Regional bank stocks have held up well here in US markets ..... just be aware of their Commercial loan exposure!

Dow Jones 11204.28 (UP) Week ending 04-24-2010


When I think back on the books I have read by Peter Lynch the iconic fund manager that was Fidelity Magellan, I always remember him talking about what a great deal your local regional bank stocks are. While some small banks are failing, (seven were taken over today by US regulators),others have performed very well and are positioned for future growth.

So I started with a list of 8 and narrowed it down to 5 bank stocks. The first is Hudson City Bancorp. Inc. (Symbol HCBK, $13.62) which has a very nice 4.4% dividend yield.

Second is Signature Bank (Symbol SBNY, $40.50) which has 13.5% Net Profit margins.

The next pick is Susquehanna Bancshares Inc. (Symbol SUSQ, $11.52). Susquehanna has made some nice acquisitions of investment businesses over the last few years and their banks are spread out over growing market areas. Susquehanna in the short term did have their credit rating lower by S&P yesterday along with 30 other regional banks and 4 large banks.

First Niagara Financial Group Inc. (Symbol FNFG, $14,59) just completed the acquisition of Harleysville National Corporation, securing entry into Southeastern Pennsylvania and the Lehigh Valley. This is a very good long term move for the company. The company has 14.5% five year sales growth and steady earnings growth.


The last one to mention is State Street Corp. (Symbol STT, $44.48). This one is a bank with sizable revenues that is an earnings turnaround story. State Street is a custody bank. Custody banks earn fees from keeping records, tracking performance and lending securities to institutional investors including mutual funds, pensions and hedge funds. Their asset management units also invest money for retail and institutional customers.

Even though I am an amateur investor, I should give professional disclosure on my holdings. I own shares in Susquehanna Bank. They are headquartered in Camden, New Jersey a city which I have a soft spot for because of my alma mater college Rutgers University, Camden is located there. I also grew up in nearby Pennsauken, N.J. I need to do this because last week a Hong Kong blogger picked up my blog story and posted on their site like a news content feed story. I don't want to mislead my Chinese friends into thinking I am a writer for Barron's or a business magazine or something!

So be cautious and do your homework when investing.

Best Regards,

Freewilly

"We need to talk about that $83.24 per barrel Elephant in the closet ...... Crude Oil. You will need to accumulate some Oil stocks."

Dow Jones 11,018.66 (UP) Week Ending 04-16-2010


Good Morning. Well we have all been enjoying this nice little rally this week, (except for that last day with the Goldman allegations and the volcano, Eyjafjallajokull, which in Icelandic means "snarler of airports"), but nobody is talking about the fact that crude oil has moved up from $55.00 to $85.00 a barrel. There are as many reasons for it to go down as there as for it to go up. But UP it goes!

I know most of you got burned in 2009 with Energy stock losses. Valero Energy and Chesapeake Energy strafed my portfolio value like a 50 caliber machine gun in year 2009. But, just like when you rode a bicycle the first time and fell off, you need to get up and ride that bike again. So I searched among the various Oil sectors for the best values and this is what I came up with.
The best value I could find is one the Chinese have an interest in as an oil source and that is PETROLEO BRASILEIRO SA (Symbol PBR, $42.28). This Brazilian oil firm has a PE of 10.44 and a 5 year growth rate in sales and earnings of 20+%. The stock is only up 28% over the last 12 months so is still a good value.
The next one is Ensco ADR (Symbol ESV, $47.18). This company has earnings growth of 53.65%. It has a price earnings ratio of 11.62 with 5 year 23.43% sales growth. Earnings per share for 2010 is $4.04, and for 2011 is $4.99 per share.

George Soros and T. Boone Pickens both own Hess Corp. (Symbol HES,$63.65) in their portfolios. When I went to look at Hess and it's peers I found that I like the numbers better for Murphy Oil (Symbol MUR, $60.20). Murphy has a five year sales growth rate of 21.92%. 2010 earnings per share is projected at $4.85, and $6.43 per share in 2011, a nice increase. I do not mention the major oil companies here like, ConocoPhillips, BP, Exxon, or Chevron because they all are projecting single digit revenue growth.

In the Oil service stocks sector I saw two that I like Cameron International Corp. (Symbol CAM, $44,75) and perennial heavyweight Schlumberger Ltd. (Symbol SLB,$65.80). Both are growing at 17 to 23% on the revenue side for the last 5 years and have very healthy multi year backlogs of work to do.

So be a wildcatter and grab one or two of these names and tuck them away for a few years in your portfolio for gushing profits.

Sincerely,

Freewilly

"One way for the amateur stock picker to find great stock picks is to get ideas from the Top Holdings list of your local mutual fund manager"

Dow Jones 10,997.35 (Up) Week Ending 04-09-2010

One way to search out picks to add key players to your stock portfolios is to check out what successful mutual fund managers are buying and holding as their top holdings in their portfolios. You look at their list then you cherry pick their best idea and buy it in your portfolio. Pretty simple, right? (The stock market is not like fantasy football where only one team can own that best player!)
So, I decided to look at the Brandywine Funds of Friess Associates. (I list a connection to their site in the right-hand column of my Freewilly site and also a link for Winterthur.) This fund group, founded by Foster Friess, who was a multiple time guest of Louis Rukeyser's "Wallstreet Week", are located in the bucolic area of Greenville, Delaware with the Brandywine Creek, Winterthur, and the lands of the iconic Dupont family fortunes. Foster's ranching/cowboy interest, (they use to have a Pig down in Greenville and may still), have taken them to Jackson Hole, Wyoming now also. Foster,(pictured right), is an advocate of making money and doing good deeds with it. Sounds like a good plan to me.
Let me say first that you can buy any one of their funds as a component of your portfolio and be perfectly happy with your returns. Their 3 funds are: Brandywine Fund -Mid Cap Equity-Growth (Symbol BRWIX), Brandywine Blue - Large Cap focus (Symbol BLUEX), Brandywine Advisors Midcap Growth Fund (Symbol BWAFX).
I searched the top holdings of that last fund, managed by Bill D'Alonzo and his Team at Friess and saw that they had 3.75% of the fund and the top holding of their top ten invested in the stock of:
Inverness Medical Innovations Inc.(Symbol IMA, $38.05) of Waltham, Massachusetts. This stock has been beat up a little bit since mid-January when it was at $44.00 and seems like a great value to buy at its current price. Inverness has 14 stock analyst right now recommending it as a BUY. It has a 5 year sales growth rate of 43.6% which I really like, being a salesman by vocation. 2010 earnings are projected at $2.73 per share and 2011 are looking like $3.15 per share.
The company enables individuals to take charge of improving their health and quality of life at home. Its products and services focus on infectious disease, cardiology, oncology, drugs of abuse and women's health. Brandywine's specialty is finding these companies with great earnings values and capitalizing on them over time.

So check out those fund prospectus and see what's in their top ten list.

All the best, Freewilly

Looking for value stocks in a market that has moved up? Look to Small Cap stocks

Dow Jones 10,927.00 (Up) Week ending 04-02-2010

Things were feeling a little bit "toppy" in the market this week as it appears investment managers are feeling safe and they are loading up their portfolios with quality stocks. So I decided to go back to my January 30th blog post to see if those small cap stocks that had been the percentage gain leaders at the end of January 2010 had continued to perform well and if any looked like a good buy at this point. LTX-Credence (Symbol LTXC , $2.91) looked like they were the best positioned to continue to do well this year. They had just done a secondary offering at $2.85 a share to pay off some debt. It looks like this will be their first year of consistent earnings. I actually purchased some of this small cap stock.
Houston American Energy Corp. (symbol HUSA , $19.69) is both a small cap and an oil company from that list, but it is just too expensive to purchase at this point here with a PE of 130.

The next stock is the casual shoe maker Crocs Inc. (Symbol CROX, $8.78). Crocs has a nice balance sheet with a quick ratio of assets to liabilities of 3 to 1. Earnings are growing at 18+ % per year. Kids are always losing these shoes or leaving them somewhere, so they always need replacements. I would consider CROX a buy here.

The next small cap stock is Culp Inc. (Symbol CFI, $11.69) the textile company which had shot up all the way to $16 and change and has now backed down to an acceptable purchase price. It appears they will produce earnings per share of 83 cents this year and 98 cents per share in 2011. I consider them reasonably priced here. I should mention that these are small cap stocks and are higher beta. Meaning that you don't want to "bet the farm" on any one of them because they can go up and down very quickly. Small Caps have less shares traded daily so all activity is magnified and can have dramatic affect on the stock price. So use small purchases of small caps to add a kicker to your portfolio.

One other stock on that list was Libbey Inc. (Symbol LBY, $12.67) a maker of glass tableware in Delaware. Annual Earnings of 60 cents in 2010 and $1.13 per share in 2011. So with a couple of analyst buy recommendations on it and a nice little spurt in earnings, it looks like you can put a trade on here in LBY.


The other stocks I mentioned in the January 30 blog were Bare Escentuals (Symbol BARE), Mindspeed Tech (Symbol MSPD) up 34.75% in January 2010 and Radio One Inc.(Symbol ROIA). Of these I like Mindspeed Tech the best because of its earnings outlook.

So be wary in this "toppy" market and add a small cap to spice up your portfolio a bit.

Sincerely,

Freewilly