Archive for January, 2012

Top International Dividend Stocks (ADR’s) – Telecom Stocks Dominate

By: ispeculatornew | Date posted: 01.19.2012 (5:00 am)

Since taking the resolution to focus more on international stocks, I have been able to spend more time looking through some of them. For no particular reason, two stocks that I looked into were European telecom companies, Vodafone (VOD) and Telefonica (TEF). As I have started to look into stocks that could be added into the Ultimate sustainable dividend portfolio, today I decided to take a longer look into the top ADR’s trying to find companies that have a high dividend yield but also have decent market cap and seem to have enough numbers to warrant further research…

Shocking Results….

I’m very surprised to see that 9 of the top 16 ADR’s that came out are telecom related. How in the world is it possible? It seems like it’s not only in North America that we see such companies. In the US, FTR has been at the top of the dividend rankings for a very long time… FTR has proven to be a very bad dividend pick. I will be taking a much deeper look into these names in the coming months both here and in our free mailing list. If you have not joined, do so now, it’s free:



The major downside of course is that for some of these companies, it’s much more difficult to get information about how they’re doing, etc. Still, since they are traded on US stock exchanges, it does require these companies to report “standard” financial statements.

As we enter 2012, I will also be posting more often about the UDSP (Ultimate Dividend Stock Portfolio) and as you know, some stocks will need to be taken out over time. You can expect those to be replaced by more international names, which can probably be found somewhere on this list. For now though, I will leave you with this list, from which I will do further analysis next week on the mailing list. Please feel free to send out any comments about these names.

Here is the top 50 of the names that we follow, ranked by dividend yield, which as we have seen is rarely the best way to choose dividend stocks. Still, it’s a good starting point:

[table “360” not found /]

Technology Stocks 2012 Power Rankings

By: ispeculatornew | Date posted: 01.18.2012 (5:00 am)

When I had the idea for this post, I thought it would be incredibly interesting to try to rank all of the stocks that I follow from the best to the worst. It turned out to be much more difficult than I had anticipated. Why? So many reasons, but basically, how would you judge these stocks? On their home run potential? On their bust likelihood? Over what time horizon? I ended up spending a lot of time trying to determine what the criteria would be and then even more trying to judge these stocks from best to worst.

Let me start off by saying, I will be making mistakes here, obviously. The goal is not for all of my top picks to do well or all of my bad picks to do poorly. Rather, I hope that my top 10 picks can end up doing better than the bottom 10. Does that make sense? Hopefully by a fair margin but I’m not even asking for that much to be happy.

How I Rank Them?

Two main things I looked at are:

-How undervalued/overvalued are these stocks in my opinion?
-How confident am I in that prediction?

Sub questions turned out to be:

-How wrong could I be? For example, I think the downside for Yahoo (YHOO) is fairly small given the value of its assets so that would be a good thing. A company such as Groupon has a lot more questions and thus more downside.

Some Companies Were Excluded

No surprise, despite being a big believer in Chinese stocks (SNDA, SOHU, NTES, CTRP, YOKU), I excluded most of those that I follow because these days I still don’t feel like I have a good grasp on them and would hesitate to voice strong opinions. You would also notice that I did not include those stocks in my 4 stock picks or even in recent long & short stock picks. I excluded Yandex (YNDX) and MakeMyTrip (MMYT) for the same reason and Orbitz Worldwide (OWW) because the stocks trades under $5.

I also had to exclude stocks that have yet to turn public such as Facebook:)

I don’t expect a single person to agree with the entire list, the chances of that happening would be nearly 0. I would still love to get your comments.

Without further wait:

1st ever IntelligentSpeculator Technology Stock Power Rankings

Rank
Stock/Company
Stock/Company Comments
1 Apple (AAPL) I’ve written about this, I think that Apple has
tremendous upside
, very limited downside and is priced at a great valuation, there’s very little to make me hesitate.
2 Baidu (BIDU) Being the dominant player in the exploding Chinese market with very little competition? Priceless.. My biggest issue is the lack of information regarding Baidu.
3 Google (GOOG) Google is gaining traction with Google+, has tons of new
initiatives and a dominant mobile platform, and did I mention their search dominance?
4 TripAdvisor (TRIP)

TRIP was spun off by EXPE
late last year and we heard little about it, but it’s an incredible business, perhaps the best play on social currently available.
5 Zynga (ZNGA)
There is clearly some uncertainty involved in buying Zynga (ZNGA) and some downside but I think that it has a great position and its valuation is very attractive. The cost structure is less favorable than TRIP’s but it has tremendous upsize.
6 Amazon (AMZN)

I love Amazon’s direction
, its recent acquisitions, how it is becoming a leader in cloud computing.. the stock is very expensive though which is why the upside is more limited.
7 Priceline (PCLN) I traded Priceline very often in the past few years, the
company’s growth has slowed down but it’s a great brand and remains a good value in my opinion.
8 OpenTable Inc (OPEN) Risky.. This is clearly the most risky pick in my top 10. Why? The company continues to have momentum and I think it could go much higher but it is facing increasing
competition from Google among others. Tough one but I’m generally bullish.
9 Travelzoo (TZOO) Travelzoo is a company that seems like a great
play on the Groupon business
. Why? Attractive valuation, less questions about its numbers and certainly less risk with a lot of upside.
10 Dice Holdings (DHX) I’ve often gone  long on DHX against MWW simply because the valuations were off and unfortunately, that seems to have been corrected to some degree. I
still do think it’s a great play, the company has quality products and is very focused.
11 Yahoo (YHOO) A company that I’ve shorted so often, criticized over
and over and now is nearly a top 10 company? Shocking. I did hint in a  recent tech newsletter that I’m becoming more optimistic because of the limited downside of Yahoo (given its foreign assets) and the leadership change can only be good.
12 Netflix (NFLX) Wow, Netflix has been a great example of a falling knife, I think it certainly has great potential for a rebound, though it still has an uphill battle following the PR disaster that occurred last year.
13 LinkedIn Corp (LNKD) I saw and still see so much potential in LNKD. This company is rock solid, continues to grow and will be able to make significant money when it decides to turn the “switch” to on. I would LOVE to buy LNKD but for now, as I complain too often, the stock is priced too expensive.
14 Groupon Inc (GRPN) In most regards, Groupon’s IPO has been a disaster. The company had issues with its numbers, had to restate some of them, and there are still many concerns about its profitability. I am staying far away for now but that could cost me. The company is growing very quickly and could turn out to be a huge thing. It just seems very risky to me and I can’t add it to my top 10. The upside potential is significant enough though.
15 WebMD Health (WBMD) WebMD is a company that I’ve been looking at for some
time, they do have a great property and I like the fact that the company is not trying to be broader than it needs to be. That being said, the company is suffering from the lack of advertising from drug companies and after saying it would not be selling itself after all earlier this month, the stock dropped nearly 30%
16 Microsoft Corp (MSFT) Boring? You might say that. Despite some new exciting
segments in its gaming, and online divisions, the company continues to be defined by its decade old Windows and Office products. Steady growth and good value of overall but this stock will likely not move much. Great for safer dividend investing but not the home run that others are looking for.
17 Quin Street Inc (QNST) Quinstreet is a fairly small, unknown company but it
has been building some solid assets and its advertising business
, I do think there is better upside than most seem to think here. That being said, competing with Google, Facebook and others for advertising dollars
is a tough business.
18 ValueClick Inc (VCLK) Valueclick is a company that I’ve enjoyed shorting but
lately has been coming up with stronger growth. I’m far from sold but am backing off on selling this one for now. That being said, there continues to be little to be excited about here.
19 Demand Media (DMD)
Demand Media has lived through the storm after its IPO
and does seem to be working on improving its web properties but I do still have major doubts about its structure, how it can compete with more “focused”
web companies.
20 eBay Inc (EBAY) eBay, the company formerly known for its auction
business is now moving fast to mobile and continues to do extremely well with Paypal which continues to face very little competition. I do expect growth to accelerate at some point and do like the business but it just seems like the Paypal growth is barely offsetting the decline from its”eBay” business.
21 Rackspace Hosting Inc
(RAX)
No doubt, RackSpace continues to evolve in a very competitive, low margin business but it has been doing so very well so far. I
22 IAC InteractiveCorp
(IACI)
I’ve never been very positive about IAC Interactive but
recently I’ve read more research that suggests the company’s best times are in the past. There are few attractive properties at IAC and while it does get some revenues from its search and dating services, I
doubt those can generate much growth in the medium term.
23 Expedia Inc (EXPE) I did like Expedia’s business quite a bit but the recent spin-off of TripAdvisor means that its best asset (in my opinion) is now off the books. It’s unclear to me what the financial picture will look like going forward so I’m staying away.
24 Adobe Systems Inc
(ADBE)
I’m not a very big trader of ADBE (have only traded it once) but I do think that in general, the company
has failed to deliver big new products, in a similar way as Microsoft (MSFT) but with weaker “core” products and not as much in the works (you can argue about the insignificance of the Xbox or others but at least MSFT has those in the works).
25 AOL Inc (AOL) For some time there, I almost became an AOL believer
after big moves like  buying TechCrunch and the 
Huffington Post
. But recent exec defections are a clear sign that things are not going well at AOL
26 Zillow Inc (Z) Zillow is another one of those companies that will do well one day but I think that day is down the road. The real estate market is crumbling and unlikely to recover anytime soon making it even more challenging for Zillow to turn profitable. For someone that takes a lot of input based on P/E ratios, that makes Zillow difficult to trust.
27 Monster Worldwide
(MWW)
Monster could be a great company, it has a great brand
in a decent product, but it’s going after every industry in every country which is not working so well. The valuation has improved but I still have my doubts about MWW’s ability to deliver much growth.
28 Research In Motion Ltd
(RIMM)
The company is going to be losing money soon,  has little hope left of turning things around, the biggest danger in shorting is that the company should end up being acquired.
Horrible products.
29 Pandora Media Inc (P) Pandora is one of those companies that will  face an uphill battle for a very long time. Pandora faces very high competition from big players such as Amazon, Apple and Google but also smaller players like Spotify. That will make for tiny margins and I just don’t see how a company that doesn’t expect to turn a profit for the next 2 years can be worth buying. I was afraid to go short but I’m becoming less so…
30 XO Group Inc (XOXO) The company formerly known as the Knot remains a great
short despite its new name. There is little to no growth and nothing that warrants its current valuation.
31 Rosetta Stone Inc (RST) Ahh Rosetta Stone, wonderful company, wonderful products
(I’m a fan!) but the company does not have the great business model. It depends heavily on advertising which makes its margins smaller than they should be. I’m not very optimistic about this stock making big moves.
32 Blue Nile Inc (NILE) What can I say,  I go short NILE about as often as I can, it usually works. Those holding this stock need to tell me how in the world the valuation makes sense. This stock is going nowhere…

So, what do you think? Agree with my rankings? Be sure to also check the Dividend Stock Power Rankings at TheDividendGuyBlog!

New Trade: Long Dice Holdings (DHX) & Short Monster Worldwide (MWW)

By: ispeculatornew | Date posted: 01.17.2012 (6:11 am)

With US markets closed yesterday for MLK day, I will be opening both the trade announced yesterday (AAPL vs NILE) and this one, Dice Holdings (DHX) vs Monster Worldwide (MWW). Somehow, this is one of those pairs of stocks that often seems to be out of sync.

Both companies operate “job listing” properties but in very different ways. While Monster has worked hard to build a global brand, a network of sites that is used and known almost everywhere around the world and used for virtually any type of job, Dice Holdings has a fairly different strategy. The company manages a few different websites that generally specialize in one specific industry such as eFinancialCareer for the financial industry.

Let’s take a look at the numbers before going further:

[table “359” not found /]

Long Dice Holdings (DHX)

The big number that I always look at is the estimated P/E ratio for next year. In this case, both companies have a nearly identical ratio which is certainly surprising because DHX has been able to increase revenues consistently by nearly 20%, that makes its current valuation very attractive in my opinion. The company is also able to focus on its properties much more than a broader company like Monster. The counter-argument though is that Dice Holdings relies on a few key industries such as the financial industry in order to achieve its growth.

Short Monster Worldwide (MWW)

In the past few years that I have been tracking tech stocks, Monster has been one of the very consistently overpriced stocks in my opinion (with Blue Nile-NILE) and I honestly do not see any reason why. At least, Blue Nile seems to have the potential to increase its sales and profits at some point down the road. I don’t see it with Monster. I think that by the time the company will have reached a large enough scale, rivals such as LinkedIn (LNKD) and perhaps Facebook will have taken their place as leaders. Monster has been unable to grow revenue anywhere near its numbers from 4-5 years ago. That is shocking in my opinion. Can the company turn things around? Sure, at some point. But I’m bettong that the stock will head lower before that happens.

Disclosure: Will go long Dice Holdings (DHX) and short Monster Worldwide (MWW) on Tuesday morning

New Trade: Long Apple (AAPL) & Short Blue Nile (NILE)

By: ispeculatornew | Date posted: 01.16.2012 (5:00 am)

No, no, this is not a repeat post, I’m actually opening up the same trade that I traded on January 6th only to close it a week later or so. I always try to find good trade opportunities and while it would be nice to always come up with new trading ideas, I’ve got to be honest, my main priority is to make money, not be “original” in trying to do so.

Another good question would be why I closed out this trade if I was going to open up the same one a few days later. That is certainly a fair question. Recently, I started writing for the tech stocks newsletter about why I use stop losses and stop gains. It’s a critical part of what I do in my opinion. You could certainly argue, as one reader did by email last week, that my stops are too aggressive and that I should let trades go a bit further. That is something I’ve been thinking about for some time now and I finally decided to not include it in my 2012 trading changes. It might change during the year but so far, the current recipe has worked awfully well for me to contemplate this change.

2012 is off to a great start for my trading as I am now up on all 3 trades including 2 that were closed very quickly. That is certainly not typical and with earnings season starting soon (Google is one big name reporting next week), volatility will certainly spike up. That is one reason why you should not expect me to trade on Google (GOOG) this week.

Back to our trade, here are the relevant numbers for both companies:

[table “357” not found /]

Long Apple (AAPL)

Apple has increased a bit this year (a bit over 3%) but that is far from enough for me to back off my statement that Apple is clearly the #1 tech company in terms of value vs price. The downside is very limited in my opinion given its valuations but the upside isn’t. There are now clear rumors that the production of the iPad3 is under way and that will give yet another boost to 2012 sales and profits. I’m also hoping for more news about the iPhone5 and the eventual release of the Apple TV to keep the momentum strong. I’ve written a few posts about Apple lately so I’ll link to those if you are curious about my thoughts about the company.

You’d be crazy to not own Apple (AAPL)
So Apple…let me get this straight

Short Blue Nile (NILE)

I do hesitate to some degree about shorting NILE at this price because the stock is already down considerably this year (almost 12%).. That could certainly bring a rebound, it would be far from shocking. However, if I forget that for a second and simply look at valuations, the stock remains very expensive and I don’t see anything to justify the valuation so in the medium term, I do expect more downside. Of course, NILE’s Q4 earnings to be released in Mid-February will be big because that would be the company’s biggest sales period by far. It should be interesting…

Disclosure: Will go Long Apple (AAPL) and Short Blue Nile (NILE) on Monday’s opening

Weekend Readings

By: ispeculatornew | Date posted: 01.15.2012 (5:00 am)

Good Sunday, I hope you are spending a great weekend and hopefully not surrounded by snow like some others around here… (sigh):) Ah well, with football and some great readings, I guess I won’t complain too much!

US debt now equivalent to entire US economy, how to invest @ DarwinsMoney
Best Canadian Dividend Stocks for 2012 @ TheDividendGuyBlog
2012 looks like a good year for the markets @ HopeToProsper
Public’s view of Capitalism @ AllFinancialMatters
How a financial adviser could help you @ InvestWithPassion
France and others downgraded @ ZeroHedge
UK debt infographic @ BorrowingMoneyOnline
ETF asset growth @ TheBigPicture

Tech Stock Readings

12 stocks for 10 years @ The Curious Cat
Murdoch admits he screwed up with MySpace @ TheNextWeb
Why Samsung is the next Apple @ TechCrunch
The Twitter-Google chess match @ ReformedBroker

Closing Trade: Long TripAdvisor (TRIP) & Short AOL (AOL)

By: ispeculatornew | Date posted: 01.14.2012 (7:59 am)

Wow, who would have thought, a second trading being closed in as many days! On Monday morning, I will be closing out the trade opened just one week ago, Long TripAdvisor (TRIP) & Short (AOL) which currently stands at +27%.

I got a good question today regarding how I calculate returns. I think I’ve gotten into some detail about this over time but probably never in a single post. Next Friday, I will discuss exactly that. Let me know if you have any questions regarding these returns, I’ll be more than happy to answer. In the meantime, have a great weekend! I will be opening one new trade Monday and hopefully Tuesday as well.

IS

So Apple (AAPL)..let me get this straight

By: ispeculatornew | Date posted: 01.13.2012 (5:00 am)

Apple is a great company, perhaps the greatest of our generation thanks in large part to Steve Jobs. Say what you want about the guy, he led what is probably the most remarkable comeback in corporate history. The company is at the top of the tech sector in front of companies like Microsoft (MSFT) and Google (GOOG) and continues to grow even after Jobs’ departure. In fact, I have put myself out there saying that “you’d need to be crazy to not own Apple (AAPL) right now” given the valuation, the risk vs. reward, etc. There are very few things you could say against Apple, how they run things, etc.

One Recurring Critic

One theme that comes up over and over is the fact that despite growing mountains of cash, the company refuses to pay out dividends back to its shareholders, preferring to keep the money for possible acquisitions, etc. At this point, that stack of cash is becoming rather large, even for a company that could eye major acquisitions in the coming years…

So Back To The Subject…

Earlier this week, after markets had closed, Apple filed an SEC document where it had to disclose among other things executive compensation. Turns out that newly appointed CEO Tim Cook’s base salary was $900,000 in 2011. That seems low for a company that is making billions in profits.

That “Other Compensation”

However, Cook also received shares and options of Apple worth over $375 million dollars!!!! Sure, he can only sell half of those in 5 years and the other part in 10 years, but that is still an insane amount of money. If Apple’s stock does continue to increase, those will be worth even more. In fact, as of yesterday, the value is slightly higher than what he was given… in fact, his options are now worth over $420 million!!!

So Is Tim Cooke Worth $380M…?

I’m usually in favor of high compensation for executives, especially when it’s paid out in shares and options like this. Why? Because, believe me, Tim Cooke has a lot of incentives to keep things going well for Apple and for the stock price to increase many times what it currently stands at. Also, it’s easy to overstate this but it’s true. If Tim Cooke is able to deliver even 1-2% more in earnings than what others could have done because of his experience, knowledge, etc… then, it is probably a great move by Apple.

There Is An “If”

Honestly, was Apple’s board forced to give out this much. We all want Tim Cooke to have strong incentives, but wouldn’t $100M been enough? I’d love to know how they came up with such a huge number. Did Mr Cooke negotiate this for himself? If so, I’d love to get a few tricks from him…

Is Apple Rich Enough That It Can “Throw Money Away?”

If that is the case, now would be a great time to pay out a dividend to its shareholders…

Just sayin’

Disclosure: Long Apple (AAPL) but closing that position on today’s opening:)

Closing A Trade, Already! (AAPL, NILE)

By: ispeculatornew | Date posted: 01.12.2012 (8:27 pm)

Wow, I had talked about having butterflies in my stomach, about how things might be more difficult, especially if my first few trades did not go well. Knock on wood, but so far so good. One week after opening the trade where I went long Apple (AAPL) and short Blue Nile (NILE), the trade ended up reaching its stop gain today and I will be closing it on tomorrow’s opening.

The trade currently stands at +20,68% with the two other trades also doing very well. Let’s hope things do keep up. I will be opening a new trade on Monday if all goes according to plan.

Feel free to join our free technology stocks newsletter below if you want more details about our trades and the stocks that we follow here:

The Biggest Investing Mistake I’ve Made…

By: ispeculatornew | Date posted: 01.12.2012 (5:00 am)

A question that I often get asked, especially when discussing my investment strategies is why I use stop trades. In case you are not aware, a stop is a price at which you will exit a position. There are many different ways to use them but in general I like to use them in a very clear manner. What do I mean? For example, on most long and short tech stocks that I enter, I use a 20% stop loss limit and a 20% stop gains limit.

That does not mean that I will never lose more than 20% on a trade though. Some events such as earnings can move stocks significantly and a stock could lose or gain 10-20% in an instant. When that happens, there is no way to limit the loss. For example, if I have a trade that stands at -17% and the stock that I am long loses 10%, I will be unable to limit my loss to 20%…

If The Loss Is Not Limited To The Stop Loss, What’s The Point?

The primary objective here is not to limit the loss to a certain amount but rather to gain some extra discipline while trading. Imagine yourself entering into a casino to play Black Jack or roulette or almost any other game. Look around you, you will see many people winning that come into the casino and start winning money. How do they react? It comes very easy to “get caught in the game”. What do I mean?

Losers think that they’ll be able to win back their losses so they put in a bit more. Winners feel like they have the momentum and the luck and they will be able to come home with lots more money. It becomes so easy to be overly optimistic and that can often lead to bad results.

I’d be curious to know how many of those end up playing long enough to lose everything they won and more. I would think though that players that come into a casino with a more specific plan on how they will play, how much they are willing to put in and when they will get out would generally do much better.

A Few Years Ago.. My First Trade

Some time ago, I did my first trade. Not only did I buy into a company but I actually decided to buy an option, a long term call on Yahoo (YHOO). Believe me, I had no clue what I was doing, I probably was more a gambler than an investor but I believed in the company at that point and wanted to get exposure, options gave me that opportunity.

So I bought a few options and in the following weeks, the value of those options increased rather quickly and even ended up doubling. I was asked by friends (who I was bragging to of course) when I would get out. I had no idea. Initially I though I would with a “decent” profit, whatever that means. At some point, those options had actually doubled in price and it was a successful trade… I never did end up getting out and eventually the option became worthless

I Am So Lucky That Happened!!!

It thought me a valuable lesson. Always have an exit. You might argue for an exceptions when you are investing for longer term (such as your retirement). I would argue that even those should have limits. You can simply put the limits a bit further if these are longer term limits.

Do You Use Stop Losses Or Stop Gains On Your Trades?

If not, how do you determine your exit points?

Ultimate Sustainable Dividend Portfolio – January 2012 Update

By: ispeculatornew | Date posted: 01.11.2012 (5:00 am)

Late last year, I did a few surveys to find out what IntelligentSpeculator readers liked the most and wanted to see more of. The Ultimate Sustainable Dividend Portfolio post that we published in September was clearly a favorite. It made us possible for me to give 20 dividend stock picks that would provide long term sustainable dividend flows to build passive income. I’ve decided to build upon this by doing monthly updates of this portfolio. The picks were made on September 14th 2011 so I will be using the previous night’s prices as my reference.

I could be using any amount but I will be starting off with a $20,000 capital so exactly $1000 into each of the 20 stocks. As you can see in the chart below the value of the portfolio has clearly increased which you would expect since the S&P500 has done exactly that as well. To be fair to the mentality shift that I’ve discussed I will be more focused on increasing the monthly cash flows that will come from this portfolio over time than the actual value.

[table “356” not found /]

I do expect for dividends to be a bit more volatile from month to month but they should increase steadily over time so that will be an important metric. In the first 4 months, the portfolio generated $165 of dividends. In the next few months, I will be giving monthly updates to this amount so we’ll see how that goes. Here is the amount to start off:

Returns

I will also be comparing the returns of this portfolio to the return of the S&P500 (with dividends reinvested).. Keep in mind that I would expect the Ultimate Sustainable to do better in difficult times and worse in great times. Why? The USDP is a more stable portfolio that will fluctuate less over time.

Trades

Every month, I will discuss trades that will be done in the portfolio, they will only be done once per month and most months will actually have no new activity. These are sustainable dividend picks so there is no reason to become too active.

As I have discussed in the recent past, there are two main flaws that I will want to address in the near future for this portfolio:

Over exposure to the oil sector (I will likely take out an oil stock in the next few months)
Under exposure to international dividend stocks

For now, I do expect to keep the portfolio at 20 stocks so any new stock being added will replace an existing one. I strongly recommend that you join our free mailing list if you are interested in dividend stocks, that is where most of the discussions regarding new stocks to add will be done. To sign up, simply enter your name below:



As always, I would love to hear your thoughts on this. It is the first of many posts on the USDP and I do hope to make this a very interesting part of this blog.