Summary

Coca-Cola (KO) - Re-opening play, misunderstood stock, diversifying in beverage industry, favourable risk-reward, 3.4% dividend

Covid has disrupted the business: 50% of sales and a large chunk of margins are in out-of-home channels. However, the long-term story remains intact and KO is now an asset light business which should command higher multiples. It has diversified its revenue stream and is targeting cost savings of $3.8bn. About 30% of all beverages are now, zero or low sugar. KO bought Costa Coffee recently, placing them in the lucrative coffee space and also looks to be pivoting towards alcoholic beverages, which could be a very big growth driver. KO has a lot of downside protection. A reasonable valuation multiple puts it in the mid-seventies (32% upside), including dividends it offers a very attractive risk-reward set-up for patient investors.

Comcast (CMCSA) - Strong cable & broadband business, discounted valuation, 53% upside potential

Boyar’s preferred media play right now. The valuation discrepancy between CMCSA and Charter is too wide to ignore. Excluding Sky, it is a US business with approximately 75% of adjusted EBITDA generated by cable. Argues that CEO, Brian Roberts, has done a better job than people give him credit for. Activist investor, Nelson Peltz, is involved and will suggest splitting the company into cable & broadband and entertainment companies. Investors can acquire their core cable business at a discounted valuation and get $28 per share in additional value, representing about 53% upside from current levels.

CVS Health (CVS) - Strong competitive advantage, low risk, Covid beneficiary, health-clinic expansion, 2.8% dividend

Minimal risk at 9x earnings and it trades at significantly lower multiples vs. peers. It has a huge competitive advantage, about 80% of the US population lives within 10 miles of a CVS. It is also a Covid beneficiary with the virus likely to require multiple jabs with CVS playing a key role. It is also in the process of launching wellness clinics called “health hubs”. With 450 locations today, they are expecting 1500 in 2021. This will help lower costs on the Aetna side. It will drive store traffic and potentially be a subscription revenue business. CVS is rapidly deleveraging after the Aetna acquisition. It is a terrific FCF generator. About $106 a share on a stock that's been stuck in the low $70s and, like Coca-Cola, you get an ~3% dividend yield while you wait.

Liberty Braves (BATRA) - Re-opening play, sports gambling and network bids beneficiary, potential sale on horizon, valuable real estate

A stock trading in the high $20s that has a low $40s estimate of intrinsic value using conservative assumptions. Again, a great reopening play that is well placed to benefit from increased sports gambling in the US. The company will also gain from major networks continuing to pay more for contract renewals. John Malone is a disinterested owner who will sell at the right price. In 2022, the tax benefits that he got from buying the Atlanta Braves will end - perhaps leading to a fourth sale of the team. Trophy assets bring bidding wars and Wall Street is not giving credit for the valuable real estate it owns or that MLB has recently okayed private equity firms taking stakes.

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