I recently initiated a position in FireEye Inc (FEYE) last week after investigating the company for a few days. I have had my eyes on technology stocks for awhile as the hot theme in investing is to find disruptive technologies and FireEye fits the bill. This is a long term growth play so I started my position at just $20,000.
Investors in Netflix (NFLX) saw the stock drop over $100 per share last night in after hours trading. The stock actually pared its losses today as the company was down as much as 25% last night. Shares of Netflix dropped over 20 percent today as the company reported earnings last night. The Good News: Netflix’s revenue rose 27% to $1.41 billion, and EPS doubled to $0.93 per share. The Bad News: Netflix gained 3 million new subscribers when the company was expected to gain 3.4 million by analysts. The company had ambitiously targeted 3.69 million subscribers for Q3. Whether it was the $1 price hike or merely that growth is slowing, the company could not meet the expectations of the Street. [Read more…]
The Dow Jones and S&P 500 are near their all time highs. The market has been on quite a bullish run and there are not a lot of screaming buy opportunities out there. Technology and retail seem a bit long in the tooth to me. There are however some sectors that still have values and I have started taking long term positions in them. Energy, financials, metals, and basic materials are largely undervalued. [Read more…]
I am as big a stock market bull as anyone. The market has had a great run over the past few years and investors who stayed the course have made a great deal of money. I believe however a pullback is coming. It is simply too hard to find great values in the market now. Many great companies are trading at values (P/E, P/S, BV) that are simply too high based on their financials. (I love Amazon but a 1400 P/E ratio is outrageous for almost any company. [Read more…]
I have written many articles citing the benefits of long term investing over short term investing. Beating the market over the short term is simply too difficult for most investors to do. It is close to impossible to time the market. Most long time traders only have minimal success at buying low and selling high over the course of a few days. Long term investing gives the average investor the opportunity to make solid profits and reduces the emotional stress of watching the market day to day. [Read more…]
The current fiscal cliff talks have caused a number of stocks to pull back in value. There are quite a few stocks who have become decent buying opportunities while others have become potentially worthless. One such company is in the technology industry. The company in question is the computer retailer Hewlett Packard Company (HPQ). Is HP a value play right now or a value trap? [Read more…]
Investors often look in the wrong place when they are trying to find a company that can make them a lot of cash. Investors are attracted to the big name companies like Walmart’s (WMT), Exxon’s (XOM), Nike’s (NKE), and Coca Cola’s (KO) of the world. While these are all great companies that can make money for investors over time, they are not great growth stocks. Large cap stocks have a place in the portfolio of investors as income generators, defensive plays, or stable growers. Investors looking to take some risks with their cash should look for a certain type of stock. [Read more…]
Facebook launched its initial public offering a few weeks ago and a lot of investors gobbled up shares of the stock. Facebook had a lot of things going in its favor. The company has name recognition. Facebook is incredible well known with over 600 million people having accounts. Social media is one of the hottest niches in the technology market place and investors are lining up to throw cash at the sector. Combine all of the factors and you can see why Facebook’s stock price hit $45 a share.
The bloom quickly came off of the rose and Facebook has seen its stock price tumble dramatically. Shares of Facebook have plummeted 55% as investors have been burned by the pricey IPO. Now Facebook is trading slightly above $20 per share. The stock dropped because a number of larger firms dumped their shares on the open market burning smaller investors. There was also some concern over the short term revenue and profit growth.
While growth investors may hate to see a stock like Facebook plummet. As a value investor, I love it when a quality company has a major price dip. That is a buying opportunity to me.
I love Facebook as a social media website but the stock was clearly overpriced.
Facebook was trading at 9 times book value, 85 times earnings, and 3 times the projected growth rate. The future P/E ratio was near 70. There was no reason that Facebook deserved such a lofty valuation except for hype. While I did not like Facebook at its IPO price, I do think that the stock is worth a shot in this price range. I would buy Facebook in the $18-$20 range as much of the risk has disappeared from the investment.
The P/E ratio is still high but Facebook’s P/E ratio is much closer to the projected growth rate of the company. Facebook has a massive $10 billion dollar cash hoard and virtually no debt. The company is still in the early stages of capitalizing on its online advertising. Facebook’s $1.8 billion in free cash flow should continue to rise long term. The 3.5 price to book value is right in line with industry competitors.
Google and Apple have been on a tear with both companies taking out the $600 level. The same cannot be said of all technology companies. There are a few laggards out there that seem to be keeping the NASDAQ from reaching its optimal level. Let’s take a look at a few tech giants that have been stuck in a holding pattern. [Read more…]
ETFs, or exchange-traded funds, are among the most popular investment tools for newbie investors. Much like mutual funds, they consist of a group of stocks or commodities based on an existing index, such as the S&P 500 or NASDAQ. They may also consist of a group of stocks in the same general industry, such as the Global X Fishing Industry ETF, which contains holdings in twenty fishing-related companies. [Read more…]