Tuesday, May 04, 2010

BAGAKOAA May 4, 2010 Bargain Shopping Today


May 4, 2010 Bargain Shopping Today

I went shopping today at the lunch hour. Before I tell you about the great bargains, I wanted to mention that the ORP effect did not work today. The 11 minutes that President Obama was on TV this morning the market went from 10,897 to 10,923 which is a first as far my record keeping goes.

Ok here’s what I bought today. (remember I got stopped out of a few positions recently which created some investment cash) I reestablished a position in VXX the ETF that tracks the VIX. I moved a little late on this one but got in at 22.20. I was thinking it about it last week at 17.80. Coulda woulda shoulda. I like everything about Hasbro HAS at the moment so added to my position with some shares at 39.04. I had to buy more McDonalds on the dip at 70.56, which pulls my average price to about 67.55. I picked up more Starbucks at 26.17 bring my average price to 25.84. I picked more AAPL off the tree at 258.80 bringing my average cost to 202.03. (Smiley face emoticon here) In a bit of a gamble I added more CVX at 80.46 a share. That brings my average cost to 70.75. Currently CVX is about 6.1% of the portfolio and is my only energy stock. Cramer suggests being well balanced in our portfolios, but until the scope of the spill is determined and how it impacts the sector, I am happy having 6% in oil. And I bought more INTC at 22.60 bring my average price to 20.68. (Think I used the word I enough in that paragraph.)

You know I (There I go again) own TEVA and have been pimping here for a while. It is, (after tonight) about 2% of the portfolio. It got a glowing review by Cramer today in his subscription newsletter Real Money Silver. While I can’t share all of it with you I would guess he’ll do a minute or two on a Mad Money soon. In a nutshell they had a great earnings report this morning. Cramer thinks and I agree that forward looking statements were a bit conservative. This is one of Cramer’s biggest holdings. Generics (its stronghold) and its MS drug performed very well in the revenue category. But the MS drug really helped the gross margin. This is a good pharm bet, but do some reading and make sure you agree. The fundamentals are nice.

There are about a dozen portfolios I am directly or indirectly associated with and I have gotten a couple a calls and questions about what is going on. (Like I know?)

Here is a summary of some of those questions:

Can you briefly summarize all this stuff about Greece?

Sure they borrowed a bunch of money and can’t pay it back. Unfortunately, in order to pay it back they must become less of a socialist state, create real jobs, stimulate the service or manufacturing sector, become less bureaucratic and corrupt, and become more fiscally responsible. (Sounds familiar?)

What’s up with AAPL in the last few days?

Apple has had some wind taken out if its sale because the Justice Department is investigating whether their decision not to use third party software (Think Adobe Flash here) for their apps is anti-competitive. It is a witch hunt and the investigation has no merit. This 15 dollar drop is a good buying opportunity and if you have more cash I would. I’d suggest a stop at 248 in case I am wrong.

Should I dump my oil stock (In this case CVX, but would apply to all oil stocks except BP, RIG and HAL) because of the oil spill?

I would cautiously stay in CVX because they are not direct parties in the Louisiana Spill and there is some strong technical resistance at 79 a share. If the spill becomes a sector issue more than it is now and CVX breaks through 79 a share, the next support level is 69.50. I’d suggest a stop at 75.25 just in case.

What is gold (and silver) going to do with all the stuff going on in the news?

Concerns about Greece and Portugal (Spain and Italy are next), the naked bomber in NYC, gold and silver surprised me today as with all the euro zone chaos and the NYC car bomb issue metals should have rallied. The only thing I can figure out is that China announced a bit of cooling in their production which kicked the legs out of copper and that may have put some stinky on gold and silver for the day, just a guess. This coupled with another drop in the Euro making the dollar stronger lowering the relative value of the commodities weaker may explain the situation.

Why was Grainger down 3%?

Great Question. (I did a lot of homework before answering) There was no good reason for Grainger to take a hit today. 3% off GWW. I looked everywhere and can find no reason for the drop. Sounds like a buying opp to me. Got any more cash?

If any of you have any questions I would be more than willing to provide brief intelligent, ok somewhat intelligent, ok somewhat entertaining answers to your questions.

There were a couple of prognostications made by the blogs author (yeah, thats it, I’ll refer to myself in the third person so I don’t say I so much) yesterday and lets see how he did. (hey this is fun). If you remember, he said Merck would hit 77 a share and look for a 75 cent pop in the stock price. It reported 67 cents a share, but adjusted for accounting issues related to the Schering Plough purchase, the actually reported 83 cents a share. The stock was up 54 cents today. Wow this guy is good.

He also called PFE, Phizer. He suggested that the estimate of 53 would be missed by a couple of pennies. The author probably neglected to consider that some of the sales and profit from the Wyeth purchase would fall into this quarter. That revenue and profit kicked the earning up from a missed 40 cents a share to 60 cents a share. You can decide if this guy got it right or not. Oh yeah, instead of dropping like the author suggests, the stock finished up2 percent today (35 cents).

He also called CVS. The estimate was 58 cents a share and this Oracle of Orange County (Sorry Tim, let me borrow the title a moment) called it at 60 cents a share and viola it was 60 cents a share. This guy is really good. Unfortunately due to the pall (Butch likes that word) over the market it did not perk up as much as expected. I closed up seven cents.

Salve Lucrum


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