but where do you begin?
In our humble opinion this is a foundation of a great investment. Strong cash flows, low debt to cash flow ratio, selling at a discount to asset value and with a strong brand or physical prescense that is well defended. Warren Buffet calls this a moat. You want this to be long and deep and wide and with angry gators inside it. (Barriers to entry)
From there stick to industries you know and only invest what you can avoid touching for at least 3 years.
Other things to keep in mind, the free cash flow multiple and price to earnings multiples should be considered. Additionally pay attention to revenue and profit growth some stocks can look expensive but really be cheap.
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The Basics Of Investing In The Stock Market
You have a little money, you keep some in a jar, maybe you want to add more to the jar one day. That’s where we come in. ( Yes I am quoting the Wedding Singer) Love that movie. At Broth Investing we believe knowing how to be smart with money can be life changing. We became financial experts with a lot of blood, sweat and tears, It’s our superpower and we want to share it with you.
How to get started investing in the stock market.
Buy a small cap or mid cap index fund, learn how to analyze individual companies, pray and just chuck money at something.
These are your three main options. For most people buying an index fund with a low-cost structure is enough. You want this to always be less than .5% . If you want to learn how to analyze companies and build your portfolio we will teach you in future articles.
In the meantime, your like small cap, midcap are these types of mushrooms? I’m too sober for this please explain.
A small cap is a company worth between 50 million and 1 billion, these companies have a bit more risk but offer higher investment rewards.
A mid cap is a company with a value of over 1 billion but less than 30 billion, anything above that is a large cap and your investment returns could be more modest.
We don’t think blindly chucking money at something without researching it is a good idea so option 3 is not something we would recommend.
In our next article we will start to teach you how to analyze companies for investment and how to build your financial future.
We will also talk about other investment vehicles beyond stocks but one thing at a time.