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3 Stocks to Buy That Are Singularly Fantastic
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3 Stocks to Buy That Are Singularly Fantastic

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A big fad on Wall Street right now is single-stock ETFs that invest in a single foreign issuer that’s not traded on a U.S. stock exchange. Here’s a better alternative to the single-stock trend.

The latest fad on Wall Street is single-stock ETFs that, as the name implies, invest in the shares of a single company, usually a foreign issuer that’s not traded on a U.S. stock exchange. According to Bloomberg, as many as 129 ETFs have filed plans with the U.S. Securities and Exchange Commission (SEC) to launch single-stock funds that will trade on U.S. exchanges.

The SEC’s problem with these single-stock funds is that they’re investing in foreign companies that may or may not have the same regulatory underpinnings as in the U.S. It will be interesting to see how the single-stock movement plays out in the months ahead. I’m not optimistic. In the meantime, I have my own interesting idea for a new ETF.

Did you know that 45 stocks trade on U.S. stock exchanges with single-letter stock symbols? It’s true. The names on the list include companies both large and small. My idea would be to include all 45 stocks in an ETF, ranking each company based on several quantitative and qualitative factors and weighting them according to their rankings.

For now, I’ll have to be happy providing investors with three stocks — a large-cap, mid-cap, and small-cap — that are singularly fantastic.

Large Cap: Visa (NYSE:V)

Visa (NYSE:V) is on one of the worst losing streaks in its history. Investors are concerned that consumers are tightening their wallets due to higher prices and interest rates.

However, Visa’s made no indication that it’s noticing a slowdown. On Aug. 30, it reported that payment volume in August was 11% higher than August 2021 and flat to July’s payments. In addition, its total cross-border volume over last year was up 31% in August and 40% from July 1 to Aug. 28.

“These figures continue to defy ongoing concerns of a spending slowdown given the macro volatility as well as recent increases in interest rates,” said Wedbush Securities analyst Moshe Katri in an Aug. 31 note to clients. The analyst has an “outperform” rating and a $270 price target on Visa’s stock. That’s 47% higher than its current share prices.

The payments company reported its Q3 2022 earnings at the end of July. They were very healthy, with a 21% increase in revenues (excluding currency) to $7.3 billion with $4.2 billion in non-GAAP net income.

Visa’s margins are incredibly high. While there are concerns that the so-called duopoly between it and Mastercard (NASDAQ:MA) will be broken up by regulators in the future, the company’s innovation will keep it ahead. It’s an excellent long-term buy.

Mid Cap: Red Rock Resorts (NASDAQ:RRR)

Red Rock Resorts (NASDAQ:RRR) continues with the recycling of its older casino properties. The latest to be demolished is the Wild Wild West Gaming Hall & Hotel in Las Vegas. The casino removed table games in 2022 due to the pandemic. As a result, the operator of 21 casino and entertainment properties has decided to redevelop the property.

The Wild Wild West property sits on 20 acres of land. It also owns another 80 acres adjacent to the casino property. The redevelopment possibilities are endless, given its location.

In addition to the Wild Wild West, it previously demolished three other older casinos. Red Rocks will sell the 107.5 acres of land on which the three casinos sat.

Red Rock’s second-quarter results included a 1% decrease in revenue to $422.2 million and a 10% decline in adjusted earnings before interest taxes, depreciation, and amortization (EBITDA) from Q2 2021. The decline in revenue was partly due to the closure of three of its properties mentioned above. Its non-gaming revenues increased by double digits during the quarter.

Red Rocks management plans a big growth movement over the next few years. It plans to double the number of properties it operates by 2029.

Of the 11 analysts that cover RRR stock, seven rate it a “buy,” three rate it “overweight,” and one rates it “underweight.” The average 12-month target price is $46, 33% higher than where it’s currently trading.

As long as the economy doesn’t falter too badly, Red Rocks will benefit from its growth for years to come.

Small Cap: SuRo Capital (NASDAQ:SSSS)

On June 22, 2020, Sutter Rock Capital Corp. changed its name to SuRo Capital Corp. (NASDAQ:SSSS) Sutter Hill, a business development company (BDC)externally managed by GSV Asset Management LLC. SuRo Capital terminated the management advisory agreement with GSV on June 20, 2020.

The BDC’s history dates to January 2011, when Michael Moe took GSV Capital public, raising $50 million in its initial public offering (IPO). In August 2017, Moe stepped aside as CEO, and GSV Capital’s Lead Director, Mark Klein, became CEO.

When Klein took over, GSV held positions in companies such as Palantir (NYSE:PLTR), Spotify (NYSE:SPOT), and other tech-related businesses. Its portfolio of 38 companies was valued at $283 million.

In the three months ended June 30, 2022, its net assets were $280.2 million, or $9.24 a share. That’s down from $380.7 million at the end of March. The tech correction knocked almost $89 million off the value of its holdings. It ended the second quarter with $153 million in cash and an investment portfolio of $200 million, down from $260 million at the end of 2021.

In the meantime, it’s repurchasing its stock. Through the first six months, it repurchased 5.83 million shares for $38.6 million. It has $16.4 million left in its share repurchase program. Those should get bought up in the third quarter.

Its shares are currently trading at 0.48x its net asset value (NAV). As recently as November 2021, SSSS shares traded above $15 and at a premium to its NAV.

Aggressive investors ought to like the risk-reward proposition. 

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