Enigma: definition : a puzzling or inexplicable occurrence or situation. Such is the case with one popular name but very unpopular stock. Twitter (Symbol TWTR, $17.84)

Dow Jones Industrial Average 16,094 (UP) Week ending 01-22-2016

A picture tells a thousand words. Our Nor'Easter here this weekend mirrors the turbulence of our current US stock markets this past week.  Hard to tell where the ocean ends and the shoreline begins, kind of like our stock averages. 

But sometimes, like Doc in John Steinbeck's story Cannery Row, you can go into The Great Tide pool, (of stocks), and in the some small eddy you can find some really amazing things. 

Such is the case of one enigmatic stock called Twitter Inc., which finds itself tossed and turned with the wild tide of these markets. 
 Twitter, (Symbol TWTR, $17.84) is simply the most fantastic and fastest news delivery system in the world. Don't try to picture it as something else or compare it to other things that it is not. 

Analyst are projecting $0.36 cents earnings for this year and projecting next year earnings at $0.56 per share. For the next 5 years earnings are projected to increase by 65% per year. Twitter has a Quick Ratio of 10 to 1. Analysts have 18 Buy recommendations and 23 Hold recommendations. Yet, Insiders over the last three months have been selling shares by a 2 to 1 ration , rather than buying them.?? 

The company has target prices of 40, 33,29,24, and 21 by various firms. Ex-Microsoft CEO bought 4% of the shares and says "Good Job" and is glad he has bought the shares. The company trades at 2.8 times book value.

There have been two large option trades with big buys placed on the March $36 Call Options.

Revenues for the company have been growing from 2013,$668 Million to 2014 at $1.4 Billion to 2015 at $2.0 Billion. Quarter over quarter sales are up 57.5 percent.

"The US markets got clobbered last week. Worst start to a new year EVER. So there must be some value picks that provide a margin of safety. I like BP plc ADR right here with the combo of dividend and potential cap gain. This is not a trade it is an investment"

Dow Jones Industrial Average 15,988  (WAY Down!) Week ending 01-15-2016

Oh brother, what a pounding we took last week. Hope that you didn't sell out of all your long term investments. I hope you still have some cash on hand to take advantage of some current bargains. 

They keep telling us that it is the end of the world for oil and that prices will continue to dive. My feeling is that we have come down on Brent Crude from 145.61 in July of 2008 to now $29.20 in January 2016 , (Oddly that is almost the exact price of a BP plc ADR share, (Symbol BP, $29.16), and that most of the correction has already happened and we are damn near a bottom on the price. 

This is a value/total return investment play for a two year investment. The BP dividend yield currently of 8.23% and with BP having more of a priority to maintain their dividend then to buy back shares, even a rise in the price from here to the $32 or $33 dollar area would be a 10 plus% added with the dividend would be an 18% investment return.  That is a fine number with me. In the short term, the stock price could go lower, but I think its steady dividend will hold it up at a decent price level . The company has $23.61 Billion in cash and short term investments. Last quarter, even at reduced revenue numbers, the company did $35 Billion dollars in revenue for the quarter.

Although my normal PEG Ratio and ROE numbers, (3.07) don't hold up well here, the company is trading at a  Price to Book ratio of less than One, (0.88), and a Price to Cash Flow of 2.8. The current PE is 14.3 and the forward PE is projected at 16.43 so not off the chart numbers. The BP ADR is projecting a $1.56 earnings per share for this year.

The company has also cost righted itself and diversified geographically and in business mix. The company is also involved in research and products in super thin membrane technology , Ultra Thin Membranes. They have anticipated this oil price drop for the last couple years and have adjusted operations accordingly.

Many products and base compounds for many industries are made from Oil. Demand for Oil remains very strong with only a 1 million barrel front end surplus right now. (Boone Pickens said so!), as the number of rigs in the US continues to drop. You need to be thinking long term investment here!

If you feel you need to be in there trading and speculating on oil for a trade, I would probably look to lean to buy some Whiting Petroleum, (Symbol WLL, $5.70), but you are on your own with that one for a trade. The better idea is to buy BP and hold it for awhile!!.

You could also wait a week and then buy BP and that might work out just as well. No reason to be in a big hurry here.

If you are an investor there is nowhere to go but up!

Invest, don't speculate.

Freewilly

" My 2016 picks with a new twist. How to build a small portfolio with 3 stocks, since the purpose of this blog is to assist novice investors to get started. A growth stock, a value stock and a steady Eddie stock."

Dow Jones Industrial Average 16,346 (Way, Way, Down) Week ending 01-08-2016

The purpose of this blog is to help people get started in the stock market who may for whatever reason have a fear of it or that just lack good information about it.

So this year I am giving picks that will allow someone to start a small portfolio starting with $5000 to $10,000. It can be built with 3 stocks from my list using 1 Growth, 1 Value, and 1 Steady Eddie stock.  Now I am not a stock broker, so when you finally make your picks that you want to use, you should run it by a licensed broker to get their opinion for your particular financial situation. This is only to give you an idea guideline on how to get started. (This is just in case you don't win the $1.3 Billion Powerball Lottery here in the USA this week.)

 2016 Growth Stock Picks:

Popeye's Louisiana Kitchen Inc. (Symbol PLKI)

Snap-On Inc. (Symbol SNA)

MobileEye N.V. (Symbol MBLY)

Celgene Corp. (Symbol CELG)

Boston Beer Company Cl. A (Symbol SAM)

Sketchers USA Inc. CL. A (Symbol SKX)

American Woodmark Corp.(Symbol AMWD)

2016 Value Stock Picks:

Apple Inc. (Symbol AAPL)

Time Warner Inc. (Symbol TWX)

Twitter Inc. (Symbol TWTR)

Oshkosh Corp. (Symbol OSK)

Teekay Corp. (Symbol TK)

Iconix Brand Group Inc. (ICON)

2016 Steady Eddie stocks:

Visa Inc. Cl. A. (Symbol V)

General Electric Corp. (Symbol GE)

Johnson & Johnson ( Symbol JNJ)


So here is an example of  a small portfolio:

Buy some shares of  Sketchers (SKX) for growth, Time Warner (TWX) for Value, and Johnson and Johnson for your steady Eddie stock. This would be a good way for someone to start out. 

I have been over past years a "Growth at a Reasonable Price or GARP" investor but in the past few months because of the changing market conditions and the change in the view of the Federal Reserves to now raise interest rates, I have more of a lean to the thinking of Value Investing in stocks or to combine the two styles in my screening of stocks. 

My investing tenets had traditionally been PEG Ratio under 1.5 and Return of Equity of 15 or higher for my GARP strategy.

I have added Price to Book Value of under 2 , (and preferably below book value if possible), and a Price to Cash flow of under 10 which seems to be a sweet spot. I may refine this as the year goes on to get a larger pool of quality prospect stocks.

I personally own 11 of these listed stocks for full disclosure. I am shopping on the others for best prices.

So there you have it. Good luck with your investing in 2016 and remember it does not hurt to have 10% of your money in Cash at all times so that you can take advantages of buying opportunities.

Thank you for reading. We will learn and prosper together. 

Please leave comments and let me know what you think or contact me with questions or comments on Twitter. My main ideas will all still remain on this blog.

I have joined the modern age and now have a Twitter Account.

Freewilly    Find me also on Twitter at:  @freewilly555

It's that time of the year when we recap last years "15 for 2015" stock picks to determine their Total Return for the Year. Most indexes were down this year except for the NASDAQ.

Dow Jones Industrial Average 17,425. (Down 2.23% for the year 2015)
S & P 500 - Down 0.73% for the year
NASDAQ Index - Up 5.73% for the year
Russell 2000 Index - Down 5.71% for the year 2015

This year was a battle. Big winners and big losers dotted the landscape. If you were heavy in the oil or commodity stocks it was a disastrous year for you as Deflation was the watch word for the year.

This year I am evaluating the picks for Total Return. That is whatever the stock percentage was for the year ,(up or down), then adding the dividend paid as a plus to the gain/loss percentage. Here are the results below for 2015:

1. Walt Disney (Symbol DIS)            Up 12.91%
2. Delta Airlines (Symbol DAL)         Up 4.12%
3. Constellation Brands (Symbol  STZ)      Up 45.97%
4. Johnson and Johnson (Symbol JNJ)      Up 1.15%
5. Discover Financial Services (Symbol DFS)   Down (-16.03%)
6. Tractor Supply (Symbol TSCO)        UP 9.42 %
7. Hershey Foods (Symbol HSY)          Down (-11.50%)
8. Oshkosh Corp. (Symbol OSK)     Down (-17.80%)
9. Celgene (Symbol CELG)               Up 7.06%
10. Yahoo (Symbol YHOO)                 Down  (-34.15)%
11. Monster Beverage (Symbol MNST)      UP 37.48%
12. Dow Chemical (Symbol DOW)   Up 16.44%
13. Edward Lifesciences (Symbol EW)  - Up 24.01%
14. Foot Locker ( Symbol FL) -  Up 17.40%
15. Southwest Airlines (Symbol LUV) - Up 2.45%

Overall result will equal parts purchased of all 15 stocks:   UP + 6.595%

You were a big winner in the two beverage stocks. Constellation Brands and Monster Beverage were the two biggest winners. (45.97% and 37.48%)

The biggest loser far and away was Yahoo, who could not figure out what to do with their assets to make them work right. (-34.15%)

You can see that being too diversified in 15 different stocks actually brought down our success percentage. In 2016 , I will pick a smaller number of stocks to try to assist to bring the percentage gain up. 

Paying a dividend did not necessarily help a stock's performance this year. 5 of the stocks paying dividends actually were negative as far as capital gain %.

All and all considering the year results for the Dow averages, not a bad year for the Freewilly's Stockpicker Blog picks. 

I would tread lightly at the beginning of the new year here and expect the volatility to continue in 2016.  Next blog I will present my picks for 2016.

Thanks and have a great 2016 investment year.

Freewilly