By Alister Sneddon, CTO of Genuine Impact
If you’re a Game of Thrones fan you’ll be waiting with anticipation for the final episode of the long-running saga. You’ll also have a view on who will win the Iron Throne.
The quest to pick stocks and shares to invest in is similarly about anticipating who’ll be a winner. Just as we’ve analysed the characters in GoT, and made our assessment of their strengths and weaknesses, we can assess a stock by looking at its Quality, Value, and Momentum.
Here are stock picks for some of our GoT favourites using these three criteria:
Jon Snow
The King in the North. Jon has a lot of backing and support from the public. He has also proven he can withstand even the most unexpected of events, even if it’s just barely getting out alive. We can’t forget he is the rightful heir to the Iron Throne, however having a right to something is not the same as having it. There is a spark of innovation to be found, joining forces with the enemy of my enemy turned out to be an excellent move against the Night King’s army, but is it a cursed alliance joining forces with Daenerys?
Even with all of the blessings Jon has been given, such as coming back from the dead, he isn’t without his flaws. In terms of tactical genius, I don’t believe running out by yourself into a battlefield or sprinting to face the Night King is considered “intelligent”. While Jon has a personality that everyone loves, and has narrowly escaped death more than once, I don’t think he is the leader everyone wants him to be.
Paddy Power Betfair PLC
I can’t think of anyone that gambles more than Jon; He is so keen on taking risks he does it with his own life whenever he gets the chance. Just like Jon and Daenerys, Paddy Power and Betfair joined forces back in September 2015 and now operate as a single company. The combined force of both Paddy Power and Betfair brought them back from the jaws of death and infighting to focus on ruling. The similarities don’t end there.
Paddy Power Betfair is an excellent Quality stock, this means they have a strong balance sheet and cash to burn if they need it. While I wouldn’t consider Jon cash rich, he undoubtably has countless people he can call upon in his time of need. Likewise, Paddy Power Betfair have a lot of cash in the bank for a rainy day, making them resilient to changes in the industry or any new gambling regulations.
The value of a company is based on the current price per share today, versus how much money the company generates. The higher the value the cheaper it is to buy this company now compared to how much money they are bringing in. The idea being that the money being generated will grow into bigger profits (and returns) in the future. Paddy Power Betfair scores extremely well for Value, they bring in a lot of revenue compared to the price of the stock today, if they can convert this money into bigger profits that means better returns for investors. If you had invested in Jon before you knew about his true heritage you would be collecting the rewards today. Just like Jon investing in Paddy Power Betfair has the potential to be something more in the future, hopefully it doesn’t take a near death experience to discover that potential!
Finally, we have the Momentum of a company. Momentum looks at industry experts, like the big banks and financial institutions, and aggregates their views. Do the experts believe this company will outperform? If so, will they barely beat expectations or maybe completely exceed everyone’s wildest dreams? Paddy Power Betfair is very average in terms of their future Momentum, they are hitting or beating their targets, but we expect them to at this point. There is no wild unexpected innovation which is going to catch us off guard, the industry feels positive, but it isn’t expecting anything amazing.
Paddy Power Betfair has the potential to convert the money they make into bigger profits and bigger pay outs to shareholders; However, the industry experts don’t see that happening any time soon. Regardless what the short term holds, Paddy Power Betfair has the cash in the bank to weather any incoming storm.
Assessment
- Quality Score: High
- Value Score: High
- Momentum Score: Low
Arya Stark
Arya Stark; if you know her name that is either very good for you or very bad. Arya is a force to be reckoned with. No matter what – she keeps on going.
While Arya might not want the Iron Throne, she is capable of taking it. Taking being the key word. Arya could be a terrifying tyrant, but thankfully she is happy with her path in the world.
Arya has told both death and Ladyship “not today” – making her a powerful force that continues to influence the world around her.
Taylor Wimpey PLC
One of the largest house building companies in the UK, Taylor Wimpey is often used as a barometer for the Brexit impact. Like Arya, Taylor Wimpey is a force unlike anything else. Despite being a powerful player in the UK economy, Taylor Wimpey isn’t what you would call a household name.
Like Arya if you know the name it’s likely you are in the industry or have a vested interest. Unlike Arya who specialises in putting people to sleep permanently, Taylor Wimpey looks to maximise the housing market no matter it’s conditions.
Taylor Wimpey is no stranger to scandals or being a bit scrappy. Unlike Arya however, Taylor Wimpey has the cashflow to make its problems and challenges negligible. Regarding the Quality score Taylor Wimpey has a lot of purchasing power, but housing market regulation is prone to change, and Brexit has us all shaken, so they are keeping an eye on their war chest.
What about Value – the future potential based on what you pay today? Arya has incredible potential but do you trust her to act on it? Taylor Wimpey also scores extremely well for Value; the company generates a lot of income compared to its current share price. If it can convert the incoming revenue into higher margins the results will be impressive.
Looking at the Momentum, the industry experts seem to agree. Not only is there a lot of potential upside in the future but it will happen sooner rather than later. Once the Brexit air clears it will be back to business as usual, and just like Arya, Taylor Wimpey will show up ready to fight.
Across the board a promising outlook, however starting from such a strong position means it’s tough to exceed expectations. Hopefully Taylor Wimpey has a few more tricks up it sleeves than Arya does.
Assessment
- Quality Score: High
- Value Score: High
- Momentum Score: High
We are getting close to the final episode date of this fantastic series and we know there are many other characters that could have made it to this list, and among them, specially two more. We haven’t forgotten about Daenerys Targaryen and the Night King. These two are probably the most iconic and important characters of the whole TV show and we have given them a special treatment, comparing them to two heavyweights in the market.
But we have left that for the next entry.
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