Archive for July, 2014

Looking For An Entry Point For Twitter ($TWTR)

By: ispeculatornew | Date posted: 07.07.2014 (3:00 am)

51vLqoKisfL__SL250_Among the tech stocks that I follow, there are a few that I own as long term positions ($FB, $AAPL), others that I’d never own (stocks like $P, $TZOO, etc) and several others that I’d love to eventually own but am tracking some metrics and the pricing in order to determine the right time to get in. I’ve talked about my desire to buy stocks like Tripadvisor ($TRIP), LinkedIn ($LNKD) and Amazon ($AMZN) but things have not looked right. The same could probably be said about Twitter. Why?

I’m a big believer in their product, what they’re trying to do and their potential. The fact that it’s probably the app I use the most on my iPhone is also a reason of course and hopefully means I have a good understanding of the product’s potential. I’m also currently listening to “Hatching Twitter” audiobook which also gives me a “founders/management perspective”. The big problem of course in buying Twitter stock from the very start has been its valuation which was well beyond what I was willing to pay for. Over the few months after the IPO, the stock got even more expensive before coming down closer to reality.

ycharts_chart

$TWTRIs Now The Right Time To Buy?

First, I’ll start off by saying a few of the reasons why I love Twitter as a company from an investor perspective:

Established and “different” social player. There are many different social companies. Facebook is the leader of course but Twitter and LinkedIn are the other parts of the “big 3”. Snapchat, Pinterest, Tumblr, Flickr, Google+ are also important players but I don’t think anyone would question that both in the US and in terms of global presence, Twitter is a terrific player. It is also different from Facebook in a way that means they can and do co-exist. Yes, they both have gone at each other in many different ways but overall, they co-exist as they provide very different offerings.

Advertising potential: There is no doubt that Twitter knows its users well. By knowing who they follow, what they read and what they write, they’re able to get enough data to compete with every other player in terms of commanding very competitive rates.

Incredible potential: You would have a hard time arguing that Twitter could not also reach a billion users. It connects users to friends and family but also to brands, services, celebrities, etc.

However, there are also elements I don’t like:

Slow growth: You’d think that given its much smaller user base, Twitter would be growing much faster yet it continues to lag. Part of it is the consistent problem of explaining to potential users what Twitter is and how to use it. It’s very disappointing that after all these years, Twitter remains unable to explain this in a clear way.

Beyond Twitter?: I see a hundred different things that Facebook could do to expand and Mark Zuckerberg continues to take its company down new roads successfully through acquisitions, new services, etc. Twitter on the other hand isn’t so exciting from that perspective. I have trouble seeing Twitter becoming a platform for several other services or even becoming a viable ecosystem.

User participation: Another issue that Twitter has been dealing with is the lack of user participation. Most users do not produce or upload any content to Twitter, they simply read.

Valuation

Of course, as is always the case, it comes down to valuations. I think Facebook is a great comparable so I’ll use that comparison:

First off, the main numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueEarningsMkt CapRevenue/Share
TWTRTwitter Inc41.33N/A155.86-34.38109.793.284.988/15/201424.74B3.51
FBFacebook Inc66.2961.8136.2521.5954.694.636.537/23/2014170.53B3.25

Revenue growth is accelerating to some extent which is positive:

TWTR Revenue (Quarterly YoY Growth) Chart

TWTR Revenue (Quarterly YoY Growth) data by YCharts

Twitter remains a money-losing business but the arrow is clearly in the right direction here:

TWTR EPS Diluted (Quarterly) Chart

TWTR EPS Diluted (Quarterly) data by YCharts

In all honesty, I do think I’m close to finding the valuation attractive enough. A combination of improving metrics and declining stock price have certainly helped TWTR become a better buy. I could see myself buying later this year, especially if we get a better sense of when TWTR will become profitable and what its plans for expansion (both its current service and future ones) will look like.

Are any of you TWTR investors or considering making the move?

Weekend Readings – Net Neutrality

By: ispeculatornew | Date posted: 07.04.2014 (3:00 am)

tiered-internetWe often hear about the importance of net neutrality and the picture on the right is said to be what we could one day be facing if it ends up going away..! Hopefully we never see that day:) Here are some good readings for the next few days:

General Readings

Secret Starbucks menu @ FT
How to bet on the price of water @ Fortune
The IPO is diyng @ VOX
Emerging markets trading at premium @ Bloomberg

Tech Stock Readings

Google (GOOG) buys Songza @ TechCrunch
Rackspace (RAX) wants to go private? @ TechCrunch
Zillow (Z) jumps the shark movement @ CitronResearch

 

Top 100 Dividend Stocks – July 2014 Edition

By: ispeculatornew | Date posted: 07.03.2014 (3:00 am)

Japan (1)It’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.

Here is the list!

TickerNamePriceDividend YieldPayout RatioEx-Dvd Date
WINWindstream Holdings Inc9.9610.04250.779/26/2014
DODiamond Offshore Drilling Inc49.637.0588.697/31/2014
FTRFrontier Communications Corp5.846.85362.429/9/2014
RIGTransocean Ltd45.036.6663.798/20/2014
CTLCenturyLink Inc36.25.97#VALUE!9/4/2014
ESVEnsco PLC55.575.436.99/11/2014
HCPHCP Inc41.385.27106.928/7/2014
TAT&T Inc35.365.253.137/8/2014
HCNHealth Care REIT Inc62.675.073110.778/7/2014
TETECO Energy Inc18.484.7696.668/12/2014
DRIDarden Restaurants Inc46.274.75157.317/8/2014
KMIKinder Morgan Inc/DE36.264.63135.027/31/2014
SOSouthern Co/The45.384.63107.367/31/2014
MOAltria Group Inc41.944.5881.439/15/2014
VTRVentas Inc64.14.52164.069/11/2014
NENoble Corp plc33.564.4725.28/7/2014
PMPhilip Morris International Inc84.314.4667.719/23/2014
RAIReynolds American Inc60.354.4479.19/10/2014
SPLSStaples Inc10.844.4344.269/24/2014
EDConsolidated Edison Inc57.744.3667.898/11/2014
PBCTPeople's United Financial Inc15.174.3587.677/30/2014
VZVerizon Communications Inc48.934.3351.737/8/2014
DUKDuke Energy Corp74.194.2182.388/13/2014
PPLPPL Corp35.534.1979.799/9/2014
FEFirstEnergy Corp34.724.15245.238/5/2014
ETREntergy Corp82.094.0483.118/11/2014
LOLorillard Inc60.974.0369.928/27/2014
COHCoach Inc34.193.9533.739/10/2014
POMPepco Holdings Inc27.483.93245.459/12/2014
PNWPinnacle West Capital Corp57.843.9360.317/30/2014
KIMKimco Realty Corp22.983.92174.489/29/2014
AEEAmeren Corp40.883.9175.819/8/2014
PCLPlum Creek Timber Co Inc45.13.9135.518/13/2014
MATMattel Inc38.973.955.28/25/2014
SCGSCANA Corp53.813.960.39/10/2014
WMBWilliams Cos Inc/The58.213.85222.629/10/2014
TEGIntegrys Energy Group Inc71.133.8261.888/27/2014
PCGPG&E Corp48.023.79100.6110/3/2014
CNPCenterPoint Energy Inc25.543.72114.158/14/2014
MACMacerich Co/The66.753.72208.328/20/2014
XELXcel Energy Inc32.233.7258.439/23/2014
CINFCincinnati Financial Corp48.043.6652.229/15/2014
PEGPublic Service Enterprise Group Inc40.793.6358.579/5/2014
AEPAmerican Electric Power Co Inc55.773.5964.468/8/2014
TGTTarget Corp57.953.5953.328/18/2014
GASAGL Resources Inc55.033.5670.938/20/2014
DTEDTE Energy Co77.873.5468.539/11/2014
LEGLeggett & Platt Inc34.283.587.719/12/2014
PFEPfizer Inc29.683.557.687/30/2014
KRFTKraft Foods Group Inc59.953.545.057/9/2014
CACA Inc28.743.4850.399/14/2014
CMSCMS Energy Corp31.153.4759.698/6/2014
FCXFreeport-McMoRan Copper & Gold Inc36.53.4284.827/11/2014
EXCExelon Corp36.483.473.558/15/2014
CVCCablevision Systems Corp17.653.4122.868/21/2014
NAVINavient Corp17.713.39#VALUE!9/3/2014
CAGConAgra Foods Inc29.683.37140.97/30/2014
PAYXPaychex Inc41.563.3783.788/1/2014
DDominion Resources Inc/VA71.523.3672.888/27/2014
GEGeneral Electric Co26.283.3553.119/25/2014
WMWaste Management Inc44.733.35696.949/5/2014
WECWisconsin Energy Corp46.923.3256.968/13/2014
NUNortheast Utilities47.273.3259.459/11/2014
GMGeneral Motors Co36.33.3109/12/2014
LMTLockheed Martin Corp160.733.31528/28/2014
OKEONEOK Inc68.083.29114.418/6/2014
PGProcter & Gamble Co/The78.593.2856.757/16/2014
CVXChevron Corp130.553.2834.898/13/2014
PSAPublic Storage171.353.27105.029/8/2014
GMEGameStop Corp40.473.2637.218/28/2014
AVBAvalonBay Communities Inc142.193.26932.949/30/2014
CLXClorox Co/The91.43.2460.067/21/2014
HASHasbro Inc53.053.2472.887/30/2014
AIVApartment Investment & Management Co32.273.22335.828/13/2014
COPConocoPhillips85.733.2241.667/24/2014
MCDMcDonald's Corp100.743.2255.58/29/2014
PLDPrologis Inc41.093.21288.829/11/2014
EQREquity Residential633.17#VALUE!9/18/2014
SESpectra Energy Corp42.483.15798/6/2014
LLYEli Lilly & Co62.173.1544.898/13/2014
GRMNGarmin Ltd60.93.1557.449/11/2014
SPGSimon Property Group Inc166.283.13111.968/11/2014
GISGeneral Mills Inc52.543.1253.417/8/2014
SYYSysco Corp37.453.165.9910/8/2014
CSCOCisco Systems Inc24.853.0633.169/30/2014
IRMIron Mountain Inc35.453.05213.919/24/2014
MRKMerck & Co Inc57.853.04116.539/11/2014
STXSeagate Technology PLC56.823.0328.188/14/2014
KMBKimberly-Clark Corp111.223.0258.089/3/2014
NUENucor Corp49.253.0196.749/30/2014
ABBVAbbVie Inc56.442.9876.997/11/2014
BMYBristol-Myers Squibb Co48.512.9790.4410/8/2014
KSSKohl's Corp52.682.9633.979/2/2014
PEPPepsiCo Inc89.342.9351.29/3/2014
MCHPMicrochip Technology Inc48.812.9171.148/19/2014
INTCIntel Corp30.92.9146.568/4/2014
FFord Motor Co17.242.9227/28/2014
KOCoca-Cola Co/The42.362.8857.859/17/2014
DOWDow Chemical Co/The51.462.8834.449/26/2014
BAXBaxter International Inc72.32.8849.79/3/2014

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:

TickerName
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: