Unemployment above 8% for 9 months now, talks of a "Fiscal Cliff" approaching and all the European debt crisis news, it is very hard for most to have serious thoughts about investments evident by our record low bond interest rates. The markets are in for a volatile few months ahead. The one bright spot since 2008, corporate profits, should begin to decrease as companies are forced to re-invest their earnings into workforce and future growth. These days, investors are happy with return of principal on their investment.
With record low bond and certificate of deposit (CD) rates, the stock market is where long term investors need to be.
Fact: You lose money by investing in CDs. If the inflation rate is at the Federal Reserve desired 2.5% for the year and a CD earns you 0.25 percent (sadly accurate these days) you are losing 2% of you money. I understand those that like the comfort and safety of a guarantee, but dreams are not made from guarantees. If your interest rate is less than the rate of inflation, you are losing money!
Why choose stocks over mutual funds? Stocks carry greater risk because, unlike mutual funds, when you purchase an individual stock, you are investing in that particular company, so your money fluctuates with the company's finances. More risk, but much more reward.
Seattle businesses have been on the cutting edge of the future for the past 40 years. Now more than ever, investors should look to Seattle-headquartered businesses for future growth and returns on capital. Here are a few stocks I have been following over the last quarter and have reason to believe they are great investment opportunities.
I call this group of stocks my Seattle Fab Five. Consisting of Boeing (NYSE:BA), Coinstar (NASDAQ:CSTR), Costco (NASDAQ:COST), Starbucks (NASDAQ:SBUX) and Zillow (NASDAQ:Z), all five are Seattle-headquartered companies. Seattle is one of the leading edge cities of the future when it comes to technology and business ideas.
Boeing - Boeing currently has a share price of $73.71 with a modest 1.33% decrease in price since the 1st trading day of 2012. Since 2007, Boeing has an average rate of change of $469.9 Billion per year indicating consistent healthy growth. With the expansion of the aerospace industry, a lower Price to Earnings Ratio when compared to competitors and a respectable dividend of 2.46% annually, Boeing is a great investment for those looking to secure long term growth with a healthy dividend return.
Coinstar - Owner of the DVD Kiosk RedBox, CoinStar has seen the best forward earnings of all the stocks I follow. Shortly after the announcement to increase Kiosk prices in September, CSTR has increased in price from $39.23 to currently 67.01 at the end of trading today. That is a 57.20% return on one's investment since the end of September. Not saying there wasn't a lot of volatility and stomach turning in the price range. CSTR carries a lot of volatility and for those who like safer investments; I would wait until they announce their quarterly earnings to initiate any type of position in the company. Since March, Coinstar seems to be finding support around $57.00. The slow-stochastic shows the stock is in a down trend be it temporarily. This stock is a true MUST WATCH! Every $1000 invested in September would be worth $1572.00 today. Coinstar, like Seattle, is a very adaptive company and is looking forward making home DVD entertainment more convenient with their proposed partnership with Verizon (NYSE:VZ).
Costco - Great earnings potential, and the name itself speaks enough. Has seen an 13.66% increase since 03 January 2012. Recently set a record high and will pass it again in the near future. Great company, great earnings, higher P/E ratio indicating more volatility and consistent growth. Not a strong dividend stock but with above of 13% so far this year, not a big deal. I would classify COST in the Boeing type of stock for those who like safer investments.
Starbucks - My favorite stock in regards to potential. Since Jan 03, 2012 SBUX has seen a growth rate of 12.44%. Could be in for a rough couple of months but offers the best value. CEO Howard Shultz continues to lead SBUX into new avenues as well branch off into different entities. SBUX has many products in the pipeline and is almost like a recession proof product. So far this year, SBUX seems to be finding support around the $51.00 a3q10tewwwwwwwwwwwwwwwwwwwcdrea. Those looking for a stock with tremendous growth potential, look no further than this stock right here!
Zillow - This stock right here is a very volatile stock. Zillow specializes in the mortgage industry. For those who haven't been to the website, go check it out Zillow.com. So far since Jan 03, 2012, Zillow has returned an astounding 84.44% on one's investment. Extremely high P/E ratio of 324.4 indicating extreme volatility within its price as well as hopes for the company's future. One bad earnings report could send this stock back down into a nose dive so be very careful. In saying that, I have high hopes for this stock and would look for an entry point around $32.
Seattle has been and will continue to lead the growth of small businesses in America. There is a reason why a large share of major corporations begin in Seattle, because of its friendly business atmosphere. Invest in Seattle!
It's easy to look back in life and think what could have been. As an investor you will have to take risks and instead of hearing about people, I would recommend getting in the game. The main thing that separates a rich person from a poor person is there willingness to be patient and take away instant gratification.
Remember, all investments carry some sort of risk. There is no such thing as a guaranteed return, and those that claim that, I would be very wary of.
Disclosure: I am long SBUX. I currently have no positions in COST, BA. I may initiate a position in CSTR and Z within the next 72 hours.