At the end of December, we launched our Longterm Ratings Portfolio that revolves around our Longterm Ratings and financial analysis of companies on five-year projections. In today's update on our Longterm Ratings Portfolio and Longterm Ratings, we will be covering our performance so far, our changes in guidance and price targets in February, our current holdings, and some attractive positions that we believe look good in March and 2011.
Since our Longterm Ratings Portfolio's inception at the end of December, in two months, we have increased the portfolio 7%. At the end of February, we had recommended holdings in fifteen companies and had exited parts of five holdings and another full position. Our realized exits were half of our position in Big Lots (NYSE:BIG) for nearly 26%, 1/3 of our position in Dean Foods (NYSE:DF) at 17.19%, 1/3 of our position in First Solar (NASDAQ:FSLR) a 24%, our full position in a Short Sale in Green Mountain Coffee Roasters (NASDAQ:GMCR) at -32%, 2/3 of our position in SunPower (SPWRA) for nearly 21%, and 1/3 of our position in Trina Solar (NYSE:TSL) for nearly 21%.
Holdings we recommended in February to our members:
- General Motors (NYSE:GM) - We have a price target (PT) at $52 for the company and believe that GM is a great value right now. The company has a lot of undervaluation currently as they have a lot of sales potential moving forward and have not priced in many gains moving forward. We believe, with only 3-4% growth in operating income moving forward, the company has significant upside. Oil prices rising does hurt margins, but the company has moved into some important smaller markets. They have gotten very positive reviews on automobiles, and that appears to be translating into a rise in sales.
- Changyou (NASDAQ:CYOU) - The company, a Chinese online internet video game producer, looks to have a lot of upside moving forward after its 2010 IPO. The company has the most popular online video game in China, and they are introducing a new line of games in 2011 that should continue to help the company grow its market share. Additionally, the company should benefit from the growing Chinese internet market that should quadruple in the next five years as internet comes to more areas in China. We have a price target of $48 for Changyou.
- Take-Two Interactive (NASDAQ:TTWO) - In 2010, TTWO was the first year that the company was profitable without a Grand Theft Auto release. The company has a very positive lineup of games coming out in 2011, and it has shown that it can take its success in GTA and put it into other games like NBA2K11 and Red Dead Redemption, which were top sellers in 2010. The company has a low P/E ratio at 17, and they are a major takeover candidate. The company would get a major premium on its current price if bought out by an Electronic Arts (ERTS) or Activision Blizzard (NASDAQ:ATVI). We have a price target of $24.
- Buffalo Wild Wings (NASDAQ:BWLD) - We believe that BWLD is a potential short at this point and recommend a short holding in this company. The company is a bit overvalued at current levels, and we are worried about growth potential for the company. The company has gotten a lot of love after its last quarterly earnings, but we are afraid that the company's growth is going to slow over the next two years. They also face rising input costs and the company has a lot of growth already priced into the stock with a heftier P/E at 24. Our PT is at 38.
- Tata Motors (NYSE:TTM) - Tata is one of our most touted recommendations. We believe this Indian company has a lot of upside potential with its dual threat of global sales after its reinvention of the Jaguar and Land Rover line as well as its growth in India with its Tata Motors line. The company should benefit from global macro increases in automobile sales as well as growth in India. The company is well positioned in its own country, and they have a lot of upside after a rough several months for the Indian markets. We have a price target of $40.
- GameStop (NYSE:GME) - The retail video game company has lost a lot of love in the market. Many believe the company is dead with the rise in online games, Best Buy, and other video game retail locations. Despite its unfavorable take in the market, we are very bullish on this company. They have a very loyal group of customers, are integrating online video games into their website and increasing online sales, and have now one of the top five subscriber rate magazines with Game Informer. We believe as the video game market continues to grow GameStop will be a major part of it, and with a P/E ratio at 8.26, the company needs to do little to make its move. The company has a PT of $29.
Changes in Guidance and Price Targets in February
- Cree (NASDAQ:CREE): Reiterated hold, reduced price target to $50
- Ford (NYSE:F): Reiterated hold, increased price target to $18.50
- Frontier Communications (NASDAQ:FTR): Dropped from buy to hold, dropped price target to $10
- General Motors (GM): Initiated coverage at buy, price target at $52
- Green Mountain Coffee Roasters (GMCR): Reiterated sell rating, reduced price target to $21.50
- Johnson Controls (NYSE:JCI): Reiterated hold, increased price target to $37
- Paychex (NASDAQ:PAYX): Reiterated hold, maintained price target to $37
- Rosetta Stone (NYSE:RST): Initiated coverage at hold, price target to $11
- Ruth's Hospitality Group (NASDAQ:RUTH): Reiterated buy, maintained price target at $11
- Take Two Interactive (TTWO): Initiated coverage at buy, price target at $24
Positions Currently in Our Buy Ranges:
Companies We are Researching to Initiate Coverage on in March:
- Colonial Properties (NYSE:CLP)
- Jinko Solar (NYSE:JKS)
- Salesforce.com (NYSE:CRM)
- Tesla Motors (NASDAQ:TSLA)