Chasing Value posts
There have been many lessons to learn from the "Great Recession." But while the message is often clear, we can't always muster the courage, discipline or consensus to act on these lessons.
The National Basketball Association (NBA) is about to enter its second season -- the playoffs. And for a Laker fan in Los Angeles, there is much to look forward to. However, the current NBA collective bargaining agreement will end and we will have to witness another battle between the billionaires and the millionaires.
Why can't the NBA learn from other businesses that have successfully maneuvered through economic turmoil to achieve profitability?
Continue reading Chasing Value: The NBA Should Learn from Others
In the middle of the summer with the stock market smoldering from the economic aftershocks of the BP (BP) oil spill, I decided to post a contrarian story emphasizing a very common refrain among value investors, "my pal Warren" being head of the class: buy on fear (sell on greed). This notion is continuing to work for what I called the toxic stock portfolio.
This is the third update to my ranting five months ago that six of the most reviled and most highly traded stocks featured by daily bad press as a group would outperform the overall market. It has, with the big winner rising from being one of the biggest losers.
Continue reading Chasing Value: Toxic Stock Update #3 -- BAC, BP, C, GE, GS, RIG
This company has been on my recommended list for longer than any other company in the four and a half years that I have been writing for BloggingStocks -- with only one exception, Intuitive Surgical (ISRG). The company is EZCorp (EZPW), which beat the Street again with third quarter earnings per share of $0.56, three cents better than the analyst estimate.
Revenue for the quarter was $198.2 million, which tops the estimate of $191.01 million. The company projects 2011 earnings higher too: EPS of about $2.35 vs. an estimate of $2.25. EZCorp grew earnings by 33% and increased its footprint by 127 stores through new construction and acquisitions.
Continue reading Chasing Value: Apple's Great, but This Stock Is Better!
It was only a month ago I wrote a story comparing Oracle Corp. (ORCL) and Hewlett Packard (HPQ), concluding the latter to be the better opportunity from a value investor's perspective. At the time Oracle was $27.49. Yesterday it closed at a new 52-week high of $29.23 -- a gain of 6.33%.
During this time, Oracle insiders have been selling shares and the trend is negative. In September alone, almost $300 million of the stock was sold off. If you examine Barron's weekly summary of insider activity, as one source, you will find that Oracle has been in the top five companies on the sell side for many weeks. As the stock has been rising, insiders have been selling into strength.
Continue reading Chasing Value: Oracle Insiders Selling as Stock Hits 52-Week High
During the second quarter I wrote a series of stories about stocks that might interest "my pal Warren" in the global market. One such stock in the June 24 post was National Grid PLC (NGG), which closed Friday October 8 at $45.43.
At the time of the recommendation, the stock was at $37.81. It was 33% off its high and, besides strong fundamentals, is a company that resembles Berkshire Hathaway's (BRK.A) Mid-American utility holdings. I thought it would be a good fit for further integration and growth of this division, given that both also have British and U.S. enterprises.
Continue reading Chasing Value: National Grid -- Maybe Warren Did
Having accepted a speaking engagement at a university school of business recently, I had to think about what introductory information I could impart to the students about investing that would be practical, immediately useful and establish a foundation for whatever direction their paths might lead. This was supposed to be the first in a series. However, since I pull no punches and can be a little edgy in my candor and presentation, who knew if I would be invited back?
My outline had five basic elements. The first thing I told them was to start now!
Continue reading Chasing Value: Class Is in Session -- Where to Start
Where did they go? Why have we not heard from them? We have heard what the rig survivors had to say, as well as the government inspectors, regulators and elected officials. BP (BP) senior management has spoken out often. We have heard from Gulf coast clean-up crews, the Coast Guard, insurance underwriters and affected business people.
Perhaps I just missed it, but I do not recall hearing anything from someone whose job it is to observe and report on safety and risk at BP facilities?
Continue reading Chasing Value: BP's Risk Manager Missing in Action
If there ever was a company that could and should be bought out, it's WD-40 (WDFC). The company has been doing well in these tough times, and guidance is for more of the same.
Perhaps that is because almost every household in America probably has a can of WD-40 in the utility closet, garage or workroom in case they need to get out of a jam or just plain un-jam something. The aerosol in the blue and yellow can has been a reliable lubricant and rust preventative for decades. It is the primary revenue-generating product for the company, but it is not the only one.
Continue reading Chasing Value: WD-40 -- A Buyout Candidate?
Last January I suggested that shares of Ross Stores (ROST) might be as much of a bargain as the merchandise it sells. That turned out to be true. The stock has outpaced the market considerably. At the time, it was trading at $45.20. Last week, on Sept. 3, Ross closed at $52.60 for a year-to-date gain of 16.37%.
Ross pays a small dividend yielding 1.12%. It is not high, but it exceeds what you're getting from money market accounts or CDs and, added to the stocks appreciating, it's a bonus.
After this nice gain, how do the metrics shape up today? Is it too late to make some money here?
Continue reading Chasing Value: Ross Stores Update, Great Then and Now
The most common question I get from friends, family, business associates and, well, everyone is -- Do you expect a double-dip recession? My answer is an unequivocal "No!"
This does not mean that I think we are going to experience a dramatic improvement in the economy. We are not. Many of my colleagues seem to oppose my view, so it is not without some trepidation that I take this stand. However, I see the glass half full. My view is that others are overly influenced by "group-think" and the calls of doom.
I do think that we are currently adrift in uncharted waters and we may have a faulty rudder, too. The biggest fear I have is that everyone jabbering about another deep recession may actually cause one.
The following supports why I feel, from what we know, that we are not destined for a double-dip recession:
Continue reading Chasing Value: No Double-Dip Recession
I have always felt that for all the blabbing we do -- or blogging, in my case -- we should try as best we can to be accountable for our good and bad calls. This report is long overdue, but I will post it anyway since all of my past year's picks and results have been made public.
The market was very harsh in the early part of 2009, filling investors fear and trepidation, and sinking to a March 9, 2009 bottom. Perhaps some of the bleeding has stopped, but the economy has not healed as bears and bulls seem to carry the day, or every other day.
Continue reading Chasing Value™: 2009 Results Crushed the S&P 500
Until recently, my largest positions were in financial stocks Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC). As a contrarian investor, I do buy on fear and sell on greed as "my pal Warren" has advised for many years. This has worked out to be very profitable over the past 18 months. However, in the past 30 days the financial stocks have dropped to second place in favor of oil and gas stocks.
I think the economic recovery is moving at a snail's pace, lowering anticipated demand for oil while gas was already depressed based on the same factors and the addition of numerous new large supplies. Add to this the mess in the Gulf of Mexico and the public's already negative sentiment about oil companies and you have the makings of depressed pricing in the sector.
Continue reading Chasing Value: Buffett Must Be Buying Oil
Yesterday I was shocked by the response to a poll I conducted in this very same column
where I suggested that six out-of-favor stocks were a buy and would out perform the over all market. The results left me puzzled for several reasons.
For one thing I have been blogging for Aol. for over four years and I cannot remember an occasion that there was so much unanimity on anything before. I expected approximately equal votes for each of four possible responses to my question, and an appreciable number that might think I was off my rocker. Instead, I was jolted to a new reality when 84% of the respondents agreed that the six toxic stocks would outperform.
The six stocks are Bank of America (BAC
), Citigroup (C
), General Electric (GE
), BP p.l.c. (BP
), Goldman Sachs (GS
) and Transocean (RIG
). I thought I was taking a contrarian position and based on recent market activity that would seem to be the case. This raises another question. If my readers are any reflection of the market, how could the market move in the opposite direction of such overwhelming sentiment?
Continue reading Chasing Value: Shocked By Toxic Stock and Still Finding Deals
Unless you are the ultimate contrarian, Friday was not a good day for the stock market. While there are always plenty of great companies to invest in, I've chosen a group of stocks that everyone else actually hates.
The stock market was none too pleased with the earnings reports from Bank of America (BAC
), Citigroup (C
) and General Electric (GE
). I was quite surprised that the trio, which are the most heavily traded stocks on the market, jolted investors as they did. I think all three are a buy.
Not to leave out any of the recently orphaned stocks, let's add three more bad boys to the picture: BP (BP
), Goldman Sachs (GS
) and Transocean (RIG
). They have been hurt by the misdeeds of management, which resulted in crushing blows to shareholders. These three stocks are very scary: The prospects for a turnaround remain bleak in most everyone's eyes, with little chance of the negative headlines or business improvement changing the outlook anytime soon. Could the timing be right to buy these monsters too?
Continue reading Chasing Value: Buying a Toxic Portfolio -- BP, RIG, C, GS, BAC and GE
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