"Many stocks look nearly fully valued here, so there is no "Margin of Safety". Goldman has come out with a Neutral on the market for the next 3 months. The Fed is ending treasury bond buying too rapidly, now that they decided to start tapering. Buyer BEWARE"

Dow Jones Industrial Average 16,876.00 (Down) Week ending 07-25-2014

I started out this week's blog collecting data for CBS Corp. It had a margin of safety and the right PEG and ROE numbers for my criteria format, but then I looked at the Insider transactions and exercise of options area, and I had to beg off.  It appears that Sumner Redstone is the CEO of both CBS and Viacom. That's odd for major corporations. Redstone owns over seventy percent of the voting interest of Viacom. Viacom and CBS Corporation are both controlled by Redstone through National Amusements Inc. So, under CBS, I saw options at zero dollars in very large blocks to National Amusements Inc. and then exercises of options under Sumner Redstone himself for CBS and for Viacom. Viacom also trades in two classes of stock A & B. ( I had visions here of the old Rapid-American Corporation with Sharon Steel and a complicated array of transactions and companies if you are old enough to remember that!) . I further found that the Shareholder's equity in both CBS and Viacom had both gone down year over year , (especially Viacom). Somewhere this boat has sprung a leak and I don't want to be the captain going down with the ship trying to figure it all out.  Buyer BEWARE.  All the data that I had collected on CBS Corp. I had to scrap.

So, here we are in the dead middle of summer and Goldman Sachs comes out and declares that they have gone market neutral. Janet Yellin at the Federal Reserve comes out and says that US bond buying will be drawn, (tapered down), from 65 Billion a month down to zero by October 2014!  That is way too rapid a cut and reduction in liquidity to the financial system. If they are hurrying to get it done by the USA November elections, that is just plain stupid and a mistake. That is 90 Days from now. Buyer BEWARE!

My recommendation this week is for you to sell some of your stocks and raise your portfolio cash position to 25% cash at this point. Get rid of some losers and take some profits off on some of  your winners. Liquidity is essential for healthy growing markets and they are taking away the punch bowl!

Don't Panic. Just be prepared and correctly position your stocks and finances for the changing conditions in the markets.

8-2-2014 more notes**   "If fiscal and monetary policy alone are used to control inflation in the modern economy, it will be controlled only by creating unemployment." John Kenneth Galbraith, The Essential Galbraith.

What the Fed is not taking in account in its statistics is the 1 million young people a year that come out of college and are left behind as the "Never Employed". These people are not counted in the unemployment statistics. This group not only does not have a job, but they are strapped with the largest student loan debt in history. A debt larger that all the credit card debt combined in the United States. The true unemployment rate is more like 10-11 percent in the country, not 6.2%.
The Fed needs to continue to supply extra liquidity to the system to let this situation unwind. 


Thank you for listening,

Freewilly

"Searching through the rubble of the Retail stocks and their rough Winter, I found a footwear company worthy of your investment dollars. That would be Foot Locker Inc. (Symbol FL)."

Dow Jones Industrial Average 17,100 (UP) Week ending 07-18-2014

I started out my illustrious career working for a division of a shoe company, Melville Corporation. Their largest division was the retail freestanding chain called Thom MCan that had 1000's of shoe stores. I started work at a new small fledgling division of Melville called CVS Pharmacies, (Consumer Value Stores), and grand opened their first store in Southeastern PA. as the store manager. (CVS later was spun off from Melville, and became a great stock investment itself.)

Foot Locker Inc. (Symbol FL, $48.67) a New York City, NY based chain has many divisions itself. Among them are Foot Locker, Lady Foot Locker, Kids Foot Locker, FootAction, Champs Sports, Eastbay, CCS, Runnerspoint, Sidestep, and Six:02. 

Foot Locker by the numbers has a PEG Ratio of 1.057 and a Return on Equity of 18.18% and very little Long Term debt. 

FL has and Investors Business rating of 94-96-90, (Smart Select Rating, Earnings growth rating, and Accumulation rating), which would be great numbers for any industry, let alone Retail.

The company has a dividend payout yield of 1.81% to keep away the short sellers.

2013 earnings per share was $2.80 and 2014 is projecting to be $3.30 per share. In 2015 they are looking at $3.63 per share which is a projected PE of 13.21. The current PE on the stock is 15.78.

Revenues for the company last year was $6.735 Billion dollars. Quarterly Free Cash flow is $223 Million dollars. The company has a healthy Current Ratio of 3.536 to 1. 

Analyst have 13 Buy ratings and 2 Overweight Ratings on the FL stock. Foot Locker Insiders have been buying the stock in the last 3 -6- and 12 months. 

How has the stock appreciated recently?  The YTD return has been 17.45%. The twelve month  trailing rate of return , (TTM) , has been 33.05% and for the trailing 3 years it has been 110.6%.

I think these are certainly numbers that you can live with in your portfolio.

I would say that this stock is "Foot Locker Approved" to purchase right now, right here. 

Have a great week and watch the very exciting and action packed Tour De France Bicycle race that hits the mountains this week.

Freewilly 

"Time to "Case Hardened" your portfolio with an "Unbreakable" stock. It is time to buy shares of Gilead Sciences, GILD."

Dow Jones Industrial Average 16,944  (Down) Week ending 07-11-2014

It's that time of year when you need to look over your portfolio and  if any of your stocks have not done anything and prospects for 2015 are looking average, then you need to sell them. The one exception is the bank stocks, which I think that you should hold on to.

Once you have done that and freed up some cash, then you need to buy some stock in 
Gilead Sciences, (Symbol GILD, $88.73). I know, I know, another "$80.00 stock".  I can't seem to get away from them! They all seem to have the great growth numbers that I require to make an investment.  

Unbreakable. Let's start with Revenues.

Last year, Revenues were $13.67 Billion dollars. In the first quarter this year, Gilead posted $5.00 Billion dollars in Revenue. Monster numbers. All this is going on at a Gross Profit Margin of 83.73%.

Now let's look at a PEG Ratio of 0.6239 and a Return on Equity of 40.04. Excellent.

The Current PE on the stock is 32.59, but the future PE is only 11.24.

How about Quarterly Free Cash Flow of $6.57 Million dollars? That will work pretty good.

 Here is a link to Gilead Sciences Inc. product pipeline in development. Gilead product pipeline

 The real engine right now is Gilead having high demand for its new Hepatitis-C drug, Sovaldi,

 Earnings for 2014 are projected to be $6.40 per share and for 2015 it looks like $7.88 per share.

Gilead Sciences has a One year Total return on its stock of 58.87% . The 3 Year Total return is 330%. I am sure that the stock that you are selling with the average numbers is not putting up numbers anywhere near the numbers of Gilead Sciences.  GILD is sure to have a good 2014-2015. 

World Cup Soccer Now!  Germany and Argentina. The world needs to shut down for a couple hours!

I wonder who the Pope is cheering for??

Freewilly


  

"You want Fireworks for your 4th of July? I am going to bring you an excellent SPECULATIVE stock pick (trade). MannKind Inc. and their just FDA-approved Diabetes Type 1 and Type 2 treatment and inhale-able delivery system"

Dow Jones Industrial Average 17,068.26 (UP , and ALL-Time high) Week ending 07-04-2014

Mannkind Corporation (Symbol MNKD, $10.00)

Last Friday, a few minutes before the market closed for the weekend, Mannkind Corp. announced that the "U.S. Food & Drug Administration (FDA) has approved AFREZZA^® (insulin human) Inhalation Powder to improve glycemic control in adult patients with diabetes mellitus."

Investors looked at each other like deer in the headlights, and started coming up with reason after reason why they should not buy the stock. Smokers and people with Asthma cannot use it; it's up 175% already and has to go down; it could cause ACUTE BRONCHOSPASM IN PATIENTS WITH CHRONIC LUNG DISEASE; they don't have any partners lined up to produce it; there will be a secondary offering. Barron's headline was, "Mannkind Ripe for Profit-Taking After Afrezza Aproval".

Now really people, stand back and think about it. There are 29 Million people and a growing number with Diabetes. The market capitalization of Mannkind is $3.869 Billion dollars. I could see some company like Merck or Pfizer throwing 10 Billion dollars to own the rights to this.

The press release states:  " AFREZZA^® (uh-FREZZ-uh) is a novel, rapid-acting inhaled insulin therapy indicated to improve glycemic control in adult patients with diabetes mellitus. The product consists of AFREZZA Inhalation Powder delivered using a small, discreet and easy-to-use inhaler. Administered at the start of a meal, AFREZZA dissolves rapidly upon inhalation to the deep lung and delivers insulin quickly to the bloodstream. Peak insulin levels are achieved within 12 to 15 minutes of administration, and decline to baseline by approximately 180 minutes.

"The FDA approval of AFREZZA provides healthcare professionals with an important new safe and effective treatment option for patients with diabetes," said Janet McGill, M.D., Professor of Medicine at Washington University School of Medicine. "We have seen in clinical studies that the combination of rapid action, injection-free delivery and ease of use makes AFREZZA a welcome alternative for many patients who require insulin."  

This stock may dip down to 8 bucks in the interim, with their being a 30% Short Stock Position in the stock, but it won't stay there. Are you going to risk not owning this stock long term because of a short term technical trade position?  Have you forgotten Steve Job's Stanford college commencement speech in my blog side column where he told you to, "Stay Hungry and Stay Foolish"??

Alfred Mann, the Inventor

So here is the way you roll with this. With the negative Barron's article this weekend and some nervous nillies taking their 100% profits, the stock will drop on Monday to a range of 8.65 to 9.25. At this point, you should start taking a position. If it does not drop down to there, then No trade.

 I think you can then hold this and wait for a partner to jump in. I think you will have a trade to 14 to 16 dollars a share. At that point, you sell your position and walk away with your money. Not complicated. If you buy at $9.00 and sell at $15.00, you would have a 66.6% gain.


I must emphasis strongly that this is not the mortgage money you are putting on this. It is your designated "Mad Money", basically a Red or Black at the casino spin of the wheel. This stock could go back to $5.00 if they do not get a partner, although that is unlikely.

On to the Tour de France! I like the Netherlands to win the FIFA World Cup, if you are betting on that.

Freewilly

"All of us Baby Boomers are getting older and we will need the cardio products from St. Jude Medical, symbol STJ, to keep our "tickers" going strong".

Dow Jones Industrial Average 16,851.84 (Down) Week ending 06-27-2014

St. Jude Medical Inc. (Symbol STJ, 69.85)

"More than 70 years ago, Danny Thomas, then a struggling young entertainer with a baby on the way, visited a Detroit church and was so moved during the Mass, he placed his last $7 in the collection box. With only a few coins left in his pocket, Danny prayed for a way to pay the looming hospital bills. The next day, he was offered a small part that would pay 10 times the amount he'd given to the church. Danny had experienced the power of prayer.

Two years later, Danny had achieved moderate acting success in Detroit, but he was struggling to take his career to the next level. Once again, he turned to the church. Praying to St. Jude Thaddeus, the patron saint of hopeless causes, Danny asked the saint to "help me find my way in life, and I will build you a shrine." from the St. Jude Children's research hospital website.

Us baby boomers are all going to need help soon because our parts are wearing out like the old car that I drive. Us boomers know who Danny Thomas the actor is above, but our children probably don't remember him. Here is the company that he started based on his promise:

"St. Jude Medical, Inc. develops, manufactures and distributes cardiovascular medical devices for the global cardiac rhythm management, cardiovascular and atrial fibrillation therapy areas and neuro-stimulation medical devices for the management of chronic pain.".  

St, Jude has a PEG Ratio of 1.73 and a Return on Equity of 17.60%, so it fits in fairly well with my blog investment criteria, which is a rating of less than 1.5 PEG and greater than 15% ROE.

The company employees 15,000 people and is based in St. Paul, Minnesota. The company has Revenues of $5.53 Billion and produced $945 Million in Levered Free cash flow.

The stock has a 1.55% dividend  yield and has a PE Ratio of 16.13. The company has a strong Current Ratio of 3.73, which will help you sleep well at night owning it.

The company boasts a One Year trailing twelve month stock price return of 52.33%.

The company has had 3-5 year earnings growth of 10.10 %. The 2014 earnings are looking like $3.99 per share.

 STJ has an earnings rating in the Investors Business Daily, (IBD), of 76.

Breaking News: The DOW Jones just broke 17,000 as I am typing here. 

I think this is a great steady growth company that is not in the news everyday, with well accepted products, similar to a stock like AMGEN, (Symbol AMGN), that you can buy and stash away in your IRA portfolio and not have to worry about it. It will certainly do better than idle cash or a money market account. 

Have a great Independence Day,

Freewilly