Posted on 20 October 2012.
Today many industries in the tech sector are in value territory. This fall from grace is apparent in how the firms of the SPDR Technology Selector Fund (XLK) trade at an average 15 price-to-earnings ratio which is only slightly higher than the 14 price-to-earnings ratio of the S&P 500 (SPY) fund companies. Many familiar semiconductor names trade at even lower valuations. Apparently, tech is no longer the darling of investors and the sector has nearly the same valuations as the broader stock market.
Investors can seize the opportunity offered by the market today by reviewing the challenges faced by different semiconductor stocks that are priced as value investments. In particular, semiconductor manufacturers and their suppliers are frequently trading at attractive multiples in today’s markets. Are they value investments or value traps?
PC Sales Slide
The tech sector is recoiling from the third quarter’s blow to personal computer sales. PC sales worldwide declined 8.3% compared with the last year’s third-quarter sales, according to Gartner Inc. market research.
Gartner head analyst Mikako Kitagawa said, “The overall PC market decline was triggered by a continuing slowdown in PC shipments,” and that the outlook for the launch of Microsoft Windows 8 is tenuous because “shipments were less vigorous as vendors and their channel partners liquidated inventory in the third quarter.”
Retailers resisted placing orders because of the weak back-to-school sales. These firms had cleared out their entire inventory before the launch of Windows 8. In contrast, the professional market remained unaffected. To continue reading, click here.
Posted in Dividend Kings
Posted on 16 October 2012.
The market is set up for fuel prices to relax from their highs. This is good news for travel-related stocks. We will review online travel search as a business model and consider which of these stocks is most attractive.
Clicks Vs. Bricks
Hotels and airline companies compete against their peers on price. Online search companies compete against each other based on the attractiveness of their platforms. The platform with the most vendors and traffic provides the best environment for search. Online search sites do not compete for vendors, banner ads, or users primarily based on the prices they charge participants. Hotel and airline vendors are more concerned about making sure their prices are seen and purchased by a large number of potential consumers.
In addition to sidestepping head-on price competition, the online search business model requires less capital expenditure. This is great news for investors, who should vehemently hate cash outflows. Since this newer business model is more attractive, investors should be willing to pay higher valuations for online search stocks.
The Case for Travel Stocks: Oil Price Decline and Economic Recovery
Gas prices might be at their 2012 peak in the U.S., but according to analyst estimates they could drop to their yearly lows by the end of 2012. This price drop would rest on dormant oil refineries starting production again. The onset of winter will also decrease miles driven, leading to lower demand.
Prices at oil service stations could fall by as much as 6.3% per gallon, which translates to a final price of about $3.54. To continue reading, click here.
Posted in Dividend Kings
Posted on 23 May 2012.
Microsoft (NASDAQ:MSFT) has reported a marginal drop in earnings for its fiscal third quarter ending March 31, 2012, on a year-on-year basis but an increase in revenue from sales of Windows software and business products. Revenue increased from $16.4 billion to $17.41 billion while revenue dropped marginally to $5.11 billion (earnings per share of $.60 per share) from $5.23 billion (earnings per share of $.61 per share) in comparison with the same quarter the previous year. The consensus EPS estimate was $.58 per share. Almost by default, Apple (AAPL) and Google (GOOG) have become the glamor tech stocks while Microsoft somewhat unfairly is regarded as just another boring technology investment. While Microsoft may not move as fast as I would like a number of important initiatives have been launched in that could be the second coming of Microsoft on Wall Street. It is worth examining some of these initiatives in detail.
Easily the most ambitious of Microsoft’s initiatives is the radically different Windows 8 that is expected to be launched toward the end of the year. Windows 8 will be a real game changer for Microsoft and many people expect that the upgrade cycle that this software will launch will rival Windows 95, which really pushed the company into the big time. It is important to remember that Windows 8 is not just another Windows upgrade but a genuinely comprehensive and oppressive attempt to provide a unified software platform for every single bit of hardware including tablets and mobile devices.To continue reading, click here.
Posted in Featured Posts
Posted on 20 April 2012.
Google (GOOG) introduced plans for a stock split in its latest earnings report. Ordinarily good news, this split has investors concerned and confused as it would create a new class of non-voting shares that would be listed under a different ticker symbol than existing stock.
Since the three founders of Google retain a majority vote and are in favor of this measure, I expect it to pass, though Google will be hosting a shareholder meeting pursuant to its legal obligations as a corporation. The stock split would give the Google co-founders even greater control over the company’s direction. Google’s stock has been tracking steadily lower since the announcement, falling from around $651 on April 12 to its current price around $608.
Also in its earnings report, Google revealed problems with its ad auctions that are eroding ad revenues. The root cause of the problem has not yet been identified, but though the number of paid clicks increased by 39% quarter over quarter, Google’s ad revenue decreased by 12% by the same measure. In comparison, Microsoft’s (MSFT) advertising revenue through Bing grew by 13%. Microsoft attributes the improved results to an increase in Bing’s market share, now standing at 15.1%. If this continues, it would spell trouble for Google’s stock price and good news for Microsoft’s.
Google’s overall revenues did increase year over year, from $8.58 billion to $10.65 billion, or 24%. Though this posted as a win in Google’s playbook, uncertainty over the cause and duration of the ad revenue problem, coupled with the upcoming stock split and persistent legal challenges, have pushed the stock into a meandering slide. To continue reading, click here.
Posted in Dividend Kings, Featured Posts
Posted on 02 April 2012.
A person would have to have been living under a rock to not know that oil investments are a good thing. We’ve been dependent on oil for hundreds of years, and until technology drastically changes, we will be dependent for many more years to come. The issue isn’t that oil is not a good investment.The issue is determining which oil companies are the winners and which to stay away from. I will invest in the former and believe that hands down, ConocoPhillips (COP) is a winner.
There are several reasons ConocoPhillips is a winner. But first, it is not because of everyone else getting on the bandwagon. Although, when you see some smart players such as Warren Buffett buying into this company (Berkshire (BRK.A) began accumulating shares of Conoco in 2008, at one point owning as many as 84 million shares), it does make you stop and think. Just because 39 hedge funds reported in late 2011 that they own ConocoPhillips (to the tune of roughly $3.5 billion) is not simply another reason to jump on board. No, the real reasons are always in the numbers.
ConocoPhillips, the third-largest U.S. integrated energy company based on market capitalization, and the largest refiner in the United States, operates in over 30 countries and holds around 8.4 billion barrels of oil equivalent in proved reserves. The company recently announced that it will begin selling assets from the company’s upstream divisions, exiting assets that yield low margins or lack any upside potential, to raise $10 billion in 2012. To continue reading, click here.
Posted in Dividend Kings, Featured Posts
Posted on 20 March 2012.
General Mills (GIS) is listed in the Fortune 500 and has established itself as one of the largest multinational corporations in the world. The company has a wide portfolio of products and brands. It is also the market leader in a number of product categories. In this article, I will be analyzing the different indicators which suggest that this company would be a good option to invest in.
Even in the stock market, General Mills has been one of the best investment options. Performance indicators have shown that the company is doing quite well. This is one of the basic reasons why I have chosen this stock for my analysis. The stock has offered significant yields to its investors and is one of the safest options as well. The company is operating in an industry which has been growing steadily over the past few years. This has allowed General Mills to expand itself and explore new opportunities. They have penetrated new markets and developed new segments worldwide.
The stock is currently trading in the market at a price just above $38 per share. The price has been fluctuating but for now they are showing a steady increase. In the last 52 weeks, the stock has been trading at a price as low as $34 per share and as high as $41 per share. Market capitalization at this price is almost $25 billion while the average trading volume is close to $5 million. There are approximately 645 million shares outstanding in the market. To continue reading, click here.
Posted in Dividend Kings