" We are heading into Black Friday so a few ideas for playing the arrival of Star Wars. Plus some work on refining my GARP/Value investing combo picks"

Dow Jones Industrial Average 17,824.00 (UP)   Week Ending 11/20/2015

The death star is coming!  The coming release of Disney's (DIS) first release of the Star Wars movies is quickly approaching. You could buy Disney of course, but I think there are some better ways to play this gigantic blockbuster.

First, you could buy the stock of
Electronic Arts, ( Symbol EA, $72.42) which has the rights to produce the Star Wars video game series.

  
Monica Gerson from Benzinga reported: 

"Electronic Arts has released a new game – the Star Wars Battlefront. The game is a 12-40 player online shooter set in the Star Wars universe and is available both online and at retail. Although the game has received relatively weak early reviews, it is still expected to be a mass-market hit and sell at least 13 million units in the quarter, analyst Ben Schachter mentioned, while adding that this could prove to be a conservative estimate.

The stock of EA has 15 Buy ratings on it and should perform well here. The company has done $4.52 Billion dollars of sales in 2015 and has Net Income of 875 Million dollars.

Another way to go, is to jump on the Star Wars toy bonanza and buy the stock of Hasbro Inc. (Symbol HAS, $75.49). I had read an article in the Wall Street Journal that said that Star Wars toys were already crowding out Snoopy and Peanuts on the toy shelves at stores even though there is a Peanuts movie out too. Hasbro has a 1.4 PEG Ratio and earnings should be on a steady climb for the next few years. Both EA and Hasbro stock prices have already done well in 2015 up 54% and 37% Year to date. Happy holidays for both of these winners.

So now on to some stocks that have good PEG Ratio's and Return on Equity, but yet also are trading at less than 3 times Price to Cash Flow and that are trading at less than 2 times Book Value.

Gannett Company Inc., (Symbol GCI, $17.00) is a spin-off from TEGNA, the old Gannett Company with broadcasting businesses.  GCI, with $2.96 Billion in revenues, is the spun-off publishing company, which adopts the name Gannett and  owns newspapers in 92 markets, including USA TODAY, and plans to acquire more papers and other media assets. Oddly they are looking to buy A.H Belo, that I discussed in last weeks blog, who owns the Dallas Texas newspaper. Carl Icann happens to own 7.4 million shares of this company. 

GCI has a Price to Book of 1.81 and a forward PE of 9.9. The company list a Return on Equity of 34% and pays a 4.71% dividend.

TEGNA had spun this company off because of the decline in newspaper advertising revenues. The company trades at 7.85 times Price to Cash Flow. Year to date the stock is up 20.82%.  I could see this stock trading to the $20 to $22 area, so a nice gain on your investment with a dividend kicker.

PDL BioPharma Inc. (Symbol PDLI, $4.00) according to their website,  "Manages a portfolio of patents and royalty assets, consisting primarily of its Queen et al. antibody humanization patents and license agreements with various biotechnology and pharmaceutical companies.  PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases for which it receives significant royalty revenue.  PDL is currently focused on intellectual property asset management, acquiring new income generating assets, and maximizing value for its shareholders."

That all sounds wonderful but here is the real important stuff.. The company has a Return on Equity 56.5% and a low PEG Ratio of  0.17.

PDL BioPharma has Revenues of $529.5 million  and a forward PE of 5.73. The Price to Book Ratio on the stock is 1.10 to 1 and the stock is trading at a Price to Free Cash Flow of 3.23.

There is more, the company pays a current dividend of 15.02% , (I doubt they will maintain this), and PDLI is in great financial shape with a Current ratio of 3.2 to 1. 

This company works on Royalty revenues from the companies that it invest in and have been quite successful. 2016 earnings are projected to be much softer,but still OK. I see a target here of $6 -$7 dollars per share on the stock price.

I asked for this book for Christmas for further learning in "Value" investing. I will let you know if Santa brings it. My hope is to bring you the best investing advice and that you continue to read my blog articles. Have a Happy and healthy Thanksgiving and holiday season.

Sincerely,

Freewilly

"This past week I had an epiphany to the virtues of "Value Investing" and how successful it can be. So I am combining my "Growth At a Reasonable Price" tenets with some traditional "Value Investing" tenets and want to see what results"

Dow Jones Industrial Average 17,910.33 Week ending 11-06-2015

Last weekend my wife and I attended a memorial gathering for a friend who was a gifted architectural historian. It was held at an estate of a gracious couple who were also friends of his. An intimate gathering to celebrate his life. Until we were introduced to our host, I had been unaware he is one of the great "Value" investors of our time.

Discussing stocks would have been inappropriate for this occasion, (although he did mention Warren Buffett a few times). Hopefully when we have the opportunity to meet again and he and I can discuss value investing as this is a topic I wish to pursue further.

Firstly let me say that I have limited expertise on this "Value Investing" subject, Anyone reading this blog that wants to "Value invest" should simply buy the stock of the world's leading experts, Warren Buffett and Charlie Munger, and may purchase shares of Berkshire Hathaway  Inc "B" stock (Symbol BRK.B , $136.33). This stock currently has a 1.38 price to book value. 

Anything written beyond this point is just a grand experiment!


So here is the spicy soup mix of screening that I came up with. I took PEG Ratio of less than 1.5, and ROE of 15% or higher, (My GARP tenets), and combined them with Value tenets of Price to Book value of 1.5 or less and Price to Cash Flow of 3 or under. Maybe a DaVinci Code for modern investing, ha,ha!  Here is what came up in the screening.

Iconix Group Inc. (Symbol ICON, $6.90)  a stock that got obliterated last week has a Book Value of 20.02. Even I can recognize this as a good value deal. PEG 0.18, ROE 14.40%, Price to Book 0.34 and Price to Cash Flow 1.91. 

A.H. Belo Corp.(Symbol AHC, $5.52) has a book value of $5.60 a share and is in the newspaper business. Who would want to own that? (Warren Buffett actually owns some newspaper companies, Washington Post). This company has an ROE of 65.5%, Price to Book 0.99, Price to Cash flow 1.42, and pays a 5.8% dividend. 

AU Optronics Corp. (Symbol AUO, $2.95) is a semiconductor company. It has a PE of 4.28, a PEG of 0.09, a ROE of 12.40, a Book value per share of $5.97, a Price to Book value of 0.49, and Price to Cash flow of 1.95.

The next one, and a few of these aren't perfect, is Concord Medical Holdings Limited, (Symbol CCM, $5.09) PEG Ratio 0.43, PE 8.63, ROE 10.50%, Book Value $6.54, Price to cash flow 11.86 (higher then my screen), Price to book 0.78. 

One stock that popped up based on Book Value but failed to pass a Warren Buffett tenet because of it being "Regulated by Government" is American International Group, (Symbol AIG, $61.93). Carl Icann is trying to remedy that situation by trying to get them to break up the company. Then they would no longer be in the "Too Big to Fail" category and under government scrutiny. Call these the "Honorable Mention" stocks.

AIG has a Book Value of near $80.00 per share with a Price to Book Value of 0.79. The current PEG Ratio is 1.16 and the forward PE is 11.32. It pays a dividend of 1.81% while you wait. The ROE is not great at 6.70 and the Price to Cash flow is off the charts at 25.25. But still may be a stock to look at.  General Motors (Symbol GM, $35.75) is another stock that might fall into this "interesting" category based on some, but not all of these Value screening criteria.

Another one in the honorable mention category in Mannatech Incorporated (Symbol MTEX, $25.10), which has had quite a run since September. PEG Ratio is 0.35 and PE is 6.06. Return on Equity is 34.60% and Price to book is 1.87. Price to Cash flow off the charts again at 13.73.  The recent run up in stock price may mean I am a little late to the game on this one. Still it makes the "Honorable Mention" category.

I may take a flyer out on ICONIX Brands, (symbol ICON), this week to test out my experiment. George Soros would tell me to double down on it if I am sure of myself. Let's see how the stock opens on Monday.

Have a great autumn weekend and enjoy your family and friends,

Freewilly