Friday, October 16, 2009

BAGAKOAA October 16 Friday wrap up.

BAGAKOAA;


October 16 Friday wrap up.


Wow, I am still reading the Cramer book, still plugging away at those retail stocks and there is so much going on in the market, I couldn’t help but to drop another note in the BAGAKOAA bucket.

 
I still have GILD as I bought it as part of my swine flu trifacta (GSK, BMY, and GILD), back in May. GILD reports next week, but RHHBY reported strong sales for Tamiflu which GILD receives a nice royalty from. I and my son used to own RHHBY but I took profits earlier in the year to get into these three. This should hit Q4 expectations for GILD which should play nice for next weeks reporting. Besides swine flu issues, GILD is well positioned against other type flu, a closely watched HIV drug, and Q1 2010, the hypertension drug Darusentan. It is trading at just over 15 PE with solid growth, at last check a strong ROE, and a healthy balance sheet. Of the three, it is my worst performing as I am even. The other two are up 14 and 10 percent. Do your homework, but this looks well positioned.

 
Everybody is talking about GE. Q3 profit is down 44%. Yeah I am real surprised. I was in earlier this year and after I actually looked at the voluminous 10Q report I got out with about 70 cents a share profit in July. This stock is a 6 dollar stock at best SEE THE JUNE BAGAKOAA note from earlier this year. How could anybody be surprised? Buffet and the Prince from Abu Dahabi are OK because they have a 10% guaranteed preferred position. We should all have that.

 
How about a stock with top line growth. GOOG had 1% top line growth. Net income is $5.13 a share. After some accounting adjustment this was a real beat of the analyst’s expectations by more than 50 cents a share. Benchmark, Barclays, Bernstein and FBR are all upgrading. Target prices are being adjusted up to 620-680 a share. It’s up 21 bucks a share, about 4%, but I would think that will settle aa little by the end of the day. I do own this and my average price is 468 a share.

 
IBM is getting whacked pretty good right now as their revenue and profit were disappointing. It did raise it’s total year earnings expectations. Most of the analysts are saying hold and 12 month target prices are in the 140ish range. I am very close to stoping (118) out. My average cost is 102.61. If I stop out I will wait a bit and get back in. Please protect your gains on this one if you have it.
 General Dynamics is getting some very positive air play. I tripped over them last night doing homework on FLIR, see yesterday’s BAGAKOAA late night edition. I will do the homework and let you know on GD.

 
BAC, as you know I am out, but several of you hold this beast. So here is a heads up. I hope you put the stops in last week as I suggested. It down 4% as of a few minutes ago and it is rightly earned. They were well below expectations and there is a lot of grey clouds around the financials of this Bank. Despite Cramer trying to put as much lipstick on this pig as possible, I can’t go with him on this one. It has to improve its credit costs, reserves, and watch the scary non performing loans. They did improve somewhat but only marginally. I can’t show much of what Cramer had to say this morning without plagiarizing while boring you to death, but in a nutshell, be patient is the message. My suggestions is, if you got out when I suggested, wait for an entry point of about 14.50. This has the makings of a 30 dollar stock by Q4 2010, but is not cheap at the moment.

The market is off its low for the day and it might have something to do with the positive Industrial Production report from a few hours ago. One more sign that we have something of a recovery going on.

 
Ok back to crunching numbers. BTW, Jack, my son and I went for a walk last night and he got me thinking of a new promising sector. Let me do some homework and I’ll let you know about it.

Salve Lucrum









2 Comments:

Blogger PADI Americas (west coast team) said...

I’m still hanging on to my GE as a looooong term hold. Hope I’m not making a huge mistake. Hey it pays a dividend and they have to get un-mired one day, eh?

What do you think of person-to-person direct lending (not sure what you’d call it). The website is: http://www.prosper.com/

October 16, 2009 at 12:41 PM  
Blogger J.J. Phineaus said...

Dear PAWCT;

Great question. But first, let’s visit your comment on GE. You are younger than I and long term is long term. However if you have some profits and you AGREE that the stock is overvalued and some if its core components are crap (GE Captial, NBC, Aerospace), if it were me 15-20 years younger, I’d take the profit and put a limit buy back in at 5-10% off the current price. If Q4 09 surprise, which even the CEO is saying won’t happen, you can get back in. You are smart, so do yourself a favor and listen to the conference call and listen to the CEO and management tell how bad the company is at the moment, then decide.

I have been a lender in prosper for about 3 years. My suggestion would be to look at it as a giving program not an investing program. There are some great rates of return and in some cases you get your money back. If you do it, do it knowing you may not get your money back but you might be helping a Pastor get his bearing after loosing his wife to cancer, or getting a semi-undeprividged kid who was resourceful enough to post something on Prosper to get a year at a technical school to learn a trade. It is a benevolent but risky place to park your money.

October 16, 2009 at 2:55 PM  

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