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New Features Added to the Blog 2007-03-07 02:33:00 You might have noticed a few changes to the site. I just want to highlight these changes:A new blog has been added to the site called Trader Pad. This is a place for me to jot down my thoughts on stocks and markets during the day. These posts will be 2-3 liners at most and the subject matter, while being stocks, will be different than the detailed and longer posts on the main blog.The Top 5 This Week shows 5 posts which have been clicked most often in a given week. This gives you an idea of the most popular posts.Recent Comments highlights your comments to me.Last but not the least, I have added Multi-lingual support for those who prefer to read this blog in their native tongue. Although I must warn you that the translated text seems to be out of context on occasion and might even be a little funny.Drop me an email and let me know what you think of the changes.-- Faisal Laljee
Shorting The Market? Here is How I Recommend It 2007-03-06 06:49:00 I try to avoid shorting the market, but if you feel compelled to do so, I recommend QID and SDS. QID is an ETF that shorts the Nasdaq. It is the anti-QQQQ's with a kick in that it magnifies the movement in QQQQ by a factor of 2. So for example, a 1% down move in QQQQ implies a 2% gain in QID. Similarly SDS is QID's counterpart for the S&P 500. If you think the stock market is heading lower, and I don't argue that, I recommend you play these for the short term.-- Faisal LaljeeFull Disclosure: I do not own any shares of QQQQ, QID or SDS but my position might change anytime without notice.
Read more:Shorting
, Market
Starbucks - Down But Not Out 2007-03-06 00:20:00 Howard Schultz's memo to his associates shows his true mettle as CEO of a company that has seen its share price increase by 4400% since it went public in 1992.Recently, after hitting an all time high of $40 back in November, Starbucks
(SBUX) has seen its share price drop over 25%. Despite growing earnings at just under 20%, and with aggressive plans to expand in Asia, the stock is trading at 27 times 2007 earnings - a multiple not seen in over 4 years.While it is true that the giant coffee company might need to slow its plans for growth overseas and is seeing slower growth in the US, it is not uncommon for companies to run into a period of slowing growth. Indeed Pepsi (PEP) took a tumble from $53 to $41 in early 2002. Considering it was a $80 billion company when the stock took a hit, Starbuck's correction does not seem that serious in comparison.Back in April of 2006, I said this about my post titled Stocks for the Long Run :Starbucks (SBUX) - Here is some information about Starbuck
Down Market Was Predicted and it Finally Happened 2007-03-03 01:06:00 Back on February 7th, in my post labeled Market
s Marking Time, I said:Every month that the market moves forward gives me more reason to be less bullish. I am still cautious going into Feb and March and I recommend investors lock their gains before the selling hits - the market has to correct 5% or more before I can get all-hands-on-deck bullish. Back on that day, the Dow hit 12749 before closing at 12666. Today, a little over 3 weeks later, Dow closed at 12114, down 4.4% from the levels where I advised profit taking. The Nasdaq is down even further, down 4.9% .While I was right this time about the market direction, I was wrong about it from September through January, where on at least 2 occasions, I cautioned readers that the market had run up too much too fast. Just want to put that out there so you don't think I highlight just my good calls.What happens next? I mentioned yesterday not to trade this volatility and I maintain that you need to build your shopping list. Don't go shoppi Read more:Predicted
, Finally
, Down Market
Warren Buffet's Portfolio 2007-03-02 03:48:00 If you don't already know, WarrenBuffet
shared with investors, his 2006 Berkshire Hathaway portfolio today. The list only contains companies that make up at least $700 million worth of investment in his portfolio. New additions for 2006 were Johnson & Johnson (JNJ), Posco (PKX), Conoco Phillips (COP), US Bankcorp (USB) and Tesco. Following are his holdings: While a couple of undiclosed names are missing, there are a couple of things I would like to mention. First that as long as Warren Buffet
is ok, Berkshire Hathaway and all the stocks that are part of its portfolio will be ok. If something were to happen to Buffet (health wise), these stocks will be in some trouble. Until then, if you own any of these, you should be ok. The ones I lke from this group are USG (I have been bullish since the first time Buffet bought this), COP, WTM and PKX if you want to own anything from this list.-- Faisal LaljeeFull Disclosure: I do not own any of the stocks above except USG, but my position mi Read more:Portfolio
Don't Look to Day Trade the Volatility 2007-03-02 03:01:00 Wow what a day. Down 200, up a little and then finally settling a little below. What to make of this? I am staying put. No trades. As I said yesterday, wait for the market to figure out its direction. Add a few more names to your shopping cart. Above all, do not trade this volatility.-- Faisal Laljee
Read more:Trade
, Volatility
Create Your Stock Shopping List But Wait for Lower Prices 2007-02-28 16:18:00 The market could go down further today, or even recover a little and then sell off. Most traders might use the slightest recovery to sell what they didn't sell yesterday. After all, it is not everyday that 498 of the S&P 500 are down. Wait before you start buying and try to hold what you have . Meanwhile start making your shopping list. When the market goes down further, you might want to put your cash to work. Some stocks to consider for your shopping list are:Companhia Vale do Rio Doce (RIO) - best iron ore producer and one of the largest miners. Commodities are not dead.New York Merchantile Exchange (NMX) - derivatives and commodities are becoming easier to trade. This is the sequel to Chicago Merc (CME)New York Stock
Exchange (NYX) - largest stock market exchange. Down from $112 to $82 on no change in fundamentals. Stock is just above its 200 day moving average.China Mobil (CHL) - largest mobile company in China, huge market cap but still growing rapidly. Close to 300 million subs Read more:Shopping
, Lower
, Prices
How to React to This Carnage - Buy Dow Chemical 2007-02-27 21:18:00 The last 20 minutes has seen the Dow Jones Industrial Average drop 200 points on top of the 250 points that it was already down this morning. I am almost afraid to look at my portfolio, which I was admiring just last night. Unless you are a day trader, you could not have sold fast enough to prevent the carnage that your portfolio is seeing today.What to do? Stop trading!!. Stop panicking!!. Go for a walk, clear your head and go back to the reasons why you bought the stocks you bought. We are in panic mode and it needs to be turned off. Above all, do not sell here.On a side note, I am thinking Dow Chemical (DOW) looks attractive here.-- Faisal Laljee
Cyberonics Looks Depressed 2007-02-27 08:57:00 By some measures, Cyberonics (CYBX) is a volatile medical device maker. God knows the management have had their share of trouble with issues ranging from the options scandal to FDA approval of its core product, but things can't get much worse at these levels. Cyberonics makes a neurological implantable device that provides electric stimulation to a major nerve. This device is has been approved to treat epilepsy and depression. The latter application has generated controversy amid concerns the Food and Drug Administration granted approval in 2005 based on insufficient data. The Cyberonics VNS Therapy System consists of an implantable generator that delivers an electrical signal to an implantable lead attached to the left vagus nerve, a cranial nerve that extends from the brain stem through the neck to organs in the chest and abdomen. Stimulation of the left vagus nerve in the neck modulates various structures and alters blood flow bilaterally in various areas of the brain. device deliv Read more:Looks
, Depressed
Media Wars Part 2 of 2: Focus on Content and Easy Digital Distribution 2007-02-26 01:53:00 In the previous installment of this series, I blogged about how Walmart's entry into the video download market would not impact companies like Netflix and Apple.In this post, I will disclose the stocks that I believe are poised to succeed from the convergence of digital and traditional media.Yahoo (YHOO)I have been bullish on Yahoo for a long time, but only with limited success. Indeed until recently, when Yahoo surpassed the coveted $30 mark that it had flirted most of last year with, my call had been fruitless and at certain points even painful. With the current launch of Panama, and a management shake-up, Yahoo has nothing to lose and everything to gain. Once a dominant force in online search, Yahoo got beaten hands down by Google who came out of nowhere to grab market share that belonged to Yahoo. However, one needs to understand that while Panama will positively impact Yahoo's paid search capability and revenues, it has equally significant components in other areas of the online Read more:Focus
, Content
, Digital
Online Search and Shop Market: Google Faces Choppy Waters 2007-02-22 06:32:00 Being that I am a Market
ing professional in the financial sector, I have information that might be interesting to the analyst community regarding the online search business.As you are aware, Google
(GOOG) and Yahoo (YHOO) have cashed in big time from the mortgage boom. Direct lenders, conventional banks and lead aggregators like Lending Tree, Nextag and LowerMyBills.com have all paid top dollar to drive online traffic to their site. Keywords like mortgage and refinance have gone for as high as $20 to $30 per click during peak times.The spate in the mortgage business started last year with interest rates rising, ARM's resetting and consumers starting to default heavily. This was the tipping point that had a lot of real estate and mortgage investors worried. This year, the problem has been exacerbated further with HSBC's (HBC) recent announcement regarding a jump in delinquincies, New Century's (NEW)similar woes and Novastar's announcement just earlier today regarding no taxable inco Read more:Search
, Waters
Cubist Pharmaceuticals Wages War Against Bacterial Infections 2007-02-20 05:39:00 By Yahoo's definition, Cubist Pharmaceuticals (CBST) is a biopharmaceutical company, engages in the research, development, and commercialization of pharmaceutical products for the acute care and anti-infective markets. In other words, Cubist develops anti-biotic drugs to fend bacteria that resist existing anti-bacterial medicine.In U.S. alone, almost 2 million people get bacterial infections every year, of which almost 5% succumb to the infections. Bacterial
infections are a relatively smaller focus for biotechs and drug companies, who usually look to develop blockbusters that can rake in a few billion rather than the millions that Cubist is looking to bring in with their focus on the abandoned market of anti-biotics. Cubicin is the first major anti-biotic in over 13 years and is the most successful one of its kind ever, bringing in $350 million in revenue so far.On the flip side, CBST’s earnings have not always yielded the result investors have hoped for. The last 4 quarters have s Read more:Wages
, Infections
The KNOT - Bound and Gagged 2007-02-13 23:46:00 TheKnot.com (KNOT) reported earnings today and they were good. I mean really good. However, analysts were expecting higher sales based on the Wedding Channel acquisition from last year and the numbers were soft in that area. Internet companies are only as big as their sales and considering the stock's huge run this last year (over 100%), a pull back on the faintest of disappointment was inevitable.For those who remember, I had recommended KNOT back in July of last year around the $16-$17 level, and recommended profit taking around $28 a couple of months back. While the stock advanced into the low thirties this year, this pull back vindicates my move to sell. While the stock still remains a take-over candidate, the market looks a little weak - specially Internet. This stock will probably see $22 before $30. On a pull back to $22, I might considering buying, but it depends on how the rest of the market and sector is behaving.-- Faisal LaljeeFull Disclosure: I do not own shares of KNOT b Read more:Bound
Boston Scientific is Compelling at these Levels 2007-02-01 07:40:00 I think BostonScientific
(BSX) is headed to $20, so if you are an options player, this is a good short term play. I would sell it in two weeks if it does not get to $20.-- Faisal LaljeeFull Disclosure: I have long positions in BSX but this might change anytime without notice.
Read more:Compelling
Time to sell Abercrombie & Fitch 2007-01-09 21:25:00 Merrill Lynch recently upgraded ANF, causing the stock to move up $5 since the new year began. I have been bullish on ANF since June when I recommended it at $55 and if you had followed my advice, you would be up 37%. However, it is time to move out of ANF now. Inventories have been building and while Hollister remains a fresh brand with plenty of growth potential, I expect the stock to pullback.-- Faisal LaljeeFull Disclosure: I currently do not own any ANF, but my position can change anytime without notice.
Read more:Abercrombie
, Fitch
Take Profits on These 2006-10-24 20:55:00 Netflix (NFLX) is up huge today. I would sell it here. I recommended it back in June and if you bought it then, you are just barely breaking even. Admittedly, I didn't quite pick the best price to buy this one. Also, to the reader who asked me about Atheros (ATHR) the other day, sell into this strength. This is not the best group.-- Faisal LaljeeDisclosure: I currently do not own NFLX or ATHR
Monster Cramer 2006-10-21 03:41:00 I have been meaning to write about it for a couple of weeks now. I am told, however, that Cramer
beat me to it today and talked about it. Well I think it is going higher. I agree with him on this one. Stay tuned for a detailed analysis over the weekend.
Read more:Monster
An Apple All Year Will Make You 35% 2006-10-20 09:22:00 Apple (AAPL) announced earnings yesterday and boy they were great. The ever growing popularity of iPods seem to know no bounds with 8.7 million of these shipping in the most recent quarter taking the fiscal total to a whopping 39 million units. iPod growth over the same period last year was 35% -- quelling investor worries regarding slowing iPod growth. At its current rate, Apple holds 75% of the MP3 player market share despite competition from Sandisk, Creative, Sony and the forthcoming Zune. Frankly, I cannot imagine Zune toppling the iPod ? it is another Microsoft product and I expect it to have its share of problems.As if iPod sales alone isn?t an amazing story in itself, what really takes the cake is Mac sales. A record number of Macs were shipped this quarter, registering a 30% growth over this period last year, reaching record proportions never achieved before in the company?s 30 year history. Over half the Mac sales were to first time Mac buyers, which means that Dell and HP mu Read more:Apple
Apple Gunning for $100 2006-10-19 15:39:00 Based on their earnings last night, I am convinced Apple
(AAPL) is worth $100. More on this later today.
Read more:Gunning
The MySpace factor 2006-10-12 21:51:00 While everyone is talking about Google (GOOG) and YouTube, I would like to bring your attention to News Corp (NWS) and MySpace
.First lets consider what News Corp was before the buyout - an old media conglomerate with the lowest ranked of the big 4 networks (Fox), a second stream newspaper (New York Post), a low margin cut throat business in Direct TV and a string of other successful but far from their prime businesses.With the acquisition of MySpace over a year ago, News Corp made perhaps the single best investment that could have been made by a media company. They paid a mere $580 million for MySpace which pales in comparison to what Google just paid for YouTube. With anywhere from 20 million to 43 million "active" members (some even whisper 100 million but thats just ludicrous), the News Corp/MySpace relationship resembles the one between Time Warner/AOL - except that MySpace has an exclusive relationship with Google (and now YouTube) and most MySpace users are impressionable teens a Read more:factor
Retail Stocks Move Higher 2006-10-05 16:11:00 With the same store sales reports coming out strong, of the first 44 retailers to report September results, 32 topped analysts' expectations and 12 fell short, according to Thomson Financial. Both Zumiez (ZUMZ) and Abercrombie (ANF) up big today and over the last few weeks. I have been bullish on both of these for a while, so it is nice to be vindicated.-- Faisal Laljee
Read more:Retail
, Stocks
, Higher
Take a Second Look at Take-Two 2006-09-29 09:40:00 Take-Two Interactive (TTWO) has been the bad boy of the video gaming industry and has been punished severely over the last year for its adulterous indiscretions in Grand Theft Auto and the options scandal. Since last June, the stock fell a whopping 70% to a low of $9 just two months ago. Since then, it has bounced back and gained over 50% and currently sits pretty at under $15. The rollercoaster ride encountered by TTWO is typical of small caps, specially those that get enveloped in scandals.I believe that the stock has a lot more room to run. Here is why:For one thing, its GTA franchise still stands strong and is the yard stick which others like Eidos and others are trying to measure up against through ventures like Just Cause and Saints Row. Second
ly, all eyes are currently on Electronic Arts (ERTS), which I have seen everyone from Pat Dorsey of Morningstar to Jim Cramer speak favorably of. Meanwhile, TTWO has been left for the dead, with everyone still denouncing it. I like it becau
TheKnot.Com Breaks Out 2006-09-26 10:37:00 I recommended theKnot.com (KNOT) back in July at around $16.50. Since then, the stock moved had up to right below its all-time high of $21.67 and broke out beautifully today on more than twice the average volume. The stock closed at $22.07 and investors who got in at or after my recommendation have already seen gains of up to 40%. I believe the stock still has room to run but I recommend stop losses along the way.-- Faisal Laljee
Water is Thicker than Oil 2006-09-26 09:23:00 My posts are usually much shorter so I apologize for the length of this one. If you are here for the stock picks only and want to skip the lecture on Water, click here to jump to the part where I recommend stocks.Water is what some consider, the new oil. Even though 70% of Earth is covered with water, only 3% is fit for human consumption, of which two-thirds is frozen and largely uninhabited ice caps and glaciers, leaving 1% available for consumption. The remaining 97% is salt water, which cannot be used for drinking or agriculture. If all the earth's water fit in a gallon jug, available fresh water would equal just over a tablespoon.There is no more fresh water on Earth today than there was a million years ago. Yet today, 6 billion people share it. Since 1950, the world population has doubled, but water use has tripled. As I write this story, I googled the word "Water Shortage" and lo and behold, a story from Arab News popped up reporting on the current water shortage in Jedda. Consi
Yay For Yahoo 2006-07-24 02:01:00 As everyone who follows financial news in the US knows, Yahoo
(YHOO) delayed the launch of its new and improved ad platform (Panama), that is supposed to generate more revenues for the company back to Q1 of next year. The news was a major disappointment on Wall Street and that coupled with its in-line earnings, sent the stock down over 20%, leaving Yahoo's market cap at less than one-third to that of its biggest competitor - Google (GOOG).Is this an over-reaction? I think so. I think Yahoo is incredibly cheap and what most people do not realize is that Yahoo's earnings were in-line despite losing Microsoft as one of its search partners. At 20 times earnings, there have been very few times when Yahoo has been such a bargain, considering that quarterly revenues are up 33% over last year.Yahoo's current search market share in the US stands at around 28% while Google's is 44% and the trend seems to indicate that Yahoo might lose more to Google. However, the Panama launch, coupled with
Stocks to Buy from Warren Buffett's Portfolio 2007-03-08 20:58:00 Last week, I posted WarrenBuffett
's most recent portfolio. This week, I did some analysis to gage his cost basis for each of his holdings so I could figure out how much gain he is sitting on for each of these holdings as of right now. If you look at the table below, it is obvious that Buffett hardly ever owns a stock for less than a triple digit gain. So for investors who don't want to do their homework and want to shadow his moves somewhat, I have highlighted the ones that are recent additions to his portfolio that have not appreciated as much as much. What this means is that these stocks will probably do well over the next 3-5 years and could may well be his AXP, KO and PG. Do you think one of these is more attractive than the others? I'd love to hear from you.-- Faisal Laljee
Read more:Stocks
, Portfolio
, Warren Buffett
Media Wars - Response to Reader Comment 2007-03-08 10:28:00 Reader Linda N recently commented on my post titled " Media Wars Part 2 of 2: Focus on Content and Easy Digital Distribution "Faisal, I think you're missing some important points about VOD. Right now, I'm downloading independent films from Unbox, in about 40 minutes to my ZEN. I can watch on the train or plug it into my TV and watch in DVD quality. This allows me to watch sophisticated independent films, that I could only get from Netflix in the past, except now I don't have to wait for the mailman and I can take my content where ever I want. It's simple to use and less expensive that buying DVD's at retail stores. Amazon got it right with Unbox. The also have content from all the studios except Disney and I don't know many adults that care about Disney films anyway. ZEN is awesome - best quality image and awesome features not found on video iPods. HP will give Walmart a great platform for downloading and offer tons of titles not available on iTunes (who currently don't have any Read more:Response
, Reader
, Comment
Japanese Caterpillar Komatsu Bulldozes its Way to the Top 2007-03-10 00:44:00 Komatsu Ltd. (KMTUY) is a Japanese
entity that engages in the manufacture and sale of construction and mining equipment, industrial machinery & vehicles and electronics products. It is also expanding its businesses into other areas such as housing, transportation and logistics equipment. One could consider Komatsu the Japanese version of Caterpillar (CAT). The stock trades on pink sheets here in the US, but that should not deter investors looking to capitalize on the multi-year expansion currently taking place in Japan. In March 2006, the company reported an annual earnings increase of 77% over 2005. Komatsu is not an obscure operation that you've never heard of. In fact, it has been marketing its products in the US since the 1960's. In 1970, it established a North American operation and is the second-largest manufacturer and supplier of construction equipment in the world today with nearly 2000 employees just in North America. Lately, the company has been taking steps to strengthen Read more:Komatsu
Will the Sub-Prime Mortgage Issues Have an Adverse Impact on the Markets 2007-03-13 18:11:00 This is a question that most investors are pondering, including myself. Will Sub-Prime MortgageIssues
Impact our Financial Markets
in a Way not seen since the Enron scandal? While I am not sure of the answer, here is my point of view.It all started with HSBC warning of higher delinquincies in their mortgage business and was quickly followed by New Century (NEW) announcing that they would not make a profit for the foreseeable future. All that now seems so far away. Making a profit is the least of New Century's worries as higher delinquincies and controversial lending has prompted an investigation into its business, not to mention that the company's almost $3 billion market cap has been wiped out.Last week, Countrywide (CFC) stopped offering 100% financing. Option One and some others followed suit. If this tightening flow through to other areas of the finance spectrum, with auto makers and credit cards, it could spell the end of the fierce consumer spending seen in the US these last Read more:Adverse
, Prime Mortgage
USG is a like a Disneyland Rollercoaster. 2007-03-16 21:11:00 It happens so often that one buys a stock for the right reasons but sells them for the wrong ones. I make that mistake frequently, but with USG, I am going to keep reminding myself why I own it. Here is a stock that is practically flat since last summer, while the rest of the market has seen a significant move up. In December, the stock finally hit $58, up from around $45 in summer, only to fall back to $52 by January even in the face of positive market momentum. By February, USG hit $58 again but the market declines pushed it down to that coveted $52 level. Just when one would have expected the stock to stabilize for the next move up, the company frustrated investors by making a share offering of some 8 million shares at $48.60, so guess what, the shares are now at $48.60. Normally, this kind of behavior is reason enough for me to sell, and I often kick myself for doing so. This time around, I have actually written myself sticky notes and stuck them to my monitor Read more:Disneyland
, Rollercoaster
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