monthly portfolio (november)
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Other than the Fountain of Youth, the most desired investor delight is to find high-yielding stocks in a strong bullish
trend. Nothing lights up a portfolio statement like unrealized gains and received dividends.
Finding the right stocks with an attractive yield can at times challenge even the best of investors. The last thing
anyone wants to do is invest in a stock that is about to lower its dividend. With careful research of industries, payout
ratios, technical analysis and a lot of time reading, you can move the odds more in your favor.
Your best asset as an investor is the knowledge you have in the industry you work in. When choosing between
equities, always pick the one in the industry you best understand. Sticking with what you know may be boring at
times but, remember, when it comes to making money, profits are always exciting.
Company Ticker Current Price Monthly Target Stop Loss Long-Term Target
Teradata TDC 63.00 68.00 58.00 72.00 Discover Financials DFS 41.05 43.45 38.8 45.00 Sherwin Williams SHW 142.66 149.85 136 155.00 Apple AAPL 595 645 549 680 Vertex Pharma VRTX 48.29 50.10 46.60 53.20 Nokia NOK ADR 2.72 2.52 2.93 2.20 Amazon AMZN 233 221 245.5 210 Zynga ZNGA 2.29 2.08 2.51 1.85 Facebook Inc. FB 21.16 19.4 23.05 17.50 Campbell Soup CPB 35.33 33.5 37.2 31.50 Regions Financial RF 6.55 6.93 6.19 7.25 Gap Inc. GPS 35.74 37.65 33.95 38.90 Seagate STX 27.35 28.85 25.93 30.00 Sprint Nextel S 5.57 5.99 5.18 6.25 Gold Corp. G 45.19 47.95 42.59 49.50
Monthly Portfolio
CFB Special Report Date 1st November 2012
REPORT NAME: November Monthly
Portfolio
INSTRUMENT NAME: Various
Monthly Portfolio
1. Teradata (TDC)
Teradata, with a market value of $13 billion, is a 32-year-old IT company
focused on developing and commercializing data warehousing services to
the world's largest 3,000 organizations. It was spun off from NCR Corp. in
2007.
Its shares are up 57% this year and have a three-year, average annual
return of 43%. Analysts give its shares six "buy" ratings, seven "buy/holds,"
and seven "holds," according to a survey of analysts by S&P.
2. Discover Financial Services (DFS)
Discover Financial, with a market value of $19 billion, issues credit cards
and acquires transactions. It operates a closed-loop credit card network
and also uses third parties to issue its cards. The company's sales growth
has averaged about 2% a year over the past 14 years.
Its shares are up 58% this year and have a three-year, average annual
return of 47%. In March, the company announced a strategy shift toward
becoming a more full-service direct-payments provider. The trend of
moving from cash and checks to electronic payments, such as credit or
debit cards, is a major tailwind for Discover.
3. Sherwin-Williams Co. (SHW)
Sherwin-Williams, with a market value of $14 billion, makes paints, coatings
and wall coverings worldwide. It is the U.S. market leader, with a 30% share.
Investor takeaway: Its shares are up 59% this year and have a three-year,
average annual return of 34%. Earnings are strong as analysts' consensus is
for $6.36 per share this year, and that they will grow by 19%, to $7.59, next
year.
Current Market Price
$63.00
Target: $68.00
Stop Loss: $58.00
Current Market Price
$142.66
Target: $149.85
Stop Loss: $136.00
Current Market Price
$41.05
Target: $43.45
Stop Loss: $38.80
Monthly Portfolio
4. Apple (AAPL)
Apple, with a market value of $621 billion, designs and makes consumer
electronic devices, including PCs (Mac), tablets (iPad), phones (iPhone) and
portable music players (iPod). Its iTunes online store is the largest music
distributor in the world; it sells and rents TV shows and movies, and sells
applications for the iPhone and iPad.
Its shares are up 61% this year and have a three-year, average annual
return of 60%. S&P has it rated "buy" with an $800 price target, a 23%
premium to the current price. S&P says its projected earnings growth, large cash position, strong free
cash flow generation and relatively high return on equity, continues to make the shares "attractive."
Although the company's recent third-quarter results were below expectations because of an
unexpectedly sharp drop in iPhone shipments, we believe the headwinds are primarily short-term in
nature and product-cycle driven. Long-term, as users become more tethered to Apple's iOS ecosystem
rather than a specific device, integrating additional Apple devices into users' routines becomes
seamless.
5. Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals, with a market value of $12 billion, is a
biopharmaceutical company that uses structure-based drug design to
discover and develop small molecule therapeutics for the treatment of a
wide range of diseases, including hepatitis C and cystic fibrosis.
Its shares are up 65% this year and have a three-year, average annual
return of 17.5%.
Current Market Price
$595
Target: $645
Stop Loss: $549
Current Market Price
$48.29
Target: $50.10
Stop Loss: $46.60
Monthly Portfolio
6. Nokia (NOK ADR)
Nokia battled through $555 million and $1.3 billion declines in operating
cash flow and cash equivalent position, respectively. For the year, Nokia
has lost $2 billion off its cash and cash equivalent line item. If this trajectory
continues, Nokia will declare bankruptcy within the next twenty-four
months, and sell off service, handset, intellectual property, and fixed asset
units at fire sale prices.
To postpone the inevitable, Nokia must eliminate its dividend in
conjunction with debt refinancing. These moves would preserve roughly $1.5 billion in cash flow over
the next 18 months. Financial engineering alone, of course, is never enough to safeguard a flawed
business model over the long term.
At $2.57, Nokia's risk versus reward profile, however, is far from favorable, and conservative investors
should immediately sell off stock.
7. Amazon (AMZN)
We believe that Amazon is overvalued and overrated. We believe that
investors have bid this company up to an unsustainable high of 108X
expected 2013 earnings. We are also especially concerned that it is trading
at 32X TTM operating cash flows and over 100X TTM free cash flows. We
see significant operational and execution risk in Amazon and are
concerned that the recent run of rapid revenue growth has not translated
into increased profits for Amazon. We are concerned with the rapid run-up
in its CapEx and its declining Returns on Investment Capital.
We think that investors are too willing to overlook profit growth in exchange for revenue growth at
Amazon. We believe that investors who have been long-time holders of Amazon may want to consider
steadily reducing their exposure to Amazon and to pay the maximum 15% tax rate on their gains rather
than stick around for a significant potential decline in Amazon's shares. In short, while we are impressed
with the performance of Amazon North America and Amazon Web Services, we believe that the halo
effect from those businesses is blinding investors to the poor performance of Amazon International.
Current Market Price
2.72
Target: 2.52
Stop Loss: 2.93
Current Market Price
$233
Target: $221
Stop Loss: $245.50
Monthly Portfolio
8. Zynga (ZNGA)
The firm reported better earnings than expected for the third quarter,
impressing investors just a few days after discreet layoffs pushed analysts
to rethink estimates. While the news is good for ZNGA shareholders, it
doesn’t do much to change the firm’s technical outlook right now.
That’s because even though ZNGA is up 11%, shares are still sitting just
below resistance at $2.50. In fact, shares actually managed to hit their
head on that $2.50 price level before reversing lower intraday/ That tells
us that the glut of supply that’s caused $2.50 to act as a price ceiling is still
there.
In spite of today’s gains, we are still calling Zynga a social media stock to sell
9. Facebook (FB)
Typically, Zynga and Facebook (FB) go hand in hand. And lately, that’s
meant that they’ve both been in supremely active stocks in freefall. FB
rallied hard after announcing third-quarter earnings that bested analysts’
expectations. While we don’t think that this stock has turned the corner
fundamentally.
Right now, Facebook looks like it’s making a double bottom pattern in
shares. Price action stays below the $23 resistance level, sending a selling
signal. Even if shares are reversing in the short-term, the primary trend is
still down.
10. Campbell Soup (CPB)
The products from Campbell Soup may be tasty and fulfilling, but the
stock is far from such a description. With stagnant long-term growth and
performance, an uneventful stock chart, and a dividend of unreliable
history, an investor is better suited toward other dividend-paying stocks
with bright futures of growth (such as McDonald's). Campbell Soup
simply does not have enough going for it to be worth investing capital in.
Current Market Price
$2.29
Target: $2.08
Stop Loss: $2.51
Current Market Price
21.16
Target: 19.40
Stop Loss: 23.05
Current Market Price
35.33
Target: 33.50
Stop Loss: 37.20
Monthly Portfolio
11. Regions Financial (RF)
Regions Financial, with a market value of $10 billion, and with $122 billion
in assets, is a financial holding company that operates 1,800 banking
offices in 16 states mostly in the Sunbelt. Its operations include banking,
brokerage and investment services, as well as mortgage banking and
insurance brokerage.
Its shares are up 67% this year and have a three-year, average annual
return of 11.5%.
12. Gap Inc. (GPS)
Gap, with a market value of $17 billion, is a specialty apparel retailer
that operates Gap, Banana Republic and Old Navy stores. They sell
casual clothing to moderate, upscale and value-oriented consumers.
The company operates more than 3,000 corporate-owned stores
throughout the U.S., Canada, Western Europe and Japan, and 250
franchise stores internationally.
Its shares are up 107% this year and have a three-year, average
annual return of 39%. Gap posted 10% higher same-store sales and 12% higher total sales.
13. Seagate Technology (STX)
Seagate, with a market value of $15 billion, manufactures hard disk
drives used in computer servers, PCs, laptops and personal-
entertainment players. Of the company's revenue, 65% to 75% comes
from original-equipment manufacturers.
Its shares are up 122% this year and have a three-year, average
annual return of 46%.
Current Market Price
$6.55
Target: $6.93
Stop Loss: $6.19
Current Market Price
$35.74
Target: $37.65
Stop Loss: $33.95
Current Market Price
$27.35
Target: $28.85
Stop Loss: $25.93
Monthly Portfolio
14. Sprint Nextel (S)
Sprint Nextel, with a market value of $15 billion, is the third-largest
wireless carrier in the U.S., serving 48 million customers directly and
8.4 million via resellers, using two separate nationwide networks.
Its shares are up 122% this year and have a three-year, average
annual return of 11%.
UBS Securities upgraded it to "buy" from "neutral" at the end of July (the same rating as S&P) after
second-quarter earnings indicated a significant increase in the outlook for EBITDA (earnings before
interest, taxes, depreciation and amortization) and free cash flow over the next three years is
warranted.
15. Goldcorp. (G)
Goldcorp (GG) interns to boost cash flow by sharply boosting production.
The company hopes to boost its gold production 70% over the next four
years, to around 4 million ounces annually. Goldcorp’s costs are bit higher
than Barrick’s -- around $625 per ounce -- but surging volume should still
equate to a steadily rising bottom line.
Goldcorp is also one of the financially stronger players in the industry, with
$1.2 billion in cash at its disposal. That should be enough to complete its
existing capital spending programs and make a series of acquisitions of
smaller gold miners.
Current Market Price
$5.57
Target: $5.99
Stop Loss: $5.18
Current Market Price
$45.90
Target: $47.95
Stop Loss: $42.59
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