Ticker: FAF, Buy below $70.

First American Financial Corporation provides comprehensive title insurance protection and professional settlement services for homebuyers and sellers.

Why I Would Buy

1. Dividend – ~3% yield, <30% payout ratio.   
2. Low Debt –Debt to equity 0.4.
3. Cheap – Forward P/E <10x, trailing < 9x.  
4. Return on Equity – In the teens for most of past decade.
5. Oligopoly – Massive database of title records, competitive advantage.

What Could Go Wrong

1. Regulatory Risk  – Could face change on state regulations, some states even insure titles themselves.
2. Short-Term Earnings Spike – Temporary boost from refinancing and new home buying resulting from low interest rates. Earning likely to decline/normalize.

Disclosure: I am long FAF, please read additional disclosures here before taking any action based on this post.

Ticker: JPM, Buy below $120.

JP Morgan Chase is an American multinational investment bank and financial services holding company.

Why I Would Buy

1. Return on Equity – JPM has averaged a decent 9 to 14% RoE for all of past decade.   
2. Cheap – Forward P/E less than 13x.
3. Dividend – generous 3.5%+ yield, <35% payout ratio.
4. Credit Ratings – Strong long term credit ratingsAA-/A-

What Could Go Wrong

1. Complexity –Complex opaque trading operations, non-trivial  probability of a blowup like other Wall Street giants in the 2009.
2. Book Value – Trading a relatively high book value multiple (1.4x).

Disclosure: I am long JPM, please read additional disclosures here before taking any action based on this post.

Ticker: CVS, Buy below $65.

CVS Health is US healthcare company that owns a pharmacy chain, pharmacy benefits manager and a health insurer.

Why I Would Buy

1. Defensive Play – Pharmacies and health insurance is generally resistant to economic cycles.   
2. Cheap – Forward P/E less than 8x.
3. Dividend – generous 3.5%+ yield, <40% payout ratio.

What Could Go Wrong

1. Retail – Retail is a big part of CVS’s revenues, this has traditionally been a poor and hypercompetitive business segment.
2. Debt – Enormous debt load, negative tangible book value.

Disclosure: I am long CVS, please read additional disclosures here before taking any action based on this post.

Ticker: CHCT, Buy below $50.

Community Healthcare Trust is a REIT that focuses on real-estate properties relating to health care.

Why I Would Buy

1. Insider – Strong insider holding and buying.   
2. Strong Alignment of Management Interests – Bulk of management and Directors compensation is in restricted stock.
3. Uncorrelated Businesses: Healthcare REIT — benefits from a recession resistant, long term trend.
4. Dividend – generous 3.5%+ yield

What Could Go Wrong

1. Coronavirus related Damage – Pandemic has hit healthcare industry disproportionately, as all non-essential procedures are being deferred.
2. Dilution – Aggressive issuance of equity to fund expansion.

Disclosure: I am long CHCT, please read additional disclosures here before taking any action based on this post.

Ticker: RTX, Buy below $65.

Raytheon Technologies Corporation is a major aerospace and defense company.

Why I Would Buy

1. Moat – Part of an oligopoly of Aerospace players, especially engines.   
2. Credit Rating – Investment grade credit rating.
3. Uncorrelated Businesses: Aerospace is a high beta industry, but the defense industry moves to an uncorrelated cycle – potentially smoothing out earnings
4. Dividend – generous 3%+ yield

What Could Go Wrong

1. Synergy May Not Materialize – Recently created from merger of Raytheon and United Technologies.  Not enough operating history available to analyze the combined entity
2. Coronavirus Impact – The extent of damage to aerospace industry is unkown.

Disclosure: I am long RTX, please read additional disclosures here before taking any action based on this post.

Ticker: EBTC, Buy below $25.

Enterprise Bank offers commercial and consumer loan and deposit products, investment management, trust, and insurance services.

Why I Would Buy

1. Insider Holding – 18%+ of the shares are held by insiders.   
2. Dividend – 3%+ dividend, with a payout ratio < 30%.
3. Cheap – Trailing P/E of 9, P/B of 0.9.
4. Return on Equity: between 9 and 12+% returns on equity annually for most of last decade.

What Could Go Wrong

1. Tiny Bank – Microcap, large exposure to commercial loans in a limited geographic area in Massachusetts.
2. Coronavirus Impact – The extent of loan book that could become non-performing is unknown.

Disclosure: I am long EBTC, please read additional disclosures here before taking any action based on this post.

Ticker: PPL, Buy below $28.

PPL Corporation is an utility serving electricity to customers in US and Great Britain.

Why I Would Buy

1. Defensive Buy – Diversified, good quality utility, a defensive play during a coronavirus meltdown.   
2. Dividend – 5%+ dividend.
3. Investment Grade Ratings – PPL long term debt is rated BBB/A- by leading rating agencies.
4. Return on Equity: 10+% returns on equity annually for most of last decade.

What Could Go Wrong

1. Not A Screaming Bargain – Even with the crash, PPL is trading at 14 times earnings.
2. Expanding Sharecount – Float has doubled in the past decade.

Disclosure: I am long PPL, please read additional disclosures here before taking any action based on this post.