From time to time, a Seeking Alpha user comments on an old article of mine. That brings it up into "My Feed" and prompts me to take a look. This morning, a new SA member made his or her first comment on an article I wrote back in January, 7 Stocks That Will Not Bounce Back In 2012:
I can only assume the reader takes exception with the inclusion of Staples (SPLS) on that list.
In this article, I review the 7 bearish selections, look at where they are today and consider the ones where my sentiment has shifted.
|Company (Ticker)||Closing Price, 1/13/2012||Intraday, 4/25/2012||Change|
|Radio Shack (RSH)||$9.90||$5.31||-46.4%|
|Best Buy (BBY)||$24.29||$22.06||-9.2%|
|Hewlett Packard (HPQ)||$26.49||$24.51||-7.5%|
First, some quick thoughts on one where my sentiment has not changed - Arbitron. I'm a bit befuddled as to how and why this stock could possibly increase in value.
Clear Channel (CCMO.PK) accounted for 19% of Arbitron's revenue in 2011. This would not be as much of an issue if Arbitron was not effectively a collection of yes men and women to the terrestrial radio industry.
There's no doubt that as a direct result of its reliance on terrestrial radio, particularly Clear Channel, for revenue, Arbitron dislikes Pandora (P). In one breath, it criticizes Pandora's method for measuring the size and habits of its audience, yet Arbitron has finally gotten around to kind of, sort of acting like a member of the 21st Century.
In Arbitron's most recent annual report, the company notes that it is not "exploring opportunities" to measure multi- and cross-platform behavior. Fantastic. It's about time. I wonder, however, how Clear Channel will react as Arbitron collects data that clearly shows how very dead broadcast radio actually is. Consider the following from an Arbitron panel study on smartphone use:
The top 5 apps are Facebook, Google Search, YouTube, Pandora radio and Yahoo Mail.
Not a big shocker, but don't expect Clear Channel's iHeart Radio to pop up on the list anytime soon.
At day's end, Arbitron is a dinosaur indebted to a dinosaur industry that came about two decades too late to the innovation party.
My sentiment has not changed on the three retailers. You can check my article history, particularly on BBY and RSH, for more on that. Start with: 3 Real Reasons For The RadioShack, Best Buy Death Spirals
On HMC and TM, I missed the ball. Simple as that. Looking back, I should have realized that overall strength in the auto industry would lift both companies. But, more than that, there was almost nowhere to go but up after both Honda and Toyota hit relative bottom following the horrible earthquake and tsunami in Japan.
Even though it's down, I have changed my tune a bit on HPQ. While I would not necessarily make a large buy of HPQ right now, I would consider scaling into a position and, once large, enough, writing covered calls against it. As much as I would have disliked her as governor of California, I have no problem with Meg Whitman as a CEO. She gets it. And she proved this on the company's last quarterly conference call back in February:
It took us a while to get into this situation in which we find ourselves. It's going to take us a little while to get out. And if you look at history, these turnarounds are not done in less than 2 years, and often they take 3 or 4 or 5 years. So I think you've got to -- and by the way, you'll see, obviously, forward progress before 5 years, of course. But we've got a journey ahead of us. And as I said, it took us a while to get into this, it's going to take us a while to get out.
We need to keep driving innovation that generates desire and demand with our customers. The fact is that for all that's right with PSG, we underinvested in innovation for the last several years, and we've been late to market too often. We have to lead again.
Granted, it sounds like something she might have said on the campaign trail, but it's all true and refreshingly candid. Research in Motion (RIMM) old and new leadership could learn a lot from Meg.
Whitman's mention of "3 or 4 or 5 years" might spook some investors, but it should not if you're a long-term investor. She speaks a lot like Amazon.com's (AMZN) Jeff Bezos. Now the question that's left to ask is can she execute like he does. The jury's still out.
As noted, I like to slowly accumulate a position in a stock like HPQ. It pays a dividend. While it's modest, it still yields about 2%. And once you have a large enough position, it's a nice candidate for covered calls - weekly or monthly. By scaling over time, you should not end up over-committing yourself to the stock, provided you have other, larger core positions surrounding as well as a couple other more speculative plays.
In summary, I would sit tight on the automakers and retail stocks for now. As much as I despise most retail outside of Amazon, stocks like RSH and BBY have experienced considerable falls. Dead cast bounces could be in order. I would buy puts on ARB if its options market was more liquid. And I intend to open a starter position in HPQ this week or next.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HPQ over the next 72 hours. I am long P.