). Trainer describes them as "all industry leaders with balance sheets that can get them through any kind of worst-case scenario you could imagine."
Clearly, Trainer thinks these companies have staying power. However, not all firms are in similar positions. For that reason, he thinks that his five businesses are about to get a lot bigger. "Naturally, there will be a lot of market share that falls into their lap just by virtue of surviving," he said."Really, more importantly, they're all trading — or have been trading — at prices that imply they never get back to something like 2012 or 2014 profit levels," he said.
Using a simple discounted-cash-flow analysis, Trainer says that the market is implying "huge, permanent reductions in profits" that aren't justified. Under that school of thought, he thinks PVH — a stock that's currently trading near $67 — could double in price. "If you look at just the current cash flows for PVH versus the stock price, the stock price is implying a permanent 70% decline," he said. "Even if they get back to 2017, we're talking 80 bucks. If the stock trades at parity with its peers, based on its return on invested capital, we're talking like 130, 140 buck a share. So, again, it's really cheap." Disclosure: TD Ameritrade is a partner of Insider, Inc.
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