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Chasing Value: Microsoft, Microsoft and more Microsoft

There are better companies and better stocks to invest in these days than Microsoft (NASDAQ: MSFT), but it would be silly of me to leave this company totally out of the picture just because it is not in my top ten.

The market is down a few percentage points as I write and MSFT is down in sync with the market. Many investment gurus have stated that they think a 10% correction is in order after the huge run-up since March 9, 2009. I am not so sure there will be a 10% correction or any particular correction just because the market was on a hot streak.

Continue reading Chasing Value: Microsoft, Microsoft and more Microsoft

Whole Foods -- Holy clarity!

I have never read an earnings release from Whole Foods Market (NASDAQ: WFMI) prior to last night. I recommend those who have read plenty of them to read this one. The clarity and transparency is refreshing.

In particular is the table which breaks down the age of stores, their comp growth rate and the return on invested capital. For example, for stores open for 11 years, Whole Foods stores show a same-store-sales growth rate of 3.8%, which is pretty good for a store open that long.

More impressive, however, is the ROIC for stores open eleven years is 77%.

Whole Foods' stock peaked at $78 in December 2005. It is now around $46, a big correction. Despite increased competition in the organic food space, Whole Foods has built a powerful brand name. In addition, its acquisition of Wild Oats was not a bad idea. Wild Oats has been restructuring the past few years and should not require too much work to integrate these stores.

It is time to do more work on Whole Foods. This looks to me like a good growth stock selling at a low valuation.

Ebay - going, going, gone - NOT

EBay has been stirring things up on blog sites around the world with its recent fee increases and business plan alterations. At this point there is no question it has been insensitive to a large group of angry and frustrated sellers. The unhappy store owners seem to want nothing more than to be heard. So heard they shall be...

I was impressed with the quantity and quality of the comments two days ago when I posted "eBay's message to sellers: Grow or die!" the storm of comments did not die down when I posted a follow-up yesterday: "eBay was revolutionary - now "peasants" are revolting!" If you want the details you can refer back to these posts. Now it's time to move forward.

While sellers have plenty of reasons to be frustrated, they can be sure they are being heard by eBay. When I last checked there were over 600-700 links to my posts. EBay management is getting an earful (and eyeful) given this, and so many other blog sites and editorial pages and direct communications to the company.

Unfortunately, no one should expect a response from eBay. They should get one; they deserve one; but they won't. EBay does not want to change its plans and it does not want to stoke the fire by giving objectors a platform. I, on the other hand, don't mind at all. I think it is important. This Marketwatch story gives a little more insight into eBay's thinking.

Continue reading Ebay - going, going, gone - NOT

In support of Home Depot - my response

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

Magic words: return on invested capital. Which stocks perform best?

The best reason to invest in a company is because they know how to make a profit and you get to go along for the ride. If they do not make a profit then, why invest? More importantly if they are not better at it than most every other company, bonds, treasuries, or an index then, again: why invest?

So how do our stocks measure up? I have listed the eight Blogging Stocks companies in order of return on invested capital (ROIC) based on AOL data from 5/29/06 (Yes I spent some of my holiday looking at this stuff)

Screaming for attention: Google (GOOG) 50.01 and Apple (AAPL)  26.31

Continue reading Magic words: return on invested capital. Which stocks perform best?

Symbol Lookup
IndexesChangePrice
DJIA-56.8410,234.42
NASDAQ-9.972,156.93
S&P 500-7.201,091.31

Last updated: November 12, 2009: 02:27 PM

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