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I purchased two stocks this week. I hope I was correct in buying them. As we all know, the Thanksgiving holiday period isn't always the best time to purchase shares of companies since trading volume is usually low and price action might be misleading. Nevertheless, I did what I did, and I'll tell you why.
First up, I bought Coca-Cola (KO). Why did I buy some of PepsiCo's (PEP) major competitor? This was the easier of the two decisions. I have a long-term position in Coke, so I wasn't so worried about a little bad timing. I dollar-cost-average every dividend check back into the stake, thus improving my price basis each and every quarter.
Unfortunately, I had to send my order in near the 52-week high. I waited too long to add to my Coke position. Shares have seen a recent run-up, perhaps because of a feeling that now may be the time to get defensive. How long will the rally last? Investors may want to own an entity like Coke instead of a riskier equity if the bullish sentiment begins to falter. I'm very confident in this company and its brand portfolio. Mostly, I love the dividend history, and anticipate future increases in the payout.
The second stock I bought was GameStop (GME), the nation's most recognizable retailer of video games. This one is a little more tricky. I'm not in this situation for the long haul. I just want to extract a minimal amount of capital appreciation from it.
Quite honestly, I'm surprised the stock was down Friday. Isn't the market excited over the prospects of the Black Friday rush? Sure, I know that wouldn't be a rational reason for Wall Street to place a bid, but the market is notorious for being the opposite of rational every now and then (actually, such a phrase underestimates the frequency of market irrationality).
Many units of Activision Blizzard's (ATVI) new Call of Duty title should be flying out the chain's doors, as well as consoles and games by Electronic Arts (ERTS), Sony (SNE), Microsoft (MSFT) and Nintendo (NTDOY). Even though I thought aspects of GameStop's latest quarterly report weren't so hot, I nevertheless considered the concept of trading the concern since the Christmas season should be kind to the business.
So, now I'm in. And, currently, I am down with the position. Not too far down, though. GameStop closed Friday at $25.32, roughly a few dimes below my purchase price. I'm confident I'll make some money with the company, but I know nothing is guaranteed. Thankfully, an iStockAnalyst.com article bolsters my belief in the move I made.
Both Coke and GameStop are interesting ideas. Can't wait to see how my timing works out on both of them.
Disclosure: I own Activision Blizzard, Coke, and GameStop; positions can change without notice.
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