"With the steady migration to electronic payments for all financial transactions there are "4 Aces" that you should nail down in your portfolio"

Dow Jones Industrial Average 12,454.83 (Down)  Week Ending 05-25-2012

Leave your wallet at home! You will just need to bring your Smartphone with you with a variety of scanning bar codes or to send an SMS short message from "machine to machine" and you will make your purchase.  Don't have a Smartphone? Then you will probably pay using unique voice identification or your thumb print or via an Iris scan of your eye.

There are four specific companies that currently dominate this process for conventional processing and for mobile financial processing.

Those 4 companies are Visa, Mastercard, Ebay (with Paypal) and Verifone Systems Inc. These companies are also forming alliances between themselves. Verifone Systems is bringing Ebay's Paypal to the checkout. Verifone and Paypal sign pact 05-24-2012 .

So let's take a look at the financial fundamentals of these Four Aces.

Visa Inc. CL A  (Symbol V, $119.37)  you are all familiar with as a product in your wallet but have you ever thought about it as a portfolio investment?   Visa, according to the SmartMoney  website will earn $6.09 per share in 2012 and is projecting $7.11 per share in 2013.

Visa has had 5 year sales growth of 15.39%. They operate at Net Profit margins of 45.84% which is a very healthy number. The long term earnings growth of the company is projected at 18.04%. The PEG ratio is a very reasonable 0.93. This one is a no brainer for you to own. The 1 year Total  return has been 50.17% and the 3 year Total return is 79.39%


Mastercard Inc. Class A , (Symbol MA, $413.96) is another financial juggernaut. 2012 earnings are projected at $22.21 per share and for 2013,  $26.29 per share.

The Phillies 3 ACES, add Blanton for your 4th ACE.

MA,  has a 5 year earnings growth rate of 17.22%. Net Profit margin runs at 29.05 %. Long term earnings growth is projected at 17.05 %.  Return on Equity has been a staggering 35.09%. Yet the PEG ratio is still only a very low 0.92.  Another ACE for your Portfolio.  Even Buffett owns this one which tells you something about the fundamentals. The one year total return is 45.36% and the 3 Yr.Total return is 136.40%. 


 eBAY Inc. (Symbol EBAY, $40.35) is the third Ace in this financial Quadopoly. (Is that a word I just invented?).

eBAY,  is looking to earn $2.36 per share in 2012 and $2.73 per share in 2013.  The big earnings driver has been the financial processing branch & interface called PayPal. Sales growth is running at an adequate10.44% , however 5 year earnings growth has run at a mind numbing $174.39% Net profit margins are at a vigorous 26.85%.  The PEG ratio once again is conservative at 1.19.  2.00 is considering to be beginning of the stock to be overpriced traditionally, so you can understand this PEG number better.

The One year Total Return on eBAY with their PAYPAL division included is 31.52% and the 3 year Total Return is 129%. I own this one already and I expect that things are going to get even better going forward.

That brings us to our 4th Ace and the one that is most like a Wild card. Verifone Systems Inc.(Symbol PAY) is parked at the intersection of all things financial. They are the Global leader in Secure Electronic Payment Solutions. Verifone's customer base, according to a press release on their website, encompasses 80 percent of the top 200 largest retailers in the US.

 You can purchase the stock at a screaming buy right now, because they had a bad quarter and the stock was taken down 15.39% on Friday 05/24. The PEG ratio on the stock right now is 0.45.  Unnoticed on Friday, was the fact that Verifone Systems signed a gigantic agreement with eBay's PAYPAL division. (See the link at the top of the article.)  Also throw in the fact, that if Apple, Google, Facebook or Microsoft want to get into this game, that Verifone becomes a very likely buyout target especially at this bargain basement price.

Verifone is projecting earnings of $2.67 in 2012 and $3.26 in 2013. These numbers have not been re-evaluated yet for the new Paypal deal effects. Also Verifone has introduced SAIL , which is a payment as a service solution which also involves social media. (See the link next) "Small-and-medium-sized-businesses-set-sail-with-Verifone"  .

Here are some numbers. 5 year sales growth of 8.80%. Net Profit margins currently run 14.63%. Projected Long Term earnings per share growth is 25.96%. The wild ride with this wild card is One year Total Return because of the bad quarter is (-21.03%) . However the Three year Total return is 398.43% a little better to our liking.  I would buy this one here in earnest and fasten you seatbelt for the ride.

It is the opinion of Freewilly , that you should be in 3 to 4 of these stocks. Have a good Memorial Day Weekend in the USA, and around the world have a very good week.

Freewilly                                          

"The US markets have been really UGLY here, discounting Europe and the gyrating Euro, but there are plenty of stocks out there from California to Alabama that have great fundamentals & businesses"

Dow Jones Industrial Average 12369.38  (Down)  Week ending 05-18-2012

"Maximilian ...Maximilian"

"The secret to riches, lab rats, is the same as the secret to comedy: .........  Timing", 
              quote from Maximilian Skinner in Ridley Scott's movie adaptation of Peter Mayle's book, "A Good Year".


Timing. The correction in the market has created a timing opportunity to pick up some really good stocks with great fundamentals at some very reasonable prices. I will talk about two of these stocks, one from California and one from Alabama.

Deckers Outdoor Corp. (Symbol DECK, $53.22) is a Goleta, California based designer and producer of footwear and accessories such as handbags and outerwear. Deckers has been effected negatively in the last quarter by their business in Europe. I guess when Europeans get sad they stop going out to buy their UGGs. Well, they should probably buy this stock and their UGG's and get happy again.

UGG's

The PE on Deckers is sitting right now at a very reasonable 11.70. DECK is projecting 2012 fiscal year earnings of $4.56 per share. 2013 earnings projected at $5.48 per share.
The 5 year sales growth at Deckers is 41.35%. The Greeks could learn something from this company. The 5 year earnings
growth is 40.11 %. Spain, Portugal listen up to what I'm saying.

The Timing part that Maximilian was talking about is the PEG ratio here of 0.87.

The stock has a Return on Equity of 25.38%. Although the stock is off 40.26% this year, it still has a 3 year return of 217.98%. I can see no other alternative except to purchase the stock and sit back and have a fine French Bordeaux and wait for your money.

  


Uncle Henry Skinner , "You'll come to see that a man learns nothing from Winning. The act of losing, However, can elicit great wisdom"


I think it is time to move on to Alabama, for our next stock with good fundamentals.


Hibbett Sports Inc. (Symbol HIBB,$ 54.94) based out of Birmingham, Alabama , operates sporting goods stores in small to mid-sized markets predominantly in the Southeast, Southwest, Mid-Atlantic and the Midwest. 

This company has a one year Total Return of 40.91% and a 3 year Total Return of 207.79%.  They don't care about Europe, because they have the Crimson Tide, of The University of Alabama. College Football country.

No Soccer here!  HIBB, has five year earnings growth of 24.64%. The PEG ratio here (Price/Earnings to Growth ratio) is a very reasonable 1.20.

 2012 earnings per share for HIBB are projected at $2.56 and for 2013 it is looking like $2.91 per share. Looks like a pretty solid investment.Sporting goods seem to be one of the items that make people happy and get them through hard times and good times. 

So Freewilly says " Roll Tide, and Roll with the stock of Hibbett Sports" 

Freewilly,  signing off .............Good Bye.

   

"The world is storing and managing a mountain of data, video, and stored photos. Who is at the forefront of this effort? VMWare"

Dow Jones Industrial Average 12820.60 (Down) Week Ending 05-11-2012

Facebook goes IPO next week

Next week, the long awaited Facebook public stock offering comes out. I would not buy it at the open, but wait until the stock settles out in a trading price range. This offering will also bring stocks along with it on it's coattails. One of those stocks is game maker Zynga , (Symbol ZNGA, $7.48), and another is the data gurus at  VMWare , (Symbol VMW, $120.32), which I will discuss today. There will be many more to discover.

According to the website DataCenter Knowledge, Facebook has as of October 2009,  30,000 servers. God knows how many they have to manage now in 2012. As of that October date, they were processing and storing 25 Terabytes of data per day. That is 1000 times the daily data volume of the US Postal Service.

 According to Mashable.com social media , the worlds information is doubling every two years. That is 1.8 ZettaBytes of data compounding every 2 years. That is the equivalent of 200 billion HD Movies  each 120 minutes long.


Who is prepared to deal with this growing mountain of data?  VMWare , (Symbol VMW, $120.32).

The Palo Alto, CA. based VMware, Inc. provides virtualization and virtualization-based cloud infrastructure solutions from the desktop to the data center and to the cloud. 

"Oh, that explains it!"

VMWare, according to SmartMoney.com is projecting 2012 earnings of $2.70 per share and 2013 earnings of $3.16 per share. There are 24 Strong Buy recommendations on the stock. The company has 5 Year sales growth of 36.83% and 5 year Earnings growth of 35.22% per share. VMW, also has 19.85% Net Profit margins. The PEG ratio on the stock is 1.51. The IDB rating on the stock is 97/98/84.

The bargain here is that the one year total return this year has only been 8.92%. So the stock has been taking a breather.  The 3 year Total return on the stock however is 278.96%. That number has a much better ring to it.


I would add 25 to 50 shares of the stock to your portfolio right here at this price.

In other NEWS, Jamie Dimon and his JP Morgan bank buddies made a bad trade this past week. The financial media jumped all over it as another case where the taxpayers and FDIC could somehow be involved in this risk. People seem to forget that the House of Morgan does thousands of successful trades each week and also that they were forced to take 25 Billion in TARP funds which they paid back quickly,  in full. 


So in the immortal words of New Jersey Governor Christie, unless you are a JPM stockholder, ..... " Just SHUT UP!!"   


It should be a fun week next week and the Facebook IPO could jar loose more Retail investors to get back in the market. (I have never been out of it!)


Freewilly     


P.S.  (Ask.com "How much is a ZettaByte"?  


       Answer:  Zettabyte 
     1,180,591,620,717,411,303,424 bytes or 2⁷⁰
     approx. 1,000,000,000,000,000,000,000 or 10 ²¹

" The financial moguls love to buy up Philly banks, that is why it is time to add some PNC Bank to your portfolio"

Dow Jones Industrial Average  13038.27 (Down and ugly)  Week ending 05-04-2012



Well , Philly was in the Wall Street Journal this week on the front page on Thursday May 3rd, in an article by Brad Reagan. The headline read like this:


"For D.C. Baseball Team, Deluge of Phillies Fans is National Disgrace" "Washington tries to keep out the Phanatics with the Ticket Rules; Poking the Hornet's Nest". 

"Well there are certain sections of Philly, Major Strasser, that I wouldn't advice you on trying to invade"

It seems that the Phillies fans are willing to follow their team no matter where they are playing. One fan even brought a sign that said "Welcome to Citizens Bank Park South".  I even saw "Occupy  Nationals Park" T-shirts on TV.  To Washington fans I have three words: "Get over it". We have always had Mets fans here at the "Citizens Bank" and "Veterans Stadium" parks and as fans we enjoy the banter with them about the merits and the faults of each baseball team. That is the fun of baseball,  always discussing and debating about the nuances of the game and why our team is best. 

Now on to the business at hand. PNC Financial Services Group Inc. (Symbol PNC, $66.05) at some point will get bought out. It is inevitable, because that is what always happens here in the Philadelphia area to our banks. PNB, CoreStates Financial Corp., Commerce Bank, PSFS, Mellon Bank, Willow Grove Bank, Girard Bank,  Sovereign bank, Home Unity Savings, First Pennsylvania, Hamilton Bank , and the list goes on.  

PNC,  looks really solid here. 2012 earnings are looking like $6.18 per share and 2013 earnings are projected at $6.84 per share. That is a forward Price Earnings ratio of 10.49. The stock pays a dividend yield of 2.42 %. There are also 15 buy recommendations on the stock.

The company has 5 year sales growth of 10.68%. Net Profit margins are 19.19% . 

 One year Total return on PNC stock has been 7.67 %. If you kick in the dividend yield of 2.42% , that brings you to 10.09% return overall, not bad. The 3 year total return however is 45.71% , now we are talking real money.  I would suspect that a JP Morgan Chase or a Wells Fargo would be well matched for a merger with PNC.  Buy it now, and wait for the fun to start happening.


If you want to go little further west to find your bank investment you might look to the hometown of the Minnesota Twins. 


U.S. Bancorp (Symbol USB, $31.84) would be my choice for the Mid-West bank in Minneapolis MN. , if you are looking to heading out that way with your investment to get away from all the bantering here. Similar numbers here, 2012 earnings per share of $2.76 and 2013 of $3.00 per share.USB  pays a dividend yielding 2.45% and has a Net Profit margins of 23.67% .  PEG on the stock (Price/earnings-to-growth ratio) is a very reasonable 1.17. 

Three Year Total Return are Rod Carew type numbers, of 78.48%.  I guess I am dating myself back to the bygone days of Twins baseball. I think Warren Buffett and Charlie Munger may have looked over this balance sheet once or twice. It seems they own 69 Million shares of USB. ...... I guess they don't get out east much. Although Warren was seen in a Diner in Iowa this morning with Becky Quick of CNBC.  I guess that is somewhat east of Nebraska. 


Well it is time for the 7th Inning stretch. I guess I'll get a hotdog and a cold brew and cheer for my Phillies to whoop up on those Bernie Madoff invested,  New York Mets.  Had to take a shot at them too! That's the NL East.




Well see you at the World Series,




Freewilly

"How about the Perfect Marriage. Clearwire and China Mobile. That would shake up the apple cart."

Dow Jones Industrial Average  13228.31 (UP)  Week ending 04-28-2012
                                                                                                                                                                    What if?  What if China Mobile (Symbol CHL, NYSE ADR), with it's deep $$ pockets, swooped in with a pile of cash and made a substantial investment in Clearwire (Symbol CLWR, $1.49) and it's siamese twin sister Sprint PCS (symbol S, $2.55). (Sprint owns 51% of Clearwire's stock.) 


Let's look at the numbers. 
Clearwire has a market cap of 1.89 Billion and Sprint has a market cap of 7.43 Billion for a total of 9.32 Billion $$.

Sprint has revenues of 34.1 Billion  and Clearwire revenues of 1.3 Billion for a total of 35.4 Billion $$. 


Sprint has 5.6 Billion in cash and Clearwire has 1.11 Billion for a total of 6.71 Billion in cash combined.
Long term debt for the two companies is 8 Billion. 

China Mobile Hong Kong Ltd. has 51.6 Billion in cash. So if they assimilate the cash and debt they could wrap up the whole deal for about 10.61 Billion net $$. This would make total sense and create a company that could functionally compete with Verizon Wireless and AT&T Mobility. Clearwire is sitting on the most spectrum of any carrier right now, and the Smart phone market and demand for data and bandwidth resources is exploding with growth. 

Don't want a foreign company owning a US Cellular carrier?
Well there is already a precedent for that. Vodafone owns 49% of Verizon Wireless.  How much would consumers love to see Verizon 
and AT&T have their world rocked with the likes of China Mobile getting up in their grill!  That announcement would really make a splash at the CTIA (Cellular Telephone Industry Association)  show next week in New Orleans.

Gordon Gekko

Oh, and what about that 700 Mhz. spectrum that Verizon Wireless is offering out ( i.e "taking the trash out to the curb") affecting Clearwire?

Nikola Tesla

Well unless Nikola Tesla is going to come back and invent some new amazing antenna technology for the 700 Mhz. band, the aforementioned  radio frequency will require an antenna as shown to the right like Gordon Gekko's old Motorola 8000 phone.  The smartphone toting crowd aren't going to like that too much!  This frequency is better suited to Industrial or Department of Defense type applications.

If your still not crazy about China Mobile as the suitor, then plug in another name like (Google, Oracle, Berkshire Hathaway, IBM, or any number of companies with allot of cash on their balance sheet.)

So my recommendation is to buy and hold Clearwire (Symbol CLWR, $1.52 per share)


Happy Cinco De Mayo!  Enjoy the 138th Kentucky Derby today at 5:00 PM EST.


Freewilly