It’s a new year, and resolutions are flying through the air like dollar bills at the Spearmint Rhino. Most of you want to lose those last few pounds, which will really hurt chip sales for the next 3 weeks. Thanks a lot, jerks. Or maybe you want to quit smoking, since sucking on cancer sticks is only attractive to other people who suck on cancer sticks. Hell, maybe your goal is to actually talk to members of the opposite sex without making a total ass of yourself. I’m sure you’ll fail at all these goals by January 15th.
If your goals are more financial in nature, do I have a treat for you. I have the top 4 stock picks of 12 top personal finance bloggers, (and Timeless Finance, who is actively trying to lose the contest because he knows he sucks too much to win it) who I’m sure researched these stocks for hours. Or it’s the best stuff they could pull out of their asses on a deadline. First everyone else’s picks, and then I’ll go into a little detail with mine.
Labatory Corp. of America
Tempur Pedic International
My Pennies My Thoughts
Ruth’s Hospitality Group
Mochi and Macarons
TD Canada Trust
American Capital Limited
S&P 500 ETF (SPY)
Don’t Quit Your Day Job
Kulicke and Soffa Industries
Credit Acceptance Corp.
My University Money
My Own Advisor
Boomer and Echo
Secure Energy Services
Unlike last year, there’s very little repeating of stocks, (only Apple was picked twice) which is going to make things tougher on the monkey I’ve hired to tabulate the results. I’m expecting results something like this:
1. Bananas (up 58205920593923852952%)
3. Throwing feces
4. All others
Now onto my picks. I’d normally recommend you run out and put your entire life savings into them, but let’s not go nuts. 95% should be sufficient. You’ll need a little bit of cash to eat in the meantime. Are you ready?
OH BABY, IT’S BACK.
I purchased shares of RIM back in March for $13.50 per share. I rode the stock all the way down to $6, then all the way back up to $13.85, where it stayed for one day before falling back down some 25%. If I didn’t know better I’d say it was mocking me.
I still like the company for the same reasons I’ve always liked it. The balance sheet is a fortress, the company has no debt, and there’s close to $6 per share worth of cash on the balance sheet. That means I’m paying ~$5 for the business, all the fixed assets and all the intellectual property. If the new phones and operating system is a hit, the stock could triple from these levels. I still maintain my target price of $39.
Say what? A radio company? I’m living in the past. Stop living in the past.
Emerson makes small appliances for various retailers, including microwaves, small refrigerators, clock radios and wine coolers. The company has a market cap of $47M, yet is sitting on $52M worth of cash. The company is profitable, (it made $10.6M during their last year) debt free, and paid out a special dividend back in 2010 that would be over 50% of the share price today.
Before you get all erect in excitement, know the company has some major issues. They’re not exactly sure who their largest shareholder is. The shares were pledged as collateral for a loan, but then the company defaulted on that loan. It’s currently tied up in Hong Kong bankruptcy court. The company is also getting booted out of Walmart in about 6 months, which will decrease revenues some 30%. Most of their costs are variable, (since they contract out all the manufacturing) so they should be able to maintain profit margins. All in all it’s a fair company, trading at an excellent price. I’ll take a gamble, and once I complete greater due diligence I’ll probably throw real money at it.
Pengrowth is a natural gas producer in western Canada, who decided to buy more assets right as the price of natural gas fell into the crapper. Nice work guys.
This company has more debt than I’m usually comfortable with, and they’ve increased the share count by about 30% in the last 6 months, actions that the market didn’t like. The company was also forced to cut the dividend so they could dedicate more cash to paying the interest on their debt.
So why do I like the company? They’re a pure play on natural gas, a commodity that I’m thinking ends the year higher than it is now. The balance sheet is under control, the dividend looks safe for now, and I think the company can whether the storm until they see higher prices. Pengrowth could be a home run if the market gets a little more bullish on natural gas.
Just imagine I’m doing this last one with a cheesy French accent.
France Telecom has two things going against it. It’s in France, where I hear the economy is kinda struggling, and they’re starting to lose market share to a new rival. (Although the latest results show a slight subscriber growth.) They recently cut the dividend, but the new dividend should be around 8.5%. Dividends work a little differently in France, kinda like body hair. They should have sufficient cash flow to cover this new decreased dividend.
The company has huge exposure to Africa and the Middle East, markets that have all sorts of growth ahead of them. They’re also selling off some non-core pieces to shore up the balance sheet, recently ridding themselves of a stake in an Austrian carrier. The company’s debt levels are reasonable, they trade at a small discount to book value, and they’re only trading at about 6 times 2013 estimated earnings.
The French government owns almost 30% of the company. If they need cash in a hurry, FT will be put on the auction block. This would not be good for the share price, and some of this uncertainty is already priced into the stock. I’m betting it won’t happen, but it’s a very real risk.
Good luck to everyone who entered the contest, but you’re all going to lose. Now commence trash talking in the comments.