Advanced Micro Devices(AMD) Valuation! A Bitcoin, Cryptocurrency Play?

Dear Reader,


Here I am going to attempt to value Advanced Micro Devices(AMD) the producer of computer processing chips.

Is Advanced Micro Devices fairy valued by the market? At a trailing Price/Earnings ratio of 238.01 and Price/Sales ratio of 8.81 by all conventional value estimates Advanced Micro Devices is overvalued. However, Advanced Micro Devices(AMD), with its cheaper than Intel offering of computer chips, has turned lately into a play on the cryptocurrencies boom. Many cryptocurrency miners prefer Advanced Micro Devices(AMD)'s processors to power their cryptocurrency mining operations. Basically AMD rides on Bitcoin's and other cryptocurrencies boom with its processors and graphic cards. Since the beginning of 2015 Advanced Micro Devices(AMD) has grown its yearly revenue by around 60% reporting growth of more than 10% each year since 2015.

So is Advanced Micro Devices(AMD) undervalued or overvalued? Basically, it is a binary outcome. If the cryptocurrency boom turns into an ordinary bust Advanced Micro Devices(AMD) will crash as well. But if in the long run Bitcoin and other cryptocurrencies triumph and turn into a real means of exchange facilitating payments and lowering the price of transnational money transfers, than Advanced Micro Devices(AMD) is significantly undervalued. I would say that after the coming economic recession and expectant Advanced Micro Devices(AMD)'s fall in price the company would become significantly undervalued. Currently, Advanced Micro Devices(AMD) could go up even more, but an eventual large price fall will come sooner rather than later.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Bank of America Valuation!

Dear Reader,


Here I am going to attempt to value Bank of America Corporation, the US based global commercial and investment bank.

Currently, Bank of America Corporation is valued by private markets at 309.79 bln. USD. Is Bank of America fairly valued? No. I believe Bank of America is overvalued by circa 20%. Otherwise said, Bank of America Corporation should be worth around 240 billion USD to reflect its true intrinsic value.

Bank of America currently trades at 1.28 Price/Book and 12.69 Price/Earnings ratios. I think the market currently overprices the quality of Bank of America's assets. Soon, a global economic recession will come and Bank of America's loan portfolio and investment assets will suffer. The good times that have been around for more than 10 years now will come to an end somewhere in 2021-2022. This time the crisis will be a loan crisis, not trading assets/investment bank crisis. Commercial banks like JPMorgan Chase, Bank of America, Citigroup and Wells Fargo will suffer a lot. US based commercial banks have been building up their loan books a lot and when the economy enters a recession they will have to write off large losses on their loan portfolios. I forecast the next financial crisis to be a long, shallow, but a protracted and ultimately deep one, like the recovery was. So US based commercial banks will be writing off losses for many years.

Bank of America has a diversified franchise, but it makes most of its money from making loans to both companies and individuals. So Bank of America is overvalued by 20% currently, in my humble opinion.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

JPMorgan Chase Valuation!

Dear Reader,


Here I am going to attempt to value JPMorgan Chase, the New York based global bank.

Regarding market capitalization at 423.55 billion USD the market capitalization JPMorgan Chase is the stellar performer among global banks and certainly the largest US based bank in terms of market value.

Is this large market capitalization of JPMorgan Chase justified? Almost. I think JPMorgan Chase is 15% overvalued at the current market environment or otherwise said JPMorgan Chase should have a market capitalization of circa 360 billion USD to exactly reflect its intrinsic value. Yes, I know JPMorgan Chase made 30.709 billion USD in profit in 2018 so its trailing Price/Earnings ratio at 13.33 does not look so high. But it is still not very low, either. The current economic environment can be best described as boom times. May be not such a pronounced economic boom as in 2008, but economic boom, nonetheless. And banks are generally a leveraged play on economic growth. So I do not think things can get any better for JPMorgan Chase.

Yes, central bank stimulus postponed the coming recession from 2020 to the second half of 2021, but the inevitable will happen and the USA, along with the rest of the world, will experience a contraction of economic activity relatively soon. That said, the stocks of US commercial banks majors such as JPMorgan Chase, Bank of America, Citigroup and Wells Fargo should not fall too much in the coming recession, or at least not so much as the stocks of the top technology companies, which are significantly overvalued. At 2.67% JPMorgan Chase's dividend yield is quite high and JPMorgan Chase's stable business mix should provide a relative protection in times of economic crisis, which are close. In times of slow or negative economic growth value stocks, which in the current market environment can be defined as energy and  financials, should significantly outperform growth stocks, technology stocks especially. 

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Citigroup Valuation!

Dear Reader,


Here I am going to make an attempt to value Citigroup Inc, the New York based global bank.

Currently, Citigroup is valued by the public markets at 164 billion USD. Is Citigroup fairly valued?

No. I think Citigroup is undervalued by circa 20% in current market conditions. Relative to its US peers JPMorgan Chase, Wells Fargo and Bank of America, Citigroup's Price-to-Book ratio at 0.93 is either at twice or at least with 40% discount.

Yes, Citigroup undertook huge restructuring after the 2008 Great Recession and in 2017 Citigroup recorded a loss of 8.048 billion USD. But in 2018 Citigroup recorded 16.672 billion USD in profit and Citigroup currently trades at 9.82 Price/Earnings multiple. At its current valuation Citigroup is a classical value stock. One explanation for the low market multiples of Citigroup may be that its revenue grew only slightly since 2016 full year and as of 2018 Citigroup's revenue is still significantly below its full year 2015 level.

So, in short, Citigroup, in my humble opinion, should be valued at around 200 billion USD by public markets to reflect its real intrinsic value. One contrary view is that a new recession is coming. And yes, global banks will suffer as their nonperforming loans will increase and they will start making write offs. But, still, Citigroup is in a good position to weather the coming storm and Citigroup's stock should outperform its US and global banking conglomerates peers if a new economic recession comes soon.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich