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jstratt

jstratt
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  • Gilead: A Growth Story [View article]
    Thanks I learned some details in this article.

    I am bullish on GILD and own several hundred shares. At the same time anything can happen as the relative large quantity of short sellers also think they know something.

    We are getting close to the midpoint of the 3rd quarter and my guess is that Sovaldi sales are continuing to grow in relation to its status as the 1st cure for a major disease in my lifetime.
    Aug 11 02:04 PM | Likes Like |Link to Comment
  • Is IBM Grossly Undervalued? [View article]
    Thanks for attempting a valuation!

    To try and match IBM with XRX is ridiculous however. XRX is a failed company propped up by government benefits administration contracts.

    I agree IBM is cheap as they have a compressed PE, a stable software and services business and the ability to buy back enough stock to meet the $20 2015 non GAAP earnings goal.

    That said they have a Hardware business that is liquidating itself long term leading to regular charges, higher risk and a management that makes incredulous statements which challenge managerial competency.
    Aug 11 01:45 PM | 1 Like Like |Link to Comment
  • Gilead Is Going To Make More Money In The Future [View article]
    Great article!

    I use a PE valuation method and was having trouble understanding the basis of the conservative valuation estimates.

    I will say that I like discounted cash flow in theory. However in this case the moving parts are more difficult to quantify than making an assessment on growth and future PE valuation.

    A final note would cast suspicion on valuations predating the latest quarterly earnings announcement. The huge increase in earnings has to have had an effect on future valuation. My suspicion is that those valuations will be revised upward.
    Aug 11 09:46 AM | Likes Like |Link to Comment
  • Bond Funds Continue To See Inflows [View article]
    Interesting perspective offered!

    I would offer that with Euro alternatives offering much lower returns an international flow into US Bond funds could be occurring.
    Aug 11 08:03 AM | Likes Like |Link to Comment
  • Disney's Super Heroes Will Make Your Investment Climb [View article]
    I have been amazed at DIS which analysts suggest has 10%+ growth as far as the eye can see.
    Aug 9 12:57 AM | Likes Like |Link to Comment
  • I Feel Like A Thief Buying IBM At Today's Low Valuation [View article]
    I held IBM for over 15 years before selling 2 years ago. I wait to get in and IBM is nearing my price in the $180-182 area. My analysis looks like this.

    It has been a curious 2 years with heavy losses to revenue and a management that lacks credibility. Major statements have been questionable and at times seem untruthful. As an example in the past year IBM has bought about $19 billion in stock and yet explains that the $10 billion increase in debt is all in the finance unit and they are really low debt.

    I could go on but anyone responsible for investing significant amounts of money has looked at the above and recoiled in horror. Meanwhile the stock is extremely stable as IBM buys practically every share offered.

    The above story has played out for 2 years and now IBM is trading for 9.4 x 2015 earnings. Meanwhile earnings have stagnated but with significantly reduced shareholdings EPS has risen by double digits.

    Roughly the Cash flow statement shows inflows of 17.2 billion Operating Cash Flow and $10 billion in debt. The outflows have been 18.72 in stock purchases, $4.04 billion in dividends and $3.8 billion Capital investment in business.

    The income statement shows the majority of the value is in the Software and Services area with hardware fracturing and liquidating in a slow manner. If I exclude hardware I see a 1% drop in revenue made up for by increasing margins and productivity.

    IBMs borrowing while an irritant at a time of declining revenue is more than sustainable. While debt increases debt is very low cost and accretive to EPS. Given the stability of cash flow and the ability to borrow I dont doubt IBMs ability to reach $20 in non GAAP EPS in FY2015.

    A conservative valuation given that assumption would be $20 X a 13 PE for $260. It wont be pretty or easy but it will be profitable. I think I can get IBM for $182 share by being patient. When people are bearish on the company, the industry and the market great opportunities can present themselves.
    Aug 9 12:17 AM | Likes Like |Link to Comment
  • General Electric Sees Africa As Its New Frontier [View article]
    Reality vs Ridiculousness

    I enjoy investing in companies that use their PR departments to try and deceive investors. GE is just a gold mine in that respect.
    Aug 7 03:51 PM | Likes Like |Link to Comment
  • Why The IBM-Monitise Deal Is Better Than The IBM-Apple Deal [View article]
    I congratulate the PR departments for putting together irrelevant Apple-IBM and IBM Montize discussions.

    The press has spent weeks babbling endlessly about nothing. Meanwhile IBM marches on and the stock drops.

    The real story may be that the IBM Systems and Technology (Hdwe) business is in rapid decline. Witness IBM offering a potential buyer for its chip unit $1 billion to take it.

    I have been very bearish on IBM for 2 years but I am moving to a neutral outlook. My best guess is when you remove all of the subterfuge IBM should be valued based on its non hardware businesses and their static revenue with huge cash flow.

    IBM is nearing a compelling enough value to take the risk.
    Aug 7 03:26 PM | Likes Like |Link to Comment
  • Finding A Regional Bank Stock Before Interest Rates Rise [View article]
    Interesting article!

    I like the strategy as it is a good time to consider upcoming financial opportunities. Like the author I have some favorite banks in mind.

    That said everyone sees rates rising long term. In the shorter term I question that and see continued pressure on the 10 year Treasury due to a lack of economic growth worldwide. Banks earnings are being compressed as we speak and we are nearing the midpoint of 3Q 2014.

    For me it is too early to formulate an exact price. I am more likely to wait for a bear scare and go for a higher beta more well known name such as RF.
    Aug 7 03:02 PM | 1 Like Like |Link to Comment
  • Earliest Phase Of A Bear Market: When Good News Becomes Bad [View article]
    Stand aside... Not!

    I tend to agree with the author on short term trend and see turbulence and even a drop. Still at the end of the year stocks will be higher. Even if I didnt feel that way I would never stand aside. I didnt in 2008-9 and I would not now.

    With a flattening yield curve I have underweighted financials and moved into some deep value plays in my opinion. Gone are JPM and C. In their place I put a $25.00 buy on GE and the market executed it about a week later. GE is frustrating to investors and thus was undervalued.

    Then VZ with a 10+ PE is deeply undervalued. The best illustration is that 2014 EPS est are 25% higher than 2013 results and the stock is 2% below last years price. All with an excellent yield and growth in revenue and productivity. I look to recapture much of that 25% plus dividend for an excellent return.

    Selling out of the market is rarely a successful way to invest and in a period of rising earnings that is especially true.
    Aug 7 10:49 AM | 1 Like Like |Link to Comment
  • Verizon: Is Tablet Growth Enough? [View article]
    I wanted to add an additional point!

    VZ 2014 EPS est is 25% above 2013 EPS and the stock price is down slightly over 1 year ago.

    I think that illustrates the valuation potential to be recaptured and add to the dividend yield.
    Aug 7 10:00 AM | Likes Like |Link to Comment
  • Bank Of America: All Clear Ahead [View article]
    What we have just witnessed is the end of the recovery period and the beginning of forward looking normalcy. It's been a long time coming.

    Unfortunately a flattening yield curve will impact bank profits in the near term. In the longer term BAC is an excellent value with growing business units and growing profitability.
    Aug 7 08:13 AM | 6 Likes Like |Link to Comment
  • Goldman Sachs: The 3 Biggest Stock Market Risks [View article]
    GS should have a more informed view than I. However when I view the 10 year below 2.5% and falling, interest rates do not appear to be rising.

    A base case for growth at a rate high enough to cause the rise in rates is also suspect. Europe, China and Japan are lacking in growth.
    Aug 7 07:38 AM | 2 Likes Like |Link to Comment
  • More Signs A Market Bottom Is Forming [View article]
    I suspect we will go lower in the market and I continue to plan for at least a 10% drop. The 10 year Treasuries across the world signal slowing growth and are compressing financial results.

    The only difference that makes for me is I lighten up on financials and reinvest in other stocks. I have eliminated JPM and C but kept a larger position in BAC. The DOJ resolution should help BAC but still with NIM declining we could have some turbulent weeks ahead.

    I could be wrong but a slow grinding market has spent a month turning and it would seem that it must have further to go.

    That said after being out of telecoms for a couple of years I am investing back into VZ which I believe should be valued above a 10.98 PE. I have a target price of $55 and with the dividend would get a 16.9% return.
    Aug 6 11:18 PM | 1 Like Like |Link to Comment
  • Bank Of America: The Bottom Feels Like It Is In [View article]
    I have a 1 year target price of $20 on BAC.

    Very quickly we will have restored the dividend, share buyback and the resolution of the DOJ litigation. For BAC the operational improvements and earnings power will begin to dominate valuation discussions.

    Unfortunately banking as a whole probably has some near term suffering from a very flat yield curve impacting profits. By the end of the year BAC will begin to shine. It has a lot of room to run with double digit returns for the next 3 years projected.
    Aug 6 04:20 PM | Likes Like |Link to Comment
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