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CashFlow posts

Does General Electric have an adequate fire break?

Posted Mar 5th 2009 10:50AM by Sheldon Liber (RSS feed)
Filed under: Major Movement, Management, Rants and Raves, Competitive Strategy, General Electric (GE), Politics, Recession, Financial Crisis

My friends and colleagues have been getting an earful from me lately about establishing economic fire breaks deep into 2011. I gave one of my investment partners a large Post-it simply stating "Fire Break 2011," which is on the wall right between his phone and computer.

We have had stories about General Electric (NYSE: GE) almost daily on our site, most of them are positive about the stock being a value, mine among them. The problem is that if GE was a value two months ago, and two weeks ago, and two days ago -- is it more of a value now that it is priced lower still? More on that later...

Continue reading Does General Electric have an adequate fire break?

Time to bottom fish AES?

Posted Jul 27th 2007 11:30AM by Eric Buscemi (RSS feed)
Filed under: Bargain Stocks

AES Corporation (NYSE: AES), the emerging-market power generation company, has had a tough few months, declining from $24 to $20.50 -- a big decline for a company with steady and large cash flow generation.

The stock's weakness began when its multi-year earnings guidance was a little lower than expected. Another reason for investor nervousness is that in the last liquidity crisis, from 2000 thru 2002, the stock got crushed as the company suffered from a seriously leveraged balance sheet with concerns about bankruptcy being high.

However, this time around, the company has considerably less debt and generates considerably more cash flow. Also, emerging markets around the world have an even greater understanding that they must place an emphasis on power generation if they want their economies to improve.

Having dropped 15% during the past month, it may be time to consider bottom fishing in AES. The stock has been trading nicely between $20 and $24.

Correction in UAL leads to good buying opportunity

Posted May 8th 2007 11:10AM by Eric Buscemi (RSS feed)
Filed under: Earnings Reports, Industry, UAL Corp (UAUA), Bargain Stocks

Airlines stocks are entering the seasonally strongest period, after having a pretty good correction. It looks like a good trading opportunity.

One stock we have blogged about in the past with good success has been UAL Corporation (NASDAQ: UAUA). UAL has had a serious correction, dropping from a January 2007 high of $50 and is now around $35.50.

What is attractive about UAL is that it has a strong franchise name and a boat load of cash and little debt. Finishing up the first quarter with $4.2 billion and just $1.2 billion in balance-sheet debt.

Operating cash flow increased by 38% from the first quarter of 2006 to approximately $626 million.

While there are some capacity issues for the most recent quarter, buying a stock with $4.2 billion in cash, balance-sheet debt of $1.2 billion and generating $626 million in OCF, is just too cheap to pass up. Look for United to revisit its $50 higher.

In support of Home Depot - my response

Posted Jul 3rd 2006 11:36AM by Sheldon Liber (RSS feed)
Filed under: After the Bell, Forecasts, Internet, Blogs, Rants and Raves, Competitive Strategy, Home Depot (HD), Berkshire Hathaway (BRK.A)

I recently received a comment to an article I wrote a while back questioning my favorable opinion of Home Depot (HD) where I stated that despite its poor performance this year I still felt it was a good core holding; thus I feel a "public airing" is in order.

The following was the comment I received on Thursday, June 29:
    Why would you list The Home Depot as a "solid company" and give people the impression it's a stock to buy or hold at this time?  Investors have had trouble with management, the board of directors, and the the direction the Home Depot is going.
   Price of HD stock has been declining since the first of the year. It hasn't been doing well over the last five years. This is a stock a person has to gamble on. Flip a coin, cut a deck of cards, roll the dice, then decide if you want to invest. There is no "solid" evidence that this is a "must have in my
portfolio" stock.
   Todays Home Depot is not the money maker of 5 or 10 or 15 years ago because it's not the same company.

Continue reading In support of Home Depot - my response