Small Break:)

avatar By: IS
Date posted: 08.22.2014 (4:00 am) | Write a Comment

Summer Picnic Wide Desktop BackgroundGood morning, I just wanted to send out a quick message to say that even though no new blog posts appeared this week (or will in the coming week), everything is going well, great in fact:) I’m just getting a bit of rest before the end of summer, and did not have any new long & short trades to open anyway (all 7 trades are within my open/close limits).  Hopefully we get more trading volatility this fall (especially if Europe continues to struggle), which should create more trading opportunities.

I hope you’re all doing well, some fascinating stuff is going on and I can’t wait to get back to writing about it:)

All the best!!

New Trade: Long Twitter ($TWTR) & Short Demand Media ($DMD)

avatar By: IS
Date posted: 08.11.2014 (3:00 am) | Write a Comment

Ahhh, today I decided to finally go ahead after hesitating. I’ve been talking about my temptation to trade Twitter and after being a doubter following its IPO, I did finally declare that I was looking for an entry point. Unfortunately, I did not move quickly enough as Twitter announced very solid earnings which caused its stock to jump in a big way. I’m unsure of how I’ll trade it as a longer term speculative pick but for now I’m ready to trade it as a long & short trade. This morning, as you might have seen, I closed out a successful trade on Facebook and Adobe so today’s trade will set me back to 7 live trades, which is currently my maximum. things continue to go well and the portfolio’s return remains above +30% so far this year.

You can also see my long & short trades here:

http://www.intelligentspeculator.net/livetrades

Today,  I’m trading 2 of the higher priced (in terms of P/E ratios) stocks in my portfolio. I feel like one has much more upside than the other so while there is risk involved trading these 2, I do feel like the risk vs. reward ratio is very good. Let’s start off by looking at the numbers:

Ticker
Name
Price
PE Ratio
PE Next Year
Return YTD
Sales Growth
Analyst rating
Book Value
Beta
Revenue/Share
TWTRTwitter Inc42.8195N/A119.11-32.44109.793.545.14N/A3.51
DMDDemand Media Inc10.27N/A149.58-9.693.683.1126.880.7422.29

TWTR Revenue (Quarterly YoY Growth) Chart

TWTR Revenue (Quarterly YoY Growth) data by YCharts

$TWTRLong Twitter (TWTR)

Twitter is a challenging company to analyze but what’s clear to me is that it has a very unique product that is well suited to this new mobile, ecosystem world and despite attempts by the best of the best (Facebook, Google and others), no one has come close to delivering a comparable product. That does seem to indicate that Twitter is well positioned to thrive in this new ecosystem-driven world. It will hurt Twitter’s attempts to branch out through things like Vine, setting up an ad network, etc but even those attempts make a lot of sense and I think Twitter should continue to push forward. How much can Twitter grow from here? I think there’s little doubt that it can generate a lot more money and its increased focus on monetization has already started to pay off. I’m not 100% convinced that Twitter will ever become a product used by the mainstream in the same way that Facebook is but it certainly has a shot and I do feel like those are a few of the reasons that make it possible to justify its sky-high valuation.

TWTR Chart

TWTR data by YCharts

Next earnings release: November 14th 2014

$DMDShort Demand Media (DMD)

Demand Media is a typical Internet 1.0 internet that has helped the company create solid properties such as eHow.com. Unfortunately, most of those properties are losing ground in a world ran by ecosystems and DMD has not been evolving quickly enough. I do expect the decline at DMD to continue if nothing special happens. Can profits return? In the short term yes but that would most likely be about cutting costs and other shorter term actions like spinning off undervalued divisions. I can’t think of one reason that would justify DMD’s current valuation. One question for you. In a world where most users access the web through mobile, through apps, how many apps of this company do you use and how much time do you spend on them?…

DMD

Next earnings release: November 7th 2014

Disclaimer: No positions on Twitter (TWTR) or Demand Media (DMD)

Closing Trade ($FB, $ADBE)

avatar By: IS
Date posted: 08.11.2014 (2:30 am) | Write a Comment

This morning, I will be closing out a new trade at the open, closing out a successful trade from June 9th, where I went long Facebook (FB) and short Adobe ($ADBE). As regular readers know, I’m very much a believer in Facebook and also hold a longer term position.

FB Chart

FB data by YCharts

Disclosure: Even after closing out this trade, I will remain long Facebook

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Ecosystems Rule The World ($AAPL, $GOOG, $MSFT, $AMZN, $FB)

avatar By: IS
Date posted: 08.07.2014 (3:00 am) | Write a Comment

ecosystemI’m sure that some of you think I should move on from this topic. I can’t:) I’m sorry but even though this gets talked about a decent amount, I still feel like most of us underestimate the impact of the ecosystems in this new “digital” era. The bigger ecosystems are able to create a world where they can leverage the network in multiple ways. I’ve discussed the fact that I consider there are currently 5 core ecosystem plays:

-Apple (AAPL)
-Google (GOOG)
-Microsoft (MSFT)
-Amazon (AMZN)
-Facebook (FB)

Each have their own strenghts and weaknesses but they are all gradually taking over the world. Think I’m exagerating? Look at the top 5 (by market cap) technology stocks in the US?

AAPL 575.73B
GOOG 392.50B
MSFT 357.01B
IBM 193.11B
FB 189.06B

And if you are wondering how long IBM can hang on here, just look at this chart:

IBM Market Cap Chart

IBM Market Cap data by YCharts

Of course, IBM will not just stand still. Their biggest move lately has been to team up with Apple in what is a great alliance, especially for Apple.  The company led by Tim Cook has had a lot of success in the past few years but one area where it has clearly lagged is having a strong presence with big corporations. Apple has never been a player willing to compromise/bend over in order to go after those contracts and will now have IBM working on doing just that.

Who Are You Betting On?

As you might already know, I already have significant positions on Apple (AAPL) and Facebook (FB) and will likely add some others in the near future.  I’m also looking for smaller players that could eventually do well in this new world.

Have any of you been investing based on this new world?

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Top 100 Dividend Stocks – August 2014 Edition – WIN A Winner?

avatar By: IS
Date posted: 08.05.2014 (3:00 am) | Write a Comment

kyoto-bambooIt’s that time of the month again. Things are always slower in the summer in terms of news, dividend increases, etc. There are still some great opportunities out there and I’m always on the lookout for ways to improve my Ultimate Sustainable Dividend portfolio. Why? Because it’s a key part of increasing my monthly passive income (see last update here). There is no “perfect” stock of course. The market is fairly efficient so it’s all about finding high quality stocks that are a good match for my portfolio and provide a good potential/downside risk ratio. Obviously, yield is just one criteria but it’s an important one and for that reason, looking at the top large cap stocks in terms of dividend payout is a great way for me to get started.

A Rare Event At The Top Of these Rankings

You might remember that in the past few months, we’ve often had Winstream Holdings (WIN) at the very top in terms of yield. It has retained that position but the yield decreased a bit after WIN shot up following very solid earnings. Take a look at this chart:

WIN Chart

WIN data by YCharts

Here is the list!

Ticker
Name
Price
Dividend Yield
Payout Ratio
Ex-Dvd Date
WINWindstream Holdings Inc11.468.73250.779/26/2014
DODiamond Offshore Drilling Inc46.797.4788.698/4/2014
RIGTransocean Ltd40.347.4463.798/20/2014
FTRFrontier Communications Corp6.556.11362.429/10/2014
ESVEnsco PLC50.655.9236.99/11/2014
CTLCenturyLink Inc39.245.5N/A9/4/2014
HCPHCP Inc41.535.25106.928/7/2014
TAT&T Inc35.595.1753.1310/8/2014
TETECO Energy Inc17.465.0496.668/12/2014
HCNHealth Care REIT Inc63.6353110.778/7/2014
SOSouthern Co/The43.294.85107.3611/6/2014
RAIReynolds American Inc55.854.879.19/8/2014
KMIKinder Morgan Inc/DE35.984.78138.4810/31/2014
NENoble Corp plc31.374.7825.28/8/2014
MOAltria Group Inc40.64.7381.439/15/2014
DRIDarden Restaurants Inc46.754.71157.3710/10/2014
FEFirstEnergy Corp31.214.61245.238/5/2014
PMPhilip Morris International Inc82.014.5868.079/23/2014
VTRVentas Inc63.54.57164.069/11/2014
ETREntergy Corp72.834.5683.118/12/2014
PBCTPeople's United Financial Inc14.524.5587.6710/29/2014
PPLPPL Corp32.994.5279.799/9/2014
EDConsolidated Edison Inc56.094.4967.898/11/2014
DUKDuke Energy Corp72.134.4182.388/13/2014
MATMattel Inc35.4254.2955.28/25/2014
PCLPlum Creek Timber Co Inc41.374.25135.518/13/2014
PNWPinnacle West Capital Corp53.494.2460.3110/30/2014
PEGPublic Service Enterprise Group Inc35.174.2158.579/3/2014
VZVerizon Communications Inc50.424.251.7310/8/2014
AEEAmeren Corp38.454.1675.819/8/2014
TEGIntegrys Energy Group Inc65.564.1561.888/27/2014
SPLSStaples Inc11.594.1444.269/24/2014
SCGSCANA Corp50.884.1360.39/8/2014
PCGPG&E Corp44.674.08100.6110/3/2014
LOLorillard Inc60.484.0769.928/27/2014
KIMKimco Realty Corp22.384.02174.4812/29/2014
POMPepco Holdings Inc26.854.02245.459/8/2014
EXCExelon Corp31.083.9973.558/13/2014
WMBWilliams Cos Inc/The56.633.95222.629/10/2014
KRFTKraft Foods Group Inc53.5853.9245.059/26/2014
COHCoach Inc34.563.9133.739/10/2014
CNPCenterPoint Energy Inc24.323.91114.158/13/2014
XELXcel Energy Inc30.83.958.439/23/2014
AEPAmerican Electric Power Co Inc51.993.8564.128/6/2014
CINFCincinnati Financial Corp46.023.8252.229/15/2014
MACMacerich Co/The65.013.82252.358/18/2014
GASAGL Resources Inc51.643.870.938/13/2014
DTEDTE Energy Co73.823.7468.539/11/2014
CMSCMS Energy Corp28.933.7359.6911/5/2014
PAYXPaychex Inc41.013.7181.3710/31/2014
HSTHost Hotels & Resorts Inc21.743.68169.529/26/2014
LEGLeggett & Platt Inc32.83.6687.719/12/2014
PFEPfizer Inc28.73.6257.6811/5/2014
NUNortheast Utilities43.93.5859.459/11/2014
WECWisconsin Energy Corp43.583.5856.968/12/2014
OKEONEOK Inc64.433.57117.511/5/2014
DDominion Resources Inc/VA67.643.5572.888/27/2014
GMGeneral Motors Co33.823.5509/12/2014
COPConocoPhillips82.53.5441.6610/16/2014
GEGeneral Electric Co25.153.553.119/18/2014
NAVINavient Corp17.23.49N/A9/3/2014
TGTTarget Corp59.593.4953.328/18/2014
GRMNGarmin Ltd55.043.4957.449/11/2014
CACA Inc28.883.4650.398/19/2014
HASHasbro Inc49.963.4472.881/30/2015
MCDMcDonald's Corp94.563.4355.768/28/2014
CLXClorox Co/The86.873.4160.0610/20/2014
FCXFreeport-McMoRan Inc37.223.3684.8210/16/2014
WMWaste Management Inc44.893.34696.949/5/2014
PGProcter & Gamble Co/The77.323.3358.8210/15/2014
CAGConAgra Foods Inc30.133.32140.910/29/2014
CVXChevron Corp129.243.3134.898/15/2014
KKellogg Co59.833.2836.168/28/2014
GISGeneral Mills Inc50.153.2753.4110/10/2014
SESpectra Energy Corp40.923.2780.568/8/2014
PSAPublic Storage171.613.26105.029/11/2014
SYYSysco Corp35.693.2565.9910/8/2014
PLDPrologis Inc40.813.23288.829/11/2014
KMBKimberly-Clark Corp103.873.2358.089/3/2014
IRMIron Mountain Inc33.513.22213.919/24/2014
ABBVAbbVie Inc52.343.2176.9910/15/2014
LLYEli Lilly & Co61.063.2144.898/13/2014
LMTLockheed Martin Corp166.973.19528/28/2014
MCHPMicrochip Technology Inc45.023.1671.148/19/2014
GMEGameStop Corp41.973.1537.218/28/2014
AVBAvalonBay Communities Inc148.083.13932.949/30/2014
CVCCablevision Systems Corp19.223.12122.868/13/2014
KOCoca-Cola Co/The39.293.1157.859/11/2014
MRKMerck & Co Inc56.743.1116.539/11/2014
EQREquity Residential64.653.09N/A9/18/2014
SPGSimon Property Group Inc168.193.09111.968/13/2014
NEENextEra Energy Inc93.893.0965.118/27/2014
AIVApartment Investment & Management Co34.183.0431414.278/13/2014
CSCOCisco Systems Inc25.233.0133.169/30/2014
CPBCampbell Soup Co41.59352.8710/9/2014
ADIAnalog Devices Inc49.632.9860.328/27/2014
AVYAvery Dennison Corp47.212.9745.858/29/2014
PEPPepsiCo Inc88.12.9751.29/3/2014
NUENucor Corp50.222.9596.749/30/2014
IPInternational Paper Co47.52.9541.058/13/2014

It’s Not All About Yield

Of course, as I always mention, dividend yield is one criteria but there’s a lot more involved here and finding a stock with strong overall fundamentals is key. I generally try to get stocks that respect the 7-7-7 rule. That is 7% of 5 year growth in dividends, earnings and sales.  If I remove those with a payout ratio over 80%, I get very few results:

Ticker
Name
ESVEnsco PLC
INTCIntel Corp
NENoble Corp plc
CVXChevron Corp
LOLorillard Inc
COHCoach Inc
SPGSimon Property Group Inc

I will be writing more about these names soon in our free mailing list, join now if you have not done so yet:

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New Trade: Long Priceline ($PCLN) & Short Pandora ($P)

avatar By: IS
Date posted: 08.04.2014 (3:00 am) | Write a Comment

A lot more earnings came in this week. The big one was Twitter (TWTR) of course which I had explained I was considering buying. Even that day, not only did I have no idea what would happen but even less what I “wanted” to happen:

In the end, Twitter shot up after very strong numbers. I’ll write more about this without a doubt:) Am I still a potential buyer? Time will tell… That being said, I’m still a believer in Twitter so it remains a possibility:) Back to my long & short picks, it was a fairly quiet week despite markets being crushed. My portfolio’s return remains in the +30% range so I’m not complaining.

You can also see my long & short trades here:

http://www.intelligentspeculator.net/livetrades

Today, I’m making my 20th long & short stock pick of the year!! It’s between 2 players that dominate their “sector”. The big difference though is that one player is in an industry that is fairly mature and makes decent profits while the other isn’t quite as convincing. You’d think Pandora was growing a lot faster than PCLN and it is.. but the difference is shrinking rather quickly don’t you think? Here are the numbers:

Ticker
Name
Price
PE Ratio
PE Next Year
Return YTD
Sales Growth
Analyst rating
Book Value
Beta
Revenue/Share
Sales 5Y Avg Growth
EPS 5Y Avg Growth
PCLNPriceline Group Inc/The1245.932.8919.437.1829.134.68137.971.26133.428.9537.44
PPandora Media Inc24.54N/A47.84-7.74132.524.092.511.823.54N/AN/A

PCLN Revenue (Quarterly YoY Growth) Chart

PCLN Revenue (Quarterly YoY Growth) data by YCharts

pricelineLong Priceline (PCLN)

Priceline has been a stock star for a decade now and when you look at its chart, you can see how much of a value it is. I do think Priceline will continue to face competition but has such a strong brand that it will continue to display steady growth and is a good pick at these levels.

PCLN Chart

PCLN data by YCharts

Next earnings release: August 11th 2014

$PShort Pandora (P)

It’s not a secret, I think Pandora is in a very tough spot. It has a great business, a great product but faces massive competition from the likes of Google (GOOG), Amazon (AMZN), Apple (AAPL), Spotify, etc. Many of those players are willing to operate at a loss for the medium to long term as a way to keep customers in their ecosystem. As those ecosystems expand to connected homes and smart cars, it’ll be an increasingly challenging environment. Margins will remain very small for Pandora and I just don’t think it can currently justify its valuation. If it can reach Netflix style of size, that might work out well but I’d say it’s unlikely at the moment and thus Pandora looks very expensive at these levels.

P Chart

P data by YCharts

Next earnings release: October 24th 2014

Disclaimer: No positions on Priceline (PCLN) or Pandora (P)