"Pre-Hurricane Sandy edition - a couple stocks for you before the electricity goes away and we are in the dark"

Dow Jones Industrial Average 13,107.21 (down)  Week ending 10-26-2012                                     

 Projected path - Hurricane Sandy

Well by the looks of this map us folks in the Philadelphia suburbs will get to experience what the people in Florida and Louisiana have to face all the time. Being in the cross-hairs of a killer hurricane. 

In this case, a hurricane that is going to take a big left hook and run straight into a double Low pressure area, another words a "Perfect Storm", smack into the jaw of the Mid-Atlantic States.

 So I better getting typing quickly to get these ideas up on the web. (I have never tried to blog on my Blackberry! and I will need the power in my phone to make phone calls). The PECO emergency number is 1-800-841-4141, my public service announcement.

Resmed Inc. (Symbol RMD, $39.92) just sold off Friday, after recording another excellent and record quarter.  The San Diego designer and manufacturer of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders is projecting 2013 earnings of $2.12 per share and  projecting 2014 earnings of $2.36 per share. RMD has made a steady rise with 5 year annual sales growth of 12.76% and 5 year annual earnings growth of 28.72%.


Resmed has a PEG ratio of 1.10 and does not list there Return on Equity?. The company had almost 1.4 Billion in annual sales and has had steady increase in sales growth over the last 4 years. 

The company has provided a 1 year Total Return of 37.14% and a 3 year Total Return of 62.24% which are very nice numbers.

The second offering, may be my most favorite stock play going into next year. 

MasterCard Inc. Cl A (Symbol MA, $452.98) may sound like it is an expensive stock, but in fact it is incredibly cheap at this price.

MA has a PEG ratio 0.95 and a Return on Equity of 35.36%.

2012 earnings are projected at $21.88 per share. 2014 earnings per share are projected at $25.78 per share. That is a projected forward PE of 17.57 for a company that has had 5 year earnings growth of 17.22%. The company operates at Net Profit margins of 29.76%. 

The company is sitting on 5.5 Billion dollars in cash and has a squeaky clean balance sheet with zero long term debt. 

The company has a One year Total return of 27.80% and a 3 year Total return of 107.28%.  I am pretty sure that people are going to keep using their credit cards and Mastercard with definitely benefit in the new trends of Mobile Payment now paired up with Ebay's PayPal. This is a profit machine with very little capital expenses. 

Also there is lots of room for international expansion.

Make sure that you get out there and vote this week if you are in the USA.

Time to hunker down and wait for the Hurricane Sandy to arrive. 

Wish us Luck.    Freewilly

"Spooky Friday, but the Dow ends UP for the week. Keep buying quality stocks and stay the course (for now)"

Dow Jones Industrial Average 13343.51  (UP, in spite of an ugly end of week) 10-19-2012

Whew! It's a good thing I didn't blog about Chipolte Mexican Grill or Google in the last few weeks! Some guy at RR Donnelly presses a wrong button and releases an 8K report early on Google and it turns the whole stock market on it's ear!

  People that know I write a stock blog will come up to me this weekend and tell me "hey, what happened to the stock market on Friday down 209 points" . Well it was triple witching options expiration what did you expect to happen? You should have bought some PUT options. The fact is that the stock market ended up for the week!

Also The Dow Jones Industrial Average since the beginning of 2009?:

" The markets were closed on New Year's Day, but the Dec 31, 2008 close was 8776.39 and Jan 2 , 2009 closed at 9034.69." That is UP 34.27%, not bad.

Sometimes you just need to look at the signs to see what stocks to buy.

Kohl's Corp. (Symbol KSS, $52.93) 

Return on Equity 16.30%  PEG ratio 0.88

Kohl's is a relentless advertiser doing TV, US mail, newspaper, Internet web, and  email non-stop.

Kohl's  is projecting 2013 earnings per share of $4.61 per share and 2014 earnings of $5.13 per share. The stock has not done much in the last 3 years being down 8%. It has been kind of storing up energy for the next big push on the stock price.The stock does pay a dividend of 2.42%.

Long term earnings growth on the retail stock is 9.57%.  The forward PE on the stock is 11.48 so priced very reasonably. KSS has an operating margin of 10.60 which is good for a retailer. They turn their inventory over 3.41 times a year which could probably be improved on. They have almost $10.00 per share in cash on the books.

There are 10 strong buy recommendations on the stock right now. This is just a nice, low risk, low volatility, steady performer that should give you a 12 to 15% annual return with the dividend and let you sleep at night. 

This from Kohl's media department,  "Based in Menomonee Falls, Wis., Kohl's (NYSE: KSS) is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. With a commitment to environmental leadership, Kohl's operates 1,146 stores in 49 states. In support of the communities it serves, Kohl's has raised more than $208 million for children's initiatives nationwide through its Kohl's Cares(R) cause merchandise program, which operates under Kohl's Cares, LLC, a wholly-owned subsidiary of Kohl's Department Stores, Inc." 

So if you want a reasonable place to shop for the holidays that gives you family friendly pricing and fairly good quality, Kohl's Department stores may be the place.

Freewilly

"Looking for that pot of gold at the end of the rainbow? Maybe it leads to Grand Canyon Education (LOPE)"

Dow Jones Industrial Average 13328.85  (Down) Week Ending 10-11-2012

Grand Canyon Education Inc. 
(Symbol LOPE, $23.89)

 Return on Equity % 34.96     PEG ratio  0.91

My search for good stocks for you with my new rules applied on Return on Equity and PEG ratio has narrowed the sphere of stocks that I can bring to you. But I think that will be a good thing as the markets reach new heights and you will need this added discipline to stay out of trouble and avoid nasty equity losses.

Two areas in the US that have continued to grow and has delivered gains in jobs are health care and education. Education has become extremely important as international candidates vie and compete for fewer and more specialized jobs as they come available. So folks are loading up on education. 

Grand Canyon Education Inc. is a regionally accredited provider of post secondary education services which is focused on offering graduate and undergraduate degree programs in core disciplines of education, business, health care and liberal arts.

LOPE has taken full advantage of these conditions with 5 Year sales growth of 65.93% 

and 5 year earnings growth of 622.29%. Projected long term earnings growth is 19.16%.

The one year total return on this stock is 44.00%, so plenty of growth going on here. The company does not pay a dividend 
so is susceptible to some shorting by the
 market with a 8.14 short interest. The 
company carries very little long term
debt.


Earnings per share for 2012 are projecting at $1.41 and for 2013 they are 
looking like  $1.60 per share. 10 analyst have strong buy recommendations on the stock.

So make a Grand investment in the company that will bring you a great education and also a great return on your investment dollar. I do not see growth slowing here anytime soon.


Hope you are enjoying this beautiful fall day. 


Freewilly

"Buckle up your chin strap and grab a stock that has a little grit and can tough it out"

Dow Jones Industrial Average 13,610.15 (UP) Week ending 10-05-2012

Starbucks Corp. (symbol SBUX, $48.74) 

 Return on Equity - 28.81%     PEG Ratio - 1.21

When you get into October, and the skies start getting grey and the days start getting shorter, you need to be like those guys in the NFL and buckle up the chin strap and get those players on your team that are going to help you to have a winning game and portfolio.

 Starbucks is that steady quality player that you need. It meets our new tenet of "Return on Equity of 15+% and a PEG Ratio of less than 1.50". SBUX has a One year Total return of 19.61% and a 3 Year Total Return of 146.35%. (All stats. from Smartmoney.com)

The company has 5 year earnings growth of 17.06% and pays a small 1.39% dividend. Starbucks Corp. is the premier roaster, marketer and retailer of specialty coffee. Earnings per share for 2012 look to be $1.78 per share and 2013 earnings forecast at $2.15 per share.

One of the big holders of SBUX is the Fidelity Select Leisure Fund and it is 15.53% of that funds holdings. I was in a Starbucks today and every seat was filled. People are conducting business and interviews there. They seemed very busy. They also have very little long term debt.

So grab a Latte and give your broker a call from your local Starbucks and order up some SBUX.

This stock with an international presence can be the tough guy you need to get you through October in good shape. You can go watch your football game now and relax! 

Better drink decaf, if you are watching the NY Jets!

Freewilly

"Mortgage origination is a hot area right now. We found one stock with a name similar to one of the characters of a favorite TV show of the 60's, the Beverly Hillbillies"

Dow Jones Industrial Average 13,437 (Down) Week ending 09-28-2012

             
Elly Mae Clampett

Every time I see the name of this stock, Ellie Mae Inc. (Symbol ELLI, $27.23), it always makes me laugh and I think back to my childhood in the 1960's and watching the situation comedy show The Beverly Hillbillies, with Jed Clampett, and his curvaceous, tom-boy daughter Elly Mae Clampett. 

Of course, the first week out after my great Return on Equity tenet declaration, I am already stretching my rules by discussing a stock that has an ROE of only 14.29%.  ELLI though,  has some other great attributes like a 1 year Total Return on the stock of 389.75%. That buys you a little more credibility. The PEG ratio is fine at a safe 1.16.

The Clampetts arrive in Beverly Hills

Ellie Mae, Inc. provides automation software for a large segment of the mortgage industry in the United States. ELLI, 5 year sales growth has averaged 8.83% per year. Projected Long Term Earnings growth is forecasted at 60.47%, so this will probably take care to improve that ROE. 2012 earnings are projected at .74 cents per share and for 2013, $0.79 cents per share.

The Wall Street Journal , MarketWatch website this week stated:

"Ellie Mae , Symbol ELLI, hard on the heels of reporting second-quarter results, again raised its full-year forecast for profit and revenue as well as earnings before interest, taxes, depreciation and amortization on an adjusted basis. As revised, the Pleasanton, Calif.-based provider of automation solutions for the residential mortgage industry sees 2012 net income in a range of 49 cents to 52 cents a share, up from 26 cents to 28 cents a share previously. Profit on an adjusted basis now stands at 68 cents to 72 cents a share for 2012, up from 42 cents to 45 cents a share previously. Full-year revenue is now pegged at $90 million to $91 million, up a prior range of $78 million to $79 million. And adjusted EBITDA is projected at $21.6 million to $22.7 million, well above the $13.1 million to $14.1 million previously forecast for 2012. Sig Anderman, CEO of Ellie Mae, noted that mortgage origination volume during the second quarter ran higher than had been forecast by Fannie Mae, Freddie Mac and the Mortgage Bankers Association earlier in 2012 and that projections have been revised higher."

Jed Klampett

Elly Mae and Granny and friend

       So this Ellie Mae is looking a lot better that Fannie Mae and Sallie Mae.  I think that Mr. Drysdale, Jed's banker , would also like the balance sheet of this Ellie Mae.  The company also has zero long term debt. There are 25 Million shares outstanding on the stock.

 Jethro eating his Kellogg's cornflakes

So it looks like both Ellie Mae's are looking pretty good. One for your Small cap portfolio and the other to add to your vintage TV show collection.

Elly and critter friend


So, I hope you strike crude oil while shooting in your backyard, (or in PA. , natural gas will work too!)

All the best,        Freewilly 

                                

"Time to tighten up our investment Tenets and add a little more emphasis on "Return on Equity"

Dow Jones Industrial Jones Average 13,579  (Up)  Week ending 09-21-2012

I was looking last night at my "The Essential Buffett"
book by Robert G. Hagstrom and decided to add an investment Tenet in regards to "Return on Equity"to my investment discipline.  Buffett puts a very large emphasis on ROE as part of his criteria and "Margin of safety" where I have always focused on earnings and earnings growth.

So here is my new "Dual " Tenet to add to my investment Tenets in Blog #1 of "Freewilly's Stockpicker blog", that is my first blog from 2009.(a must read along with Isaac Asimov's verse there in the comments section).

Here it is: "I will only purchase stocks with a Return on Equity of 15% or higher and that have a PEG Ratio of less than 1.50." *** ( It is OK if the PEG ratio goes above 1.50 after you are already invested in the stock.)

So I will put out a few examples of stocks that fit in with this new dual criteria. Oddly, they are both in the suddenly hated Transportation sector. 



Tata Motors Ltd. ADS ( Symbol TTM, $25.36) is the first stock that fits this more scrutinizing criteria. This Mumbai , India of passenger, commercial, defense and homeland security vehicles has some very interesting numbers. This one comes up aces with the new criteria. Tata Motors has a current Return on Equity of 49.99%. That will work for sure. But add to that a PEG ratio of a very low .58.

(*** definition of PEG - Price/earnings-to-growth ratio. The PEG is calculated by dividing a stock's P/E by its projected long-term earnings growth rate. (SmartMoney.com PEGs use forward P/Es, and three-to-five-year growth rates.) The PEG provides a snapshot of the relationships between three important stock attributes — share price, earnings per share and the rate at which those earnings are expected to grow. Generally speaking, the lower the PEG, the less expensive a stock is relative to its growth projections.) 

 Tata Motors has 5 year sales growth of 76.19%. Earnings for 2012 are looking like $3.51 per share and for 2013 it appears to be $3.89 per share. The one year Total Return is 68.84% and the 3 year Total Return is $105.3 %.  You certainly can live with those numbers.

The second transport stock that appeared with this type of ROE/PEG screening is: 

C.H. Robinson Worldwide Inc. (Symbol CHRW, $57.62) has a Return on Equity of 35.11%. The PEG ratio is 1.27, so within our strict parameters. CHRW offers a 2.29% dividend yield to get you started. 5 years sales growth has been a healthy 8.26%.

Earnings look fine here with 2012 earnings of $2.89 per share and 2013 earnings of $3.29 of share. 

Wall Street has not been kind to CHRW,  with the one year total return of (-11.97)% and a 3 year total return of only 3.71%. So you need to think long term here, and get good sleep at night. 

Happy Trails!

Freewilly

"Do a little align on your teeth and your portfolio by adding the stock of Align Technology (ALGN)"

Dow Jones Industrial Average 13,593 (UP) Week ending 09-16-2012

As you know, no matter what you do or how much milk
your kids drink, you will ultimately end up at the orthodontist
for your kids to have braces installed to straighten their teeth.

Align Technology Inc. (ALGN, $38.22) has a solution that seems to solve the problem which is less invasive and
also probably less expensive.

First of all Align has zero long term debt which is always a
nice feature for a company. 2012 earnings per share is projected at $1.22 per share and for 2013,  $1.38 per share.
5 year sales growth has been 13.75%. Projected long term earnings growth is 21.76%.

Align Technology has their much recognized marketing brand name , "invisalign", which has defined this industry and the trend of moving away from the traditional metal brace appliances.The company has a 17.93% Return on Equity.

The company has had a One year Total return on the stock of 122.86% and a 3 year total return of 179.39%.  The stock has a PEG ratio of 1.63 here , so it is a little pricey with a forward PE (Price to Earnings) ratio of 31.59%. You might want to be patient and wait and see if you can get a better price in October when the market usually corrects a little bit. The company also runs at a very healthy 73.79% Gross Margin, so they have allot of profit going into the financials to make their way to the bottom line.

The company did about a 1/2 billion dollars in sales in 2011 ,so it is a small-cap stock heading towards being a small- mid-cap company. 

I see lots of room for growth here so consider it a 1 to 3 year holding in your portfolio.

I gotta run, hope you and your family are well,


(I missed last week because I was traveling to Washington, DC.)

Freewilly

"No matter who wins the election here in the US, we are still all going to be interested in Food, Home and Garden"

Dow Jones Industrial Average 13090.84 (Down) Week ending 08-31-2012 

Well, one election Convention done (Republican) and one left to go (Democratic). Neither party seems to have a clear advantage in this fray. No matter who wins though, you will need to keep investing  in the stock market  because you can't make any money putting your money in the bank in a Saving certificate of deposit (CD) or a savings account.

Make no mistake, these next two months here in the stock market are going to be treacherous with high volatility. You should take some profits off here on your winners. At the same time, you will still need to start "accumulating" good quality stocks that you can hold for 1 to 3 years.

Scripps Networks Interactive Inc. Class A  (Symbol SNI, $59.10), 

is one such of these stocks. Scripps has a nice blend of shows 


that cover all the things that people like. Scripps Networks Interactive is a
leading developer of
 lifestyle-content for television and the Internet.
The company's brands includes HGTV, Food Network, Travel Channel,
 DIY Network, Cooking Channel and country music network 
Great American Country. 

       

Scripps has a One year total return of 45.89% and a 

3 year total return of 80.02%. Return on Equity is a tidy

 30.49%. The 5 year  sales growth has been a steady

 8.75% per year. 2012 earnings look like they will come 

in at at around $3.37 a share. 2013 is looking like $3.80 

per share according to Smartmoney's estimates. 

2 Billion plus in annual revenues make this a nice Mid-Cap stock to add to your portfolio.
 I would buy into it in parts or even wait a
 little bit here because the next 8 weeks show allow
 some lower price entry points.
The company operates at Gross Margins of
56.53% so is very profitable. 

 Food Network Stars - Season 8

The Current ratio on the stock is 6.34 to 1 so SNI is in very good financial condition.
Year to date the stock is up over 39%
a very healthy number. The real secret in the sauce here may be that

Scripps programming is interactive with the audience, 
which is

a very good ingredient for success. Food, Home, Garden,

Travel, Music, and "Do it Yourself" , all the stuff that people like and 

are always interested in. 

 Bobby, Giada, and Alton a winning lineup

Enjoy your Labor Day weekend. Don't work too much, give yourself a break. 

That's what this holiday is about.

As the chairman's nephew says at SNI's - Iron Chef's Kitchen Stadium, 

"Allez Cuisine!!" and good luck.

Freewilly

"Looking ahead at the great debate in Washington DC about Medicare , I thought I would take a look at the Healthcare stocks. (My tech stock run is over!)

Dow Jones Industrial Average 13,158  (Down) Week ending 08-24-2012

 Sorry that I missed you last week, I was on vacation in 
the mountains with no computer.  Nothing on hand, but 
a copy of the Wall Street Journal. There is a lot of 
gas line activity up there which  is providing  work and 
is a boom for the lodging industry. In contrast it seems
 to be hurting the tourist industry because their are no
 rooms available for people to stay at , thus 
hurting the traditional summer industries like retail.

 I thought you were probably sick of the run of tech stocks so I moved
 over to take a look at the Healthcare stocks.  I am doing the same
 thing in my personal life in about a week, moving from wireless technology sales over to sales 
of medical equipment hardware. I look forward to my next great learning experience.


To take a look at the Healthcare Stocks , I went to Morningstar's Sector website 
and did a screen of the best performing stocks for a 3 year period. 
Below are the stocks in order going down from the best 3 year gain % : 


Stock Name                            Symbol         _YTD         3 month      1 Year        3 Year
Regeneron Pharmaceuticals  (REGN)         161.75        11.86         155.44        87.53
Alexion Pharmaceuticals Inc. (ALXN)           49.29        14.65          99.48         67.89
Valeant Pharmaceuticals Inc.  (VRX)            11.59           8.45          22.82        57.46
Perrigo Company                    (PRGO)           13.72          7.43          18.21         55.81
Edwards Lifesciences .              (EW)             40.28        13.57          37.20         46.08
Biogen Idec Inc.                         (BIIB)           33.60        11.68          59.73        43.72
Novo Nordisk A/S                      (NVO)           37.26        11.77          56.13        38.67
Watson Pharmaceutical Inc.      (WPI)            38.08        14.51          27.28        33.27
Intuitive Surgical, Inc.          (ISRG)            9.18         -4.89         44.55         29.85          

3 year is a good time period to look at because, as you can see, the stocks vary wildly in their movement over the three year period. Any of these stocks would have been a good investment and looking at the 3 month and 1 year they continue to have momentum.

You'll notice I have not posted the stock prices of these stocks
just their performance numbers. You should pick one of them as the Healthcare component in your portfolio and decide how much you want to allocate in dollars, then buy however many shares you can for the money that you allocated.

I am looking forward to this fall and NFL Football. Watching Peyton Manning and the Denver Broncos in preseason while I write this blog, and he is looking good so far. You need to multitask on weekends to maximize your time and get everything done.

All the best,

Freewilly