| DON'T BUY | | General Motors Corporation | GM-N | 28.210 | Under certain statistical valuation parameters General Motors (GM-N) and Ford (F-N) always look very cheap but the balance sheets really scare him. Significant amount of debts. Also have pension and benefit obligations. When you couple that with having competition with very well capitalized and very competent companies it makes it a very tough environment for them. | 2008-01-31 | |
| DON'T BUY | | Ford Motor | F-N | 6.640 | Under certain statistical valuation parameters General Motors (GM-N) and Ford (F-N) always look very cheap but the balance sheets really scare him. Significant amount of debts. Also have pension and benefit obligations. When you couple that with having competition with very well capitalized and very competent companies it makes it a very tough environment for them. | 2008-01-31 | |
| BUY | | Valero Energy Corp | VLO-N | 59.060 | The refining industry is a difficult one, but they don’t build any more of them. Fairly cheap on a Price/Sales and Price/Earnings level. Would prefer a high dividend yield. | 2008-01-31 | |
| DON'T BUY | | eBay Inc | EBAY-Q | 26.890 | His problem with this is he thinks it’s a busted market darling. Its biggest problem from a valuation perspective is its Price/Sales ratio. Trading at 5X sales and recent results have been disappointing. | 2008-01-31 | |
| DON'T BUY | | Apple | AAPL-Q | 135.360 | Trades at about 5X sales. Very strong balance sheet but it is a very high multiple for a consumers electronic company. | 2008-01-31 | |
| BUY | | Furniture Brands International Inc. | FBN-N | 9.550 | Very low priced sales ratio. Just cut the dividend from $0.16 a share to $0.04 a share, which could be a sign of a turn around. Very strong balance sheet. Forecasting earnings for 2008 above what analysts were expecting. There has been insider purchases. Tremendously undervalued. Can see an upside in furniture in the next housing cycle and there will be one. | 2008-01-31 | |
| Comment | | J.C. Penney | JCP-N | 47.350 | Retail sector in the US has been beaten up. It’s at levels where valuation is starting to look fairly reasonable at around 50% of revenues and 10X earnings. | 2008-01-31 | |
| DON'T BUY | | General Electric | GE-N | 35.360 | Starting to show up on his screens, mostly because of its yield. Reasonable PE and 3.5% yield. He tends to not invest in really large companies because the law of large numbers makes it difficult for them to grow at a rapid pace. He has always been concerned about the black box of GE finance. | 2008-01-31 | |
| TOP PICK | | Starbucks | SBUX-Q | 18.910 | Thinks really painful markets when combined by a stumble can create really attractive entry points. 1.5X sales and 20X earnings are multiples that he is comfortable with. Great growth prospects ahead of them. More international potential. | 2008-01-31 | |
| TOP PICK | | Masco Corp. | MAS-N | 22.930 | Makes products that are used in home renovations and new house construction, which is a negative news back drop right now. This and the weak market have led to a 50% decline in the share price. This is a company that’s been around for 50 years and know how to manage the housing cycles. Yield of about 4% and have increased the dividend for 48 straight years. | 2008-01-31 | |
| TOP PICK | | Allstate | ALL-N | 49.220 | Bad times for financials but less so for insurance companies. At under $50 it is yielding a little over 3%. Have increased the dividend every year they have been public. Had started with 900 million shares but through buy-backs they are now down to about 563 million. 1.3X book and about 8X earnings makes it a good valuation. | 2008-01-31 | |
| DON'T BUY | | Nike Inc | NKE-N | 61.330 | A great company and not all that expensive. Trades at about 1.5X sales and 20X earnings, which is more than he would like to pay. Recent lows might have made it a good Buy. The kind of company you want to put on your Watch List. | 2008-01-31 | |
| BUY | | Brown Shoe Company Inc. | BWS-N | 17.190 | Trades at a very low price/sales multiple. | 2008-01-31 | |
| BUY | | Foot Locker | FL-N | 13.690 | Very cheap. | 2008-01-31 | |
| BUY | | CitiGroup | C-N | 28.170 | Basically believes that the banking system will muddle through this problem. A basket of these financials with the yields they’re offering can be a very effective way to invest. Buy in measured proportions. | 2008-01-31 | |
| BUY | | Bank of America | BAC-N | 44.150 | Basically believes that the banking system will muddle through this problem. A basket of these financials with the yields they’re offering can be a very effective way to invest. Buy in measured proportions. | 2008-01-31 | |
| BUY | | Wachovia Corp | WB-N | 38.470 | Basically believes that the banking system will muddle through this problem. A basket of these financials with the yields they’re offering can be a very effective way to invest. Buy in measured proportions. | 2008-01-31 | |
| BUY | | Bank of Montreal | BMO-T | 56.750 | Basically believes that the banking system will muddle through this problem. A basket of these financials with the yields they’re offering can be a very effective way to invest. Buy in measured proportions. | 2008-01-31 | |
| HOLD | | General Electric | GE-N | 40.120 | Not certain that this stock is cheap. The market cap is approaching $400 billion making it difficult to generate excess returns. Reasonable dividend and reasonable price earnings multiple. Would not add to your holdings. | 2007-07-20 | |
| TOP PICK | | Furniture Brands International Inc. | FBN-N | 12.620 | One of the leading furniture companies in the US. Exposed to the housing sector. Negative trading pattern. He is pretty sure the furniture industry in the US is going to have a positive period. The valuation is compelling. Deals they have a strong enough balance sheet to weather a prolonged housing weakness. | 2007-07-20 | |
| BUY on WEAKNESS | | Johnson & Johnson | JNJ-N | 61.790 | On his watch list. Nice diversified large cap situation. Decent dividend yield. A good mix of business. Would like to buy below $60. | 2007-07-20 | |
| DON'T BUY | | Rite Aid Corp. | RAD-N | 5.910 | Likes where management is going. This is a risk/reward situation and a turnaround story. Trades at a reasonable price/sales ratio, but has a lot of debt on the balance sheet. Made a large acquisition, which was too large for his liking. | 2007-07-20 | |
| TOP PICK | | Whole Foods Market Inc. | WFMI-Q | 39.320 | Perfectly positioned in the long-term trend towards wealthier consumers paying more for better quality food. This one is the leader in the consumers’ mind. Likes its multiple of 1 X sales. A long-term hold. | 2007-07-20 | |
| DON'T BUY | | Exxon Mobil | XOM-N | 91.940 | Can’t see enough growth in the stock price in the future. Dividend yield under 2%. | 2007-07-20 | |
| TOP PICK | | A. Schulman Inc. | SHLM-Q | 24.450 | Manufactures plastic resins. Trades for about 40% of revenues. Likes Price/Sales ratios below 50%. Strong balance sheet and decent dividend. 2/3 of its operations are European and profitable. 1/3 is N. A. and unprofitable and the company is not recognizing tax benefits on losses. Assuming they turn it around, current earnings are understated. New product line is coming out, which is not reflected in the current stock price. | 2007-07-20 | |
| Comment | | CitiGroup | C-N | 50.730 | Prefers the US banks. | 2007-07-20 | |
| SELL | | McDonalds | MCD-N | 52.090 | Fully valued. Generating impressive same-store sales growth. | 2007-07-20 | |
| BUY | | Sears Holdings Corp. | SHLD-Q | 153.340 | One of the cheaper retailers and the Sears brand is a great brand. Just had a rough quarter, which created a buying opportunity. Sells for about 50% of revenue while Target (TGT-N) sells for about 1 X sales and Penney’s (JCP-N) is at about 85%. | 2007-07-20 | |
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