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November 30, 2006

Wal-Mart (WMT): Waiting for the right time!

The less than stellar Thanksgiving sales data has many analysts worried about the retailer’s future and the state of the economy.  While the sales were still up 7% compared to last year, this was not enough to get anyone excited.  To put things into perspective, Wal-Mart is more than just a company.  Some analyst uses this company’s performance as a way to gauge the economy.  As a result of the negative press, the stock has taken a bit of a hit in the last several days. 

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November 29, 2006

Ford is a buying opportunity

Ford Motors Company (F) is on its way towards relevancy with the acceptance of the 38,000 worker buyout offer.  Ford can be compared to someone buying a fixer upper home where the pipes are leaking and the entire house is in need of repair.  Now that the new owner has moved in, the first thing that needed to be done is to repair the pipes so the leaking would cease.  Once the leak is no more, the next step is to concentrate on fixing the other not so urgent matters.  It is my opinion Ford is on its way up from here. This is exactly the same strategy as GM, which drove their stock from $18 to above $30.   If the restructuring plan goes as planned, this stock would be in the mid teen, possibly $18/share by end of 2007.  For these and other positive reasons, iBooyah.com is slapping a "buy" recommendation at $8.20/share.

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November 22, 2006

Evaluating Stocks

With thousands of stocks to choose from, developing a systematic approach to evaluating stocks can make it easier to make your selections. The first step is to narrow the options from the thousands of possible choices to ones most likely to meet your objectives. That typically involves screening companies based on criteria important to you. For instance, if you are interested in growth stocks, you might look for earnings growth over a certain percentage. Or for value stocks, you might look for companies with low price/earnings ratios or low price-to-book values.

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The rules of diversification

Financial experts will tell you to diversify your investments and you should – Here are some ways to go about diversifying your investments:

First of all, when many people think of diversification they think of putting money in many, many different stocks. In reality, you don’t need more than eight to ten stocks in order to be diversified. Personally, I typically only hold eights stocks at any given time. This number allows you to reap the rewards of good stock picks while also protecting your portfolio against one-time disasters.

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November 20, 2006

iBooyah.com upgrading YHOO to a buy

One of Warren Buffet’s guiding principles is to invest in things you use and understand.  This strategy has proven to be of great success, but it is difficult to find companies that is of good value.  In today’s bullish environment, it is becoming a challenge to find these types of companies at bargain price.  Fortunately, there is one company you probably are using on a daily basis and is a major internet play. What's more interesing is the stock is currently trading at a bargain compared to its competitors.  The company is Yahoo!  This company is in the same position as Microsoft was earlier this year. In May, MSFT’s stock was trading around $23/share.  Today, MSFT is almost $30/share.  If you recall, in May 2006, Wall St. was disappointed when the company announced it will spend an additional $2 billion in R&D.  This caused Wall St. to question the company’s future and sell off; six months later, MSFT stock has more than recovered.

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Professional Pessimism is your friend

If you haven’t noticed, the stock market has been on a tear, setting new highs daily.  In fact, the DOW is trading at all time high, almost 400 points above the height of the dot.com bubble.  On Tuesday, November 20, the DOW closed at 12,316.54. How long will this rally continue is anyone’s guess.  Depending on economic data and future interest rate sentiment, the market could change in an instant and head either way.  Keep your eyes on the next FOMC meeting.  The FOMC is the key. There are some who believe that the Fed might lower interest rate to keep the economy from slowing too much.  However, based on recent economic indicators, most analysts believe the Fed will keep rates at 5.25% and possibly cut in early 2007.

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November 16, 2006

Starbucks (SBUX) not so hot

A few months back I stated Starbucks (SBUX) needs to beat expectation handily in order to justify their current valuation.  The stock was then trading in the low 30's.  Due to market optimism, SBUX has been battling its way back to the almost $40/share.  My position remains the same in respect to SBUX stock, SBUX is overvalued and trading at premium. There is just too much expectation.  Today, we saw the result of these high expectation; SBUX's number failed to impress Wall Street and the stock is down almost 6% in after-hour trading.  Look to pick up this stock in the low 30's.  My take it is SBUX is a $32 stock; that would be a great point of entry.

On a postive note, I noticed every Starbucks store I frequented while on vacation in Hawaii appears to be packed; so people are still in love with their cofee.

November 02, 2006

Marvell (MRVL) is looking MARVELOUS!

Marvell Technology (MRVL) is one of the companies that have recently been dragged down due to options expensing practices.    Stock options are intended to award employees and executives through equity.  However, some companies have taken advantage of this and decided to back date the options price in order to entice key employees or execs. Albeit the practice of back dating is illegal, some companies have decided to look the other way.  Now that company must expense stock option in the earning reports, the SEC and the Justice Dept. are now starting to look at these practices with a microscope.  Even the most respected names such as Apple Inc, is not immune to this error in judgment.  The problem is prevalent amongst Silicon Valley companies.

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