Category: Stock Pick of the Day


Stock Market Info – Varying Levels Of Awesomeness

Filed Under: Stock Pick of the Day by Bill — 1 Comment
July 14, 2009

Everyone gets their inside information or hot tips from varying sources.  However, when it comes to finding the best stock market info your source definitely matters.  Here are 3 sources of stock market information with their pros, cons, and my general thoughts.  Hey if you didn’t want my general thoughts why are you reading my blog?

Stock Market Info Tips:

  1. The Water Cooler Guy – When Fred from accounting tells you about his big score in stock xyz and wants everyone to follow what he’s going to do next in his stock market ventures you better listen, or should you?
    • Pros – The advice is free, if you’re both right you’ll be office heroes and you’ll get quality time with your boss giving his stock tips, and you don’t feel too obligated to follow one way or the other since it’s just Fred.
    • Cons – Office politics may make you feel pressured to follow along, Fred will likely only talk about his stock market wins, not his losses you get a skewed view of his choices.
    • Random Thoughts – If you want to invest in an office setting start a stock market investing club.  That way there is open discussion and time for facts not just boasting, with all the other benefits of the water cooler time.
  2. Investment Newsletter/Publications – From the Wall Street Journal to 1000 a month newsletters which ones are worth it?
    • Pros - Investment newsletters can give you insight that is unique and timely, critical to a good investment plan.  Also, you can learn just by following the thought patterns of the authors.
    • Cons – Too cheap of ones everyone gets the same info, too expensive and the stock market info drains too much of your trading account for you to make any money off of the information.
    • Random Thoughts – Don’t spend more than 1% of your trading portfolio on stock market information of any kind.  I know this is limiting in the beginning, but it will stop you from becoming a stock market tool junkie.
  3. The Internet – Forums, Blogs, and Search Engines – What else do you need?
    • Pros – Generally the price is right, even the exclusive forums aren’t usually more than $20 a month.  Often they have more expensive newsletters or other services tied to them, but you get to check those out on the sites before you buy. 
    • Cons – There is no good way to validate stock market info on the net since it’s not generally peer reviewed.  So you have to take any ideas with a grain of salt.
    • Random Thoughts – Use the Internet for learning how to think like a investor or trader.   Learn to make a trading plan, or how to calculated risk, but don’t just buy what others are buying, learn how to come to the conclusion on your own.
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DOW Stock Pick

Filed Under: Stock Pick of the Day by Bill — Comments Off
December 29, 2008

My last stock pick of 2008 will be Dow Chemicals.  This is a pure and simple dividend play.  Honestly not much more into it than that.  The closing on Friday was $19.64 (though for the record I’ll count closing of the day posted) with a dividend yield of 8.69%.

Sure we’ve all been pounded chasing a few falling knives before, but as noted in: http://seekingalpha.com/article/111955-dow-chemical-a-legitimate-high-yield-stock

the CEO of DOW stated in October’s earnings release:

Dow is the only company in the Fortune 200 to have paid its regularly quarterly cash dividend without reduction or interruption since 1912…That’s 388 consecutive quarters. I’ve said it before, but I want to say it again, we will not break that streak. [1]

Dow is bound to making it’s dividend payments.  Once it misses a dividend a pile of shares that have been held for decades will get released causing share prices to plummet, and who wants to be the CEO on the watch for that one?

In the chart above I swore DOW had a stock split I had to verify before I wrote this post.  Essentially DOW has only returned 2.9% per year since 1993.  Earnings in 1993 were about $2.02 a share excluding all the speciality business sales and breast implant litigation with a dividend of 21 cents a share per quarter.  The current EPS is $2.75 with a dividend of 42 cents a share per quarter.  So just counting earnings the growth of price and earnings are roughly in line (earnings grew at almost 2% per years) however, the dividend has been growing at 5% a year.  Future earnings outlooks according to Yahoo Finance is 7% per year for the next 5 years.  This kicks out a PEG of about 1. 

DOW is one of those companies I have wanted to own for awhile and it’s likely one I’d hold for awhile.  If you have a portfolio outside of your IRA or 401K I’d recommend it there as it likely will fall into the long term capital gain category with dividend income both of which are tax lowered than ordinary income for most investors.

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Stock Return – Review of All Stock Picks

Filed Under: Stock Pick of the Day by Bill — 1 Comment
December 14, 2008

Just so no one thought I wasn’t making suggestions and ignoring them I wanted to review the share’s return for each stock pick that I have made on Learn The Stock Market And How To Trade since its inception a couple of months ago.

Here’s each stock return compared to the DOW Jones returns and S&P 500 returns:

Stock End of Day Price Price Now % G/L S&P 500 SP % DOW                        DOW%
PFE 17.65 16.92 -2% 996.23 -12% 9447.11 -9%
WEN 3.97 4.28 8% 909.92 -3% 8579.19 1%
LOW 17.9 21.99 23% 899.22 -2% 8629.68 0%
BA 52.42 39.2 -25% 968.75 -9% 9319.83 -7%
COP 55.77 51.39 -8% 1005.75 -13% 9625.28 -10%
CAT 39.33 42.08 7% 851.81 3% 8443.39 2%
AIG 2.01 1.8 -10% 896.24 -2% 8149.09 6%
F 2.72 3.04 12% 876.07 0% 8635.42 0%
JNJ 57.25 57.25 0% 879.73 0% 8629.68 0%

(Click on a stock symbol to see the post where the stock was recommended.)

(Starting price was chosen for end of day on the day the stock was chosen.  This is because the vast majority of you read the site after the market has closed.)

Average G/L 0%
S&P Average -4%
DOW Average -2%
S&P Now 879.73
DOW Now 8629.68

As you can see, if you bought equal dollars in each of the choices you’d be about broke even right now compared to -4% for the S&P 500 returns or -2% for the DOW Jones returns.  Boeing (BA) has been my real dog of a choice (including in real life where they caused my company to have to slow down) and AIG is down compared to the market, though this isn’t unexpected.  I believe Boeing will come back if they ever get their 787 up in the air.

Lowes (LOW) has done very well as well as Ford, though expect Ford to be quite volatile for awhile.  If I was purely trading I’d probably take some profits from the F stock, but that’s hard to do in this blogging nature and I’ll go ahead and hold on to it.  I’m also very happy with how PFE has held up, being the first stock pick, and when either the stock market turns or some of their new products make it through testing I expect very good returns still. 

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JNJ Stock

Filed Under: Stock Pick of the Day by Bill — 3 Comments
December 12, 2008

Johnson & Johnson (Stock: JNJ) is a research and manufacturing company in skin care, wound care, nutrient and pharmaceuticals.  What I love about JNJ stock is it owns the type of brand names that people use to describe all products in the same category like “BAND-AID” AND “Tylenol” and they make LEVAQUIN, an antibiotic that saved my hide when I had a staph infection the other month.  These are the type of products that people will keep buying despite the economic hardships.  Even after of the Tylenol scare of 1982 where the market share of pain killers went from 35% to 8%, but bounced back in less than one year.  That’s brand loyalty! 

Now my favorite long term CAGR chart:

 

 

Looking at the chart JNJ is below the 2 standard deviation line for the first time since 1984 or so.  Also there is resistance along the 15.4% CAGR line (the current CAGR) around ’87 – 88 during the Black Monday time frame.  The stock price has held up incredibly well compared to the general market only falling 14% in the last year compared to the S&P 500 which has fallen 41%.  The real earnings are holding this stock up and when the market turns I believe it will float to the top and you can enjoy a nice safe 3.2% dividend while you wait.

JNJ Stock Technical Analysis:

 The price is still below the 50 day moving average, however it appears the lows are getting higher and higher showing weakness in the selling pressure.  While you may choose to wait for the price to break the 50 day it depends if you’re planning on trading this stock or investing in it.  My vote is this stock is a better investment.

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