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Ray Merola  

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  • Where Do Analysts Stand On Bank Of America? [View article]
    Edi222

    Thanks for the call-out. I'll have to look at the earnings report tomorrow with an eye on the ARI charge (or lack thereof). I cannot recall if that was one of the myriad "adjustments" rolled into 2015 1Q operating earnings.

    This will be another acid test: can BAC management start putting together an earnings report without a whole bunch of adjustments? See Wells Fargo for how a bank quarterly report should be compiled.

    I'm expecting a ho-hum report tomorrow. However, ho-hum will be an improvement and a big YoY jump. All Bank of A management has to do is to get out of their own way.
    Jul 14, 2015. 12:58 PM | 4 Likes Like |Link to Comment
  • Where Do Analysts Stand On Bank Of America? [View article]
    On a P/E basis, it would seem BAC could command a 13x multiple if the company can muster any kind of earnings consistency. This means going several quarters without some sort of embarrassment or mishap. If so, a $21 stock is possible.

    However, I'd cross reference this with a P/Book valuation. Better yet, a P/Tangible Book. Gold standard Wells Fargo has a 2.0x P/TBV. Could BAC earn even a 1.4-1.5x handle? If so, at least a $21 target is possible: tangible book was $14.79 at the end of March. In recent quarters, this figure has been rising, not falling. We will get another update tomorrow.
    Jul 14, 2015. 11:11 AM | 4 Likes Like |Link to Comment
  • Celgene: Is This Range Bound Stock Ready To Go Higher? [View article]
    Thank you for a concise, well-written and informative article about Celgene. Likewise, I have been bullish on the shares for some time now. The pipeline is strong and deep. Management is experienced and gets results. The shares are not expensive when viewed through the lens of the out years.

    The risk-reward profile appears highly asymmetric.

    Long CELG.
    Jul 13, 2015. 08:23 PM | 3 Likes Like |Link to Comment
  • Caterpillar Still Held Back By Weak Commodities [View article]
    Having owned CAT shares since 2010, I finally closed the position.

    Over the years, I accumulated / distributed shares on the cycles; though never closing out the position, adding income with short calls / short puts, and reaping the dividends. Through the period, buying ~$80 and selling over $100 proved a reasonable approach.

    The commodity cycle tea leaves just doesn't add up for me now. Suspect there's easier places to make money.

    However, immediately after closing the position I sold short puts at $80 and $77.50. If the stock falls below those levels, I'm willing to dribble back in.

    Will continue to monitor the company and the shares. I have some nagging doubts about CEO Oberhelman, too. Nonetheless, strong operating cash flow and the dividend helped the investment thesis.
    Jul 13, 2015. 01:18 PM | 2 Likes Like |Link to Comment
  • Aflac - The Advantage Of A Stagnating Stock Price [View article]
    Ditto your comment, David

    Typically, cherry-picking an investment-return time frame indicates the need to make a point: however, as you suggested the point often becomes poor valuation methodology at the time of purchase, or stretching the facts to fit a thesis.

    I purchased AFL stock in early 2012 at prices below $50. Now at ~$61.50, I'm sitting on a decent capital gain, but another return aspect embedded in your comment is the concept of total return: this includes dividends.

    Aflac is a Dividend Aristocrat: one of about a hundred select companies that have increased cash dividends for at least 25 consecutive years. If memory serves me, AFL is working on 32 years.

    Dividends are a key return component when evaluating securities. Since the 1920s, I believe just under half of the market's total returns are comprised of the dividend.

    Finally, Aflac remains undervalued via several metrics: P/E is one. The other is Price/Book. Post-financial crisis, a number of financial sector stocks have not recovered near the pre-crisis multiples. Even after including a significant margin of safety, Aflac still appears undervalued.

    Accumulating shares during times of excessive undervaluation, and reaping the dividend often provides the patient investor solid long-term returns.

    Long AFL.
    Jul 10, 2015. 01:26 PM | 12 Likes Like |Link to Comment
  • United Rentals Represents Solid Value After A Market Overreaction [View article]
    zito

    Company management cannot comment during the "quiet period" leading up to the earnings release.
    Jul 9, 2015. 09:28 AM | 1 Like Like |Link to Comment
  • United Rentals Represents Solid Value After A Market Overreaction [View article]
    The vicious decline appears overdone. A management comment about May sales snowballed into a 23% peak-to-trough bear-market crater for the shares.

    I was bullish on the stock at $92, and continue to be so today. I purchased additional shares after the May swoon.

    Currently, I plan to wait until after the 2Q earnings release (July 22) before making additional moves; follow the release carefully, then potentially accumulate more stock.
    Jul 9, 2015. 08:36 AM | 4 Likes Like |Link to Comment
  • An Assorted List Of Mojo, Catalyst, Overhang And Contrarian Stocks For 2015 - Mid-Year Review [View article]
    You've got a good idea there, moseslarsen

    If NUE yields 4%, it's a very undervalued security. I encourage close review of the 2Q earnings report, paying particular attention to operating cash flow.
    Jul 8, 2015. 02:12 PM | 2 Likes Like |Link to Comment
  • An Assorted List Of Mojo, Catalyst, Overhang And Contrarian Stocks For 2015 - Mid-Year Review [View article]
    Thanks for reading, jhesr

    I remain bullish on AT&T. It's also a reasonable stock to own in a down market: big dividend and pretty solid base earnings. I don't see folks here shutting down their cellphones, and going dark internet over Greece and China.
    Jul 8, 2015. 02:11 PM | 3 Likes Like |Link to Comment
  • An Assorted List Of Mojo, Catalyst, Overhang And Contrarian Stocks For 2015 - Mid-Year Review [View article]
    That is uncanny, markone

    Likewise, I purchased additional Nucor shares a few pennies above $43. GM's price action is absolutely horrendous. I guess traders are fretting the China stock market implosion will crater auto sales and destroy GM earnings.

    I believe June saw ~4.5% increase in China sales. That needs to be verified.

    During times of market volatility, I tend to do very little. Just read and watch. Especially with earnings reports around the corner, I don't plan to try to game the market.
    Jul 8, 2015. 02:09 PM | 2 Likes Like |Link to Comment
  • Annaly Capital Management And The Guide To Book Value Vs. Earnings [View article]
    Another excellent article, CWM

    Question: NLY shares are trading well below book. This hasn't been the case throughout most of its existence. At what point should one consider selling Annaly (or a mREIT in general) on over-valuation?

    Would a P/Book much greater than 1.0x be a yellow flag?
    Jul 8, 2015. 08:25 AM | 2 Likes Like |Link to Comment
  • The Battle For Williams Heats Up [View article]
    What facts and valuation metrics lead you to believe ETE is an overvalued equity? Based upon cash flow, I think ETE sells below Fair Value.
    Jul 7, 2015. 09:47 AM | 1 Like Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    BG Group produces gas, but also some oil complicating isolating purchase price / mcf. Using $70 billion acquisition cost, and the data on the link found below, it appears Shell may pay ~$5.80 boe for proven, discovered, and probable reserves; and ~$23 boe for proven reserves. Please double-check my math.

    http://bit.ly/1G1hn4I
    Jul 5, 2015. 09:39 AM | 1 Like Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thank you, warno1

    Having a good family Texas BBQ today, and wishing you all a safe and happy Independence Day, too.
    Jul 4, 2015. 12:44 PM | Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Mark

    I truly appreciate the encouraging comments. Thank you.

    I learn a lot from my readers, too.

    Happy 4th of July.
    Jul 3, 2015. 09:18 PM | 1 Like Like |Link to Comment
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