Thursday, May 31, 2007
disclosure: optimistically long
Aflac Incorporated, through its subsidiaries, engages in the marketing and sale of supplemental health and life insurance plans in the United States and Japan. It sells cancer plans, care plans, general medical indemnity plans, medical/sickness riders, living benefit life plans, ordinary life insurance plans, and annuities in Japan. The company also sells cancer plans and various types of health insurance, including accident/disability, fixed-benefit dental, sickness and hospital indemnity, vision care, hospital intensive care, long-term care, ordinary life, and short-term disability plans in the United States. Aflac underwrites individually issued policies, and markets its policies through independent agents, as well as through independent corporate agencies, and individual agencies. The company was founded in 1955 and is headquartered in Columbus, Georgia.
According to AFL’s financials it appears Aflac is a pretty sound company. With nearly 19% ROE and 10% profit margin AFL is doing something right. The commercials are pretty funny too. This one is my favorite.
Wednesday, May 30, 2007
Canon produces cameras, personal printers, business printers, scanners and other printing and photography equipment. Canon’s top competitors in the photography industry are Nikon, Sony, Minolta, HP, and Kodak, all of whom have a growing line of digital cameras. The competition in the digital camera industry is growing daily, but Canon has been able to find a niche with Digital SLR cameras and lenses.
CAJ is trading around $57 with a p/e ratio roughly 19. Canon has a forward p/e of 15 which makes it looks like a bargain at $57. This is a great large cap stock to hold in your portfolio for the long term. CAJ has annual revenues of over 35 billion with quarterly earnings growth over 21%. With very small short holdings the risk in CAJ appears minimal. Click here for statistics.
Tuesday, May 29, 2007
1. Team up with the cable companies! If you can’t beat them, join them. TIVO should team up with a cable provider like Timer Warner, Verizon, or Comcast to reach a wider audience.
2. Model the business plan after the cell phone carriers and give the product away! The profit is all in the programming anyway, so give the units away for free. If TIVO required a one year programming contract with every unit they would be positive in no time. The base units (80 hours) are selling for $99.99, while the bigger 180 hour unit is selling for $199.99, and the steroid unit (300 hour) is selling for $599.99! No one in there right mind is going to spend six hundred dollars on a TIVO when the cable companies are giving them away for free! If you truly believe in the product than the customers will continue to use the service after the contract has expired.
3. Hire a new CEO. Having a CEO that has a vision of where the company should be heading is crucial to any company’s success. TIVO needs a fresh start with a new CEO that has not been sitting on the company’s board of directors like there current CEO Tom Rodgers.
Turning a company like TIVO out of the red is going to require some huge changes. TIVO is a tough stock to trade because they don’t have the financial stability or growth potential that most investors are searching for. TIVO’s best asset is there name recognition and they need to use this to turn the company profitable. I will keep TIVO on my watch list, but not in my portfolio.
Thursday, May 24, 2007
“It started with a simple plan to make a superior T-shirt. A shirt that provided compression and wicked perspiration off your skin rather than absorb it. A shirt that worked with your body to regulate temperature and enhance performance.”
With a p/e ratio of 58 UA appears overpriced currently trading arouund $47, but if you can get in on a correction UA is a good stock to have in your portfolio. UA has a forward p/e around 38 and a quarterly revenue growth of over 40%. Like many growth stocks the short float is over 32% making this a very volatile stock. Trade this one carefully. Good analysis here. Nike and UA analysis here.
Wednesday, May 23, 2007
Today’s Nikes are much different than the old Nike Airs of the 1980’s. Technology has played a large role in the Nike revolution. Today you can go online and get a pair of Nikes in two different sizes, for that goofy longer left foot, and customize every color including the swoosh. You can even get your name stitched on your right toe if you so desire. Check it out here. Nike has also teamed up with Apple so you can now get a transmitter that will attach to your customized Nikes and talk to your iPod. This transmitter will tell you everything about your run including your distance and average mile speed.
If you are still reading this and not on the Nike web site making an awesome pair of gold shocks than you must be ready to talk about the stock. Nike has been on an upward trend all year and recently hit an all time high of $55. NKE has a respectable p/e ratio of 20 and an impressive profit margin of nearly 9%. Good analysis here. What else is there to say besides Just do it!
Tuesday, May 22, 2007
In honor of the announcement today that wallstrip.com has been purchased by CBS for an undisclosed sum (rumored to be around 5 million) I will take a look at some other companies destined for a buyout. The investment guru himself Warren Buffet has announced that his holding company Berkshire Hathaway (BRK-A) is in the market to acquire another company. So with all these buyouts and mergers who is next? Here are a few interesting possibilities from the retail sector..
1. Borders Group, Inc. (BGP) has been rumored to be in talks with Barnes & Noble (BKS) about a possible buyout. BGP with over 567 locations may be attractive to Barnes & Noble, but Borders has a lot of baggage. BGP has revenue of $4.11 billion but has a disappointing profit margin of -3.68%. This may be a good fit for BKS, but will they be willing to pay a premium for this company?
2. Polaris Industries Inc. (PII) is a good candidate for a private equity firm or even someone like Berkshire Hathaway (BRK-A). PII has reasonably strong earnings with a p/e ratio of 19 and total annual revenue around $1.7 billion. PII is a great target because it is profitable and has a market cap of 1.86 billion. If someone was to buy PII with a premium of say 10% they would still be right around the 2 billion dollar range. $52 (current price) X .1 (10%) + $52 (current price) = $57.2 (purchase price per share) X 35,760,000 (shares outstanding) = $2,045,472,000 (purchase price)
3. Radio Shack (RSH) has rumors flying that Dell (DELL) may be interested in a buyout. This is a little troubling knowing all the problems Dell is having with its accounting and regulatory fillings. Dell is interested in finding another form of distribution, but RSH seems like a long shot. If Dell wants to use an outside distribution method similar to HP (HPQ) why not use Best Buy (BBY) or Circuit City (CC) where the consumers can compare and contrast the different products?
Disclosure: no position
Monday, May 21, 2007
Here is the Tease: "Do you walk in crocs? Some very good health news and some that's not-so-great on the shoes. Get the real deal on crocs... Tonight only on news 8 at ten."
TI’s most recent success story is the DLP television. “It’s all in the mirrors” is TI’s ad slogan for the new DLP TV’s because they use millions of mirrors to create the intense clarity. DLP’s do have some disadvantages when compared to LCD and Plasma as far a picture clarity, contrast, and viewing angle, but for the price DLP is awfully competitive. The biggest disadvantage that DLP’s have is that they are projection TV’s. No smooth looking flat panels here, but that has not stopped TI from successfully marketing this product.
Analog chips are not quite as sexy as DLP TVs or high tech cell phones but these chips make up 40% of TI’s business. This is a huge global market in which TI dominates. Used in computers and other electronic devices analog chips are used to communicate and convert information to digital format. Let’s turn to Business Weekly for a better explanation:
“Analog chips measure "real world" inputs—from the temperature in a room or the sound of a voice to the touch of a button—so they can be converted into a digital signal that a computer or other device can understand”
So what is the stock play for TXN? TI is one of those companies that tend to stay in a pretty narrow window as far as stock price goes. I have traded in and out of this stock between $28 and $35, but recently TI has begun an upward trend holding pretty strong at $36. I am waiting on TXN right now to retreat a little to add on to my position. TXN is trading at 12.75 times earnings and has a one year target of $39.
Saturday, May 19, 2007
Today I am officially on the life Time bandwagon! This place is amazing. With first class amenities and a helpful staff (you know who you are) life Time has produced a top of the line club atmosphere. Life Time’s core competences include cleanliness, friendliness, and the ability to consistently exceed the customer’s expectations. These clubs are enormous and have enough machines to satisfy the most demanding members. Not only does Life Time have the standard gym equipment they also have a full salon, deli, childcare, indoor and outdoor pools, indoor basketball, racquetball, rock climbing wall and a field of tennis courts. From an investors point of few LTM is a great growth stock. One of the best things about LTM is that they own much of the real estate the clubs sit on. This is a great asset for the company and investors have taken notice.
Obesity is a huge problem in America and the only way to really fight this epidemic is to exercise (LTM) and eat healthy (WFMI). With over seven million people in America 100 pounds or more over weight the time for change is upon us.
I am not the spokesman (officially) for life Time, but as member I am quite impressed with the facilities. As a stockholder I have a few concerns with LTM. One of the downsides to this company is the overexpansion of clubs. This type of growth is unbelievable for a company of this size and although growth can be very beneficial to stockholders, it can be detrimental to a company. With so much expansion it is hard to analyze the profitability of a company like LTM. LTM should continue to grow and open new clubs but they need to make sure quality is not jeopardized in the process.
LTM has 60 fitness centers, as of December 31, 2006, and has plans to open 8 new centers in 2007. Net revenue jumped from 390.1 million in 2005, to 511.9 million in 2006. For the complete 2006 annual report click here. LTM is currently trading for around $50 a share and has a P/E ratio of 34 and a forward P/E of 23.
Disclosure: actively trade long
Thursday, May 17, 2007
1. Anyone can invest! Hedge funds, although not regulated by the SEC, have to abide by a few regulations including but not limited to accepting only accredited investors. This means that if you don’t earn a minimum amount of money annually and have a net worth of $1 million, along with a significant amount of investment knowledge you can not invest with the elite.
2. Easily redeemable. In a normal hedge fund you are usually required to keep your money invested for a set period of time, usually one year. Many hedge funds will also only allow investors to enter and exit the fund twice a year. This is done in order to minimize professional fees and maximize the management’s investment opportunities without having to exit positions early.
3. Great way to hedge yourself against your long positions. Hedge funds invest in many complex instruments that the normal investor may shy away from including, derivatives, options, and shorts. They will also leverage up aggressively going uncovered or “naked” on many positions. Although a hedge fund may not out perform a bull market it will usually greatly out perform in a bear market due to its ability to short on leverage.
1. There is only one public hedge fund. If you wanted to invest in oil you have numerous different options including ETF’s, Futures, Stocks, and Mutual Funds, but if you wanted to invest in a hedge fund Fortress is your only option. With no competition to pull comparisons it is very difficult to discern if you have made the best investment decision.
2. Fees, Fees, and more Fees! Hedge funds are notorious for charging huge fees including a fee for capital under management (usually around 1 percent annually), and a profits fee (usually 20%). This is why the “Forbes 400 Richest Americans” list is loaded with hedge fund managers. Most investors are willing to pay these outrageous fees because the fund is still producing 20-40% rate of returns.
So will a publicly traded hedge fund be able to produce the same type returns on capital as the privately held funds? A publicly traded hedge fund is going to have to deal with the effects of Sarbanes Oxley and other SEC regulations which will likely have a negative impact on the bottom line. Fortress announced its first quarter earnings this week which had fallen 50% due to professional fees involving its IPO. Fortress is trading today (5/17/2007) at $29.07 with a P/E ratio of 24. It appears the verdict is still out on this new investment instrument, but with more IPO's expected in the near future it will be interesting to watch what happens.
Wednesday, May 16, 2007
Disclosure: Long LUV