Thursday, February 27, 2014

Bad earnings create opportunities

It's always painful to see more bad news about companies with good fundamentals, such as BP or JP Morgan.  The key is to find the value.  Is the issue limited to that year or that quarter?  (e.g. such as government fines)

What I avoid:

  • Airlines

What I like:

  • Banks with good fundamentals
  • Beaten up energy companies with good fundamentals

This is why I'm buying more BP and JP.

Sunday, August 7, 2011

Get ready to make money when fear grips the market

Banking stocks are taking a hit, especially Bank of America!  We don't know what's going to happen there and we all hope BoA survives this mess, especially since BoA partly saved the world from the financial crisis by taking in Countrywide.  Trust me, if you knew the back story, you'd appreciate the sacrifice.

But there are quite a few jewels out there that's performing.  They have paid off their govt bailout debts, decent earnings, and will likely out perform in the long term (3-5 years).  Banks like JP Morgan.

While no doubt the banking sector will take a hit Monday morning, this is when smart investors actually bring capital into the market and buy low...then sell high.  Funny concept, right?

I'm buying JP Morgan on Monday's session and it's running around $38.  Cheap.  Check the fundamentals.

Thursday, July 7, 2011

Stock tip: Why Microsoft is hot again (MSFT) -- Facebook, Skype, Bing

Google's been drawing battle lines against Facebook, and in response Facebook allied itself with Google's main nemesis: Microsoft.

Facebook's relationship with the Microsoft's Bing team and now video chat through Skype is an effective partnership that makes sense. Video chat has been Skype's bread and butter and tying it up with a social network of 750 million people automatically lifts Skype from a dying platform to a de facto monopoly, with Microsoft benefiting the most out of this partnership.

The ability to monetize this is still "cloudy", but what it does mean is additional users and access to a platform (Facebook's social network) that Microsoft was never really good at. Plus the fact that Microsoft is still a cash cow in its legacy line up (Office, Windows), this makes Microsoft's stock extremely attractive long term.

I'm buying more Microsoft today!

Friday, February 18, 2011

Turmoil in Egypt and Middle East - chance to invest?

There are several ways you can invest in the Middle East without having to leave your house.

First, let's talk about Egypt. It's the gate keeper of the Suez Canal and all of the economic activity that passes through there they take a piece of the pie. Not to mention its energy reserves and tourism dollars -- which recently have been hit by the turmoil behind non-violent protests for Mubarak's removal. Now that it has some decent stability with the military promising democratic elections within six months, investors should take a look at NYSE: EGPT as a potential investment now.

A much older and more "aged" choice is the Middle East's premier ETF which is NYSE: GULF. Like the Egyptian ETF, it continues to be challenged with recent protests and negative news in the region. Yet the truth of the matter is, most of the allocation for GULF is based in Qatar, Kuwait, UAE, and other players that are "more stable" than the rest of the countries. The focus on telecommunications in these emerging countries also is a different strategy than solely depending on energy.

At the end of the day, the question whether to invest is your belief on whether the Middle East will get back to "normal". If your position is long term, it looks like it will. If your position is short term, your money will not be earning anything for a while.

Saturday, December 4, 2010

Don't buy gold right now

In the past couple of years I've always commented positively about gold. Investors flock to them when the economy is in the pits. But the world tackling debt problems in Ireland and Greece head on, with the Feds printing money to get more "stimulus" in the U.S. and global economy, we are coming to a point where the global economy is climbing slowly out of the darkness of recession. And this means only one thing -- reinvestment of capital elsewhere and gold will be dumped.

You have been forewarned. If you bought in low, you are fine, but if you have bought in about $1200 per ounce, get ready for a correction. It's coming in 2011.

Friday, May 28, 2010

South Korea an opportunity to invest: SK Telecom

Recent fears of fresh tensions between North and South Korea have created panic in the South Korean stock market. While this is temporarily inconvenient for investors, it is actually an opportunity for others that have not even touched the South Korean market.

But you don't need to go to Seoul to invest money in the country. You can purchase South Korean stocks in the NYSE. For instance, SK Telecom (NYSE:SKM), which has roughly a 50% market share in the wireless telecom market, is currently 15% cheaper than what it was several weeks ago. Why? Not because the company had any fundamental flaws, but because of fears of war.

Will North and South Korea actually blow each other up? The answer is no. Most of it is being resolved through the United Nations and punitive sanctions. Once the general market realizes that the region is stable, the 15% discount on SK Telecom will quickly disappear.

This is the reason why I'm definitely looking at SK Telecom. A brief study of their history and moves show they're not scared to even invest outside the market, such as their brief stint at running Helio, which was taken over by Virgin and ultimately Sprint.

Tuesday, May 11, 2010

Stock Pick: PLDT (again!) because of Philippines elections

Slightly over a year ago, I predicted that a long term hold on PLDT was wise.  It is trading as ticker symbol PHI on NYSE.

Back then, it was priced at $46.95 a share.  It was roughly $60.34 one year later.  Not counting the extra dividends, let me break it down if someone bought 1000 shares during that year to year period.  The $46,950 investment would net  $60,340, or a $13,390 profit in roughly a one year period.  In short, a 28.5% annualized return on investment.

But why PLDT again?

But why am I highlighting PLDT again?  The stock price is now around ~$55 USD.  Isn't it too expensive?   In my opinion, it's cheap.  Aside from their performance and monopoly-like control in all things related to communications, their stock price is dependent on the following:

  • The Philippines' geopolitical stability.
  • Strength of the peso.
The Philippines election and geopolitical stability
There is increased likelihood that the peso (and subsequently PLDT's stock price) will continue to strengthen because the Philippines presidential election was successfully held and a pro-business candidate was elected.

Strength of peso, falling dollar, the blessings of OFW
Despite the recession last year where the U.S. had a -2.4% GDP and Southeast Asian neighbors like Malaysia had a -2.8% GDP, the Philippines managed to inch out in the positive territory with 0.9% growth.  

Most analysts familiar with the country's dynamics can point to a high number of overseas foreign workers (OFW) that remit billions of dollars a month as the key success factor in keeping the economy afloat.  Almost 20% of the Philippines' working population is overseas. 

Morgan Stanley and other analysts are estimating that this year, the country will have a $4 billion surplus in its balance of payments,a record of all monetary transactions between a country and the rest of the world.  This surplus, in a global economy that's still recovering, is a huge indicator that the peso will continue to rise against other currencies.

In short, with all things considered, the Philippines and subsequently, PLDT, look like they have bright futures ahead.