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jstratt

jstratt
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  • My Top Company For Income And Capital Gains [View article]
    I just wanted to add a little perspective on JNJ

    Retirement investors should strongly consider JNJ as it is a special opportunity of a combination of revenue growth, earnings growth, lower risk, good dividend and the stock is widely owned, all at a fair value.

    Over the history I have followed JNJ of 30+ years it tends to go up methodically with each quarterly earnings report. When a market correction of 20% has occurred JNJ would be off 10% typically.

    I mention this because the past 5 years has obscured the longer term pattern. JNJ did have a horrible CEO for several years until about 2 years ago when Gorsky took over.

    a few observations

    - purchase at this time would likely yield 2.9% (est 2.90 dividend after increase/$99)

    - PE based on 2014 earnings est is $98.96/$5.88= 16.83

    JNJ has been a top portfolio position since Gorsky took over.
    Apr 19 09:07 AM | Likes Like |Link to Comment
  • IBM's Latest Quarter In Charts [View article]
    I dont see a justification for IBM stock to be at $190. Given a continuous decline I think $175 is a more realistic valuation.

    As IBM continues to raise its debt to buy back stock it will have to cut back stock purchases and the share price will likely drop.
    Apr 17 10:01 PM | Likes Like |Link to Comment
  • General Electric's Fair Value Is $35 [View article]
    I hope the author is correct!

    I do question however a 2nd article from an anonymous writer (in 24 hours) with a high dollar target for GE.
    Apr 17 01:18 PM | 2 Likes Like |Link to Comment
  • What Exactly Is Risk? [View article]
    Thanks for an interesting article Larry!

    Where would one find the Riskanalyze tool you suggest?
    Apr 17 01:08 PM | Likes Like |Link to Comment
  • IBM Finally Breaks Out: The Earnings Update. [View article]
    Nice Article Alex!

    Let me lay out some concerns regarding IBM

    Essentially IBM is borrowing money to buy back shares in huge amounts at the same time revenue and profits are falling. I think they said they spent 8 billion in the quarter and ttm FCF is 10.43 billion.

    So the question becomes how much you believe in management when they are pushing all the chips onto the table?

    Revenue is clearly alarming with a 4% drop on top of last years 5% drop in the quarter just reported. I do agree revenue is not the best measure of company success or failure however.

    After over a decade as an long term investor I removed IBM from my portfolio last year. I did trade after that buying in the $170s and selling in the $180s.

    The dividend theory in the article should mention that IBM doesnt have unlimited cash and has debt near $40 per share. If I were leading IBM I would not grow the dividend when I may need the cash in an industry transition.
    Apr 17 10:11 AM | 1 Like Like |Link to Comment
  • Why General Electric Is Heading To $32 [View article]
    This is the type of article that is suspicious as it is written by someone who doesnt own or intend to buy shares. Further it takes a one sided positive view without any attempt at a balance.

    This morning GE announced a better than expected 15% decline in earnings to .33 from last years quarter .39. Further this year earnings are expected to be flat over last year at $1.70.

    As an investor I am frustrated by a GE that is BBB rated and slowly pondering how to recover from a recession 6 years ago. The company recognizes this and apparently is evaluating changes in leadership.

    The risk I see to GE of not acting is that activist investors will enter and GE will be broken into pieces. I would prefer that GE not try to spend 3 more years trying to recover from the recession.

    Shouldnt an investor put GE in a class with HON and BRK and ask which offers better performance potential?
    Apr 17 08:55 AM | Likes Like |Link to Comment
  • Bank Of America Is Not A Solid Investment For New Money, And Litigations Continue [View article]
    I just thought I would weigh in on BAC.

    - The litigation issues are no longer a threat to capital levels and will have a much lower impact on share price going forward.

    - I thought the quarter just reported was not an easy quarter for banks in general and BAC in particular as Mortgage activity was down and flat share prices didnt help the Merrill unit.

    - if you read the company conference call significant ongoing cost savings are taking place

    - the past 5 years have been all about raising capital levels, litigation and dealing with problem assets. BAC is entering a new period.

    - book value was $20.71 before the latest release and it should trade at book or above in the future.

    My overall conclusion is that BAC is a powerful generator of cash with Operating Cash Flow of $92.82 bil at last count. It is fairly valued and having met long term capital levels will begin deploying capital to help build value.

    If you are worried about asset risk the reality is that BAC is about as low risk today as they will ever be. I say that because in spite of some things you read or hear they dont really have much lending risk to consumers or businesses. Further after 7 years of government investigations and litigation (2008-2014) most of what remains is deminimus.

    I am not a huge fan of the bank in many regards but as an investor it is a fair value, and I own shares and consider BAC a buy at the current level.
    Apr 16 09:16 PM | 3 Likes Like |Link to Comment
  • International Business Machines Corporation misses by $0.01, misses on revenue [View news story]
    Sadly I dont know why anyone expected a different result. IBM has been hemorrhaging each and every quarter with this CEO.
    Really the board needs to be held accountable for IBM performance. They either pushed out or allowed Palmisano to leave because he hit a certain preretirement age. When a CEO is a consistent performer it is a mistake to puch them out.
    The stock should not have been priced higher than $185 going into earnings anyway. Given this management team you have to subtract 10% of valuation.
    My concern is that IBM may be severely damaged before the Board acts.
    Apr 16 08:06 PM | 2 Likes Like |Link to Comment
  • IBM Earnings Preview: Focus On Revenues For Indications Of Future Growth [View article]
    This will be an interesting quarter for IBM. I am not brave enough to hold IBM shares as I havent a clue what to expect. The year ago quarter was a disaster with a 5% revenue drop so perhaps the comparison will be better this year.

    To expect a revenue increase does seem fanciful however.

    A complete disaster would be if IBM reports poor results and violates its $20.00 sh earnings goal.

    A strong showing would be at least flat revenue, with solid earnings and after years of irrelevance Smarter Planet or Watson actually begin to look like more than a marketing ploy.

    I really think IBM is worth $188 per share prior to earnings. A probable range after earnings would be from $172-$205.
    Apr 14 11:14 PM | Likes Like |Link to Comment
  • Citigroup higher after beating estimates [View news story]
    My guess is that C should have kept their allowance reserves rather than recognizing them as profits.

    The real positive is that 3rd world issues apparently havent severely affected C profits.
    Apr 14 08:26 AM | 2 Likes Like |Link to Comment
  • The Coming Week: The Start Of A New Bear Market? Evidence And Real Danger Signals [View article]
    Lots of people want to write about a correction. Maybe we will have one! But since everyone has already concluded we are in a correction I will opt out.

    It is not that we shouldnt have one. Its not that the market isnt tired. It isnt that banks are going to turn in good performance. It is just that easy money appears to be staying easy or getting easier across the world.

    As an investor I am just happy to own some of the best companies in capitalist history. Just like I have been for the past 35 years.
    Apr 13 08:59 PM | Likes Like |Link to Comment
  • Honeywell: A Safe Investment For Defensive Investors [View article]
    Good article!

    Some thoughts...

    - As a holder of HON it is hard to believe it can continue to rise rapidly as it has for the past 5 years. Nothing rises forever

    - Hon delivers and a 14.7 forward PE is very tempting as is 16.32 x 2014 earnings

    - I do wish HON had more FCF

    - What other industrial increases revenue by 8%+

    - Dividends with 10% growth rate and only a 34% payout

    It does make me wonder why I also invest in GE?
    Apr 13 08:51 PM | 1 Like Like |Link to Comment
  • Assessing The Recent Stock Market Damage [View article]
    It wouldnt surprise me to see a correction but I think people are getting a little crazy suggesting that 4% is a huge move from the highest SP500 moment.

    A couple of good earnings reports and it could be off to the races again. I say that because investors are largely drunk on gains and anticipating buying more shares at any pullback.

    Its ok with me if UsedToiletpaper.com cant go public next week!
    Apr 12 10:06 AM | 1 Like Like |Link to Comment
  • Debating Michael Lewis' 'Flash Boys': High-Frequency Trading Not All Bad [View article]
    I find this issue fascinating for many reasons. I became aware of flash trading in 2008 when it became known that HFT's make money every single day in a month or all but perhaps 1 day in a quarter. Then it became known that Congress had passed laws allowing the theft of trade information and prices through HFT.

    What is fascinating is now that everyone is aware in a national consciousness what will happen?

    My guess is that not much will change. Congress legalized theft for campaign contributions. In an era of unlimited campaign contributions the only realistic expectation is for a delay in future theft legislation.
    Apr 11 10:25 AM | Likes Like |Link to Comment
  • Bank Of America, JPMorgan Kick Off Upcoming Mega Bank Results [View article]
    I just wanted to comment on JPM and why some other banks might be better investment choices. Sometimes we have to read between the lines and JPM may be an example.

    JPM has been forced to adjust its business by the government is the conclusion from all the litigation. Shifting assets away from regulators to London and making huge commodity bets is out. The media love affair with Jamie Dimon has cooled only slightly.

    My question is what is the impact from forcing JPM to change. Analysts have done a poor job of covering JPM and failed to even cover the London Chief investment office until the London whale fiasco as an example. They failed to even notice huge commodity bets with any relevance.

    I am not suggesting JPM is a bad investment just that poor coverage of JPM by media has left investors short on knowledge and thus other banks may be better investment alternatives.
    Apr 11 09:33 AM | Likes Like |Link to Comment
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