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Why Empire Financial Research Continues To Recommend Facebook Stock?

MENAFN - Fri Sep 24, 11:05PM CDT



Simon / Pixabay

Whitney Tilson's email to investors discussing why do we continue to recommend Facebook Inc (NASDAQ:FB) stock?; New York passes sweeping bills to improve conditions for delivery workers.

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1) I've been very critical of some of Facebook (NASDAQ:FB)'s business practices in recent e-mails, which led two readers to ask:

  • "Hi Whitney. You've written several e-mails outlining the awful business practices of Facebook, but you continue to rate it as a buy in one of your portfolios. Why?" - Jim S.
  • "Hi Whitney, Thanks for today's post regarding Facebook. Just curious, have your thoughts changed on FB as an investment? We are Empire Elite Partners and have been invested in Facebook since it was part of your perfect portfolio." - Lisa T.

The short answer is that I'm able to hold two seemingly contradictory thoughts in my head at the same time: a company may be behaving badly, yet its stock might be undervalued.

In fact, this is often the case, especially if you're a value-oriented investor like me. We look for beaten down, out-of-favor stocks - which sometimes is the result of some taint. But as legendary investor Bill Miller once noted: "If it's in the headlines, it's in the stock price." And if the problems prove to be fixable, the stock can soar.

One of my best investments ever was buying McDonald's (NYSE:MCD) in late 2002 and early 2003 from $16 per share down to $12.50 per share as the company weathered criticism that its food was unhealthy and was contributing to the obesity epidemic.

I also made a quick profit in mid-2010 when I bought oil giant BP's (BP) stock in the wake of the Deepwater Horizon oil spill in the Gulf of Mexico.

Here at Empire Financial Research, our most important job is to give our subscribers money-making stock ideas. Thus, we haven't hesitated to recommend controversial companies such as gunmaker Smith & Wesson Brands (NASDAQ:SWBI), cigarette company Altria (NYSE:MO), defense contractor General Dynamics (NYSE:GD), spirits maker Diageo (NYSE:DEO), pot stock Green Thumb Industries (OTCMKTS:GTBIF), and gambling companies Penn National Gaming (NASDAQ:PENN), Las Vegas Sands (NYSE:LVS), DraftKings (NASDAQ:DKNG), and Flutter Entertainment (LON:FLTR).

2) Speaking of companies behaving badly, in Tuesday's e-mail I shared an article - Revolt of the Delivery Workers - about the horrific work conditions these men suffer, so I was glad to see this: New York Passes Sweeping Bills to Improve Conditions for Delivery Workers . Excerpt:

The working conditions are no doubt similar across the country (and world), so the solution isn't to wait for each city to enact these basic reforms, but rather for the companies themselves to embrace them.

If one of them were to do so, perhaps customers would reward it by shifting their business, which would compel the others to follow.

Best regards,

Whitney

P.S. I welcome your feedback at [email protected] .

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