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Portfolio Management 101

 
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  • Ford Sales Are Revving Up, Stock Still Has 25% Upside
    Sat, Aug. 9 F 22 Comments

    Summary

    • Trying to time an entry point can sometimes result in a missed opportunity.
    • Ford stock has had a nice return since April but it looks like momentum is building in unit sales.
    • Despite the recent pop in the stock, it still offers 25% upside.
  • Digital Realty Keeps Cruising
     • Fri, Aug. 1 COR, DFT, DLR 12 Comments

    Summary

    • Mobile data growth continues to drive demand for data management and storage resources.
    • Portfolio Repositioning for Digital Realty is about to gain steam in the second half of the year.
    • With the largest portfolio of Digital Centers, Digital Realty should be selling at a premium to peers.
    • Based on current FFO and expected growth in FFO in 2014-2015, the stock may hit $84.
  • A Breakdown Of Apple's ROE Tells A Cautionary Tale
    Editors' Pick • Mon, Jul. 21 AAPL 75 Comments

    Summary

    • ROE is an important metric that can provide investors with a company's ability to generate returns.
    • A high ROE is better than a low ROE but the trend and expectations of ROE are even more important.
    • While Apple's ROE has been very high, it has been on a downward trajectory over the last 3 years.
    • A Breakdown of Apple's ROE indicates what the driver has been and Apple's reliance on new product launches.
    • The trend can be reversed, but certain actions need to be taken by Apple.
  • Forget The Trains And Planes, Buy This Industrial REIT For A 20% Treat
       • Tue, Jul. 15 CSX, FDX, JBHT 35 Comments

    Summary

    • Economic expansion in the US should continue to benefit transportation companies and warehouse real estate.
    • Being positioned in some of the busiest ports in the US provides a competitive advantage for Terreno.
    • Despite its lofty valuation, the stock not only has upside but the potential for dividend increases as well.
  • Prospect Capital: With The SEC Issue Resolved, The Stock Has 50% Potential Return
    Editors' Pick • Mon, Jul. 7 ARCC, PSEC 34 Comments

    Summary

    • Prospect Capital had a run in with the SEC that scared away investors but the issue was accounting related and did not affect operations.
    • Despite not having to restate prior year financial statements, the stock merely recovered to pre-SEC issue levels.
    • I think investors are still taking a wait and see approach but the stock has substantial upside of 50%.
  • Resource Capital: 14% Dividend Yield Is Nice, But I'm Putting This One On Ice
       • Fri, Jul. 4 RSO 45 Comments

    Summary

    • Resource Capital operations in a very lucrative niche within capital lending.
    • Despite a big drop in one of the most profitable areas of its portfolio, it seems to be focusing on the right growth drivers.
    • Despite a 14% yield, there is just too much inconsistency in the fundamentals of the company, and the dividend may be cut further.
    • Until fundamentals stabilize, I'd watch this one for now.
  • Bristow Group: Deep Offshore Drilling Is The Catalyst For A High-Flying Stock
       • Wed, Jun. 18 BRS 21 Comments

    Summary

    • The leader in oil and gas helicopter transportation is not resting on its laurels.
    • The growth in offshore drilling has provided the company with additional growth opportunities and it is positioning itself to be a market leader in the space.
    • The current market price doesn't seem to be giving the company credit for the growth in earnings expected over the next 2 years.
  • CBL & Associates: A Detailed Look At The Transformation Reveals A Potentially Sharp Upside Move
       • Fri, May. 30 GGP, GRT, PEI 9 Comments

    Summary

    • Investors don't like uncertainty and in many cases, it is avoided like the plague.
    • Fortunately for smart investors, the potential risks and rewards of uncertainty can be evaluated and opportunities usually are greatest when uncertainty is highest.
    • The uncertainty of CBL's portfolio transformation is not well understood and it is currently trading well below its intrinsic value.
  • Dogs Of The Dow Strategy Working So Far. What Should You Do Now?
    Wed, May. 21 MRK, MSFT, PFE 9 Comments

    Summary

    • The Dogs of the Dow strategy is a defensive way to invest in equities.
    • The strategy has performed well thus far but there is no rule that states you must continue to remain invested.
    • To determine which Dogs to keep and which Dogs to sell, online analyst estimates can be used as an input into your decision.
  • Cohen & Steers: The King Of REITs Poised To Provide Investors 42% Annualized Returns
       • Fri, May. 16 BLK, CNS 12 Comments

    Summary

    • Retail investors are still wary of the 2008-2009 portfolio declines and are increasingly looking for ways to diversify.
    • The retail liquid alternatives space provides uncorrelated returns to traditional asset classes and has been growing rapidly.
    • The companies well-positioned in the space, either because of reputational advantages or distribution capabilities, will be the major beneficiaries of RLA growth.
  • Annaly: Can You Invest In It And Still Sleep Well At Night?
    Wed, Apr. 30 AGNC, ARR, FMCC 51 Comments

    Summary

    • Mortgage REITs have very unique risks that may be more complex than some Equity REITs.
    • Prepayment risks and interest rate risks are the primary risks faced by mREITs.
    • Understanding mREIT risks and how Annaly mitigates them should give you some comfort if you decide to invest in it.
  • IBM: Can This Old Tech Company Still Provide A 17% Return?
    Wed, Apr. 23 ACN, IBM 3 Comments

    Summary

    • IBM is the epitome of old tech.
    • Somewhat forgotten, it has reinvented itself as an IT services company.
    • While I have been fond of its competitor Accenture, I think the tables have finally turned.
  • Google Android Has And Will Continue To Dominate The Global Smartphone Market
    Tue, Apr. 22 AAPL, SSNLF, NOK 35 Comments

    Summary

    • Google Android has dominated the global smartphone market.
    • With comparable features to the Apple iOS, the only differentiating factor in developing markets is cost.
    • As the lowest cost provider in collaboration with many other players in the mobile ecosystem, Google is positioned to continue to dominate smartphones.
  • Facebook: A Great Company, But The Pullback Doesn't Make It A Great Buy Yet
    Mon, Apr. 21 EBAY, FB 57 Comments

    Summary

    • Great companies are relatively easy to identify but they can go through challenging periods and expensive valuations.
    • In Facebook's case, it is difficult to evaluate a proper price target because of its short history.
    • Relative to peers and optimistic estimates, the stock currently looks expensive.
    • The pullback may not be over, so investors would be prudent to wait until there is confirmation of another upward trend.
  • Citigroup: Valuations Are Cheap, But Patience Will Be Required
    Tue, Apr. 15 C 1 Comment

    Summary

    • Citi announced better than expected results, but the numbers seemed tepid.
    • Results for the company have been volatile over the last several years, and the turnaround is still not complete.
    • The implied fair value price seemed too high and severely optimistic.
    • With a more conservative valuation approach, the stock still looks attractive for a 12-18 month holding period.
  • Ford: Waiting Until It Hits $15 May Result In A Missed Opportunity
    Sun, Apr. 13 GM, HMC, NSANY 42 Comments

    Summary

    • Ford stock has corrected sharply along with the broader market.
    • On a YTD basis, it is still outperforming both the broader market and the peer group.
    • A price of $15 will certainly be a buying opportunity but there is a risk that it doesn't reach those levels before it reverses.
    • Investors interested in the stock should consider buying even if it doesn't reach $15, otherwise, a 30% opportunity may be missed.
  • Crown Crafts Inc.: Some Upside Potential But Revenue Growth Is Key
    Fri, Apr. 11 CRWS 3 Comments

    Summary

    • Birth rates are at an all-time low and are poised to reverse that trend and begin to increase again.
    • With the economy improving and consumer confidence rising, families are more likely to have children.
    • Crown Crafts is positioned to take advantage of this trend not only as a licensor of well-known themes, but also in positioning its company brand for a higher level recognition.
    • The question remains whether Crown can generate growth in revenues.
  • Microsoft Starts To Give Away Windows: Should Investors Give Away The Stock?
    Thu, Apr. 10 GOOGL, MSFT 11 Comments

    Summary

    • Investing in Microsoft has been a windfall for early investors who initially enjoyed price appreciation and now have a dividend to boot.
    • The war against Google is forcing Microsoft to reevaluate its strategy, and the stock has lagged recently.
    • There is still some moderate upside in the stock in the long-term, but potential downside in the short-term requires monitoring.
  • GE: The Recent 7% Pullback Is An Opportunity To Increase Positions
    Wed, Apr. 9 GE 6 Comments

    Summary

    • GE is one of the most diversified companies and has had solid financial results and stellar returns for shareholders over the years.
    • Over some periods, it may mimic the broader index because of its size and breadth of operations.
    • When the stock has a strong pullback relative to the broader index, it may indicate a good buying opportunity.
  • Hewlett-Packard Has Upside But Barron's Is Too Optimistic
    Mon, Apr. 7 HPQ 9 Comments

    Summary

    • Barron's recently published a bullish story on Hewlett-Packard claiming the stock has a 20% upside in a year.
    • Despite steady cash flows, HPQ has had declines in revenue.
    • The stock has the potential to rise substantially, but until revenue grows, it deserves to trade at a discount to peers.
  • Bank Of America: Not Just A Dividend Growth Story, It's Undervalued
    Fri, Apr. 4 BAC 15 Comments

    Summary

    • Bank of America's has recovered from the financial crisis and will soon have greater flexibility to implement shareholder-friendly policies.
    • Its dividend is expected to grow considerably over the next few years.
    • But dividend growth isn't the only reason to buy this stock. It has upside potential as well.
  • Barron's 10 Favorite Stocks For 2014 - 1Q Update
    Wed, Apr. 2 AAL, ABX, C 6 Comments

    Summary

    • Barron's Top Picks for 2014 were a diverse group of stocks from companies in different industries.
    • All of these stocks had analyst coverage whose opinions were as varied as they were inaccurate.
    • When evaluating stocks, even from well-known financial publications, do your own research and base decisions on your own opinion.
  • Google: Optimism Is Built Into The Current Price
    Tue, Apr. 1 XLK, VGT, TECL 8 Comments

    Summary

    • Google's growth story is amazing and investors who got in early probably experienced a once in a lifetime investment opportunity.
    • Google has provided returns in excess of 12 times the initial investment since its IPO and I wonder if it can do it again.
    • Despite very optimistic earnings growth projections, the stock looks slightly overvalued.
    • A shortfall in earnings could adversely impact the projected returns on the stock and cause a sharp correction.
  • Slower-Growing Apple Is Still A Buy
    Tue, Apr. 1 AAPL 21 Comments

    Summary

    • Apple has had phenomenal revenue and earnings growth over the last 15 years.
    • Over the last 3-5 years, growth has slowed considerably for Apple.
    • Despite slower growth, Apple stock has meaningful return potential.
    • The value for shareholders going forward may come more from dividend growth than earnings growth.
  • Buying Aristocrats Can Result In Long-Term Dividend Growth
    Fri, Mar. 28 T, XOM, JNJ 34 Comments

    Summary

    • There are companies that have historically been able to sustain growth in dividends over long periods of time.
    • While past performance is not an indication of future results, these companies are well managed and are financially stable.
    • Finding the right companies with high probability of continued dividend growth may be beneficial in the long run.
  • General Growth Properties: Is Being #2 A Competitive Advantage?
    Editors' Pick • Sat, Mar. 22 GGP, SPG 1 Comment

    Summary

    • General Growth is the second largest mall owner, but instead of trying to catch #1, it is actually getting smaller.
    • It is 'recycling' its portfolio to focus more on higher end malls with sales per square foot above $650.
    • Will this be enough for investors and is this a good time to invest?
  • Simon Property Group: Are 2 Birds In The Hand Really Worth More?
    Editors' Pick • Thu, Mar. 20 DDS, GGP, JCP 5 Comments

    Summary

    • Simon Property is the premier regional mall owner in the US.
    • The recent announcement to spin off part of its business may present an interesting opportunity.
    • Depending on your investment style, Simon may or may not be attractively priced.
  • How Networking Helps Digital Realty Distance Itself From The Competition
       • Sun, Mar. 16 DLR 26 Comments

    Summary

    • The Network Effect Can be a powerful competitive advantage.
    • A first mover in any industry can establish a network effect.
    • Digital Realty has used the network effect to become the leader in its industry.
  • Intelligent REIT Shoppers Should Wait Until Kimco Goes On Sale
    Editors' Pick • Mon, Mar. 10 KIM 5 Comments

    Summary

    • Consumer confidence is rising which should bode well for Retail REITs.
    • Kimco Realty is going through a strategic change that should keep it well positioned to capitalize on consumer trends.
    • Unfortunately, Kimco has limited upside due to its current fair valuation.
  • Mortgage REITs: Proceed Without Fear
    Sun, Mar. 2 AGNC, AI, ANH 72 Comments
  • RLJ Lodging Distancing Itself From The Competition: Watch For Strong Dividend Hikes
    Mon, Feb. 24 H, HST, AHT Comment!
  • Emerging Markets Deserve Some Portfolio Love Too
    Editors' Pick • Mon, Feb. 10 AAPL, ACWI, C 3 Comments