The 2009 clock is ticking loudly. The year has started off with a lot of continued turbulence. We have a new president, Barack Obama, who will boldly lead us where no man has gone before -- two trillion further in debt, most likely.
Not that this is his doing, but it is his chosen calling, and right now he is calling out to the Senate minority to compromise, and get yet another federal stimulus package off the shelf and out the door.
I will not be reviewing the actual progress of my Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more until after the first quarter, but enough has happened that some commentary is warranted. For now, I will simply say that five stocks are up, four are down, with APC being the highlight and GE the lowest.
American Eagle Outfitters (NYSE: AEO) shared in its latest earnings report that same-store sales were down 22% year-over-year. There is no way to characterize that as good. Like most companies, it is tightening its belt to sustain itself: reducing costs where it can with layoffs, changing manufacturing and reviewing its product line. On February 4, 2009, the Motley Fools agreed with my assessment of the company, also pointing out that the company is sitting on a $1.66 per share in cash. It closed last Friday at $9.64 and I continue to believe that in the long run, AEO, and its shareholders, will be rewarded for its cash management.
Anadarko Petroleum (NYSE: APC) actually is better positioned than I originally posted. I stated it held 50% of its reserves in North America, when according to the following article it actually holds as much as 80% at home, and made other, recent discoveries. The company continues to reduce debt, expand production, as well as position itself for future growth, whenever that may be. The stock closed at $41.78, and continues to be one of my favorite stocks. If, as some talking heads rant, the market is going to take another dive sometime this year, I will be jumping all over this stock again. If you are not enticed yet consider this, Anadarko (APC) Q4 profits triple.
Anglo American ADR (NASDAQ: AAUK) continues to suffer from low commodity prices, but I remain confident that once the effect of our U.S. Treasury running the printing presses is felt, all of those commodities will rise in value. I consider buying AAUK when it is down a very diversified inflation hedge. The stock closed Friday at $11.18 and during recent dips I added to my position.
Annaly Capital Management (NYSE: NLY) reported its earnings and paid me the anticipated huge yield approaching 15%. For the fourth Quarter 2008, EPS were $0.47, and EPS for the year was $2.20. NLY closed Friday at $15.38. There is no change in the outlook that the federal government will continue backing up all the home loans that secure its investments, so there is no reason not to love this stock.
Diageo plc (NYSE: DEO) has been one of the middle of the road picks, although it has been more up than down. The company has been affected by the global economy, but less than most. It had to postpone some expansion plans in Ireland, while at the same time doing the opposite in India. I consider this a low risk stock. It closed Friday at $55.58.
Ahead of DEO earnings, the Sunday Times of London on February 8 reported that Diageo is expected to lower its growth forecasts when it announces full-year results this week from its previous expectations of 7-9% due to tough conditions in its major markets. Still, "the company is likely to maintain that its business is robust, despite having to adopt a more cautious outlook."
EZCorp Inc. (NASDAQ: EZPW) produced solid earnings that perked up the stock modestly for a time. It continues to expand amid speculation that the new congress, in concert with the new president, will be looking at ways to cap the profit margins on cash advances and pawn shop loans. In the mean time, I am buying on dips. It closed Friday at $13.87.
General Electric Company (NYSE: GE) is the subject of daily reports that it may lose its AAA rating, that it might have to cut its dividend, or both. At Friday's closing price of $11.10, the stock was paying a 10.22% yield (TTM). As a shareholder who loves to bank those payouts, I must admit it would not grieve me to see the yield cut in half from today's levels. A 5.5% yield would be plenty and it would make the review of the company's AAA rating less of a concern. The stock is simply being weighted down by the unknowns that may be hidden in its financial division.
Intuitive Surgical Inc (NASDAQ: ISRG) reported what would be considered solid earnings for almost any company, but this is one that has been remarkable for so long that investors wait with baited breath for a miss. Well, ISRG didn't really miss, but earnings and growth have been slowed by the overall economy and in particular hospital spending. The stock had retreated to a 52 week low of $87.14 but is up 30% since then, some say because JNJ is rumored to acquire Intuitive Surgical. ISRG closed at $114.62. I added more shares at $110.00.
Wells Fargo & Company (NYSE: WFC) has been very volatile this year as its competitors have reported nothing but bad news. There is also fear that Wells might be undercapitalized with respect to its reserve requirements. It has completed its acquisition of Wachovia and has begun the integration process. Anything unexpected from this acquisition or reduction in liquidity could affect the stock even more severely than it has been to date. I continue to view WFC as a long-term value and I have added to my position several times, reducing my cost when it dips. I have even "gambled" further by selling naked puts for March at a strike price of $12.00. (This option requires an approval that most investors will not get, and for those who do, I still recommend you think twice.) WFC closed Friday at 19.14.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares in all nine stocks.