July Buys 2012

NOKIA CORP SPON ADR F1 ADR REP 1 NOKIA CORPS (NOK) – We already hold some of this stock.  Nokia continues to be pilloried by the market. The stock dropped to a new 52 week low of 1.92 last week. We like the stink of decaying flesh on corporate bones.  Nokia missed the smartphone wave, and the Tsunami landed on it. They have made deals with Microsoft for the Windows platform and a joint project with Siemens.  Right now, the brain trust of analysts is saying that Nokia will cut its dividend (likely) and that one should sit on the sidelines.  Microsoft infused quite a bit of cash, over $1B into NOKIA to work with a partner to catch up on its Smartphone ambitions, but it did not give an exclusive to the phone manufacturer. They also are being hammered on the low end by Asian competitors who offer viciously low pricing, and their brand name has all but evaporated from the U.S. market. All that said, at $1.92, we think that  NOK isn’t going out of business.  Further, even though the company got burned going its own way with advanced mobile phone devices and got smoked by Apple and Google, it holds substantial patents that Apple and Google need to access, which we believe are worth more than its current very low share price. It holds a BB+ credit rating from Morningstar. Its dividend is at 9.2%. If slashed in half 4.5% is still not that bad to buy a bit of patience.  We are buying cautiously, but see a lot of upside potential at these basement prices. BUY

CEMEX (CX) – The Friday before last the Senate passed a two year, $105B transportation bill that should be good news for Cemex and other building material suppliers. Cemex has been a gradual build of purchases of the world’s largest producer of ready-mix concrete.  Cemex has operations in the US, Mexico, South America, Europe and Asia.  They have been selling off non-core assets to reduce their debt load after acquiring Rinker just before the 2008-2009 correction.  The stock has great recovery potential 2015-2017, which, while a bit slower than our original estimates, is in line with the pace of economic recovery. Look for book value to return to the $15/sh range in 2015-17. At $6.53 you’re getting a great company at a good discount to fair market value.  BUY



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