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Samuel Talkington's  Instablog

Samuel Talkington
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Seeking my undergraduate degree (BA) from The University of Washington with a concentration in Finance. Very interested in fixed income markets and equity markets.
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  • Seattle Fab Five: BA, CSTR, COST, SBUX, Z

    With all of the negative news coverage about our fiscal future it is very hard for most to have serious thoughts about investments evident by our record low bond interest rates. These days, people are happy with return of principal on their investments.

    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. The uncertainty within the European Union (NYSEARCA:EU) and China's economic slowdown is only adding fuel to the fire in most investors' opinions. Oh and did I mention the tax increases as well as our national deficit. Where is one to turn with his money during these tough times?

    Yes, this is a global economy we live in so business and fiscal decisions made overseas greatly effect American businesses bottom line. The EU matter will be sure to take the market on a "tremors" type of a roller-coaster ride. China's current economic growth rate above 10% is clearly unsustainable and in some ways can be damaging to their future. An economic growth rate between 2.5-4%longterm is a "healthy" economic growth rate. That is just what is going on overseas.

    As for back home, government proposed year-end tax increases as well as our over $15 Trillion dollars in national deficit will by all means be heavily discussed but likely avoided as we try to recover from our recession. The rumor of Quantitative easing third round is the "fix" the market is hoping for and by some indications already pricing in. So much uncertainty in today's market is leaving all of us scratching our heads.

    Fact: You lose money by investing in CD's. How you might ask? If the inflation rate is at the feds desired 2.5% for the year and a CD earns you .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 stock 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.

    Here are a few stocks I have been following over the last quarter and have reason to believe they are great investment opportunities. 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 weary of.

    I call this group of stocks my Seattle Fab Five Consisting of Boeing (NYSE:BA), Coinstar (CSTR), Costco (NASDAQ:COST), Starbucks (NASDAQ:SBUX) and Zillow (NASDAQ:Z); all five are Seattle Headquartered Company's.

    Boeing (BA) - Current share price of $71.71. % increase or decrease since 01 Jan 2012 -4%. Since 2007 Boeing has an average rate of change of $469.9 Billion per year indicating consistent healthy growth. With the expansion of the Aero Space 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 (CSTR)- Owner of the DVD Kiosk RedBox, CoinStar has seen the largest growth out 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 70.81% 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 $1700 today.

    Costco (COST)- Great earnings potential and the name itself speaks enough. Has seen an 11.56% increasesince 03 Jan 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 growth of 11% 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 (SBUX)- 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 range. Those looking for a stock with tremendous growth potential, look no further than this stock right here SBUX!

    Zillow (Z)- 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 dollars.

    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.

    I currently have no positions in COST, BA. I May initiate a position in CSTR and Z within the next 72 hours. I am long SBUX.

    Disclosure: I am long SBUX.

    Jul 12 10:00 PM | Link | Comment!
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