Continue reading Volatile Markets: Checking our stock picks - Week 4

Volatile Markets: Checking our stock picks - Week 4 originally appeared on BloggingStocks on Fri, 14 Sep 2007 14:00:00 EST. Please see our terms for use of feeds.

Continue reading Volatile Markets: Checking our stock picks - Week 3

Volatile Markets: Checking our stock picks - Week 3 originally appeared on BloggingStocks on Fri, 07 Sep 2007 18:02:00 EST. Please see our terms for use of feeds.

Kessler made an observation which I found intriguing -- that there is often a disconnect between analysts' recommendations on a stock and their target prices. More specifically, he often finds that analysts keep a buy recommendation on a stock even though it is trading above that analyst's target price. In my view, when an analyst is employed by an investment bank, there is an economic incentive to keep a buy rating on a stock -- particularly when the bank is earning revenues from other business relationships it has with that company.

S&P does not do investment banking and it judges itself on whether its stock recommendations make money for investors. Thus Kessler felt it was important to change his recommendation once Yahoo exceeded his target price of $28. Kessler developed this estimate by developing a discounted cash flow (DCF) analysis of Yahoo's core business and adding to that the value of Yahoo's minority stakes in various publicly-traded companies, such as Alibaba, a Chinese Internet company.

Kessler had a mixed interpretation of Yahoo's conference call. He was pleased that Yahoo reported 30% growth in revenues from its top 200 advertising customers. But he also believed that there was significant negative sentiment about Yahoo based on several 2006 operating disappointments -- such as the delay in introducing Panama. In Kessler's view, The positive reaction to its latest announcement has balanced the negative sentiment and may also be overestimating the income statement benefit from Panama.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, a Professor of Management at Babson College, and editor of The Cohan Letter. He has no financial interest in the securities of Alibaba, McGraw-Hill or Yahoo.

Sell Yahoo!? S&P's Kessler thinks it's time to dump the stock originally appeared on BloggingStocks on Thu, 25 Jan 2007 13:21:00 EST. Please see our terms for use of feeds.

For those of you trying to think of the perfect gift that has value, will last a long time, and teach your kids a lesson, consider a few shares of The Black & Decker Corp. (NYSE:BDK) or Harley Davidson Inc. (NYSE:HOG).

Normally, I would recommend stocks be purchased as value plays and, at current prices, these two are fairly-valued stocks. I believe that they have room to go up, but I do not expect you to get rich from these levels. However, both companies are well managed, have strong brands and sell products that your kids might be interested in (motorcycles and power tools) ... even big kids. Getting the annual reports and introducing children to investing at an early age will be rewarding later on. Both companies also pay dividends, and I expect over the long haul, the growth rates will beat the overall market.

Black & Decker closed yesterday at $78.10. When I wrote about it last in August, it was about $70 per share. It was approaching a value play for me. It went as low as $66 a few days later and to my regret I did not buy in. I was greedy and looking for a $64 price. Had you invested then, on an annualized basis, you would be up about 25% from $70.

Harley Davidson closed yesterday at $70.11. I last wrote about HOG in August as well, when it was about $56 per share: I have been a shareholder since 1998. Had you bought in at the August price, you would now have achieved a gain of over 50% on an annualized basis.

You've heard about the gift that keeps on giving? BDK and HOG are both great picks and would make unique and valuable gifts for your children, now and going forward.

Happy Holidays!

Interested in reading more? Check out my other posts for Blogging Stocks here.

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an architecture & planning firm.

Two stocking stuffers: Black & Decker and Harley Davidson originally appeared on BloggingStocks on Fri, 22 Dec 2006 12:01:00 EST. Please see our terms for use of feeds.