Common Stock Chat

This page is set up for those that want to chat about various common stocks.

There are no rules–other than the usual–no politics.

1,054 thoughts on “Common Stock Chat”

  1. Two weeks ago, Bloomberg reported about an alarming drop profits at Exxon and Chevron because of plunging refinery profits. (“a flood of new output amid stagnating demand “) Reuters, likewise: “Big Oil bleak on refining profits going into 2025.” Today, its different. Bloomberg now says that refinery profit margins are — and have been — fatter than ever. Small refinery closings (forced by high upkeep costs) will benefit Exxon and other Big 3 mega refiners. Less competition and cheaper crude inputs.

    Activists have lately been skipping over the “declining sector – Darwinian struggle” story lines. There is activist interest in refiners like Phillips. (PSX – up 11% in one month.) I avoid buying refiners directly, (profits too volatile, a bad Canadian experience) but I would if I could add Aramco. Googling through the corporate shells, it seems that the Saudis control the largest US refinery, The ability to profit from cheap drill-baby US crude inputs while influencing world pricing by turning the OPEC output spigot on or off seems like an unbeatable advantage. JMO, DYODD.

    “Houston’s oldest refinery is shutting. It won’t be the last. ”
    https://finance.yahoo.com/news/houston-oldest-refinery-shutting-won-140000129.html

    1. Bear, I read the article earlier. Doesn’t give me the warm fzuzzies about the future of gas in California. I just bought gas at Costco and I was shocked it seems like it was 45 cents higher than a week ago.

      1. — “SAN DIEGO (FOX 5/KUSI) — The average price for a gallon of regular gasoline in California has risen 44 cents from a month ago, according to AAA.” — So a 45 cent jump was a good estimate. It sounds like a temporary issue. A NorCal refinery fire on top of a Winter/Summer changeover supply shortage.
        — Waiting to see on tariffs, but absent a trade war, I think crude oil prices could very well go down. (This is a minority / outlier / surprise-of-2025 view.) California gas prices may be a special case: seaborne shipping, no pipelines, refinery closings. JMO. DYODD.

      2. CM, that money is going to the state not new profits to the companies. California has the highest gasoline prices in US. Just paid $2.79 in NY and prices have been steady.

        1. I just did a western NY thru MA to NH road trip. Highest prices were 3.02 in MA and in NH was 2.68. Remember, in CA there are other overheads for the delivery + station owners (worker pay/benefits, shipping costs and more) that drive the prices, and then the taxes. Politicians have made some ignorant comments (surprise): the barrel/refined prices are the equalizer, and that is what should be talked about. The PUMP prices are artifacts of the adders after that, any they should be looked at for the specific case. This is a prime example of that!

        2. Dan it’s not just taxes we had a refinery fire at one of the refineries and it’s been shut for 2 weeks.

          1. I agree with Charles. This is not a tax issue. One large refinery is closed by fire, two are closed for seasonal maintenance. (Chevron, Valero). About 30% of state refining capacity offline. Many refineries are running different blends now which constrains supply reallocation. JMO. DYODD.,

  2. Purchased a starter position in MRK this morning. Again breaking my rule of buying stocks over 50.00 a share. I can buy more shares and therefore my profits are greater on lower cost stocks. But this company I have been watching for the potential to own a world class pharmaceutical stock.

    1. Charles, In my opinion, very good stock pick. Watching that one also. It has fallen nicely into a more reasonable range now.
      Regarding your “rule” on not buying stocks over $50 because profits are greater on lower cost stocks. Wondering if you can elaborate on that? That doesn’t make any sense to me.

      1. Pig, that’s hard to explain.
        Just mentally I buy 100 shares of a 100.00 stock and it drops $10.00 like WHR has done recently is a little unsettling.
        But if I spread out the risk with 100 shares each of 3 stocks at $33.00 each I spread the risk out and the odds that 1 or 2 of the stocks have a gain to make up for any losses.

    2. Yes, MRK is getting very interesting. Morningstar analyst report dated 2-13-2025 has a fair value of $110 (available for free on Schwab when you do a stock quote). Nice dividend of around 3.8%. Dividend payout ratio of about 65%. Forward P/E ratio is about 9.4

      I also own KHC paying a very high dividend of over 5.5%. Dividend payout ratio is the low 60% range. FWD PE after lower 2025 guidance is 10.7

      Both of these I attribute to market concern over Kennedy’s HHS appointment. Overreaction (IMHO but DYODD). I may a buyer of MRK shortly

      1. Steve, I’m not afraid of the big bad boggy man. What is he going to do?
        KHC I personally like a lot of their products and I try to find them when they are on sale and stock up. I grew up using their products and I’m not sure how the younger generation feels about them. From what I just see when I am grocery shopping has been legacy brands have jacked their prices up to maintain margin and not just because of inflation. I rarely buy redi-made pasta sauce but I did recently and I couldn’t see much difference between Prego, Classico and Rao’s except the price. I feel CPB overpaid for the brand.
        I think Buffet still has a position in KHC but I heard he wasn’t happy as it didn’t follow his rule of buy good companies at good prices. I had read they were heavy in debt and downsizing to pay it off.
        Actual results compared to CEO promises don’t look good and trying to maintain margin with eggflation (pun alert ) doesn’t look good.

          1. OMG where did you put the camera?
            My wife is scheduled for knee replacement in 3 months and the doctor has given her a list of things he doesn’t want her eating so this is going to make a radical change in what is on the menu.

        1. I am not concerned about RFK Jr. Some of the angst is just stupid. Removing fluoride from municipal water is one. Guess what America? Lots of bottled water has no fluoride.

          From a Merck perspective, RFK may be doing things like getting rid of vaccine mandates. Many countries in the world do not have government mandates and their use of vaccines is still a very high percentage. This and possibly set a higher bar for vaccines to get approved. So, there is some potential risk to Merck’s earnings. But Merck is down from a high of $134.63. Seems excessive to me.

          Yes, KHC has its share of problems. Some of the ingredients it has in it foods may be banned. They will replace it.

        2. Just to add a little more to this. The Gardasil vaccine for HPV. Some states require it before a female student can enter the 6th grade. These vaccine mandates are likely to be eliminated by RFK Jr. It probably becomes an available vaccine you can get if the doctor and parent believe it is necessary. The recent drop in Merck’s stock price is they stopped shipments of Gardasil to China until mid-2025. If Kennedy eliminates vaccine mandates, how many states have this requirement and what will that do to sales? Does Merck have other vaccines that have mandates that will see some drop-off in sales? Vaccine mandates were great for pharm sales creating “captive” audiences. On the positive side, Pharm wants PBMs regulated, and Congress with the Admin seems to favor that. I worked in the PBM industry. They do lower prices. It will be sold to the public as savings but over time, drug costs will go up depending on what is in any legislation. Like every investment, lots of variables to consider.

        3. Charles M, I dumped my KHC about eight or nine years ago and I’m looking to replace it with CPB because I like V8, Cape Cod, Goldfish, Noosa, Pepperidge Farm, and Rao’s.

          You never associated with Squeaky Fromme, did you?

    3. My projection guess for MRK is 72ish, an area with good prior support. With the current 81 cents dividend, the yield at 72 would be 4.5%. I bought PFE, also beaten up, at 25 because the yield is 6.9%. I’m sure investors have other reasons to bottom fish pharma than yield, but it works for me.

      1. R2S I have yet to place a GTC bid for the next tranche. I guessed I wouldn’t be buying at the low so I expected to average down. Glad to have you on board. Please keep the updates coming.
        This is my second add to my own ETF joins BMY

  3. I have been watching growth stocks that pay a reasonable dividend. By that I mean the dividend has to be in a range of 1% below or 1% above what you could get on a Treasury bill. I feel the opportunity for growth might outweigh the added risk. You have to understand that getting good stocks on a discount is rare.
    Normally this happens when a company’s earnings are under pressure or the economy is bad .
    For decades companies have had growth outside the US. So a part of the earnings depend on the international market. With earnings both domestic and foreign if one market is down and the other is up it slows growth but balances out. What worries me is if both markets are bad it’s a double whammy.
    Right now with these tariffs we are giving markets outside the US the impression of the ugly American. Consumers in other markets will decide they don’t want to buy well known US brands and it will take time for that to change. This isn’t just retail brands it will affect shippers and wholesale markets
    I still want some of these stocks but I will proceed cautiously.

  4. LAND – What’s going on with LAND today? +4.75% on a day like today? I don’t see any news and it’s certainly not up on interest rates moving up… Anyone know?

  5. Powell made a timely comment today about mortgages eventually becoming impossible to get in certain areas due to high costs of insurance. The California state high risk pool isn’t able to cover its wild fire obligations. It put out a $1 billion capital call out to the state private insurers. (This is pretty much how the state pools work so no surprise. ) Insurers have 30 days to pay amounts based on their California market share. I estimate State Farm could owe ~200 million, Farmers, ~149 million and little Mercury MCY, 61 million. Half gets passed through to policyholders, half is paid by the insurers.

    When losses rise faster than premiums, insurers often pull out of markets, pushing more people into the state pools, something both Florida and California have seen. I think reinsurers are better bets than state-regulated retail insurers. They have flexibility in setting rates and are not obligated to remain in unprofitable markets. I think the preferreds are safer bets there.

    Here’s a list of insurance companies and premiums written in California in 2023:
    1. State Farm: $2.7 billion
    2. Farmers Insurance: $2 billion
    3. Liberty Mutual: $908 million
    4. CSAA Insurance Exchange $895 million
    5. Mercury Insurance: $839 million
    6. Allstate: $792 million
    7. USAA: $742 million
    8. Auto Club: $720 million

    Compiled from various news sources. JMO. DYODD.

      1. Information came from news stories citing Moodys, S&P Global and JPMorgan estimates and may not be apples-to-apples or complete (Chubb 1.5 billion loss and Travelers 1.7 billion loss are missing) but should give a rough relative estimate.

        There are some odd results from blanket assessments. You can be right about risk and still lose. Allstate and Farmers had slowed CA sales. State Farm had correctly seen the LA risk and cancelled many LA policies, All ended up with large assessments. All reasons why I prefer reinsurers., easier to get away. JMO. DYODD.

    1. Bear,
      Any insurer that operated in California in the past 2 years is subject to assessment was my read.
      I’m wondering about assessments on insurers no longer operating in Cal.

  6. TSLA looks like it might give back the post-election surge from 250. Not a prediction.

  7. Ford , not a natural, yet with the reasonable fade below the two yr low, seems to me a reasonable item. Yes, lots of negs ( trade, tariffs, ect. ) …. any thoughts welcome …. I am a adder here & on modest fades.
    Has paid a .15c qtrly & special …. how long ????

    1. Jim, I added today. relatively small holding but have always liked them. They are investor friendly. Sold last yr for a huge gain, bought back in the fall and have added a few times since. I have patience with this one. Other investors don’t seem to though, lol.

      1. I don’t know if it matters to you , but F public common holders do not control
        the company. The Ford family own the supervoting shares and I believe 40% of votes as a result.
        So, don’t expect them to accept Tesla’s bid at $100 ,funding secured.

        yes, the last part is a joke.

      2. F-D – the preferred issue is a holding I have my eye on. I have owned it in the recent past also

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