" Let's make your portfolio hard as nails by adding a little Under Armour (symbol UA ) (NYSE). An investment not for those who sit on the bench on the sidelines"

Dow Jones Industrial Average 13,212 (UP) Week ending 03-30-2011

Your probably wondering why I am recommending the purchase of a stock Under Armour Inc. Cl A (Symbol UA, $94.00) that has a forward trading PE of 42?  Well how about because it has a Consensus Estimate of GAP earnings of a rise of 63.54%!  (.60 cents over .37 cents per share).  This dude has got game! 2012 earnings per share are projected at $2.33 and then rises in 2013 to a projection of $2.99 earnings per share.

The financials on this stock are very strong. UA's  Current ratio is 7 - 2 , Assets to Liabilities to speak in horse racing odds, and I thing this one will be a pace setting runner. 5 year sales growth for the company has been 28.36%. It has projected long term Earnings growth of 27.53 %. 

They also have a very healthy Return on Equity of 17.37%. I would consider this a very aggressive growth investment to fill that part of your portfolio for high growth. (my broker Vince likes this one too for this purpose. I told him I wanted to be in the game!). It will of course have a high beta to go along with that, with the price moving around rapidly. 

Under Armour, Inc. is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. They make really slick stuff and do really slick marketing of that stuff.  Here is their website. www.underarmour.com  .

4.68% of the company's stock is owned by the Berkshire:Focus Fund. They are currently up 28.45% on their investment. The one year total return on the stock is 28.36% and the 3 year total return is 420.2%.

"Slick stuff for Slick Willy". Maybe I could even golf decently if I donned the Under Armour wear.  Probably  not!   

    Wishing you a Happy April Fool's day and also Palm Sunday if your are a Christian in around an hour and 10 minutes if you are in the USA eastern time zone.  

Freewilly signing off

"Happy 20th anniversary Smart Money magazine. In honor of it, Sarah Morgan of Dow Jones writes about the top twenty stocks for those 20 years. I will discuss the best, #1 and #2"

Dow Jones Industrial Average 13,232.62 (Up) Week ending 03-16-2012.
Dow Jones Industrial Average 13,081 (down) Week ending 03-23-2012.

The folks that do the fine work that is Smart Money Magazine celebrated their 20th Anniversary last week. They are a continuing source of reliable financial information and we thank them. Sarah Morgan there decided to put together the stats to see what stocks had performed the best as far as appreciation over the last 20 years and I decided to tell you about Number 1 & Number 2 that still both have good fundamentals.                                                                                                 

KANSAS CITY SOUTHERN (Symbol KSU, $70.45)  turned out to be the number one performing stock over the last 20 years. It has gone up an astounding 19,090%. They used to be a conglomerate but spun off the Janus Capital Group and are now just the railroad. What makes them special? Not only do they have the very desirable West-East railroad routes but they also crisscross with North-South routes going from Canada to Mexico. 

KSU continues to roll out the earnings with $3.48 per share projected for 2012 and $4.12 per share for 2013. Long term earnings are projected at 17.7%.   The one year total return has been 29.4% and the 3 year total return motored at 454.3%.  This train just keeps rolling down the track. Also if they don't build all these pipelines their tanker cars will be filled with crude oil and liquefied natural gas to get the stuff to the refinery locations. This one still looks good to me after 20 years of growth. 

So who was number #2? That would be  Middleby Corp. (Symbol MIDD,$99.72) . Who the heck is that and what business are they in? Sounds like an episode from the old show the Twilight Zone. (next stop Willoughby!) Well when you go on Friday night and pick up a pizza it was probably baked in one of their commercial ovens.  

Middleby had a leisurely Total return since April 1992 of 14,330%. You didn't know you had eatin that much pizza! Middleby "makes ovens and other equipments for restaurants, but "it's probably more of a technology company than an industrial or equipment company," says Anton Brenner, an equity analyst with Roth Capital Partners, LLC. "It's the most innovative company in the industry," Brenner says. They regularly add new labor-saving features to their equipment, he says. They've also grown through M&A: The stock really took off after Middleby merged with Blodgett, a division of Maytag that also made commercial cooking equipment."  (from Sarah's article). 

 MIDD is projecting earning per share for 2012 of $5.81 . 2013 is shaping up as projecting at $6.62 per share. 5 year sales growth has been 14.84% and the Long Term projected earnings growth is 22%. (all these stats are from SmartMoney of course). The company runs at a Buffett like 20.30% Return on Equity. The Total 3 year return has been a meager 207.5%  , enough to boost up your kid's college fund.

My brother Howard says my little articles with the logos reminds him of the AMC show "Madmen" produced by Lionsgate Entertainment (symbol LGF, $14.50) (and no slouch itself, just produced "the Hunger Games" !) . Well I hope it entertains and informs you at the same time. 

Do not be afraid to ask questions via the comment portion of this site to share ideas on these subjects.

Have a pleasant Spring day if you are in the Northern hemisphere. If you are in the Southern Hemisphere 12 more weeks of Winter.

Freewilly

"Burton G. Malkiel , Professor of Economics at Princeton University challenges the veracity of the concept of this blog which is based on Fundamental Analysis. Looks like it's time for a throw-down!"

Dow Jones Industrial Average 12,977.57 (Down) Week ending 03-02-2012
Dow Jones Industrial Average 12,922.00 (Down) Week ending 03-09-2012

Burton Malkiel in his landmark book "A Random Walk Down Wall Street" which was first published in 1973, (I have the Six edition, 1996), examines his basis thesis that "the market,  prices stocks so efficiently that a blindfolded chimpanzee  throwing darts at the Wall Street Journal can select a portfolio that performs as well as those managed by experts". In other words, just throw away your fundamental or for that matter technical analysis of stocks and just go buy S&P Index funds from Burton's buddy Jack Bogle at the Vanguard Group of Investment Companies.

Before I start jumping all over this thesis, I would recommend getting a copy of this book, because it is loaded with good information about "Risk" and "Beta" and speaks on a range of investment vehicles. First, Index funds are by definition "Average" . They purchase all the stocks in a sector both good and bad and you can only end up with average. Now average, might look good if you are an investor with no discipline in your purchasing of stocks and are always speculating on bad stocks and losing money. The reason that the Index investing has worked at all over the years, is because of another investment premise that is very good, that of purchasing small amounts of stock consistently over time whether the market is up or down. This is a very good method, but why not apply it to good fundamental stocks instead?

Malkiel finds weakness in Fundamental Analysis at three points. First the information and analyst may be incorrect. He challenges that stock analyst cannot be clairvoyant on earnings predictions. Well with the Sarbanes-Oxley rules on financial disclosure and the wealth of public information available this is not as much of a concern. It must be understood that random events can influence a companies earnings. Second, he says the analyst"s estimate of "Value" may be faulty. Well if Freewilly is your analyst, I will admit that sometimes I find estimating revenue growth for a company as somewhat problematic. I will keep you out of trouble though because of the many alternate investment choices. Third , the stock market may not correct it's "mistake" and the stock price might not converge to it's true value estimate. (Witness the stocks of GM and Ford last year, GM my biggest loser! Serves me right for investing along side the US government!). Yeah, that happens sometimes, but not to often with well managed companies.

Never under estimate the intelligence of a Chimpanzee. Nor that of an amateur stock blogger. I have been so busy that I didn't get my pick out to press last week but I purchased it anyway based on fundamentals and a double catalyst.

Verifone (Symbol PAY, $47.80) I purchased on Monday and it was down on Monday. On Tuesday with the Dow down 200 Points, Verifone (Pay) was up 3 and 1/2 points. What are the catalyst? ................................

"VeriFone to Enable Isis NFC Mobile Commerce Access for Millions of Retail Checkout Lanes Nationwide. VeriFone Systems, Inc. (NYSE: PAY), today announced an agreement with Isis, the joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, to integrate the Isis Mobile Commerce Application in current and future NFC-enabled product lines. The companies have also agreed that their sales, marketing and implementation teams will collaborate to target large retail and petroleum/convenience merchants in previously announced Isis launch markets of Salt Lake City and Austin." The Smartphone strikes again!  The second catalyst is something I picked up in conversation. That is the rumor that with the advent of the SIM chip on the credit card and the new layers of security being put in place, that basically every credit machine that is in the field, is in effect, currently, obsolete,  because they can not read the new SIM chip cards. This is not a bad bit of news for Verifone, who just bought Hypercom and who along with Ingenico, make most of these machines. 

The company, which already had a 5 year revenue growth rate of 11% and a Return on Equity of 31.3%, looks to be in a very good position. 2012 earnings per share is projected at $2.66 and for 2013 it is $3.25 per share (if you can believe the analyst!).

So I will conclude, randomly, by saying that a group of good fundamental stocks will beat an index of average stocks hands down every time.  Best of luck and buy in small increments over time.

Also, Freewilly welcome the IDX -Indonesia Stock Exchange to our site this week to be added to our Stock Exchange column on the right side.

Freewilly