Sometimes I am so confounded by my fellow investors that I have a hard time finding somewhere to do a reality check, so I throw myself on the mercy of the blogosphere today. I do this because I have found no solace by making inquiries with brokers, analysts, traders, friends, family, and fellow investors large and small.
For almost three years I have been touting a EZCorp (EZPW
) stock that just keeps rising, and I believe is still under valued. Way undervalued. Before I continue let me make it clear I own the stock personally and in my investment company's portfolio -- still eating my own cooking.
The initial shares have a cost basis of $11.80. EZPW opened at $29.20 today and is trading higher.
Yesterday EZCorp announced the acquisition of a majority interest in it's Australian partner: EZCORP to Form Global Strategic Alliance With Cash Converters
. This expands the global reach of both businesses, increases the range of services, and should also improve efficiency in a broad number of areas.
Continue reading Chasing Value: EZCorp Still a Bargain
To paraphrase Mark Twain
"The reports of our
death are greatly exaggerated". The world economy
has been in shambles for a few years now, and our nation has much work ahead of it. 2010 was an improvement over 2009 and I believe 2011 will show further improvement.
There are lots of ideas running through my mind as I consider where the economy might be heading in 2011. What opportunities lay in front of us waiting to be picked up or passed over? Just five trading days left, and market activity will slow down except among fund managers making adjustments for tax purposes or window dressing. You should examine your tax situation, too.
Continue reading Chasing Value: Pre-Christmas Quick Takes
Leave it to our representatives in Washington to make a compromise that ignores most of their previously stated beliefs -- of only a few days ago. This just reinforces again the old joke "How do you know when a politician is lying?..."
Monday the Obama administration and congressional Republicans came to an agreement to extend both unemployment benefits by 13 months, and the Bush-era tax cuts for all by two years. What happened to the Republican and Democratic noise about fiscal responsibility and reducing the debt?
A few days ago Republicans were not going to vote for an extension of the unemployment funding if there was not an associated revenue offset to pay for it. That's gone, so the deficit is going up. The Democrats claimed they would not back an extension of the tax cuts for people that earned over $200,000 for individuals and $250,000 for joint returns claiming this would add $900 billion toward debt reduction. That's gone so the deficit is going up.
Continue reading Serious Money: Washington Compromise Stinks, but Here Are Some Stocks to Look At
The market is down and the headlines
are blaming Cisco Systems (CSCO
), in part because they reported tepid earnings and somber growth projections. This once again underscores the fact that stock prices are always determined at the margins. Most folks could care less, and this is reflected by the big silent yawn of the majority of investors.
Cisco is not the bell-weather it has been in the past. Some of its business is down because there are more alternatives from competitors, "the cloud" keeps growing, and also many products have become commodities.
There are many other companies I would consider better measures of how the economy is doing.
Continue reading Chasing Value: Cisco Shmisco -- It's Nothing
Steve Jobs, the illustrious CEO and the heart and soul of Apple Inc. (AAPL
) would have you believe that Apple cannot issue a dividend to shareholders because of the scary competitive business environment. He conveys to us that they need the money to overcome hardship and if the right opportunity comes along make key acquisitions.
This is utter nonsense, a supreme untruth, wasted breadth and a failure to come to grips with reality. In the past quarter Apple increased its cash and short term investments to $50 billion as I wrote it would
six weeks ago.
Apple currently has 914 million outstanding shares. With the stock trading around $300 per share, a 2% dividend yield would require $6 per share or, $5.5 billion dollars annually to cover the distribution.
Continue reading Chasing Value: Apple Does Not Need $50 Billion
Since the early spring, when the government announced it would start selling its shares of Citigroup, Inc. (C
) stock, there has been downward pressure on the shares. At the time of the announcement it was reported that all of the government's 27% stake in the company will have been sold off before the end of the year. There is no certainty of that, after all it is the government, but it would not likely be too long after that.
This raises a lot of questions as to what will happen in 2011. Perhaps Citigroup will start buying back shares: there sure are a lot of them floating around. At last count, 28.97 billion of them with a cap rate floating around $115 billion. For comparison, Bank of America Corporation (BAC
) only has 10.03 billion shares outstanding with a cap rate near $137 billion.
Continue reading Chasing Value: Government Still Selling Citigroup Shares -- I'm Selling Puts
The long awaited Initial Public Offering (IPO) of Tesla Motors (TSLA) stock hit the market at $17.00 a share and it is up in a down market, trading between $18 and $19 throughout Tuesday morning.
I say stay away. First and foremost, investors should take note of the fact that most IPO's end up as losing propositions. In the case of Tesla, which lost over $55.7 million last year and will lose more this year, the bleeding has just begun.
The car manufacturing business is very capital intensive and Tesla only hopes to stem the tide in 2012 when it projects a production run of 20,000 Model S all electric sedans for $50,000 each.
Continue reading Tesla IPO: Hot Stock or Portfolio Shock?
"Nobody doesn't like Sara Lee (SLE)?" Think again. Swiss company Nestle has filed a lawsuit against the Illinois-based food giant, claiming patent infringement of the Nespresso coffee system. While the Swiss are known for staying neutral, Nestle felt compelled to seek legal action in an effort to protect its highest-selling product.
Nespresso is the business model that keeps on giving ... once customers buy one of the high-end machines, they also need to buy capsules of blended coffee (available in 16 varieties of varying flavors and intensity). The machines run from $199 to $599 and the capsules are about 55 cents apiece (which provides one cup). That 12-cup-a-day habit can add up quickly.
Continue reading Nestle Sues Sara Lee over Patent Infringement
Shares of BP PLC (BP) have been in free fall the past month as investors worry whether or not the company is going to be able to deal with the oil disaster in the Gulf, but the stock made a nice move today, gaining 12.3% on the day to close the session at $32.78.
While today's price jump was impressive, it was still not enough to make up for the 16% drop we saw yesterday, which marked the stock's worst trading day since 1972.
Continue reading BP Bounces Off 52-Week Low
Chrysler Group announced that it has issued a recall for 600,000 vehicles
today for a range of safety concerns.
The company announced that the recall was in light of concerns including faulty brakes, sticky accelerators, and electrical fires. Today's reports come as drivers are already dealing with safety concerns stemming from the massive recalls Toyota has been forced to issue over the past year.
Continue reading Chrysler Recalls 600,000 Vehicles
Stocks have fallen over the past month and certain stocks have fallen considerably. If you have lost equity recently and can find similarly positioned stocks, it may be wise to consider some lateral moves. Selling one stock and buying something comparable allows you to claim a loss while still remaining fully invested.
In this way you do not have to observe the 30-day rule where you cannot claim a loss in a stock sold today if you buy it back until after 30 days have past. In 30 days the market opportunity to repurchase the shares of the company you sold at good price may have also past.
Continue reading Serious Money: Tax Savings, Lateral Moves
It really is hard to believe that is has been six weeks since BP's (BP
) oil well exploded and sank in the gulf, and even harder to believe that the company has still not been able to stop oil from leaking out into the ocean.
Everyone wants answers to what exactly led to the to oil rig's explosion, and today the U.S. Attorney General Eric Holder stated that a criminal investigation had been launched
into the matter to determine which, if any, laws were broken leading up to the disaster.
Continue reading Criminal Investigation Launched over BP Oil Spill
There's another positive data point in the campaign to check contagion and keep credit markets liquid.
The European Central Bank's intervention to buy the government debt of Greece, Spain, Portugal, Italy, and Ireland has apparently started to bolster investor confidence, Bloomberg News reported Thursday
. Central banks of Germany, France, and Italy also intervened.
Continue reading ECB Intervention Calming Bond Market
Continuing from where I left off earlier today regarding the Goldman Sachs - Paulson & Company debacle...
What would have happened if the collateralized debt obligations were created and sold exactly as was done, shorted by Paulson, and the eventual buyer was Warren Buffett?
First of all, "my pal Warren"
would not let his position be known to anyone beyond normal filing requirements and perhaps announced at some later date. Second, if it was disclosed that Buffett was betting against Paulson, Mr Paulson would be a huge fool if he did not think twice about his shorting the CDO given this new piece of information. Third, should the buyers of the actual CDO be treated differently than Buffett, or you or me? Of course not.
If I were CEO Blankfein, that is what I would have tossed back at Congress.
Continue reading Congress, SEC and Goldman Sachs Failures -- Part 2
This is getting a little too easy! Friday's positive close marked the forty-fifth calendar day that has elapsed since the Standard & Poor's 500 stock index pulled back even a measly 1%. The Dow even briefly reclaimed 11,000
before rolling back a hair away from the milestone figure at the close.
If you were a visitor from another planet, you would be forgiven for concluding that the stock market always goes up. It certainly has seemed that way since February 23, when the market posted its last significant one-day drop.
Continue reading 45 Days Without a 1% Slide Equals a Coming Correction
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