Archives for January 2010

4 Potential Value Plays

This is a list of stocks that I am watching because the prices appear to be good values. I have no position long or short in any of these companies.

1. Verizon (VZ)– Verizon is purely a dividend play for 2010. Growth will be tepid this year as the company’s landline business is shrinking. The growth for Verizon won’t come until 2011 when the telecommunications company is rumored to be adding Apple’s popular iPhone to its product offerings. According to the Wall Street Journal, “only 26% of the company’s annual-subscriber (retail) wireless customers held smartphonesor multimedia devices.” There is tremendous growth potential in selling smartphones and data plans to these customers.

2. Exxon Mobil (XOM) -At $64 a share the oil giant is falling into buy territory.  The oil bubble seems to have burst but with global economies recovering oil demand should be on the rise. The recent acquisition of XTO gives Exxon more exposure to the natural gas sector. With the recent market drop investors will flock to solid large cap names with strong balance sheets like Exxon. 

3. Goldman Sachs (GS) – I have learned from past experience to never bet against Goldman Sachs. Wall Street is expecting Goldman Sachs to earn anywhere from 17.50-18.75 per share for the current year which means the best investment bank in the world is selling for just 8 to 8.5 times 2010 earnings.

4. Apple (AAPL)– There may be a little more downside in Apple but not too much more. Shares have been punished relatively quickly. The stock has cooled dramatically from the $215 level just 10 days ago. The stock was due for a pullback sometime and maybe the market’s lukewarm response to the iPad was the reasoning. Either way shares look like a decent buy in the 180’s.

FDIC Shuts Down 6 More Banks

The FDIC shut down 5 more banks on Friday. First Regional Bank of LA, First National Bank of Georgia, Community Bank & Trust , Florida Community Bank, Marshall Bank, and American Marine Bank were all closed by the FDIC. Since January of 2008 155 banks have been shut down and there are more to come. 140 failed in 2008 and 15 so far this year. This may seem like a lot but it really isn’t that big a number compared to the 534 banks that failed in 1989.  This just highlights that the financial crisis is not yet over for many small and midsized banks. Foreclosures and loan defaults are crippling the balance sheet of smaller banks and they are unable to find adequate capital to stay afloat.

Money Crashers 2010 New Year Giveaway Bash – $9,200+ in Cash and Prizes

Sign up for you chane to win the Money Crashers 2010 New Years Giveaway! The contest ends Sunday january 31st, 2010

Can you believe that it’s already 2010? Of course the New Year brings a new set of goals and resolutions and I’m sure you all are revved up to make and save more money and do an even better job managing your personal finances in the coming year.

Here at Money Crashers we offer a wealth of personal finance information, including useful tips and reviews around topics like budgeting, saving money, college & careers, credit & debt, and investing. Think of the site as your “Guide to Financial Fitness.” Our goal is to help you achieve your financial goals.

Here are just a few of the prizes being offered:

In addition to all of the financial resources here, this year we want to take it a step further and give you the opportunity to win some amazing free stuff that will give you a head start with your finances in 2010. Enter the Money Crashers 2010 New Year Giveaway Bash! We’ve partnered with various finance companies and bloggers to put together over $9,200 in sweet prizes – including $3,150 in cash, $1,105 in gift cards, the entire line of Apple iPod mp3 players, 2 Amazon Kindles, a whole bunch of popular finance books, and much much more.

So how does the Giveaway work? We have the exact details outlined lower on this page, but in a nutshell, all you have to do is perform certain actions to gain entries into the contest (i.e. follow us on Twitter, subscribe to our RSS feed, join our Facebook group, etc). The more you do, the better your chances of winning. Then on February 3, we’ll randomly select the winners for each individual prize. Additionally, the top 3 participants with the most entries at the end will get $100 each from Money Crashers. There will be over 100 winners, so you have a great chance of winning something! Now take a look at these awesome prizes and start building up your entries for the Giveaway!


Without further adieu, here’s the full list of prizes in the Money Crashers 2010 New Year Giveaway Bash! Big thanks to all of the sponsors. If you’d like to include your own prize in this event, it’s not too late. Contact us asap.


3 $100 Cash Prizes ($300 Total) from Money Crashers added Jan 4
All of the other prizes below on this list will be selected through a random draw on February 3, but we’re also giving $100 in cash to the top 3 participants that collect the most entries by the end of the contest. Some things you just can’t leave to chance, right? More details on this in the how the contest works section.

$600 Cash from Dream Routine added Jan 22
dream routine
Dream Routine is an exclusive society designed to drill down to the core of your money problems. The power of Dream Routine lies in its MasterMind Group, which prepares you for “becoming a millionaire”. Sign up for their Insider’s Newsletter because they currently need free Beta Testers for their new program (you also get 15 extra entries for this).
Twitter: @DreamRoutine

$500 Cash from Wise Bread added Jan 4
Wise Bread is a community of personal finance bloggers who help you live large on a small budget. Despite what you may have heard, you don’t have to sacrifice your financial independence to enjoy life. Top bloggers offer useful money saving tips and the site also features a popular finance forum and daily “best deals” posts.
Twitter: @wisebread

A listing of how to register and win can be found here.

I’m A MoneyCrashers Member

I am pleased to announce that I have joined the Money Crashers team! I will be writing articles for the Money Crashers personal finance site. Money Crashers is a community of people who are trying to make financially sound decisions. Money Crashers strives to educate individuals in making wise decisions about credit and debt, investing, education, real estate, insurance, spending, and more. The eleven indispensable principles of a Money Crasher will guide these individuals in making these financial decisions. People, young and old, will no longer be targets of financial predators. They will take control of their money and their future by demonstrating common sense and self-control. Money Crashers is here to help you in your journey to becoming financially independent, sound, and secure.

Today’s News

Apple (AAPL) unveiled its new tablet PC named the iPad. iPad pricing will range from $499 to $829 depending on options such as memory and 3G coverage. According to CNBC’s tech reporter Jim Goldman, the iPad looks like a giant iPhone. Is the device needed in a market with laptops, netbooks, and smartphones? Probably not but my guess is Apple will still sell millions of them.

US Steel (X) is taking it on the chin again today dropping 8% to $45 per share. Shares have been downgraded by several firms and Fitch cut its debt ratings below investment grade. While I have no position in the stock, shares are beginning to look attractive. The stock is a decent long turn turnaround play.

Toyota Motor (TM) has temporarily stopped selling 8 models in the US. The Corolla, Camry, Avalon, Matrix, RAV4, Tundra, Highlander, and Sequoia all have problems with a sticky accelerator that causes these models to accelerate on their own. Toyota shares are down over 9% based on the news. The hit to Toyota’s reputation may create an opening for other auto companies like Ford, Honda, GM to gain market share.

US Steel’s Stock Slammed

Today US Steel (X) reported a loss of 267 million dollars for Q4 of 2009. The $1.65 per share loss was 22 cents below analysts expectations of a loss of $1.44. The big surprise is that US Steel is forecasting a similar loss for Q1 of 2010. The projected loss would be the 5th straight loss for US Steel. The stock has been pummeled dropping over 10% to $50.50 per share today. I listed US Steel in a post last week as one of three stocks that investors should consider selling. I believed that US Steel’s stock valuation was too rich when shares were trading over $65 last week. I received a lot of emails from individuals who said that I was crazy and that the steel giant was only headed upward. Over the past week US Steel has lost 23% of its value and I don’t believe shares have totally bottomed out.

Why did I think US Steel was overvalued? The stock was priced for perfection. Analysts were all over television screens telling investors to buy US Steel despite its hefty PE ratio. Merrill Lynch and Deutsche Bank were adding US Steel to their buy lists when the stock was trading at its 52 week high. The stock was priced for a robust economic recovery, rising steel prices and lower raw material costs. It was obvious that any negative news was going to punish the stock badly. 

So what do I expect now? I expect brokerage firms to change their opinions and place US Steel on their sell lists. The stock is a screaming buy in the upper 20’s but I doubt it will ever get that low. I would actually look at buying shares of US Steel in the high 30’s to mid 40’s now that expectations have been tempered.

Buffett In The News

According to numerous media reports, Warren Buffett will soon be purchasing more shares of foreign steelmaker POSCO (PKX). Buffett already owns over 4% of the South Korean steel manufacturer. This is a curious move considering that Buffett has historically invested in quality companies selling at distressed prices. POSCO is a quality company but the current price doesn’t seem to be as cheap as the traditional Buffett investment.

Buffett thinks that the Kraft-Cadbury deal is a bad deal for shareholders of Kraft. He states that he would have voted against the proposed acquisition due to the issuance of share, high reorganization costs and the sale of its frozen pizza division. Only time will tell if Buffett is correct in his assertion that Kraft (KFT) is overpaying for the Cadbury franchise.

3 Stocks To Keep An Eye On

1. Amazon (AMZN)– The ecommerce giant has been on a tear over the past year rising from the high 40’s to $127 per share. Many analysts have placed a buy rating on the stock and price targets keep going up. Forward earnings are expected to come in at $2.58. Price to earnings growth is 2.5. This stock is priced for continued earnings growth of 20% or more. I like Amazon’s business model but the stock is currently trading at 75 times earnings. Any hint of slowing earnings growth over the next year and Amazon’s shares will get hammered.


2. Research In Motion (RIMM)-Research in Motion appears to be fairly valued and has been one of the best tech companies of the past decade. RIMM grew its revenue by over 40% last quarter but the smartphone market is becoming a crowded place with increasing competition from Apple and Google. Palm has just signed a deal with Verizon to begin offering their smartphones at the nation’s largest wireless carrier. It appears that RIMM will have to increase spending on marketing just to maintain their current market share.


3. US Steel (X) – The nation’s largest steel company saw its shares decimated during the global recession. Shares have rebounded almost 300% from the $16 level. While I like US Steel as a long term holding; the stock has gotten ahead of itself over the near term. US Steel is trading at $65 a share and has a forward PE of 52. This is based on estimated earnings of $1.24. Some analysts are even anticipating a loss as large as $3 per share for 2010. If you were one of the smart investors that got in at $40 or below; it may be a good time to trim your position and take some profits.

Jim Rogers Take on Commodities

Interesting take by Jim Rogers on agricultural products. Do you agree?

AK Steel Purchase

I started a position in AK Steel(AKS) at $23.60 for a short term trade.

I picked up additional shares of Bank of America(BAC) at $16.30 for my long term portfolio.