02-28-07: It is days like today that separates the great investors from the average. The average investors will run away and return when the market is up again, but for the great investors, he or she is out there looking for opportunities to buy great companies at a deep discount. After having analyzed today’s decline, we believed the market has over-reacted. Here are some reasons as to why we believed things will be okay:
02-27-07: The market is in panic mode today. The DOW is off 200 378 416 points and the NASDAQ is down 70 96 points. The sell-off in China overnight has spooked investors across the globe. The Shanghai stock exchange dropped 9 percent, the largest percentage drop in a decade. The fear of global recession has investors up in arms and people are dumping stocks in an attempt to salvage any gains they have. Is this just an over reaction or a sign of hard times ahead? Here are some strategies to consider during these uncertain times:
02-25-07: Marvell Technology Group (MRVL) will finally report earnings after the market closed Monday. Some analysts have upgraded the stock as if MRVL will somehow pull a rabbit out of the hat and surprise the world. The problem is the stock has been running up in the last weeks, settling around $20 per share. Our prediction is MRVL will report inline with expectation. Heck, they might even surprise the market by beating their numbers a little. However, we doubt the stock will move up as a result. This is one of those cases where investors will probably sell on the news. Exercise caution if you decide to take position in this stock. Our view remains the same as our previous evaluation of MRVL.
There are typically three types of investors. For feasibility, we will refer to them as Type I, II and III. Which type are you? Feel free to comment.
Type I: These are new individuals looking to learn about more about investing. They are typically young in age and are fairly new to investing. Being new to investing, these individual will usually get their investment ideas from a stock broker’s recommendation or story they have read in Forbes or a television show. The main characteristic of this group is they are more likely follow the crowd and invest in sectors that are in favor.
02-23-07: Microsoft (MSF) shares have been on the decline in the past few weeks as investors are becoming increasingly concerned over the sales of Windows Vista. According to initial reports, sales of Vista in the first few weeks of release have not doing as well as expected. As a result, last week, Steve Ballmer basically lowered the expectation for Vista sales. Adding insult to injury, yesterday, a judge ruled MSFT will need to pay $1.5 billion to Alcatel-Lucent SA regarding a software patent infringement relating to MP3 technology. MSFT shares are now trading in the $28 range from it 52 week high of $31 per share. Do not panic! Here are some points to keep in mind:
02-23-07: You know a stock is trading at a deep discount when Warren Buffet decides to take a stake in a company. In the latest Berkshire Hathaway filing, Warren Buffet bought approximately a million shares of United Health (UNH). Interestingly, we had recently evaluated UNH last month and identified it as an undervalued stock. We are pleasantly surprise to see our views are in the same ball park as the mastermind of value investing. Here are some reasons why we believed UNH is still a buy.
Since oil is now back in focus, we would like to remind folks of this strategy. Thus far, we have been correct in our predictions:
Orginally published on 1-24-07: We have written many articles on oil at iBooyah.com because we believed oil plays a large role in the world’s economy. When oil was dropping because the weather was unseasonably warm at the beginning of the year, we encouraged people to buy companies like ConocoPhillips (COP), Exxon Mobil (XOM), Chevron (CVX) , BP and Valero (VLO) as they were falling with the price of oil. We also predicted any fall in oil prices would be temporary and should be viewed as an opportunity to buy. Our other prediction that oil will unlikely fall below $50 per barrel remains intact. To profit from oil, read on..
02-21-07: With the Democrats now in control of Congress, should we now expect to see some movements on the alternative energy front? This is a common question we have received. While politics can play a role, we believed it is ultimately the company themselves that controls their destiny. Despite the perception that the Democrats are more environmental friendly, the reality is if big oil were to disappear, these same politicians would be concern over jobs and the taxes these companies generate. Short answer; we would not place our hope on any favorable governmental policies to move any securities. However, since alternative energy is now in focus, let’s take a look at Archer-Daniels-Midland (ADM) as they are currently the largest ethanol producer in the U.S. today.
02-18-07: Western Digital (WDC) is one of the premier hard drive producers. While we believed this market has reached the mature stage, there is still room to grow as new devices continue to provide catalyst for growth. When a company approach this stage of the business cycle, it is reasonable to expect gross margin to decline. In the last quarterly report, the company provided lower guidance for 2007 which sparked concerns. The decline in gross margin has Wall St. nervous. Another concern with WDC is its reliance on Dell. WDC is one of Dell’s main providers of hard drives. While Wall St. appears to have given up on WDC, we view this as an opportunity. Here are our thoughts on WDC:
02-17-07: Starbucks Coffee (SBUX) has always been one of our favorite companies. The brand is second to none. This company has changed the way we drink coffee. There is no going back for most of us. We used to believe it was a fad, but no longer. We are a loyal customer and addicted to their latte. SBUX continues to grow in the U.S. and abroad. If there is no Starbucks near you, no worries, there will be one eventually. We have been patiently watching SBUX ever since we sold it last November. In retrospect, it was the right move as it turned out we sold at its peak. The company’s valuation concerned us so we decided to take profit. However, we believed the time is now right to buy SBUX. Here are some reasons:
02-16-07: As the DOW continues to set new record highs, it is easy to forget how quickly the gains we have worked so hard to obtain can instantly vanish in a matter of days. This is fundamentally why we believed it is important to always evaluate your current position so corrective measures can be taken as market events unfold.
One of the biggest mistakes most individual investors made (including us) during the dotcom hay days was allowing our greed to affect our judgments. Some common mistakes included, not selling JDSU when it was at $400 per share or not being able to resist the temptation to buy Amazon.com (AMZN) even when it was at $500 per share despite knowing it was against our better judgments. We are determined to help individual investors avoid these mistakes.
02-15-07: Constellation Brands Inc. (STZ) is one of the largest producer and distributor of alcoholic beverages. The company produces and distributes many of the well known brands alcoholic beverages. Its 200-plus brands range from jug wines to coveted California reds such as Ravenswood and Estancia, beer imports from Corona to St. Pauli Girl, and liquors like Skol gin and Black Velvet Canadian whiskey. It owns 10 brands of vodka including Fleishmann's, Barton and Glenmore (AP, 2007). STZ competes head to head with Anheuser-Busch (BUD).
02-14-07: In life we all live by certain codes or rules. The same goes with our investment decisions. Great investors such as Warren Buffet and Peter Lynch would not be able to achieve superior appreciation without having some rules. With that said, here are some simple rules we believed can help with your investment matters.
02-13-07: Aetna Inc. (AET) – Our long term view on AET is bullish. We actually bought AET last August when the stock tumbled because AET warned of lower than expected guidance and earnings. We were fortunate as the stock was trading in the low 30s for a few days and was just too cheap to ignore. We remain a holder of AET today as we believed this stock is still undervalued.
02-13-07: Bed, Bath & Beyond Inc. (BBBY) operates approximately 800 stores selling high quality domestic merchandise and home furnishings at prices below those offered by department stores. The company’s breadth and depth of products far exceeds what is available in most department stores. As a “one stop” shop for household products with sound fundamentals, we believed this stock could double in the next 3 years. Trading at current level ($42.29), see an opportunity for superior return with this stock. Here are the key points for our view.
02-12-07: Some of you have requested our opinions on PetroHawk Energy Corp. (HAWK). After having the opportunity to study the company, we are cautious optimistic on the stock. We will post our thoughts on the other stocks in the coming weeks. We hope this helps with your investment matters. Thanks again for your continued feedback.
02-11-07: Sometime we find it useful to remind ourselves of the fundamentals of investing. It is easy to get caught up in the moment and make irrational decision. To keep ourselves from making decisions on the fly, we must remind ourselves that investing is a process that should be driven by well-developed plans with specific goals in mind. Goals are important as it will help us address the most common question we face on a daily basis. Should I keep this stock or sell it? Should I take profit? Should I accept the lost and move on? We all face these questions as investors. This article will attempt to provide some guidelines to help with these questions.
The self-directed individual investors have continued to grow. TD Ameritrade (AMTD) targets individual investors that are looking for value trades. The typical customer profile is someone in the early stages of accumulation of assets as well as experienced investors that does not need the expertise of a full brokerage firms. These are cost conscious individual that seek to benefit from low trading cost. Moreover, these are individual that trades more often than the average investors. Fortunately, these targeted customers account for the majority of investors. After watching this stock for almost a year, we believed the time to buy AMTD is finally right. Here are some reasons for our opinion.
Armor Holdings (AH). Military spending will continue to increase despite which party is in office. No politicians want to appear weak when it comes to the military in the post 9-11 world. As a result, what the military wants, the military gets. This is evident in our Federal budget since 2001. The trend will only continue as long as this country is engaged in the war on terrorism, which could last forever. One of the many companies that has been profiting from increased military spending and will continue to profit is Armor Holdings (AH).
Yahoo! (YHOO) – Despite recent negative sentiments surrounding Yahoo!, especially when the company is compared to Google (GOOG), we remain bullish on this company’s outlook. As the world’s largest provider of online content and services, we believed YHOO is extremely undervalued at this level. Here are some key points:
Sprint Nextel (S) – The merger of Sprint and Nextel was a combination of two companies that were in free fall hoping to save one another. After about a year as single entity, the jury is still out on the company’s long term performance. At current level ($17 per share), is it time to jump in?
Thanks again to those that provided feedback and requests. Here are more of our views on the stocks you have mentioned. Today, we are providing our opinion on Salesforce.com (CRM), SanDisk (SNDK) and EMC Corp (EMC). These are all great technology companies with various issues to contend with. Again, if we have not provided analysis of your stock, check back soon as we are still working it. We hope these opinions can assist you with your investment matters.
Oil services stocks have recently taken some beating as commodity prices have dropped due to higher than expected inventory. One of these stocks which lost some momentum is BJ Services Company (BJS). This company is one of the leading providers of pressure pumping for oil services within the petroleum industry. The pressure pump is required to cement and stimulate new oil and natural gas wells. An important service that is necessary with new oil and natural gas wells. Currently trading at $27.57, this stock appears to have bottomed and could be poised to move as commodity prices have recovered.
2-7-07: Here are our responses to your questions and requests. We apologize for not being able to really go in-dept on some of these companies as we wanted to provide feedback to you as soon as possible. We will however keep all suggestions in mind for future analysis. If your requested company is not mentioned, rests assure we will eventually get to them so check back soon. Thanks again for your suggestions and feedback.
All eyes are on Cisco (CSCO) today as the market awaits its earning announcement. Most analysts are expecting the company to post impressive numbers as evidence by its recent run up. The entire technology sector will be affected by how CSCO performed. If CSCO delivers, the technology sector should rally tomorrow. However, if CSCO disappoints, watch out as the entire technology sector could sell-off. We remain bullish on Cisco over the long term, but the recent run up is a little concerning. The expectation might be too lofty for CSCO to deliver.
Time Warner Inc. (TWX) last quarter performance was uninspiring to say the least. After a nice gain in 2006, we are less than optimistic this year will yield similar performance. Thus, we have lowered our expectation for 2007. The stock buybacks was a great way to boost the flagging stock price in 2006, but it is merely a temporary boost. Over the long haul, revenue is the only way to drive shareholder value. Last quarter performance had too much “window dressing” for our taste.
As most would agree, picking the right stock is no science. The goal of “buying low and selling high” is relatively a simple concept, but in practice this is not always easy to do. Instead, most of us end up buying high and hoping to sell it at a higher price. From our experience, attempting to profit from an already hot issue usually result in failure. For this reason, we tend to stay away from the so call hot stocks as we believed the market is just too efficient. Information in this day and age is instant and prices are reflected within seconds of any news. Once a stock has been anointed “hot”, it is usually too late. With that said, we have identified some "cold" stocks, which we believed has the potential to get hot and yield above average return.
If you have not noticed, the homebuilders stock is starting to show signs of life. We had predicted 2007 will be when this sector starts its recovery as the bottom for these stocks were in late 2006. Thus far, our prediction has been correct. DR. Horton (DHI), Toll Brothers (TOL) and KB Homes (KBH) are heading higher. Since our last article about Homebuilders, these stocks are up almost 20 percent. While these stocks have had a nice run, we believed this might just be the beginning of the ascent, here are some reasons:
We have received several requests from readers in regards to where they should invest their money based on different scenarios and various stages of their life. We are happy to provide the following recommendations as a baseline. This is how we would allocate the investment. In the following three scenarios, we have a 10 year old, 40 year old and a 65 year old retiree. We hope you find these subjective recommendations useful.
