Archive for February, 2013

Ringing Up a few Buys

The market in the United States is very oversold. The market in Europe is being hammered, and Japan has some sectors that look interesting.

FTE – We would agree that the analysts over-reaction to Illiad’s entry in the French market for phones has been a bit extreme. The economy is winging France Telecom (FT), and competition is being felt, but the company has a giant footprint in Europe and Africa which doesn’t even blink at Illiad’s “threat” to their wireless service in the mother country.  That, and the French government still has a stake in FT.  We’ve been net buyers on its way down in the curve, a little here and there, to lock in good returns.  For now the dividend, with a projected yield of 14.89% appears to be in good shape. Anything under $14.50 we like just fine.   BUY.

DCM – We bought some NTT DoCoMo back when the Fukishima plant melted down and Japanese stocks were affected. We like the Godzilla of Japanese phone companies that holds 45% market share. They’ve been cost cutting and turning towards volume sales of smart phones as a way to create more revenue where older phones didn’t have it: In the data plans.  With a projected yield on the dividend of about 4.3%, we like it enough to buy a bit of it and keep it around to offset the American stocks being sold. BUY.

If there is a correction, we’ll be looking at buying GM in the middle of it. It’s great stock, debt reduced, lean and mean, with the government exiting its share,  and it’s already selling for about half of its fair market value.  We think there might be some further discount with the correction.  BUY PENDING.

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Sells: Peak of Cycle Hitting – Time to Look at Selling Targets

The peak of a cycle is about to hit in the American stock market. My research “window” that determines which stocks to invest in is telling me that the DOW at this level is not sustainable, and that there will be a moderate correction.

The Great Recession started right after my window hit 4 equities. Following the GR, it was nearly 330.

Currently the tally of high quality equities selling at a discount to fair market value that also pay a small or better dividend is down to 14 stocks, most of which I already have a stake in.

Most stocks will get held.  You want some cash to invest into a correction, though, so you look to stocks with either a murky future in the middle of a correction, or that the correction will directly impact.

So, what to sell?

MSFT – Microsoft – Their Windows 8 roll out will sell millions of copies, but it isn’t slowing the slide they’re in with both Google and Apple. Their phones might be a bit of a bright spot, but XBox is GAME OVER until they deliver something new for Christmas, which had best be 2013.  It may be that Microsoft gets its act together, but if there is a correction, investors will probably short it down for a while.  We have a slight profit in it, about 5-6% plus dividends. We’ll get out after three years and watch to see if there is another entry point. SELL

NUE – Nucor – We’d happily get into Nucor again at discount to fair market value. We’re holding a nice 23% profit in it, plus the dividends locked in around 5.235%, so it’s been a nice ride. Steel will feel a pinch if the wingnuts in Congress let the sequester roll in.   SELL.

BT – British Telecom – We’re only up about 5.3% on the stock, but we made a killing on the 8%+ dividends over the last few years.  We’d buy it again, but the credit downgrade of the British is going to push it down, and we’d rather re-buy it at a discount to fair market value and lock in the profit. SELL.

LOW – Lowe’s had a very nice 28% run up since we bought it, but if there is a correction where the automatic sequester kicks in, the fear of it might affect the price for a time. The forward outlook isn’t as rosy as our other holdings. We’d rather hold our profit.  Great company. Again, no problem getting back into it if the circumstances are good.  SELL.

EV – Eaton Vance – We’ve done very nicely by Eaton Vance over the years, but their forward outlook isn’t great, the profit is there, and the market is likely to correct, possibly aggravating Eaton Vance’s issues. We probably won’t be back into this stock/sector in the near future. SELL.

ABBV – AbbVie Inc –  We might revisit this pharma company that makes Humira, but the profit was good, the forward outlook a bit murky, and the dividend just not good enough to lose the gain on the equity side of this investment.  SELL.

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