Sunday, January 31, 2016

Saturday, January 30th 2016

The "it's going to get worse before it gets worse." edition. 

As you already know one of my favorite money talk shows is Marketplace from American Public Media. Last week's wrap had a scary conversation about how things are going to get bad in the next few months. The conversation gave me pause about the timing of this (mis)adventure. Foolish as it seems, I am going to forge ahead with the best choices I can make with the knowledge I have, and take comfort in the knowledge that I have a reasonable amount of time before I retire so I still have time on my side.

On the sunny side, this is the first week that officially gets a Ka-Ching rating, a new tag that denotes that stocks in my Buy list actually made enough gains to put me into the "black" or took me higher up than last week. Both Alphabet Inc. (GOOG) and Fresh Del Monte (FDP) ended the week with gains. GOOG made great progress ending the week at $742.95, putting one of my batches well in the black and the other pretty close. On average though, I am 1% over. FDP ended the week at $40.81 giving me a current gain of 3.2%. This put a smile on my face in spite of the potential storm that is approaching.

This week I saw another manifestation of what I have referred to as the "Ownership Bias". At the grocery store while buying lunch time fruit in syrup things, I ended up buying the Del Monte brand over the Dole brand, just because I own FDP stock.

In the Potentials list I have a new stock this week:
Name                               Novo Nordisk ADR
Industry:                            Drug
Symbol:                              NVO
Timeliness:                        1
Safety:                               2
Technical:                          3
Approximate Price:            $55
Dividend Yield:                  1.6%
Industry Rank:                    27
Low Gain Estimate:            20%
High Gain Estimate:           55%

Novo Nordisk (NVO) is a Dutch company that makes medications primarily for diabetes management, hemophilia, and other conditions. They have a had a strong 2015 and are poised to continue a good run this year too. Two new diabetes drugs have just received FDA approval and more drugs are well into the research and approval pipeline. They have a small (1.6%) dividend and a good price appreciation potential too. This is also the only stock given a Timeliness of 1 by Valueline in the Drug industry group. I foresee a good chance that I will convert this to a Buy in the next week.

Still on the bubble is Cal-Maine (CALM) which I should have bought when I first saw it. If I had I would have put away a gain of 5%-7% and also claimed the dividend that just passed the ex-dividend date. Maybe this will be the week I jump into this omlette too.

That's all I have this week. If you have been a regular reader, please leave a comment and tell me WhatSayYou?

Sunday, January 24, 2016

Saturday, January 23rd 2016

The rollercoaster ride continues...

The market had yet another day of free fall, with 500+ point drop during the day. But by the end of the week the panic had subsided and the markets had levelled off to the levels at the beginning of the week. Read the weekly wrap from my favorite money program on the radio Marketplace.

In terms of current holdings this was a good week. Alphabet Inc. (GOOG) jumped up close 36 points to approximately $725 and almost caught up to one of the batches that I are in my Buy list at $726.70. If this trend continues next week I will break out of the red on this Buy.

Fresh Del Monte (FDP) managed to stay about flat to just under the surface and ended the week at $39.36. This is below my purchase price of $35.54, but not too far to worry just yet.

Cal-Maine (CALM) which is still on my list of Potentials has been a tease. Jumping up and dropping back down but not really picking a direction in this volatile market. I am starting to wonder if I should commit to this stock and ride the waves or hold back a bit longer. My worry is no matter what I choose, it might end up being the wrong decision. Aargh! Maybe my 3 ( is it up to 4 this week ) loyal readers want to chime in and leave a comment to push me this way or that. WhatSayYou?

Last week I did not find any stocks that were good Potentials, so nothing new to report this time. 

Monday, January 18, 2016

Saturday, January 16th 2016

The market freefall continued in the previous week fueled by China, low crude oil prices, and the worry about the long terms effects of the Federal Reserve raising rates. 

All this meant that my previous week's Buy, GOOG continued its downswing and ended the week at $694.45, a significant further loss of investment, earning this week another Ka-Flunk rating. Still I am confident that the investment will pay off in the long term. A contrarian (read crazy) side of me is wondering if I should dig in deeper and buy some more. What would you do? Feel free to leave a comment and let me know WhatSayYou?.

Fortunately it was not all gloom and doom this week. Last week I found another stock for the Potentials list and immediately purchased it too, putting it into the Buy set. First the stats on the new find:

Name                               Fresh Del Monte Products
Industry:                            Food Processing
Symbol:                              FDP
Timeliness:                        1
Safety:                               3
Technical:                         2
Approximate Price:            $39
Dividend Yield:                  1.3%
Industry Rank:                  28
Low Gain Estimate:            0%
High Gain Estimate:           25%

Fresh Del Monte (FDP), is a familiar name if you shop for groceries anywhere in the United States. You probably know them from the Del Monte brand of canned fruit that you have most likely purchased. Although the dividend yeild is not stunning at only 1.3% and the potential gain is a bit on the lower side, this seems to be a solid stock to weather the current storms. Also, it just got a bump in its Timeliness, from 2 to 1 and the Technical (short term price variance) rating has been bouncing between 1 & 2. The Food Processing industry has also been bumped up from 35 last week to 28 this week making this stock a worthy Buy.

I managed to pick up a few at $39.54, and in spite of the rough week the stock ended the week $39.36. A fraction lower than my purchase price, but not to the tune of the drop in my GOOG holdings. I will be watching this one like a hawk and probably taking my gains as soon as they get above 10%.

And now for the Greek Tragedy of the week. For ( the 3 of you ) that have been following my (mis)adventures from the beginning of this year, you know that I have had Cal-Maine Foods (CALM) on my list of Potentials. Well, I have still not purchased it and put it into the Buy set. Then last week as the entire stock market was in free fall, CALM managed to reverse gravity and advanced almost $4 on the day the market dipped 500+ points!! It ended the week at $49.39 over $3 higher than the start of the week, a gain of about 6.5%. Sadly, I missed out on this goose which laid a golden egg this week.

That's all folks!

Monday, January 11, 2016

January 9th 2016: Addendum

So what happened to Kimberly Clark (KMB), you're wondering. It was listed as one of the Potentials in January 2nd 2016 post but there was no mention of it in the January 9th 2016 post. Well, after further consideration I have Dropped it from the list...

Here's the reason; the stock is priced at a whopping $128 or so. This means to get a reasonable number of them I am looking at multiples of $12800. The price appreciation potential of the stock does not justify, for me, such a large investment at this time.

So it's off the list. Maybe another time.

The Ownership Bias

I noticed an interesting behavior I exhibited this weekend and thought it was relevant to this blog, so here goes...

Needed to buy something for a small home project and was heading to my local home improvement store. As I was driving I noticed that there was a Lowe's store on my way that I had not noticed before. But rather than stopping in there to get what I needed I drove another 5 miles to the Home Depot store!!

It's not like I thought I would not find what I needed, some hardwood and some hardware ( screws and fasteners ), at Lowe's. My only reason was that I own stock in Home Depot and spending my money there seems like a better return on my investment!!

There you go, the "Ownership Bias."
Can I copyright that phrase now?

Also, maybe I should look into buying some Lowe's stock too and save me some driving.

Saturday, January 9, 2016

Saturday, January 9th 2016

... Or a funny thing happened on the way to the market.

Two of my picks from last week CALM and FUN got downgraded by Valueline in the report that came out last week. CALM went from a Timeliness of 1 to 2 and FUN dropped from 2 to 3. This meant that FUN immediately Dropped out of my list of Potentials; I may consider it again if at a future date if it rises from the ashes. You know, with a stock symbol like FUN, how can you completely give up on it? 

CALM though is still on the Potentials list because a Timeliness of 2 is still considered a good or Timely stock in the Valueline universe. CALM also withstood the storm that came down on the market last week reasonably well, which is a great segue to the GREAT CHINESE MARKET DEBACLE of 2016.

The Chinese stock holders and the world in general have started to catch on to the hoax of the Chinese stock market. As a person of Indian origin, with a Chinese made knife still stuck deep in the back of my psyche, reference to the "हिंदी चीनी भाई भाई" ( Indians and Chinese are brothers ) days right before the Chinese People's Army attacked India, I have a deep suspicion of anything Chinese. So I am not surprised that the miracle of the Chinese stock market is just a mirage that is starting to fade.

Anyway, the instability meltdown of the Chinese market affected markets around the globe and I figured this would be a good time to buy some stocks that have dropped from their high perches. So, onward to the Buy(s) of the week.

I picked up a small quantity of GOOG at $744.475 and another small quantity of GOOG when the market dropped even further at $726.70. I thought this would be a good time to invest with the market on the downswing, but I underestimated the velocity of the downswing. The week ended with GOOG at $714.47 earning this week the Ka-Flunk label :-( . I am not worried about this because I believe the Google (Alphabet Inc.) is still a good investment and it will pay off.

Still on the list of Potentials is this stock from last week:
Name                               Cal-Maine Foods
Industry:                            Food Processing
Symbol:                              CALM
Timeliness:                        2
Safety:                               3
Technical:                          3
Approximate Price:            $46
Dividend Yield:                  6.6%
Industry Rank:                  35
Low Gain Estimate:            0%
High Gain Estimate:           45%

The Industry ranking has dropped 3 slots to 35, the estimated yield is down to 6.6%, and both the Timeliness and Technical Ranks have dropped by one. But the price appreciation has risen to 0-45% to match the price drop showing that the stock still has the same appreciation potential. Also the price is only down a few points to a little above $46, so the stock dealt with the China crisis quite well. This makes sense because the company has no real exposure to Chinese markets. All this keeps the stock in the running as a potential buy.

That's all folks...

Saturday, January 2, 2016

Saturday: January 2nd 2016

Happy New Year!!

New year, new blog, and off we go...

I am starting off with a modest sum of money for this experiment. It's not in the hundreds of thousands, I wish it was, it's not, but it's not in the hundreds either. Somewhere in between should we say. :)

With the experiment just beginning, there are no stocks to report about.
So here are the stocks I am considering as the first few Potentials dips in the investing pool, I'll call them Potentials.

Name                               Cal-Maine Foods
Industry:                            Food Processing
Symbol:                              CALM
Timeliness:                        1
Safety:                               3
Technical:                          2
Approximate Price:            $50
Dividend Yield:                  7.9%
Industry Rank:                   32
Low Gain Estimate:           0%
High Gain Estimate:           30%

This one is a food company that deals mostly in eggs, good old eggs; boiled, fried, scrambled, over-easy, no matter how you like them, you are most probably buying them from this giant. The most attractive metric about this stock is the Timeliness ranking which in Valueline terms is a as good as it get rating. Another is the whopping 7.9% dividend yield, which means even if the stock declines 7-8% in the year you are still at a break even point. If the stock rises, then you have a bonus. The 3-5 year horizon has this stock rising between 0-30%. Even if the stock stays stable or increases slightly the over 7% annual rate of return is better than many other investment ideas.

Name:                                Kimberly Clark Corp
Industry:                            Household Products
Symbol:                              KMB
Timeliness:                        2
Safety:                               1
Technical:                          3
Approximate Price:            $128
Dividend Yield:                  2.8%
Industry Rank:                   8
Low Gain Estimate:            0%
High Gain Estimate:           10%

This is another giant, this one in stuff you use in the home all the time. It owns many known brands like Cottonelle, Kleenex, and Huggies. Although the Timeliness ranking is not top grade, it's still considered a "Timely" stock at a rating of 2. The 2.8% dividend yield and the small potential stock price gain over 3-5 years are also attractive. The most valuable asset for the company though is the many, many, many recognizable brands it owns and that the products it sells are mostly bad economy proof.

Name:                                Alphabet Inc.
Industry:                            Internet
Symbol:                              GOOG
Timeliness:                        1
Safety:                               2
Technical:                          2
Approximate Price:            $748
Dividend Yield:                  0%
Industry Rank:                   15
Low Gain Estimate:            15%
High Gain Estimate:           55%

OK, this is getting a bit repetitive, another GIANT!! Good ol' Google. What can I say, I won't be able to afford too many of these shares, but a tiny amount of them growing by 15-55% over the next few years will still accomplish a lot. The Timeliness of 1 is also reassuring. Google makes money by the truckload, and is constantly innovating, so I feel comfortable putting a chunk of my investment into a small fraction of this stock. I have done this once before and received handsome earnings for my bravery.

Name:                                Cedar Fair L.P.
Industry:                            Recreation
Symbol:                              FUN
Timeliness:                        2
Safety:                               3
Technical:                          2
Approximate Price:            $54

Dividend Yield:                  6.0%
Industry Rank:                   17
Low Gain Estimate:            25%
High Gain Estimate:           85%

Everyone loves to have FUN, and this company is fun itself. It operates 11 amusement parks mostly in the Midwest (OH, PA, MI, MN) and if that sounds vague, it also runs the Knott's Berry Farm in CA. Timely enough at 2 and with a solid dividend of about 6%, this company has been on a steady stock price rise for 5 solid years, it has also grown its dividend steadily over that time. Seems like a fun ride to me.