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A successful fund analyst continuously striving to maximize Alpha. Many years of experience in asset management, along with a great deal of knowledge in equity research . I have a firm belief in financially strong companies in order to outperform the market. I typically formulate my portfolio... More
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  • The New Year Can't Come Any Sooner
       Various companies have seen a drastic sell off as the year 2010 comes to an end and the year 2011 approaches. Fund managers of all types are getting out of positions where they have realized exceptional returns. This should be looked at more as an opportunity to buy rather than a time to short these stocks

    Some examples include:

    Ulta Salon (NASDAQ:ULTA) has seen a 91% year to date return but during the last month has seen a 10% pull back by investors. The growth in this company is still intact since management has made it clear that in 2011 they will open numerous stores nation wide. With an ROE of just under 20% and a future PE of just 24 as compared to its current PE of 34, my valuations suggest this company as a 2011 continued growth stock.

    Netflix Inc (NASDAQ:NFLX) is another company that has seen significant growth during the 2010 calendar year. Netflix has realized a 235% return year to date but has seen a sell off of nearly 10% over the last month. This DVD movie rental company should be able to sustain its growth due to the emergence of their online streaming packages. The cutting of costs should be able to make up for the loss of customers that will look for other alternatives. Also the consistent revenues that Netflix generates should tell you how good this company is, in turn leading to another great campaign for management in 2011.

    Zagg Inc (NASDAQ:ZAGG)
    Any company associated with Apple products has a good chance of becoming successful. Zagg makes all types of products for Iphones, Ipads, and many of the hot technology products on the market. Zagg has realized a 94% return year to date but as of the last two weeks they have seen a 12% decrease in its share price. The company is innovative in their production line and has reached out to mobile companies like Verizon to sell their products in stores. Look for the slight drop in share price to turn around and for shareholders to see significant growth in 2011.

    Coinstar (CSTR)
    has seen its share price increase by 108% year to date but as the year has come to an end the stock has dropped 13% over the last month. The company is known for its innovative products such as the coin counting machines located in grocery stores along with its booming DVD movie rental segment known as Redbox. The stock is currently trading at 44 times earnings and the forward PE is forecasted at around 20 times earnings. They have exceeded quarterly estimates each time for the last three or four years and will look to continue this streak. They have healthy financial statements and with their plans for 2011, look out for a Netflix type surge.

    Conclusion: Investors need to be aware that a trend is a trend and a good company is a good company. All of the companies listed above have three things in common, they are Efficient, Convenient, and Innovative, something all companies should strive for. All four of the companies have realized significant growth over the last year and fund managers are taking the profits to boost year end portfolio returns. Do not look at the recent losses as anything more than short term pull outs because the future looks bright for every single company on this list. 

    For detailed information regarding each stock, I have research reports available at request.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 24 3:14 PM | Link | Comment!
  • An Industry Defined By Change
        The movie rental industry has gone through numerous transitions this decade. The industry has tranformed from brick and mortar businesses to having three main components, rentals via kiosks, video on demand, and subscriptions. All three have grown rapidly over the last few years and are projected to exceed those recent trends.
        Ten years ago Blockbuster and Hollywood video commanded the movie rental industry with ease. Presently, Hollywood video is bankrupt while Blockbuster is coming out of bankruptcy and attempting to make an unprecedented return. Blockbuster's management fell into the trap of business procrastination, they were on top of the industry but allowed companies like Netflix and Coinstar to squeeze their way in. Redbox has seen a growth in market share from Q3 in 2009 to Q3 in 2010, from 18.8% to 27.9% respectively. Blockbuster and Hollywood videos market share has decreased from 26.9% in Q3 2009 to 18.5% in Q3 2010. The change occured because consumers preferred more convenient ways to rent, which ultimately led to the bankruptcy of the most prominent rental companies.

    What we see now...

        Netflix has recently announced that they are going streaming only which means they will be cutting costs from postage use and will realize a positive change in inventory costs. The sudden change in its business strategy seems extremely pre-mature but they have set themselves in good position for 7-10 years from now. Redbox has announced that they will have a streaming partner in the near future and it is clear that they are in good shape in this industry. With Netflix going streaming only Redbox will be able to scoop up those who prefer hard copy movie watching, along with offering a streaming package later on. Blockbuster is attempting a diffcult comeback using kiosks with a similiar structure to Redbox. It seems like they have not learned from their previous mistake and are jumping into a business model that has already been mastered.

    The historical rate of return for the studio business is around 13% per year, which the trend is likely to increase as digital creates new opportunities for the disturbution of films. Making videos online offers significant growth possibilities. Companies like Skype and YouTube, offer online services and approimately 80% of revenue comes from outside the US. Therefore it is smart for companies like Netflix and Redbox to develop a strategy for online viewing.

    With the downfall of B&M the 18% market share that was held is for the taking and there will be many winners. Coinstar has a reputation of adapting to the needs of the consumer, Netflix has a simliar reputation but has not been around as long, Blockbuster is the only company that has had a troubled past and needs to go through this transition wisely if management wants to survive.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I analyze companies and industries and give my opinions. I try to make it simple for the reader, instead of using terms they do not understand
    Tags: OUTR, NFLX, BBI
    Dec 22 5:28 PM | Link | 1 Comment
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