7 Hot Stocks to Buy That Ditched the NRA

It’s about time companies stood up to the schoolyard bully

Source: Shutterstock

One of the most influential lobby groups in the entire country is losing its grip on some of America’s best-known brands thanks to its misguided belief that the second amendment was intended to include AR-15s and other assault rifles.

It wasn’t. 

Customers have spoken with their pocketbooks. No longer will they support brands that do business with the NRA. As a result, the five-million-strong who belong to the gun lobby has lost out on significant discounts across many different products and services.

The NRA, in its ornery way, has responded to the defectors with typical fire and brimstone language.

“[It is] a shameful display of political and civic cowardice,” the NRA said in a statement. “In time, these brands will be replaced by others who recognize that patriotism and determined commitment to Constitutional freedoms are characteristics of a marketplace they very much want to serve.”

Not every brand has abandoned the NRA, mind you.  FedEx Corporation (NYSE:FDX) remains a part of the discount program because it’s never set or changed rates as a result of its customers’ beliefs despite the fact it is very much opposed to the NRA’s position.

While I understand the position taken by FedEx, which is no position, I can’t help but think they are missing the boat on a critical issue.

For this reason, despite having some business deficiencies, I recommend these seven stocks to buy for having the decency to ditch the NRA. Listening to your customers is the best way to keep them as customers.

Bravo!

Hot Stocks That Ditched the NRA: First National Bank of Omaha

Hot Stocks That Ditched the NRA: First National Bank of Omaha
Source: Shutterstock

Okay, I’m cheating here — First National Bank of Omaha isn’t a publicly traded company, but I wish it were. Because not only does it have the backbone to stand up to the schoolyard bully, it’s one of the best-run banks in America.

First National announced Feb. 22 that it would not extend the contract to issue NRA credit cards to the gun lobby’s members who get a $40 credit when taking out a new card. Customers spoke. First National listened.

And before you suggest it’s a meaningless move from an insignificant bank, think again. First National is the 15th largest credit card issuer in the nation with more than $20 billion in assets and the nation’s largest privately-owned bank.

First National is one of those “smaller” banks that punches above its weight. It’s also worth noting that another famous Omaha resident, Warren Buffett, is less of a fan of the NRA boycott.

“I don’t believe in imposing my views on 370,000 employees and a million shareholders,” Buffett told CNBC. “I’m not their nanny on that.”

I get where he’s coming from, and while I will always recommend Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B) to readers even after he’s gone, the Oracle’s become more of a “do as I say, not as I do” personality in recent years.

I commend the bank for doing what it thinks is right. It would definitely be one of my stocks to buy were it a public company.

Hot Stocks That Ditched the NRA: Chubb (CB)

The NRA will argue that the decision made by Chubb Ltd. (NYSE:CB) three months ago to stop offering NRA Carry Guard — which provides insurance coverage for legal and other costs incurred in civil and criminal trials as a result of self-defense shootings — was strictly business.

Maybe that’s true, but if there were any second thoughts on the part of the insurance company, the Florida shooting eliminated any reservations it might have had about ending the relationship.

While I’m sure another insurance company desperate for business will jump into the fray, it seems strange that anyone would feel the need to take out insurance to cover a self-defense shooting.

If this is the type of insurance you feel you need and you don’t have disability, critical illness and life insurance, I feel sorry for your family.

As a company, I think it’s made a smart decision distancing itself from the NRA. There’s more than enough property and casualty business to be had in the 54 countries where it operates around the world.

It generated $3.8 billion in net income in 2017 despite the increase in annual catastrophe losses. I doubt it’s going to miss the NRA premiums. 

Hot Stocks That Ditched the NRA: Wyndham Worldwide (WYN)

Hot Stocks That Ditched the NRA: Wyndham Worldwide (WYN)
Source: Shutterstock

When you’re a company with the world’s largest hotel network, the last thing you want to do is appear to be favoring a special-interest group like the NRA over your millions of other guests around the world whose only concerns are staying in a nice hotel with a comfortable bed.

It seems that Wyndham Worldwide Corporation (NYSE:WYN) once was part of the NRA discount program offering a 10% break on hotel rates to NRA members. Wyndham says it ended the relationship in 2017, tweeting as much on Feb. 22, in response to another person’s tweet.

Some might wonder why it took the company so long to ditch the NRA when it already faced a boycott after Sandy Hook in 2012, but at least it managed to pull the plug this past year. From a business perspective, it’s got a lot going on.

In January Wyndham announced that it was acquiring La Quinta Holdings Inc’s (NYSE:LQ) franchise and management business for $1.95 billion. The move strengthens the company’s position in midscale lodging by adding almost 900 hotels to its network.

La Quinta’s asset-light business model provides Wyndham with excellent growth complimenting its existing midscale brands such as Ramada and Hawthorn.

Now is not the time to be messing around with the NRA. 

Hot Stocks That Ditched the NRA: TrueCar (TRUE)

Hot Stocks That Ditched the NRA: TrueCar (TRUE)

As I said in the opening, not all of the stocks to buy I’ve listed are perfect businesses; far from it.

However, it’s much easier for investors to hang in there when difficulties arise knowing that the company has integrity and is willing to do the right thing. That’s especially true when struggling to make money. 

TrueCar Inc (NASDAQ:TRUE) is one such company. It announced on Twitter February 23 that it was ending its relationship with the NRA. 

TrueCar is an information service for car buyers that gives them the data they need to know to make an informed car-buying decision. By providing the information to online users and then connecting them to certified TrueCar dealerships, the company is paid a fee by the dealers when these users purchase a vehicle.

So, it’s a volume business.

In Q4 2017, TrueCar generated $83.1 million in revenue from fees earned by 239,521 users purchasing vehicles from TrueCar dealers, 12% and 9% higher respectively from a year earlier. 

Unfortunately, on a GAAP basis, it lost $33 million in 2017. However, on a non-GAAP EBITDA basis, TrueCar made $29 million, almost double what it made in 2016.

Down considerably from its $21.56 high hit last July, value buyers might want to take a closer look, but only with money, you can afford to lose.

Hot Stocks That Ditched the NRA: Symantec (SYMC)

Symantec Corporation (NASDAQ:SYMC)
Source: Shutterstock

One of the unintended consequences of the burgeoning field of data analytics is that it allows company marketers to splice and dice customer information to the point where that information becomes irrelevant.

How else do you explain Symantec Corporation (NASDAQ:SYMC) offering discounts to NRA members?

I can’t think of a single reason why this five-million-strong cohort of potential customers is deserving of product discounts. Its membership brings nothing extraordinary to the table that millions of Americans who aren’t members of the lobby group don’t already possess.

But, to its credit, it’s recognized that narrowing the field to such a small segment of the American population, is a waste of time.

Symantec shares haven’t done very well over the past 52 weeks, down 5% through February 26. That’s coming off two healthy years in 2016 and 2017.

Why the downward trend?

Symantec’s earnings and revenue for fiscal 2018 are going to be lower than analyst expectations. The company sees revenues no higher than $4.95 billion while analysts are expecting $5 billion on the top line.

On the bottom line, analysts are expecting adjusted earnings per share of $1.68, four cents higher than the company’s revised guidance at the top-end of its outlook.

Short term, the company’s growing cloud business is going to deliver lower revenues on the enterprise side of operations as customers transition to subscription-based products; long-term, it gives the company a fighting chance in the hotly competitive cyber security market.   

SYMC stock hasn’t traded under $25 consistently since the middle of 2016. I’d consider it a buy if it drops below that level in the next 12 months.

Hot Stocks That Ditched the NRA: Avis Budget (CAR)

Back in April 2016, I called Avis Budget Group Inc. (NASDAQ:CAR) a deep-value stock worth buying soon given value stocks were starting to outperform growth stocks.

In the 22 months since CAR stock is up 82%. If recent earnings mean anything, look for Avis stock to move into the $50s and higher over the next 22 months.

In the fourth quarter, Avis’s adjusted earnings were $0.45 a share, 200% higher than a year earlier and significantly higher than what analysts were expecting on 7.5% revenue growth.

I’m prepared to give Avis the benefit of the doubt despite the fact it has ridiculously high long-term debt that’s almost 100% of its market cap. I see Americans renting a lot of cars this summer although very few by NRA members who no longer get Avis and Budget discounts.

Hot Stocks That Ditched the NRA: Delta Air Lines (DAL)

Hot Stocks That Ditched the NRA: Delta Air Lines (DAL)
Source: via Delta

Delta Air Lines, Inc. (NYSE:DAL) is part of the travel industry’s protest of the NRA. You’ve got rental car companies, hotel chains and even airlines cutting off the NRAs sweetheart deal for its members.

Why are there so many travel-related businesses ending their relationship with the NRA? Its customers caught them with their hands in the cookie jar. There is no other industry that I can think of that has such flexible pricing in its offerings.

Imagine going into Starbucks Corporation (NASDAQ:SBUX) and paying $2.50 for a coffee while another person pays $2.25 or $2.75. It happens all the time in the travel game. A 10% discount to NRA members is probably one of many offered by Delta and the rest of the airlines.

When everybody’s discounting, you can’t afford to exclude a particular group from the savings. Unless of course, you get found out, which is what probably happened at Delta.

Delta, like a lot of American companies, is going to benefit from the corporate tax rate cut from 35% to 21%. Delta suggests that it will increase 2018 earnings by 20% from the tax cut alone.

Add to that a business that’s seeing growth in all the places it operates including its trans-Atlantic travel and it’s easy to see why the company was quick to ditch the NRA.

Sure, rising fuel costs are eating into airline profits, and perhaps Delta wouldn’t have acted so quickly if it didn’t have the tax savings to fall back on, but given the airline’s expected to earn as much as $6.70 a share in 2018, it doesn’t need the NRA.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2018/02/7-stocks-to-buy-that-ditched-the-nra/.

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