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Mittleman Brothers CIO Chris Mittleman on the stocks to watch and how potential Fed action could impact investors’ strategies.
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Back to you we wanna bring it back call what Chris middlemen -- managing partner at middlemen Brothers.
And I Chris let's get right to what the last time you're here he recommended Avis Avis is up about 50%.
Since the last time you recommended it I understand you're still going -- Davis and what other stocks you recommend right now.
We think -- this is still undervalued it's gone up a bit it's around the 1660.
-- -- today.
But the stock is got about three dollars of -- three dollars and twenty cents in free cash flow per share it's about 400 million of free cash flow.
I don't see a reason why it shouldn't be trading closer to.
Maybe nine times that number that would be about thirty dollars a share.
C by the way we see Revlon there's another what are your picks that -- up huge today up about seven and a half percent.
Is that -- so why did it knocks out your recommendation of no not at all and Revlon -- another great company with a strong history of steady free cash full production they should be generating about a hundred million dollars of free cash flow this year that's about a dollar -- share.
I think the stock at a minimum would be worth about.
24 dollars a share you look at -- -- Estee Lauder they trade it 20/20 five times free cash flow.
Maybe about twelve times ebitda Revlon -- margins are very similar there is around 90% ebitda margins.
I don't think there's a re a real reason why -- should be trading at such a big discount but Chris when you look at the slow down in the economy -- has slowed down the GDP is slower than ever.
It's not in a recessionary -- -- one point 7% is just barely above that you still have unemployment very argue worried about retail sector slowing down because the consumer doesn't feel so good.
I'm not so worried about a with these kind of companies when you look at what happened during the last Great Recession we saw a dramatic decline.
In GDP negative -- negative 9% GDP Revlon sales from 2007 to 2009 drop may be 5%.
A lot of that was due to foreign currency because 45% of their sales were overseas.
So I think a lot of the businesses that we're looking for have proven themselves resilient.
In a really does vicious economic environment what we -- already so if we get a little bit of weakness -- another recession I don't think there's a reason to believe they won't be able to be as resilient as they were in the past OK and finally -- -- gonna be talking to Jim Rogers a lot about what the Fed's been doing but I wanna ask you with the Fed's decision coming out tomorrow they're meeting right now.
It depending on what they do would that change your investment strategy and anyway no not at all -- -- the Fed has gone through periods multi year.
You know.
Raising of interest rates decrease in interest rates the Fed started raising rates and 94.
Pretty aggressively in the market kind of stalled out that that would not necessarily been a great time to abandon stocks just because the Fed was raising rates.
Monetary policy obviously is a factor as an influence on the economy but.
We're really bottom up investors and we're looking for things that.
We can make money and regardless what's going on with interest rates that during the seventies the market went up with.
Didn't go up that you saw a lot of Smart investors like Jimmy -- making great money during the seventies.
During a time when interest rates went from 5% to 15% and inflation with out of control so.
You can find your spots appear opportunistic and value warranted and make decent money even.
Even with ruff said Jim Rogers just gave you go saw when you gave him a credits say they don't just talk about Chris -- good to see a Larry we're gonna see a couple of minutes for the S&P futures.
