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.

Wednesday, May 5, 2010

BP a value stock because of oil spill?

(Public, NYSE:BP)

BP has lost 17% of its market value since the oil spill.  While there's a lot of emotion surrounding the current oil spill issue and as a lover of the Gulf of Mexico (I love fishing for snook), I have personal feelings about BP's oil well ruining my favorite fishing spots and hurting the tourism industry of Florida.

Nonetheless, the company has said they are willing to pay for all for the damages and help restore what was damaged.  With the amount of money and political pressure that's going to come from this fall out, this short term problem might be have long term benefits to the Gulf states.  For one, I doubt they'll approve anymore additional oil drilling until there's new technologies and safeguards developed.  Second, it will serve as a warning to everyone else to have safety checks on their oil rigs and more federal scrutiny.

We will see how this plays out in the next few years after a decade of legal rambling, but these types of mistakes do drive innovation and safety measures to better our nation.

What is sure though is that the world is running out of oil and BP still has wells around the world and in the long run we will still all use its oil.

It's the third largest energy company and the 4th largest company in the world.  While the potential damage estimates go up as high from $3 billion $28 billion, BP will continue to help lead the world in delivering the goods: energy and oil.

In short, BP looks very attractive for a medium term buy.

Sunday, May 2, 2010

Adobe a stock pick? I think so. A quick analysis.

Believe it or not, I think there's money to be made in Adobe despite the public (and very strange) Apple fiasco.

Not so much because Apple is rejecting Flash and that HTML5 is coming to the horizon, but because Adobe is an innovative company.  They still have cash cows with Photoshop, Premier, and other products.

Hands down they are the industry leaders in image editing, video editing, and with the new CS5 launch, they  continue to solidify that position.

According to Google's YTD analysis on the stock, the stock's been getting a beating, a severe one due to the recent spat with Apple.  But I'm seriously looking at this stock.  For a few reasons:

  • It's cheap, compared to what it was earlier this year.  
  • It has other products that are not dependent on Flash.  In my opinion, it's well diversified.  (Take at the revenue breakdown below.)
  • While HTML5 might be a danger to its Flash player -- what stops Adobe from creating the best HTML5 player out there?  That's right, they can still own that market and have the experience to do so!  They can leverage their current relationships with operating systems and browser developers.
  • They are a trusted brand name.

In short, being at the leading edge at streaming video doesn't necessarily have to be a negative if there's an open source technology standard out there threatening your current innovative product (Flash).  You could simply use HTML5 -- no one owns it, no one licenses it, so use the resources you have to own the market.

Easier said than done, I know, but I believe with Adobe's resources and strength, I'm pretty sure they have a fighting chance to develop the next streaming video technology.

What are your thoughts?