Sunday, July 30, 2017

" Have been selling some positions into this rally in the Dow Jones Industrial Average. I am keeping in mind Warren Buffett's first rule of investing, "Don't lose money". Peeled back some QCOM, UAA, and AET. Be cautious here"

Dow Jones Industrial Average  21,830.31 (UP) Week ending 07-28-2017
S & P 500 - 2472.10  (UP) 

What me worry? The President thinks he is in the fantasy football league and has to make two lineup moves every week. That following an ill-timed, illogical, and probably illegal executive order to discriminate against a class of people in the military based on gender.  Congress cannot agree on approving some sort of healthcare bill, while the present ACA health plan is losing coverage in various states and is increasing in premiums cost and deductibles. Will they ever be able to pass any new fiscal policy with tax repeals for people and business and possibly a repatriation bill to bring back money into the US to stimulate business?  Storm clouds on the horizon I say.

One place you can park some money while you wait for the storm to pass is Cisco Systems (Symbol CSCO, $31.52). Wall Street hates hardware companies because they are capital intensive and have inventories and also obsolescence of products.

Cisco though had revenues last year of $48.5 Billion dollars and had net income of 10 billion dollars. They have more cash on hand than allot of small countries with a bulging $68.5 Billion dollars. The company pays a nice 3.68% dividend payout which will help you to compound your money.

People forget that everything is moving to the cloud. Well much of that stored information is put onto Cisco Systems servers. They are the best. Not only that, at some point Cisco will also be the lead company for cyber and network security. The Cloud needs to be safe.

The company trades at PEG ratio of 1.55 and a Return on Equity of 15.60. It trades at a forward PE of 12.49 some is a pretty good value in a high priced market. Earnings for 2018 are projected at $2.45 per share.

The Current and Quick Ratio are both 3.5 to 1. Sales end up flat here year over year so that is why the stock has not taken off here and is only up 4.3 % this year. The stock has a target price of $36 so fairly low expectations. 

My thinking is if you are going to crank out $10 to 11 Billion dollars in net income every year and have a pot load of money to buy up other small companies, then you really cannot go wrong here.

I love my Apple TV box,  because I can watch cool stuff on Youtube and Netflix.  Here is a link to a great HBO Documentary special on that may be of interest to value investors or even anybody as a human interest story.  Warren is going to give all $100 Billion away to charities. He was inspired by his wife to do it.

HBO Documentary - Warren Buffett - well done HBO!

 Warren Buffett - Berkshire Hathaway, Inc. 
Be cautious and take some profits here and raise some cash for future bargains. 

Evaluate your non-performers and pair some of them down. Make better use of your precious funds.

Best Wishes - Freewilly. 

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