Saturday, July 14, 2018

Here is the quandary. How do we take advantage of the 2nd half growth spurt in earnings of 2018 without getting caught up in the 2019 stock market hangover. It is important question of timing.

Dow Jones Industrial Average 25,019.41 (UP) Week ending 07-13-2018
S + P 500 Stocks average - 2801.31
NASDAQ 7825.98


"Investors feeling a bit confined"

What is an investor to do?  There are some tempting gains sitting right out there in front of you. The earnings and buybacks will all be drawing you to buy in. The quants are just blindly pouring into mega growth stock names and riding a wave. Align Technology Inc. is at $363.45 a share. Stamps.com is at $217.10 per share. Lending Tree is at $232.95. It puts me in mind of the market phase when the optical electronics stocks were just heading to the moon. They shortly, (but not immediately), found their way to the ground instead.

But alas, I am a Value Investor. They tell me that I can't purchase bonds, because interest rates are going up and bonds will go down, so no margin of safety there. Do I just move to money market and wait outside the market until the rise and the swoon both are all done? 2020? Do I have the patience for that?  Or do I want do buy some somewhat reasonable , (less than full margin of safety),  Value stocks and ride them out through the storm next year as a long term investor?  Yes it is a quandary.


Well I can give you a couple of "now or later" or "keep an eye on"  Value Picks I like with good Returns on Equity for now.


Progressive Corp.  (Symbol PGR , price $58.44 , Return on Equity 20.20%).  Warren Buffett has GEICO to anchor his portfolio and kick into cash flow, you should have Progressive for your insurance company anchor.




 CBS Class B.  (Symbol CBS , price $59.01, Return on Equity 46.80%) Someday the Redstone's and National Amusement and Viacom and CBS will sort out this tangled mess to realize the value here. 

Mario Gabelli has been waiting on it for years now. (Did I mention patience before?) . I have ridden this trade in the distant past and it worked out very well. Buying Westinghouse shares at 13 and then later selling it in converted CBS Shares at $68.00 per share. ( My daughter bought a new Volkswagen Jetta on her own with this trade!)

This is not a value pick, but it is a name that has popped up as a long term investment idea. Again, not a call on the timing of the price of the stock right here (i.e. Speculative pick) , just bring it up as a "thought out loud". (Also FYI, Tom Gardner from Motley Fool had brought the name up on Consuelo Mack's Wealth Track Show this past week.) 



                                      Stitch Fix . (Symbol SFIX, price $32.96 each)

That's all for today. Happy Bastille Day. The French are in the FIFA World Championship tomorrow against a good Croatia team.  Good luck to both squads. 

 Le Tour De France heads to the brutal cobble stones in Stage 9 tomorrow, then 3 days in Stages in the Alps, (sounds brutal like traveling through our US stock markets with the tariff challenges).

Au revoir!    Freewilly


Sunday, June 17, 2018

"Well I finally moved some money in my 401K into the Short term Treasury Bond Fund. I am OK with the FED interest rate raises to date, but I don't think we need another 1/2 percent raise by the end of the year." Still Buying ZTO Express and Mondelez International here.

The FED has done enough!   These minimum wage earners get a little raise on their pay and the FED wants to take it away with higher interest on their credit cards.  Just STOP already.  There is no inflation anywhere! The Russians and OPEC are going to pump more oil so those oil prices will come down naturally. GDP of 4% is not overheating for the USA.  It is and should be just NORMAL growth for this economy. Just leave the rates alone. The European Union is holding firm on their low rates. Don't increase our trade deficits with the dollar being too strong. ENOUGH already

( The only inflation I can find is on the price of Mayonnaise. I can live with that and just use Mustard instead to bring the price down).

There are two value stocks I like here even though one is near it highs for the year.

ZTO Express (Cayman) Inc. ADR (Symbol ZTO , $21.15)  

ZTO Express (Cayman) Inc. engages in the provision of express delivery and value-added logistics services through a nationwide network partner. The company was founded by Mei Song Lai in April 2015 and is headquartered in Shanghai, China. ( information from CBS Marketwatch) ZTO had $1.93 Billion in sales last year.  

Officially established in 2013, ZTO Express operates through about 7,700 network partners, according to the firm's prospectus. The company gets about three-fourths of its business from Alibaba and has 26,000 direct employees in China and more than 200,000 across its entire network. (CNBC reporting).


 Mondelez International (Symbol MDLZ, $40.82) can be purchased here with a good margin of safety. Oreo's, Triscuits's, and many other great snack products here. Earnings are growing at almost 9% a year and it has a forward PE of 16. Earnings Q/Q were up 53.3%. Also a 2.1% dividend payment to add to your total return.  

Have a great Sunday watching the FIFA 2018 Soccer games. Mexico upset Germany today. Great excitement here.

Invest wisely and carefully with these interest rates going up in the USA. 

Freewilly

Sunday, May 27, 2018

Going shopping for Value in the very sleepy Healthcare area. Mallinckrodt Plc. - symbol MNK is priced to buy, with a good margin of safety.

 









The healthcare area seems to be ripe with value for investment right now after a kind of dormant period. I would invest in Mallinckrodt Plc. (symbol MNK) at $16.50 per share and Forward PE of 2.3 and a possible book value of as high $75.00 per share. 

The venom is still out there on Achtar, the $$ expensive drug after the 60 Minutes TV show, but that will be corrected and they will move forward.

On this Memorial Day we salute the veterans of all wars. Let us hope that some day all wars and violence against our fellow man will end.

Freewilly


Sunday, April 22, 2018

The death of the Barron's newspaper version coming with the news two weeks ago that they stopped putting the earnings in the stock listings in the paper. What's the point? Alan Abelson must be rolling over in his grave. Also I have a value stock pick for you, GOOGL

Dow Jones Industrial Average 24462.94   (UP) for the Week ending 04/20/2018 
S & P 500 Index 2670.14  

Hello. Two weeks ago I received my Barron's magazine paper version on a Saturday 
morning  and suddenly discovered that there are no longer listed "Last years earnings"
, "This years earnings" and "next years earnings".  (The last copy to have it was the 
April 9th copy).  This  action renders this once handy tool as kind of useless now. 
(Tits on a bull came to mind).  I am calculatingly that it is the beginning of the end 
of one of the decent newspaper magazines you could read and use as an investor. Oh,
 well I guess the individual stock picker will just need to figure it out. Can't we just
 have a Saturday afternoon without turning on a computer or cell phone? 


The magazine still does have some good articles though. This week they pointed out 
General Mills (Symbol GIS, $43.41 )was a bargain right 
now, down 27% for the year and a new 52 week low , and is paying a 4.52% dividend
right now. The company has moved into some new areas with the purchase of 
Blue Buffalo Pet foods  and is actually looking to have a pretty good year.  The 
consumer Staples stocks  in general got beat up this week.    J M Smucker 
Co. (Symbol SJM, $114.92) and a PE of 6.43 and a good dividend 
also looks like a good value play here and SJM has less debt than GIS.

After some weeks of studying though, the real value stock  that I want to discuss with
 you is the stock of Alphabet (Symbol GOOGL, $1077.31)
 I had picked up some shares when it was at $1040.00 this week , which seems to be a 
good buy in point for the stock.  Google reports earnings this week and could get roughed
up a bit according to the CNBC option guys and this could create an opportunity to pick 
up  5 or 10 shares or more.



Warren Buffett for years liked the dynamics of the newspaper business and their
 steady cash flow that they got from advertising revenues.  Buffett in the past has owned
 The Washington Post and the Media General Newspapers and liked many newspapers
 that were dominant in smaller markets.  Now Google gets all those advertising revenues
 and also works with and teaches their customers the most effective way to advertise. 



Then you add to that revenue the Alphabet Cloud Businesses, The AI artificial
intelligence business, The Linux operating system Google interface for all the 
cell phones accept Apple,  $100 Billion dollars in cash, All the mobile patents 
they got when they purchase the Motorola cell phone business, YouTube, 
Waymo automated driverless car business, etc, etc. etc., and you have a 
virtual fireworks of value to be thrown off into stock gains. You just need to buy
the shares.


 "The best value stock I could find GOOGL"
I will also leave you with a good book for value investors to read by Guy Spier. He is 
good freinds with value investor Mohnish Pabrai and tells many good ideas for the
discipline of being a value investor. (Also about many bad behaviors to avoid. Oddly
he says that I should not talk about the stocks I own, but this would be counter-productive 
to writing a Value Stock investing blog so I will need to bend that one rule. I think he will
let me slide on this one.  I bought this book at Barnes and Noble bookstores. I still support
brick and mortar.  Call me old fashion. I like to read Barron's in the paper version best also.




Many happy financial returns, 


Freewilly

Sunday, February 11, 2018

"A Tale of Two Cities. While Philadelphia PA was basking in the glow of a 2018 NFL Superbowl Victory, New York City and Wall Street were on a wild ride downward. A week where the Dow Jones had swung wildly and ended down 10%."

Dow Jones Industrial Average 24,190.90  (Down, Way Down!) By most accounts a 10% correction.
S & P 500 2619.55 

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only". Charles Dickens "A Tale of Two Cities"

While Philadelphia PA. was winning their first NFL Superbowl and riding high for the week, with the Championship Parade down Broad Street to the Philadelphia Museum of Art ,(where the Rocky statue stands), on Thursday, it was a glorious week. The first NFL world championship in football for Philadelphia since 1960. Happiness and tears abounded. The team simply had fun.

 (Picture photo credit N.Y. Daily News)
But, up in New York City and Wall Street it was entirely different story. The VIX exploded up and down and traveled over 22,000 points in one week as leveraged VIX derivative funds created havoc in the markets with 50 times amplified volatility. On January 26th, 2018 the Dow Jones Industrial Average stood at 26,616.71 and there were whispers of Dow 30,000. On Friday, 02-09-2018 the Dow closed at 24,190.9, 2,427 points lower in a heart-pounding roller coaster trading week. It was the best of times and it was the worst of times. There were tears, but not of happiness

So what is investor to do for the balance of 2018?  My suggestion is to buy bulletproof stocks. Ones that have proved their merit and are tested over time.

One idea is to buy the stock of Texas Instruments (Symbol TXN, $100.49). TXN for 14 years in a row have increased their dividend. They produced free cash flow in 2016 of $4.1 Billion dollars. 

Earnings for the company were $3.61 per share in the trailing 12 months and will be $4.99 per share this year.  Earnings per share for 2019 are projected at $5.67 per share. A forward PE of 17.72.  4th quarter Quarter over quarter earnings were up 28.4%.

Texas Instruments had sales of $14.95 Billion last year that produced $3.65 Billion dollars in income. It had gross margins of 64.3% and a Return on Equity of 39.30%.

TI presently sports a Current Ratio of 3.90 to 1 with very little debt. More insiders are buying the stock than selling. 

The target price on the stock is $120.58
and TI currently sports a 2.47% Dividend yield. I think this could be a very nice total return on your investment in 2018.

The stock gained 33.45% last year and Performance YTD this year is (-3.78%).

Analysts having them at 6 Strong Buy, 8 Buy, and 17 Hold. I think this "Continuous Compounder" as one analyst called it, is just the ticket to be a steady performer in your portfolio.


Meanwhile in other news in this crazy week, Earthling resident genius Elon Musk sent a Tesla car to MARS! (pictured, no photoshop!)

Oh and this week, we have the always joyful PyeongChang 2018 XXIII Olympic Winter Games.

I think the best of times has a big and hopeful lead over the worst of times! 

"All things are possible. You just solve one problem at a time". ( a quote from that movie, "The Martian". Great and hopeful movie. 

All the best to you and your family and country,

Freewilly






Monday, January 1, 2018

Happy New Year 2018. Here are my Value stock picks for the new year. I will evaluate results this time at 1 year and 2 year intervals because sometimes good things in Value investing take time.

Dow Jones Industrial Average 24,719.22  Year End at 12/31/2017
S & P 500 Average 2673.61

2017 was a great year for both Value and Growth investing. You could have just bought Apple or Microsoft and been up 40-50% but who would have thought to do just that?

This year I decided to go with 12 picks to help you build your assets. These are all Value stock picks specifically this year. I think in the long term these with give you the best results with the least risk to your capital.

"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”  Sir John Templeton

So in no particular order, here are my picks for 2018:

1.  Alaska Airlines (Symbol ALK)
2.  J.P Morgan Chase (symbol JPM)
3.  Andeavor (symbol ANDV)
4.   InTEST Corp.  ( Symbol INTT)
5.   Express Scripts (Symbol ESRX)
6.   Gilead Sciences (Symbol GILD)
7.   Mastercard Inc. (Symbol MA)
8.   ManuLife Financial Corp. (Symbol MFC)
9.   Square (Symbol SQ)
10.  Discovery Communications (Symbol DISCA)
11.  Jazz Pharmaceutical (Symbol JAZZ)
12.  Brown Forman Group (Symbol BF.B or BF/B) 

This is a mix of varying ideas developed from concepts on Value Investing with consideration to PEG, ROE and intrinsic value of the company . Some Value investors would say these picks are not ugly enough or distressed enough to make a real killing, but for my readers this is an appropriate list that will also preserve capital. (***email me or comment if you want some ugly names and I will be glad to oblige).


We did have some losses in 2017,    but they were not financial.......

 Tom Petty R.I.P. (Rock in Peace)






Have a healthy, happy and prosperous New Year, 2018,

Freewilly





Friday, December 22, 2017

The recap of the 2017 stock picks from the beginning of the year. Equal weighting of these 11 stocks would have brought you in a 56.82% gain (12/20 cutoff date). Also a historic milepost - Blog # 300

Dow Jones Industrial Average 24,754.06 (U) Week Ending 12/22/2017
S & P 500 Index - 2683.34 (UP)


"If you don't lose money, most of the remaining alternatives are good ones!" 

Joel Greenblatt, Gotham Capital



Well it's that time of year again , when we review the blog stock picks from the beginning of the year to see how my prognostications ended up. It was a fabulous year with  8 of my 11 picks being on the ++ plus side. There was one big loser and 5 big winners.

 If you purchased equal parts of each of the eleven stocks I listed, your gains for the year, not including some good dividends, would have been 56.82%. I can live with that!




Here are the results:  

Lending Tree (symbol TREE)                     Up  233.05%  YTD
Align Technologies (symbol ALGN)           Up 143.06% YTD
Activision Blizzard (symbol ATVI)             Up 78.29% YTD
Lennar Corporation (symbol LEN              Up 45.73% YTD
Skyworks Solutions Inc. (symbol SWKS)   Up 30.50% YTD



Amgen Corp. (symbol AMGN)                  Up 21.13% YTD
The Blackstone Group LP (symbol BX)   Up 18.35% YTD
 Goodyear Tire Company (symbol GT)     Up 5.02% YTD



and the losers......

CVS Health Corporation  (symbol CVS)  Down (6.78)% YTD
INSYS Therapeutics (symbol INSY)          Down (21.74)% YTD
Under Armour Inc. (symbol UAA)             Down (47.78)% YTD

It has been a year of great learning and studying of the wide spectrum of ideas on Value investing from the many great minds that express their ideas about it. The Google forums with Value investors on YouTube have been particularly helpful. And I would be remiss to not mention the book that is a guiding light to me,  John Heins and Whitney Tilson's, "The Art of Value Investing", which I keep on my bed side table like a bible. Incredible thoughts on the subject.

I am a much better investor now then I was just one year ago. I wish that I had more time to write blogs weekly, but Value investing ideas take time and patience, so it is not really necessary to write weekly. We are blessed to have such wonderful resources available. This is Blog #300 for me since 2009, so it has been a learning and growing experience. I hope that it has been helpful to you.





Next blog will be my Value stock picks for 2018

Until then have a happy and healthy holiday season and a great new year.

Freewilly  - Blog # 300 - 12/22/2017

                                    

Saturday, November 18, 2017

"Special Edition Blog: How to prosper with a few stocks on the coattails of the BitCoin currency and blockchain transactions trading and their meteoric rise in value"

Dow Jones Industrial Average 23,358.24 (Down) Week ending 11/17/2017
S & P 500 = 2578.85


BitCoin. The word conjures up all kinds of thoughts. The California Gold Rush of 1849 is what comes to my mind. There is even Bitcoin "Mining", (like during the Gold Rush), which according to www,bitcoinmining.com is the following: 

"Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere"

Here is what I posted on Twitter 4 days ago: "Bitcoin = Speculation. Options and Derivatives trading on BitCoin = Insanity squared. There is a place for crypto currency, but not at these prices."  I do not think you should invest in BitCoin no more than I think a retail investor should do any currency trading. ( Because you will get your head handed to you!!). 


1 Bitcoin currently ,(11/18/2017),  is valued at $7699.98 US Dollars if you want to keep score going into the future.

  However, I think there is a few stocks that you can invest in to take advantage of this "crypto" decentralized digital currency phenomenon.

First, Mastercard Incorporated,(Symbol MA, $149.02), has filed for 4 Patents on BlockChain Money Based transfer solutions. I believe that the pairing of this trusted franchise name combined with the rocket fuel of block chain crypto currency transactions can be a huge winner. 



Mastercard is already up year to date 44.33%  without these systems even being added yet, so a very successful and profitable franchise.

Second, Square Inc. (Symbol SQ, $44.26), is a financial services, merchant services aggregator and mobile payment company based in San Francisco, California. Square helps millions of sellers run their business - from secure credit card processing to point of sale solutions. They also make loans to small and micro businesses. Square Inc. that currently did $2 Billion dollars in sales has a stock price that is up 224.14% year to date.



Square has introduced the option to buy and sell Bitcoin through its Square Cash app.

 Credit Suisse research analysts Paul Condra and Mrinalini Bhutoria reported the following: (Source: The Street.com article), 

"Impact of this latest move is uncertain, but could give SQ [Square Inc] early mover advantage: While the function currently appears to only permit buying and selling of Bitcoin via an exchange with no ability to purchase other coins or to send coins directly to other Cash users, we believe it could place SQ in an early-mover position as a mainstream fin-tech company providing crypto-currency services," the report said. "SQ is also well positioned to enable crypto transactions at the physical point of sale." . 

They have a Neutral rating on the SQ stock currently and also stated that PayPal, (Symbol PYPL), is also well positioned to provide similar services.

I believe that although MA and SQ are up at high prices for the year, I think that you can purchase them here for a 2 to 5 year investment.



So if you don't want to be dealing with Millibit Coin or Satoshi, (fractions of Bitcoins), then I would suggest just settling in with one or both of these stocks.

Thank you for reading and Happy Thanksgiving to my USA readers. 

Sorry that I have not been able to blog on a weekly basis. Next blog, I will be back to my traditional Value Investing ideas.

Sincere regards,

Freewilly





Sunday, October 8, 2017

Where's the Beef? Finally a food or beverage stock that I can consider a value buy. Tyson Foods, Inc.

Dow Jones Industrial Average 22.773.67 (Up) Week ending 10-06-2017
S & P 500 2549.33

Greetings all. I have been searching for awhile for a Food and Beverage stock that I could buy at a reasonable price that was a good value. Nothing on the Beverage side, (maybe Molson Coors Brewing, symbol TAP,  being about the cheapest),  but I did come up with one on the Food side.  Tyson Foods, Inc. (Symbol TSN, $70.66) which I always thought of as a "Chicken" company, just knocked the ball out of the park with a big gain in "Beef" sales.  These two categories along with "Pork" and " Prepared Foods" make up the 4 divisions of Tyson Foods, Inc. 

Tyson sports a great Return on Equity of 18.10% and a nice low PEG Ratio of 1.16. The stock is 92.10 percent institutionally owned. 

On the earnings side they earned $4.75 per share in the trailing 12 months and are forecast to earn $5.52 per share for next year. That is a forward projected PE of 12.80.

The stock trades at a Price to Sales of 0.69 and a price to current book value of 2.56, very reasonable for a stock in this sector.

 The company employs 114,000 people worldwide so I like that. In the last 12 months there were 72 Insider buys to just 25 Sells. In 2016 the company generated $2.02 Billion in Free Cash Flow. 

Analyst are 8 Buy, 1 Overweight, and 5 Hold on the stock. Truth be told , I had actually picked up the stock at $66.00 and I am finally getting a chance to write about it. 

IBD Composite rating on the stock is 82, and the other rankings are 77 earnings, 70 RS rating and A sector and B+ Accumulation/Distribution.


Tyson owns many well known brands here as you can see above. The stock is up YTD 14.56% and it pays a 1.27% dividend, so a very nice total return so far with plenty of upside headroom for the stock to move.  I would put a target price on it of $95.00 and say you are good to buy it here or on a market dip. 

I hope that your month of October is going well so far.  Things are very well here in Pennsylvania, USA. 

Happy Columbus Day.

Have a great week and eat lots of "Beef" from Tyson Foods, Inc.

Freewilly

Monday, September 4, 2017

The whirlwind month of August is over and did not turn out so bad. There was a mention of 3% quarterly revised GDP, a good sign for the US economy. I put together a small watch list for September to keep an eye on going forward.

Dow Jones Industrial Average 21,987.56   (UP) Week ending 09/01/2017

S & P 500  2476.55


Greetings fellow value investors.  It has been a busy summer here in Oreland PA. Sorry I have been hiding out from you. 

 I like to buy things in pairs in my IRA account, so I picked up some shares in Jazz Pharmaceutical , ( Symbol JAZZ, $143.00),  to go along with my Gilead Sciences (symbol GILD, who bought Kite Pharmaceuticals and their Car T cancer technology). I have spoken about Gilead many times on my blog as an undervalued large-cap biotech company. I like JAZZ here, buying the shares under $145.  These two sit up there with my other top holdings Alaska Airlines, (ALK), and Cisco Systems, (CSCO), which I believe to both be under-valued,  based on future projections for the companies.  

Everything past this point are just on "Watch list" and are not recommendations.

Sometimes I am asked if there are any Chinese companies that I would invest in?  This is an ADR traded on the NASDAQ as Weibo Corp. ADR, (Symbol WB, $104.72). It is like Facebook for mainland Republic of China users for social media.  I have added it to my "watch list" at this time.


Here is a Wikepedia description about the company:

"Sina Weibo (NASDAQWB) is a Chinese microblogging (weibo) website. It is one of the most popular social media sites in China, in use by well over 30% of Internet users, with a market penetration similar to the United States' Twitter. It was launched by Sina Corporation on 14 August 2009, and as of December 2012 has 503 million registered users. By the third quarter of 2015, Sina Weibo has 222 million subscribers and 100 million daily users. About 100 million messages are posted each day on Sina Weibo.

In March 2014, Sina Corporation announced a spinoff of Weibo as a separate entity and filed an IPO under the symbol WB , (Weibo).  Sina carved-out part 11% of Weibo in the IPO, and Alibaba owned 32% post IPO.  The company began trading publicly on 17 April 2014.

As of June 2017, Sina Weibo has over 361 million monthly active users, with surging advertising sales and total earnings in the second-quarter of 2017."   Buying things in pairs,  this might be a good investment to pair up with an existing position in Facebook , (FB symbol). I have never owned a Chinese stock ADR and would consider this a somewhat speculative investment. 

**************************************************
Then I have a list of some value names of micro-cap companies with market capitalization of between 50 Million and $558 Million dollars. This is down in an area where there is not much analyst coverage and you have a better shot at finding some better values. Here are 4 of them to add to your "Watch List" :


Lakeland Industries, Inc. (Symbol LAKE, $13.70). A good balance sheet and a $109 million dollar market cap. $0.84 cents in earnings forecast for 2019. 

A couple of broadcast companies next. 
 Beasley Broadcast Group , Inc. (Symbol BBGI, $10.35 per share) with a market capitalization of $293 million. It has a PE currently of 4.7.  

Second, Hemisphere Media Group Inc. , (Symbol HMTV, $13.05 per share) which owns Spanish broadcasting stations in North and Latin America. It has a PEG ratio of 1.55 and market capitalization of $558 Million. Earnings of $0.45 cents per share. 

Plus one more, InTEST Corp.  (Symbol INTT, $7.60 per share) with earnings of $0.26 cents per share and a market capitalization of $80 Million.

Labor Day Monday here in the US today so we are off from work today. September is not usually a great month for the stock market averages, so it is a time mostly to study and look for opportunities.



Have a great, healthy and successful September,

Freewilly

Sunday, July 30, 2017

" Have been selling some positions into this rally in the Dow Jones Industrial Average. I am keeping in mind Warren Buffett's first rule of investing, "Don't lose money". Peeled back some QCOM, UAA, and AET. Be cautious here"

Dow Jones Industrial Average  21,830.31 (UP) Week ending 07-28-2017
S & P 500 - 2472.10  (UP) 


What me worry? The President thinks he is in the fantasy football league and has to make two lineup moves every week. That following an ill-timed, illogical, and probably illegal executive order to discriminate against a class of people in the military based on gender.  Congress cannot agree on approving some sort of healthcare bill, while the present ACA health plan is losing coverage in various states and is increasing in premiums cost and deductibles. Will they ever be able to pass any new fiscal policy with tax repeals for people and business and possibly a repatriation bill to bring back money into the US to stimulate business?  Storm clouds on the horizon I say.


One place you can park some money while you wait for the storm to pass is Cisco Systems (Symbol CSCO, $31.52). Wall Street hates hardware companies because they are capital intensive and have inventories and also obsolescence of products.

Cisco though had revenues last year of $48.5 Billion dollars and had net income of 10 billion dollars. They have more cash on hand than allot of small countries with a bulging $68.5 Billion dollars. The company pays a nice 3.68% dividend payout which will help you to compound your money.


People forget that everything is moving to the cloud. Well much of that stored information is put onto Cisco Systems servers. They are the best. Not only that, at some point Cisco will also be the lead company for cyber and network security. The Cloud needs to be safe.

The company trades at PEG ratio of 1.55 and a Return on Equity of 15.60. It trades at a forward PE of 12.49 some is a pretty good value in a high priced market. Earnings for 2018 are projected at $2.45 per share.

The Current and Quick Ratio are both 3.5 to 1. Sales end up flat here year over year so that is why the stock has not taken off here and is only up 4.3 % this year. The stock has a target price of $36 so fairly low expectations. 

My thinking is if you are going to crank out $10 to 11 Billion dollars in net income every year and have a pot load of money to buy up other small companies, then you really cannot go wrong here.


I love my Apple TV box,  because I can watch cool stuff on Youtube and Netflix.  Here is a link to a great HBO Documentary special on that may be of interest to value investors or even anybody as a human interest story.  Warren is going to give all $100 Billion away to charities. He was inspired by his wife to do it.

HBO Documentary - Warren Buffett - well done HBO!

 Warren Buffett - Berkshire Hathaway, Inc. 
Be cautious and take some profits here and raise some cash for future bargains. 

Evaluate your non-performers and pair some of them down. Make better use of your precious funds.

Best Wishes - Freewilly.