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Archive for the ‘Stocks’ Category

Stock Review: “Buckle” up and ride this stock into the sunset (BKE)

Wednesday, September 3rd, 2008

buckleAs most of you know, I am very selective about doing stock reviews. Whenever I am not sure what stock to investigate I always go back to one thing: what is something or somewhere that I shop at, buy, or find useful. I also will only write a review on something that I have watched for sometime. Lately however, even everyday stocks have are getting slaughtered. Especially bad are the numbers for fashion retailers. On a whim I decided to check out where I got my last pair of jeans, a little store I like to call The Buckle. Ok so they call it themselves The Buckle as well (BKE). They are a retailer of medium priced but higher quality clothes. They have been managing to eke out profits while everyone else is tanking or hurting, and guess what? Its the end of summer, pretty soon people are going to be buying fall/winter clothes.

Some things I like about The Buckle:

-A look at executive transactions reveals that in the past 8 months, excluding the CEO Dennis Nelson who is fairly steadily income-selling, shows that the Buckle execs have actually acquired more than they have sold. In fact there is a whole sheet of people exercising their stock options…including Dennis Nelson.

-Royce Funds own 100 million in stock. This fund family has one of the better rates of return over the past few years.

-Insiders own 47% of outstanding shares in the company including massive portions by Daniel Hirschfeld, the son of the founder of The Buckle.

-Company has zero debt. Imagine that.

-The average sales per square foot grew 2% annually over the past 5 years.

-They promote store managers from within. The average district manager has been with the company 20 years.

-The company has bought back company stock (always a good sign).

-They pay one of the highest dividends in apparel retailing with the current yield around 1.8 percent.

Buckle is a company that makes money year in, year out no matter the economic conditions. They aren’t the store you necessarily when you think of fashion but they are solid. Senior management, all experienced retailers, is committed to growing the business. They have redesigned their website, and have a great marketing curve.

This all adds up to a very solid business and as I said before, we are just coming into a new clothes buying season which means the short term looks great….and considering all of the above, the long term looks even better.

FAC: The Beer Stock Index

Friday, May 9th, 2008

pacificoIn honor of Friday, the best day of the week I have something special for you all. I don’t know about you but there is nothing I like better on a friday afternoon than an nice cold beer in summer. I think of it as my sort of blue collar toast to the work week. Of course, I can’t consider myself a blue collar worker since I sit at a computer all day, but at least I can pretend I just got done with a strenuous week of construction. Unfortunately a lot of my favorite beers are privately held companies but some are not. I promised myself I will make within the next few months at least a small investment in things I drink. So here are my top 5 company picks with their beer that I drink the most of:

Anheuser Busch – (NYSE:BUD) – Budweiser beer
Who hasn’t had a Bud? Anheuser Busch sells more of the brand than any other beer in the world. There is a huge plant near Fort Collins (we really are the beer capital of the US imo, or at least close). The commercials with the Clydesdales: its all real. No really, its crazy, they have horses out running around playing football at their plant. Well, maybe they don’t play football, but they are definitely out there runnin around. They pay a decent yield and own some theme parks too.

Grupo Modelo – (Public, MXK:GMODELOC) – Pacifico
What says summer better than Mexican beer, with lime? And ok so they make a lot more than Pacifico but I challenge any of you to find me a better Mexican beer than Pacifico Clara. I have a weekly debate with my buddy who loves Negro Modelo and apparently his taste buds are still maturing. He’ll come around.

Molson Coors Brewing Company – (Public, NYSE:TAP) – Blue Moon
Montreal, Canada-based company which owns the Coors Light, Coors, Coors Non-Alcoholic, Blue Moon Belgian White Ale, Blue Moon, Molson Canadian, Molson Dry, Molson Export and Grolsch brand of beers. I can forgive them for Grolsch simply because of Blue Moon. They brew coors not too far from here in Golden Colorado and we always see these ads with streams and rocky mountains and pete coors standing majestically. Sadly, it does not make Coors taste any better. They still made it this high up because I have to rep my Canadian heritage.

Boston Beer Company – (Public, NYSE:SAM) – Samuel Adams Boston Lager beer
Sam Adams is the best tasting of the mass produced beer imo. Plus it has a sweet ticker “SAM”

InBev NV – (Public, EBR:INB) – Leffe Belgian Ales
The international stock offering, I had to include at least one belgian ale cause boy do I love them. Most of the heavier beers I drink are privately held microbreweries but as I was browsing around I stumbled upon InBev, Hallelujah!

**Bonus For Non-Alcoholic Beverage:

Cadbury plc (ADR) – (Public, NYSE:CBY) – Diet Dr Pepper
Now tastes even more like regular Dr Pepper, and now being consumed en mass by Jesse every day.

Now you too can own some stock and tell yourself every day: “I just made a bit of money off of Jesse.” What more can a reader ask for, right? Happy Friday!

Frontier Airlines bankruptcy – Frontier files for bankruptcy

Friday, April 11th, 2008

Frontier Airlines files for bankruptcy. Those five words are a bit of a shock to me. According to the AP:

NEW YORK (AFP) — Denver-based Frontier Airlines said Friday it had filed for bankruptcy after a credit card processor said it would start withholding receipts from the sale of the airline’s tickets.

Frontier said in a statement it would continue to operate without disruption during the bankruptcy proceedings, offering its full schedule of flights, honoring reservations and paying employees and suppliers.

The company said it was forced to file for bankruptcy protection in a New York court “following an unexpected attempt by its principal credit card processor to substantially increase a ‘holdback’ of customer receipts, which threatened to severely impact Frontier’s liquidity.”

Frontier flies with a fleet of 62 aircraft (Airbus A320s) and a workforce of 6000. They fly Denver-70 cities and quite frankly they are my favorite airline so it saddens me to see this happen. I have written in the past that I like their business model (similar to Southwest). Apparently they filed after its credit-card processor (First Data Corp) started holding back proceeds from ticket sales. In my opinion it was a good move because a massive cash hold back would have had massive ramifications as far as threatening their liquidity.

So what about my Frontier shares? eek?

I too have a few shares of Frontier Airlines and this bankruptcy did of course nail us. Stock plunged 73% to 42 cents as of one hour ago.

Should I pull out?… I mean Frontier just filed for friggin bankruptcy!

No! Frontier has a sustainable business model and I believe they will recover (see Southwest article). Hold tight, they have as much in assets as they do debt (somewhere between 500 million – 1 billion) so they are in ok shape considering the circumstances. The rising cost of oil will be a problem but travel is NOT drastically declining and I believe Frontier will come back. At least lets hope!

Some updates and a little bit about the current state of the stock market

Sunday, March 30th, 2008

Hosting datacenter move

My hosting company did a great job of minimizing downtime considering the massive move they undertook, thanks to them.

Earning Power update

Unfortunately there have been a few hitches in the release of Earning Power.  The main one is editing, it is massive as far as ebooks go: I believe if you are going to sell an ebook, it should be as big or bigger than a book.  So there are a few things being ironed out, but it is coming soon, I promise.

Stock Market Observations

Over the last couple months the stock market has been ridiculous. To say it has been a roller coaster ride is somewhat of an understatement, its been more like a piston. Up, down, up down. Every time it seemed things were going to sink there were some great rallies. The bad news is that this is not the end of our troubles.

One major problem is that although it is true a lot of the “worst” subprime loans have come due there are some lurking dirty secrets in the mortgage industry. A worse thing is that subprime loans were divided up and sold as “good” “kinda bad” and “bad”. So really, we have loans that are bad, really bad, super bad, “oh Lord help us” bad, and “interest on interest” bad loans.

On the other side, it is not a time for panic. At some point things will go down, but this will not be some epic unrecoverable crash. Yes you should keep investing, yes you should keep contributing to your 401k and no you shouldn’t renovate that concrete bunker from 1999.

The real story here is temper your expecations. Things have been up and down and they will probably go down some, but don’t get too excited either way. A rally does not mean all is well, the market can rally on bizzare things. For example Elliot Spitzer caused a lot of wall streeters to dance with joy and break out scotch and cigars a few weeks ago but in the long run it means nothing about our economic conditions. A drop doesn’t mean the end is near. Remember, let the day traders worry about the short term, while you and I worry about being rich long term.

xm sirius merger – xm sirius merger approved and Stock implications

Monday, March 24th, 2008

XM Sirius merger from CNN:XM Satellite Radio

NEW YORK (CNNMoney.com) — The U.S. Justice Department approved the merger between satellite radio companies Sirius and XM Monday, more than a year after the two companies first announced their deal.

But for fans of Howard Stern, Opie & Anthony and other Sirius and XM on-air personalities, there are still many questions about how much a combined Sirius-XM service will cost and what programs they’ll be able to hear. Plus, Sirius and XM face one more regulatory hurdle before the deal can officially be completed.

What does the XM Sirius Merger mean for the consumer?

Its hard to say what the merger means for the consumer because the FCC still hasn’t approved the merger. The current price for XM and Sirius is $12.95 each for base packages. Supposedly they will offer a price plan where consumers can pick their favorite sirius stations as well as their favorite XM stations for a varied price…but less than what the combined service would currently cost.

Sirius satellite radioWhat does the XM Sirius Merger mean for stock holders?

Shares of both jumped somewhat today with the DOJ announcement. XM (XMSR) went up 15.5% while Sirius (SIRI) went up to 8.6%. If the deal is approved by the FCC chances are good that both XM and Sirius will jump up again. On the flip side, if it is declined by the FCC I suspect there is going to be a nasty drop. The overall picture though is that if the deal goes through, long term both sets of stockholders will profit long term…especially if they give the combined, ala cart programming. I personally have considered satellite radio for a while but I didn’t want a standard package and the channels I wanted were scattered too much over the two different providers. I would imagine there are a fair amount of people in the same boat as I am. The whole SHOULD be greater than the sum of the parts.

Visa Stock – the Visa Stock release results

Wednesday, March 19th, 2008

Visa StockVisa Stock. Thats right, right now you can own it. Visa stock went on sales today for $44/share which is more than the expected $35-$42/share that was expected but you can hardly blame them for starting it a bit higher considering the hype that has surrounded the IPO.

So far Visa has raised a record 18 billion dollars in its stock market flotation. The previous record was the amount raised when telecom giant AT&T went public eight years ago, raising 10 billion dollars.
Not only that but Visa still has over 40 million shares in reserve, which could bring the final figure for the sale to nearly 20 billion dollars.

This is Visa’s first time being registered on the New York Stock Exchange. The successful launch comes despite the international credit crisis… Visa is entering a jittery market, considering the shaky consumer confidence. How many people do you know right now going out and making big purchases? Many companies cancelled stock market floatations planned for the past few months because of the poor financial climate but Visa decided to go ahead anyway.

Visa Stock ups

-Visa is something that everyone (well most everyone) uses and there is a good chance that Visa Stock will go up considerably in the next year since this is their initial public offering.

-Visa Stock should be fairly easy to get ahold of since they are releasing such a massive amount, in a weak market.

-MasterCard is up 300%-plus since its 2006 IPO.

Visa Stock downs

-Dont expect Visa stock to repeat Mastercard Stock. There were a lot of problems with Mastercard that were turned around fairly quickly.

-The economy is weak so people are spending less

-Visa stock volume is huge

Overall, I think I am going to pick up a few shares simply for the reason that this is a once in a lifetime kind of thing – an opportunity to buy the initial public offering of something that I use every day.

Southwest Airlines troubles – Stock Review

Wednesday, March 12th, 2008

southwest airlinesI wrote a comment a long time ago on an investing blog about Southwest Airlines. I was praising them because of certain business practices. Well, somehow one of you sneaky astute readers got a hold of it to drill me on it because of the breaking news about their failed inspections. The truth is, I STILL like Southwest as company despite this terrible break down.

Southwest Airlines (NYSE:LUV) is an airline which immediately makes red flags go up like its Chinese new year. Admittedly their stock is well off of its high, but then again what isn’t right now. So lets go over the good, the bad and the elephant in the room.

The Good:
Southwest does things that allow it to be be one of the best values in low cost airline travel. They don’t have all the frills of other airlines but they offer decent leg room, clean areas, and the basic compliments. What do they do differently? Here is my list:

1) One type of plane
They operate all Boeing 737s. Why is this a big deal? It means that they only need parts for one kind of plane, they only need to hire mechanics that know one kind of plane, and they can easily exchange planes for any given flight. They hire pilots that are proficient flying 737s. The list goes on and on. This is huge, and one of the main failures of the larger domestic airlines.

2) Flying into and out of Denver
This small move that they made a year and a half ago allowed them to directly compete with Frontier…and in many cases win. Denver is logistically out of the way of any other major cities….but it is right smack in the middle of the US. It also is one of the largest and newest airports in the entire United States.

3) Low fare sales
They lead ALL airlines in low fair sales. This builds frequent flying as well as loyalty.

4) Fuel Price Hedging
They were one of the first airlines to realize years ago that oil prices (And thus jet fuel) would go up substantially so they starting hedging accordingly. They have years of price protection ahead.

5) General innovation
They are constantly on the lookout on ways to increase efficiency without sacrificing quality. This is ABSOLUTELY necessary for any airline hoping to succeed.

The Bad:

1) Failed Inspections. They had to ground 42 jets today in the wake of last weeks 10 million dollar fine over failed inspections.

2) Bad publicity over the “clothing” incident has lingered and now there is bad publicity over their “obesity” rule.

3) #1 is so bad we don’t need a number 3

The Elephant in the Room
Even after all this trouble with inspections and grounded jets blows over…the airline industry as a whole is still a terrible buy. Oil prices are going to continue to rise, and consumer spending is dropping like a rock. One of the first things to go when people are cutting back is travel costs. There will always be high volumes of business travelors but the fallout from the lack of economic growth will affect the airline industry even more.

Have we seen the bottom?
I don’t believe so.

Should I sell?
No, they WILL recover. If you are still holding, I believe long term they will recover well.

Should I buy?
Now thats a tricky question because their stock is so low currently on the heals of the recent problems, but at this point I cant recommend buying. I do think they will reach the bottom sometime in the next 5 months.

Overall as a company I see them recovering, but I think it will be a while before this audit is resolved. Couple that with reduced consumer spending and it is going to be a rough going for a while. On the other side when the economy starts to recover, whenever that is, I believe Southwest will recover VERY well.

Recession Proof Investing – stocks to invest in during a recession

Tuesday, March 11th, 2008

Recession investing seems to be the next most asked question I get in regards to recession next to 401k questions. The two are obviously completely linked but for the purpose of tonight I am going to tackle individual investing during a recession. I am going to take a general view here.

Generally all stock returns are poor during recessions. Both value and growth stocks returned well under their long term averages. In the past, value stocks have beaten growth stocks by about 4% during recessions. This is interesting because value stocks are also the least volatile – something that is important during a downturn in the economy.
Recession investing, What what exactly is the bottom line?
It boils down to this: anything that is invested in the stock market that does not follow an index is a specific risk. However if we are in a recession, or you believe we are going into a recession its a lot safer to invest in value stocks.
What are some examples of recession investing?
The very easiest thing to do is think about things that people use every day. No matter what is happening, people are going to need tp, breakfast cereal, toothpaste etc etc etc. You might hear people talk about cutting down on driving, but how often do you hear someone talk about cutting down on eating breakfast?

The world is NOT ending, its a retirement sale baby!

Thursday, February 7th, 2008

Money truck 401k retirementIf I had a nickel for every time I have heard the words “recession” and “economic trouble” and “disaster” in the past month I would driving my money truck down to the bank with the biggest change counter in town. Im not sure how you count a truck load of nickels but Im sure it cant be easy.

Everyone knows this is the real end of the world.
Exploding Earth Penny Saved Finance

So anyway….
The media is of course going crazy over it, which immediately should raise red flags because they are TERRIBLE at predicting the economy. My favorite of all time is people saying that google stock was super overpriced at $80 a share. Oops. I saw an article in mens health I think it was where they picked some stocks based on an expert, throwing darts, and some other random means. The dart method had by far the best results. In any case there are several key points here:

1) Yes there is a housing bubble but surprise…some of it is ALREADY behind us.

2) One of the key points of a recession is a lack of jobs. Consumer spending may be down, but jobs are not. In fact, I am going to my alma mater’s career fair tomorrow (by the time this is posted it will be the day of) because my company is in desperate need of developers.

3) Regardless of what happens, dip in stocks means one thing. Cheaper stock prices! No matter what happens there will be no massive massive sell off of stocks. There will be no massive crash. A downturn in stocks is a chance to get ahead on retirement saving. Think of it as a sale on retirement!

For every dollar less a stock is right now that you can buy it for for your retirement fund, you are making much more money in the long run. For people wanting to get out right now it is problematic….but for most people that are reading this blog this is like the day after thanksgiving sale…for stocks, except you don’t have to wait outside in freezing temperatures in front of circuit city drinking spiked hot chocolate waiting for 7 am to get a tv in below freezing colorado weather. Oh no bitterness here by the way.

So everyone calm down, don’t pull your money out of your investments. Don’t panic that your 401k went down. Dont try to time the market. I promise it will all be ok. If its not, I promise I will share my box with you.

Free Iphone, fixing your 401k, and evil mutual fund managers (via expense ratios and fund fees)

Monday, February 4th, 2008

I know, first thing you are wondering is FREE Iphone? WHERE CAN I GET IT!? Well, just hold on a few and read through. I was talking to one of my friends from work about viking death metal (no joke) and rock band (pretty much the best video game ever) and somehow the conversation drifted toward the 401k plan at our company. He said he had been dabbling in a few of the funds offered and seemed surprised when I said I was dumping 90% of mine (and my girlfriends) into our one index fund. So of course he asked me why? Well, its very very simple. Nearly every mutual fund available in our plan has an expense ratio greater than one.

Mutual Fund fees ruin returns

What the hell is an expense ratio and why do I care?

The expense ratio is the percent of total assets that the investor is charged just to be in the fund. This is supposed to cover the costs of running the mutual fund…but honestly it really is how mutual fund houses and managers steal your money to make themselves multimillionaires. Here is the simple version:

The Penny Saved IphoneMutual fund from your 401k you are in:

BIG MUTUAL FUND: expense ratio: 1.50%

Lets say youve been working for a few years so you have 20k in your 401k. Lets say you get a return this year of 10%. Wow sweet an extra $2000! But wait a minute, your mutual fund that are in has an expense ration of 1.50 so they keep 15% of that. You only get $1700 and they keep that other $300.

Lets say you were instead investing in the index fund with an expense ratio of .10 (actual number for mine). Instead of the fund keeping $300, they would be keeping $10. That extra money, why, thats your free iphone right there. Ok so maybe you can’t actually pull that $300 out and buy an iphone (though you could if it was a Roth IRA) but you get the point.

But dont mutual funds make more money than index funds?
No, 85% of mutual funds fail to beat the market average.

Other types of expenses that mutual funds might charge:

Front-end load
This is basically a fee paid when shares are purchased. It is also known as a “front-end load,” and this fee goes to the brokers that sell the fund’s shares. Front-end loads reduce the amount of your investment. A good example is if you have $1,000 and want to invest it in a mutual fund with a 5% front-end load. The $50 you pay comes off the top, and so only $950 will be invested in the fund.

Back-end load
This is where the brokers take their cut when you decide to sell shares. This is even worse because they take part of your capital gains as well. Some mutual funds let you out of these if you stay with them long enough but its just one more robbery trick.

Level load / Low load
The only difference between level loads and low loads as opposed to back-end loads, is that this time frame where charges are levied is shorter.
Load of Crap
Most of the above fees.