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Breaking Bad is TV series about a chemistry teacher that is
diagnosed with inoperable lung cancer at the beginning of the
series. He turns to a life of crime, producing and selling
methamphetamine with a former student.
This series has managed to grow its audience every year for
five seasons. The cliffhanger from last season had 2.8M
viewers, an increase of 47% from the previous years finale
that was entitled "Face Off" - a very appropriate name. For
2013, the series earned 13 Emmy Award Nominations.
But this is an investing article, not one trying to get
people excited for the final season! So let's take a look a
few stocks that can help your portfolio get high(er)... in
Disclaimer: I will try to not be too much of a spoiler for
all those that will later go on Netflix (NFLX - Analyst Report) or some other
streaming service to binge watch all the episodes at once.
First the tie in to the show. Many will point to season 4
when the Roomba makes an appearance, but I am a little
partial to Jessie's excitement over the potential to "make a
robot" when a battery dies.
((IRBT - Snapshot Report)) is one of my favorite stocks and not just because of
its connection to this great TV show. I like it for many
reasons, but the biggest has to be the earnings growth
potential it has.
I put together this chart of the Zacks Consensus Estimates
for 2013 and 2014. The chart shows how earnings estimates
for both years have been trending higher in nearly each
month this year.
With those estimates moving higher and higher, you know that
it is a Zacks Rank #1 (Strong Buy). The Rank loves stocks
that see increases in the annual earnings estimates.
This stock should be part of your portfolio, and when you do
buy it, I am guessing you will clean up.
First the tie in to the show, and this one is pretty obvious.
Even before I knew what the show was about, I knew that an
RV had something to do with meth. Is the model that they use
a Winnebago? I couldn't tell you that, but I do know the WGO
is a Zacks Rank #2 (Buy).
((WGO - Snapshot Report)) is on this list for obvious reasons, but I like it
for a less than obvious reason. Yes, I am all about growth
and this stock isn't really one that you would expect to see
growth from. Instead, you see value. A whole lot of value.
In order to be a Zacks Rank #2 (Buy) the stock had to
exhibit some growth in earnings estimates. WGO did that a
few months ago when 2013 Zacks Consensus Estimates stood at
$0.80. By March they had increased to $1.02 and have ticked
a penny higher since.
The 2014 Zacks Consensus Estimate experienced a similar move
in March as the estimate jumped from $1.00 to $1.24. The
implied earnings growth rate of 21% probably a good bit
better than the gas mileage a newer model can get.
I see a few online resources have the PE of WGO at a very
reasonable 11x trailing earnings. That number is
a whole lot closer the to the traditional MPG of an RV.
Smith & Wesson
The tie in to Breaking Bad is pretty obvious here too. Most criminal operations require a gun, and I am going to guess that being in business for 150 years has exposed SWHC to many a gangster / dealer.
Smith & Wesson
((SWHC - Snapshot Report)) is a maker of firearms and is a Zacks Rank #1 (Strong Buy). I like SWHC for a few reasons, but the thing that jumps out at me when I look at this stock is the revenue growth.
This chart tells me all I need to know about this story. A company that doesn't see revenue growth has a hard time growing earnings. SWHC does not have that problem at all. In fact, they are seeing hockey stick growth and I like to get in on that idea as early as possible.
The YCharts of quarterly revenues can be found on the Zacks home page. They tell me a good part of the story, but the earnings story is what drives stocks. The 2013 Zacks Consensus Estimate for SWHC recently moved from $1.04 in May to $1.32 at the end of July. That kind of growth is what I am gunning for.
Breaking Bad has had a wonderful run and entertained the masses. Watching it via Netflix
((NFLX - Analyst Report)) seems to ensure that this series will live long after the final episodes air on AMC. Buying these stocks ensures that you will invest in Breaking Bad style and your portfolio could get high(er).
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Brian Bolan is a Stock Strategist
Zacks.com. He is the Editor in charge of the Zacks Home Run Investor
service, a Buy and Hold service where he recommends the
stocks in the portfolio.
Brian is also the editor of Breakout Growth
trading service that focuses on small cap stocks and also
a risk limiting strategy.
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