"With the Royal Wedding coming this week, will this spur a new fashion age with sales of Fancy hats and Revlon makeup?"

Dow Jones Industrial Average  12,595.37 (UP)  04-26-2011 Tuesday



Royal princess Kate Middleton

 Nothing like a Royal Wedding to launch a new wave of fashion and makeup trends, especially since the new princess already is known for her fashionable hats. It also doesn't hurt that she is the loveliest lady to arrive at Buckingham Palace since it was graced by William's mother, Lady Diana. (I wish Diana were here to see it, but I know she is here in spirit and will certainly be present in everyone's mind).



One company that will certainly benefit from this new and exciting trend will be the well known brand and franchise of Revlon Inc. (Symbol REV, $16.20).  

I do not think that Revlon's stock has really priced in the value of their worldwide reknown leading brand. I could see their own possible marriage to an Avon or an Estee Lauder Cosmetics company.

Revlon, Inc. through its subsidiary, manufactures, markets and sells an array of cosmetics, women's hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and personal care products. They live at the high fashion address of  237 Park Avenue, New York, NY 10017.

 Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name. Starting with a single product — a new type of nail enamel — the three founders pooled their resources and developed a unique manufacturing process. Using pigments instead of dyes, Revlon developed a variety of new shades of opaque nail enamel. The company has had a wild history including Michael Milliken junk bonds at one point being involved in a buyout.

It has not been a bed of roses for Revlon, with the stock dropping to as low as $2.37 back on March 10th, 2009.  In April 2006 , the stock was at $34.40 per share. Talk about Beta. This is not my traditional stock pick based on the fundamentals because the numbers are just too crazy. The company has $25.26 in revenues for every share of the company and the company operates at 70.51% Gross margins, outstanding. The flip side is, the company has a negative book value and $22.17 a share in long-term debt. Such is the world of high fashion, not for the faint of heart.

Revlon's stock has a 3 year total return on the stock of 69.3%.
Earnings for 2011 look like $1.33 and for 2012, $1.43 per share, so they are making money. It looks to me like there is a trade here, with a target price of $23-$24.  Revlon reports earnings this week on Thursday, April 28th with a slew of other companies. I think beauty products will benefit from having a whole world market to expand in to. Most cultures embrace a whole range of beauty products.

Revlon also sells to the growing market for hair colors for covering that gray, and also even sell wigs!

Jessica Biel

Lot's of celebrities with Revlon's advertising including spokeswoman Halle Berry, Jessica Biel, Jessica Alba and others.

So get on the Revlon Trolley, (pictured below Hong Kong tram) and take a ride to a nice capital gain. Happy earnings report week.


     Freewilly

"A sudden silence in the financial community with the tragic loss of the very young and eloquent Joseph Battipaglia"

Dow Jones Industrial Average (Down)  12341.83

Joe Battipaglia 1955-2011


I was stunned. It was Thursday night, April 14th, and I was watching the Larry Kudlow show on CNBC like I do every night and Larry made the somber announcement that Joe Battipaglia, one of the steady and  level headed voices on wall street had passed away today. I sat frozen on the couch in disbelief. I felt a blow to the stomach like I had lost a member of my family.
     
       Joe Battipaglia, 55 years old, and two years younger than me, who was a star guest analyst on CNBC and Fox continuously and leader in the financial industry for decades was gone. I will defer to Neil Cavuto of Fox Business News for a personal remembrance: Remembering-Joe-Battipaglia . Joe grew up in the New York City borough of Queens, the only child of a city sanitation worker and the first in his family to go to college, according to CNBC.com. My sincere condolences to his family and especially his children. My father died when I was five, so I know what it is like to experience that grief as a young child. Joe would want us to continue to talk about the thing he loved, business and stocks, so that is what I am going to do.

 LTX-CREDENCE, (Symbol LTXC, $8.57) is a stock that I mentioned last year and own personally.
 Verigy was supposed to purchase LTX Credence but then came along Advantest and they bought out Verigy. The cancellation of the deal will result in LTXC receiving 15 Million dollars that will go right to the bottom line. LTXC already has a low price earnings ratio of 7.4. The company is growing at 16% and is expecting to have 2011 earnings of $1.08 and $1.32 in 2012.  Joe Battipaglia's firm Stifel Nicolaus had  reiterated a buy recommendation on this stock on 12/10/2010 to a $10.00 price. The company has a return on equity of 24.30% with a PE heading towards 6.49 with a 15 million dollar kicker. I wouldn't be surprised if Advantest went after them also as an acquisition target. (I think they will want to get their 15 Mil back.)

There are lot's of bargains out in the NASDAQ stocks right now.

 Ebix Inc. (Symbol EBIX, $22.54) the Atlanta GA. insurance and health care "cloud" CRM and application software company was taken down 25% in price the other week by an anonymous blog of all things. (Probably a disgruntled competitor). The company has a 5 year sales growth rate of  43.68% mostly due to acquisition and a 5 year earnings growth rate of 61.75%. These are the facts. Ebix runs with net profit margins of 44.60%. They have a one year total return of
38.5% and a 3 year total return of 139.0%. These are also facts, indisputable. The company plans on buying back 45 million shares. I would prefer that they continue to use their money instead to acquire other companies, but no harm here. All the major ETF holders in the stock have nice gains on their investment.

I will leave you with 2 links with  Joe Battipaglia from April 2011 from the Larry Kudlow CNBC show.

We will miss you Joe. 

http://video.cnbc.com/gallery/?video=3000014418

http://video.cnbc.com/gallery/?video=3000015715

Live your life to the fullest everyday and remember Joe in your prayers.

Freewilly

"A late Easter and a rise in Cotton prices has led to some bargains in Retail Apparel stocks"

Dow Jones Industrial Avg. 12,380 (UP) Week ending 04-08-2011

We have all heard about the meteoric rise in the price of Cotton. Demand is steady and in high volumes to China, India and Pakistan.

What the newsmen have not told you is that demand for cotton has actually dropped by 7 million bales since 2006.  This is similar to another commodity, Oil , where speculation has driven the price higher, while worldwide demand is leveling off.

As we have all seen in the housing market, speculation or what Alan Greenspan called "Irrational exuberance," eventually comes to an end and prices return down toward the "mathematical mean" price.  When this happens with cotton, it will be a windfall to some well run apparel retailers.  Easter being late in April this year is also going to create soft sales numbers for apparel retailers for their Q1 2011 number comparisons to Q1 2010 figures. Q2 numbers on the other hand, should be excellent comparisons. Here are a few names that should benefit from this phenomena. I would buy them now and hold into the Christmas holiday.
    

Aeropostale Inc. (Symbol ARO, $25.62)  even without cotton prices  going down currently has a Return on Equity of 49.2%. ARO also has a 5 year sales growth of 15.31% and 5 year earnings growth of 31.85%. Sometimes you need to shop in the off season to get investment bargains. Don't forget that this stock's share price is up 91.51% over the last 5 years.



Limited Brands Inc. (Symbol LTD, $37.17)  is projecting 2012 earnings of $2.31 and 2013 earnings of $2.64 per share. LTD has  Return on Equity of 42.5% and offers a too reasonable dividend of 2.15%. This stock has a three year total return of 132%. March sales have been surprisingly strong against lowered expectations with a backdrop of unusually cold weather, bubbling gasoline prices and the shift of Easter into April.

Urban Outfitters Inc. (Symbol URBN, $30.91) is a company to like for a lot of reasons. 2012 earnings are projected at $1.74 per share and for 2013 looking like $2.08 a share. Urban has a great balance sheet with a Current ratio of 3.81 to 1 and has no long term debt.
 This company with a 5 year sales growth  rate of 16.15% is a real bargain at this "off the rack" price. These three are all quality investments; a piece of the puzzle.

These are 8 month investments, so don't worry if they bounce up and down in price between now and then.
 Just pick one out and go with it.

Freewilly

"With the markets increasing volatility it is never a bad time to put a solid financial stock in your portfolio to lower your beta"

Dow Jones Industrial Average 12,376.72 (UP) Week ending 04-01-2011

It may be time to cash in one of those highly volatile tech names that you own that have run up a bit and put a little balance back into your portfolio with a solid bank and financial service name. PNC Financial Services Group Inc. (Symbol PNC, $63.72) a bank that caters to business could be a good place to start. PNC is projecting 2011 earnings of $5.63 per share and for 2012,  $6.38 per share so it trades at a very reasonable PE ratio. PNC has had a very nice 5 year sales growth rate of 18.12 % and a Net profit margin of 19.50%. Not much of a dividend here, but a bank of large enough size to be a possible acquisition candidate.

REPUBLIC BANCORP A (Symbol RBCAA, $19.99) trades at a remarkably low PE of 5.  This  Louisville, KY bank has a decent dividend yield of 2.85%. Republic has Net profit margins of 23.8%
and a Book value of $17.72 per share so it is a great value here. It has a Beta volatility rating of 0.97 so it will not rock the boat of your moving portfolio value. It also has a steady 5 year sales growth rate of 8.81% , which is not to bad for a bank.



J.Pierpont Morgan


I would be remiss if I did not mention here, for a conversation on stability and low beta , the bank founded by John Pierpont Morgan the lender of last resort to railroads, banks, and governments. A one man "federal reserve" , they said to look into his eyes was like looking into the headlights of an oncoming freight train.

JPMorgan Chase & Co. (Symbol JPM, $46.35) has a low PE of 9.7 . Book value on this stock is $44.28 per share and it has a low beta volatility 1.15 so you can sleep at night here with this one. Earnings for 2011 are projected at $4.78 per share and for 2012 , $5.61 per share. They have on their balance sheet 2.18 Trillion dollars in assets, (and big liabilities to go with them), and 930 Billion in deposits. (Maybe they should keep our Social Security payments from our paychecks here so it doesn't get spent!).

I would also like to include a savings and loan financial institution in the small cap category. New York Community Bancorp Inc. (Symbol NYB,  $17.37 ) offers a  5.76% dividend yield. NYB has a Beta volatility ratio of 0.75, operates at Net profit margins of 24%, and has a five year sales growth of 10.24%. The stock has not moved much, (Total return 12 month, 11.5%) because the dividend is an 80% payout ratio. but you will certainly hold on to your principle.

Remember what Will Rogers said , " The quickest way to double your money is to fold it and put it back in your pocket."

So reign in the volatility a little bit on your high beta portfolio and plug in one of these names in your list of diversified stocks.



         Freewilly