Three Turn-Around Stocks I’m Buying Today

Joseph Carlson (0:00)

I just spent $5,000 buying three stocks, and each of these companies is high quality. They're great businesses, but the stock price continues to go down. In fact, all three of these are in massive dips. They are what we consider turnaround plays. You're hoping that you'll buy it now, and things will turn around. So I'll be going over the three companies that I chose to buy, these turnaround plays that I'm jumping into, as well as some other ones. I'll be looking at some other ones that I am avoiding, stocks that are going down that I'm not buying quite yet. So we have a number of companies that I'll be looking at today. Plus we have some news to get to. We also have Tom Lee, who is of course bullish on the market, but he says investors are a little bit scared right now, unnecessarily. So we'll be looking at his arguments of why he thinks the S&P 500 will end higher this year. And of course we have the Fail of the Week, which in this case I have to highlight Apple. Apple is now tightening the controls on the Mac, saying that they're going to protect users against AI agents. This is the playbook Apple has run many times. They say it's in the name of security and safety and protection, when there's really some other considerations going on. So we'll be going over more of that in the Fail of the Week. So overall, we have a massive episode to get into. Let's go ahead and jump in. If you haven't tried out Qualtrum, now's the time. You can try it out risk-free with a free trial. It comes with a stock analysis platform, exclusive content, access to a massive Discord community that is moderated, and there's tons of active investors on it, as well as you get access to the iOS app, which works really, really well. I know because I built it myself, and we have an Android one coming out soon. So lots of things going on. Try it out if you haven't. qualtrum.com. Now, like I said, I bought three different companies. The first one was Netflix. I bought another $2,000 of this stock. Before we go into my reasoning for buying Netflix today, I first want to take a look at my position to show you what I already own of this company, because I already have a substantial position in Netflix. So if we turn over to the portfolio here, the goal behind my portfolio is to accumulate large positions in incredibly high quality companies, where I can basically buy into them once, and then just watch them work for me for the next 20 or 30 years. These are what I call compounding machines. They're companies that continue to grow earnings, they grow their products, they can raise prices because their products get better, they get more users, and they grow and they grow, and they do so very profitably. They're also companies overall that I think have very strong motes, because you don't want to make money for a short period of time, you want to make money for a long duration of time. So I'm looking at the long game with each of these positions. And Netflix really does embody the characteristics that I'm looking for. It is a company that is a long-term play. I'm not buying Netflix because I think the next quarter will be good or bad. That's really not part of my analysis. I'm looking over the next 10 or 20 years to see which companies will generate enormous amounts of cash for the shareholder, which ones have global opportunities to grow much bigger. Now, my position in Netflix is already an $88,000 position. So it is massive. It's a big one. It's position number eight right behind Microsoft, and it's 6% of my portfolio. So I have a huge over weighting in Netflix already.

My gains on this company, however, have not been amazing. It's actually gone down a bit, and we'll get to that in a minute, but it's gone down because Netflix is in a massive dip. See, at one point in time, this was about $40,000 in gains. Now we're at $16,000, and I continue to buy it even above my cost basis. Buying more Netflix today actually raises my cost basis on the company. It makes it so that I'm more at risk of going in the red on Netflix if this company continues to go down. So that's the bad thing. When I buy Netflix today, I'm buying it above my average cost. I'm raising my risk of going into the red, but that's a risk that I think is worth taking. Because Netflix today is a great company, I believe, at a very good deal. And part of my thesis on this is I think that Netflix is one of these companies that the biases in investors cause them to do poor analysis on. Let's go ahead and take a couple examples. First of all, when we look at Netflix, the impression that many investors have is this company's facing so much competition, it can barely grow. It's barely trying to survive against YouTube, against Paramount, Warner Bros, or whatever it is now, this massive company that they're facing against. How can Netflix compete? A lot of people have spoke about the doom of Netflix, about how there's massive engagement problems.