Sunday, January 25, 2015

"Automotive Parts stocks in general do pretty well in the stock market. Here is one that meets all my criteria, Delphi Automotive PLC (Symbol DLPH). Also one Special situation play with the Shake Shack IPO (Symbol SHAK), coming this week."

Dow Jones industrial Average 17,673 (Down) Week ending 01-23-2015

I seem to just love these transport stocks that begin with the letter "D". This one I found as a holding in the Vanguard Midcap Value Index fund as a top 10 holding. My company had just switched over our 401K plans over to Vanguard Funds, so I thought I would go in and take a look around.

Delphi Automotive PLC (Symbol DLPH, $69,67) is a leading global supplier of technologies for automotive and commercial vehicle markets with headquarters in Gillingham, United Kingdom.

Delphi meets my base criteria with flying colors with a Return on Equity of 46.12% and having a PEG Ratio of 0.96. (They were able to produce this fine return on equity number without running up excessive long term debt.)

My favorite thing about the company is that they employ 117,000 people worldwide. We need more companies in the world like that! Another good thing about Delphi is that they are buying back $1.5 Billion dollars of their stock so they are very confident in their future business prospects.


Delphi, (DLPH), has annual Revenue of $17.1 Billion dollars and 1 Year earnings growth has been 10.8% and the 3-5 year current earnings growth forecast is projected to be 12.7%, with a current PE, (Price to Earnings ratio), of 16.14 and a forward PE of 13.71 per share.

Earnings per share for 2015 are projected at $5.05 per share and for 2016 it is looking like $5.64 per share. (per CBS MarketWatch). The company also pays a dividend at a yield rate of 1.4%. I would say that you can go ahead and buy the shares right here and have a margin of safety for a 3 year investment.
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I have a "two for" for you for this week. A SPECIAL situation occurrence and a way to trade it. This is just a fun trade idea. 

The IPO of Shake Shack (Symbol SHAK), comes public this week with 5 Million shares priced at around "$14 to16 dollars". The shares will come public on Friday January 30th.


Unless you are a preferred customer of Goldman or Morgan Stanley you will probably not be able to get in on the subscription for the public offering price. But, I believe that some of the other new restaurant stocks will be carried forward and up on the coattails of this public stock offering and allow you to profit on the offering. 

Here are the two stocks I think you can buy going into this Friday and have a trade:

Zoe's Kitchen Inc. (Symbol ZOES, $30.55) which currently has a 100+ stores and are expanding out to 1600 stores.

Zoe's Kitchen, Inc. operates restaurants. The company operates its business through a single segment, fast casual restaurant serving a distinct menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. Zoe's Kitchen was founded by Zoë and Marcus Cassimus in 1995 and is headquartered in Plano, TX.

and second :

El Pollo Loco Holdings Inc. (Symbol LOCO, $26.15)

 El Pollo Loco, Inc. develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco. The company specialize in flame-grilled chicken in a wide variety of contemporary mexican-influenced entrees, including specialty chicken burritos, chicken quesadillas, chicken tortilla soup, pollo bowls and pollo salads.

 Both of these stocks and also Shake Shack, if you believe in Peter Lynch's idea to buy the simple things you know around you, should be very good long term investments as they expand through the years. 

 

So a trade, or a long term investment, you decide!

 Freewilly

 

Sunday, January 18, 2015

"Airline stocks have had a tremendous run. That all happened before the price of Oil dropped by 50%. I like the tail winds that are pushing Delta Airlines, (DAL), forward".

Dow Jones Industrial Average 17,737.37 (Down) Week Ending 01-09-2015
Dow Jones Industrial Average 17,512.00 (Down) Week Ending 01-16-2015


Well we begin 2015 once again in turbulent waters in the stock market. Your decision making on picking and holding stocks will be challenged each day with wild volatility. So you will need to know the reason you are buying a stock and why you need to remain committed to it, even though all around you the media will be telling you that it all is going to come crashing down. So stick with your fundamentals and rules that you have set for your stock picks, and hold firm.


One on my top stock picks for 2015 is
Delta Airlines Inc.(Symbol DAL, $45.84). Delta meets my base criteria with a PEG Ratio of 0.19 and a Return on Equity of 80.10%. It says the PE ratio is 3.99 but going forward it is more like 10. You are going to hear that December revenues for 2014 were down just like American Airlines, but pay no mind to it. They don't mention that Delta is now competing with Alaska Airlines in the Seattle market, a battle they will win. Below is a map of the routes they run. Their hub is the Hartsfield–Jackson Atlanta International Airport which is the busiest airport in North America. (Dubai and Heathrow are the world's busiest).

 I have heard one estimate that Delta will save $3 Billion dollars in cost savings if oil stays down where it is now in price. I think that they will save a good part of that with oil settling awhile in the Fifties range. 

 The company did Revenues last year of $39.79 Billion dollars and produced Net Income of $9.85 Billion dollars. They operate at a Gross Margin of 46.4%.

Earnings per share for 2014 were $3.34 per share and for 2015 it is projected at $4.88 per share.The 3 Year earnings growth for the company has been 41%. 


I have seen analysts ratings of 14 Buy -2 Outperform and 2 hold. Also 9 Strong Buy-1 Buy -and 1 Hold on "The Street.com", which is a very good source of data for your own scrutiny and analysis.

The company currently has an IBD earnings rating of 63 and pays out a dividend at the rate of 0.80% , better than a bank account.

So how has the stock done? Year to Date it is down (-6.81%), so you are buying it at a slight discount. The one year change for the trailing 12 months, (TTM) it is up 45.16%. The 3 year Total Return is a gigantic 417.87%. Again, that all took place before the price of oil dropped down.

 Hartsfield–Jackson Atlanta International Airport 
 So I am recommending that you purchase Delta stock , (DAL) and I believe the stock will end the year in the $60-$65 dollar range.

 "Stay true to your beliefs and your ideas shall guide you through."

Freewilly



Sunday, January 4, 2015

"Here are the Freewilly's Stock Picker Blog "15 stocks for 2015". The more stocks, the harder the challenge. But I think I am up to the task."

Dow Jones Industrial Average 17832.99 (Down) Week Ending 01-02-2015



The Who song , "We won't get fooled again", comes to mind when I think back about my 2014 blog stock picks.  I guess I was looking for growth at an "Unreasonable" price with some of picks that either tread water or were beat up for non-delivery of immediate gigantic earnings gains. I think that that won't be a problem in 2015, although we are still staying aggressive.

So my picks are again centered around "mostly" stocks with a PEG ratio of less than 1.5 and that have a Return on Equity of 15% plus.

So here is the 2015 list of picks for this year.

1. Walt Disney (Symbol DIS)
2. Delta Airlines (Symbol DAL)
3. Constellation Brands (Symbol  STZ)
4. Johnson and Johnson (Symbol JNJ)
5. Discover Financial Services (Symbol DFS)
6. Tractor Supply (Symbol TSCO)
7. Hershey Foods (Symbol HSY)
8. Oshkosh Corp. (Symbol OSK)
9. Celgene (Symbol CELG)
10. Yahoo (Symbol YHOO)
11. Monster Beverage (Symbol MNST)
12. Dow Chemical (Symbol DOW)
13. Edward Lifesciences (Symbol EW)
14. Foot Locker ( Symbol FL)
15. Southwest Airlines (Symbol LUV)


No Small cap stocks this year. All Mid-Cap and Large cap stocks. A mix of transportation, Health care, Food and Beverage, Media, and a few retail stocks mostly. One common theme is a reduction in commodity cost for many of these companies in 2015. I sifted thorough this list over and over again trying to filter out any stocks that were too speculative. Many of these stocks also pay a nice dividend to add to your gains.

 This is a muscular team with many stock market heavyweights on it. But guess what?
You deserve to have the best investments in your portfolio and nothing less than that.
Yahoo, (YHOO), was included in this group because of it gigantic investment stock holding in Alibaba, (BABA). 


I did my part for the economy yesterday and went out and traded in my old 2001 Nissan Altima for a brand new 2015 Nissan Altima version. Lots of customer loyalty bonus incentive programs going on right now. So I guess I am optimistic about the economy this year. 

Since we have had three years in a row with double digit gains in the market I have put together a portfolio that has a degree of "Risk Off" built into it and that is the best approach to 2015.

I would be remiss not to mention, since my number one pick is Disney this year, the owner of the fantastic ESPN Network, the profound loss and passing of ESPN Sports Center analyst and major company asset Stuart Scott at the age of 49. It was announced this morning after his long bout with cancer. You would have never known it when watching him on TV. 

He had been the latest winner this summer of the Jimmy Valvano ESPY award for courageousness in facing his cancer. If you have never seen the ESPN Jimmy Valvano "30 for 30" episode it is a must see.

If you can live your life like Stuart Scott, you will have no regrets.

Freewilly

 Stuart Scott - ESPN Analyst