Tuesday, July 13, 2010

July 13, 2010 When you’re good, you’re good


July 13, 2010 When you’re good, you’re good

We just got back from the All Star Game. Yawn! But I was thrilled to hear this afternoon that Intel topped top line and bottom line estimates. Sunday night we called the 43 cents a share income estimate soft and went way out on a limb and said 50 cents a share. Now when you look at that it’s only 7 cents a share right? How hard could it be to best an estimate by seven cents a share? Well in the case of Intel it would mean having to generate $389,200,000 more in profit as the have 5.56 Billion shares outstanding. Well they actually produced more than $444800000 of profit that expected or 51 cents a share. There was a nice 2% jump today and if you were insightful enough to do the homework and bought the January 2011 20 dollar call mentioned here in the blog in May (about the 24th), you should be in a position to consider taking some profit here.

We also suggested YUM was going to disappoint. We did not get that correct, at face value. They reported a 58 WHEN CORRECTED for a one time charge. Without the correction they would have hit 50 cents a share. We suggested a disappointing 52 cents a share. I’ll let you decide if we got that one right. The market took it as a good report which we did not expect and the stock was up 2.14%. So contrary to what we were thinking, MCD was up, the sector was up and there was no buying on the dips.

We initiated two new positions today before the market opened. Do your homework as these are speculative stocks. One is the Israeli defense contractor ESLT Elbit Systems LTD. I am easing into this and though we had a good day, will look for small dips or flat days to add to the stock. Elbit Systems Ltd. develops, manufactures, and integrates defense electronic and electro-optic systems primarily in Israel, the United States, and Europe. The company involves in military aircraft and helicopter systems; helmet mounted systems; commercial aviation systems and aero structures; unmanned air vehicle systems; naval systems; land vehicle systems; command, control, communications, computer, and intelligence (C4I) systems; electro-optic and countermeasures systems; homeland security systems; electronic warfare (EW) and signal intelligence (SIGINT) systems; and various commercial activities. They have little debt sexy fundies, decent free cash flow, and took a 20% hit when the Turks were trying to get materials into the Gaza Strip because it was a regional geo political issue. The theory is that the Turks won’t by from Elbit anymore. Read their filings as they do less than 5% of their business in Turkey. They major customer are (besides Israel) is the US and the UK. This has the making of an 82 dollar stock. Its forward looking P/E ratio is 9.69. It normally trades in the S & P Average Range of 14-15. Do the math. Even on the low end, it should be a 74.48 cent stock. Please do your homework as this one looks too good to be true so I may have missed something. Anyway I’m in and I have my stops in place.

The other one I have to give Cramer Credit for. PNG PAA Natural Gas Storage is a publicly traded master limited partnership engaged in the development, acquisition, operation and commercial management of natural gas storage facilities. The Partnership currently owns and operates two natural gas storage facilities located in Louisiana and Michigan, which together have an aggregate working gas storage capacity of approximately 50 BCF. The Partnership’s general partner, as well as the majority of the Partnership’s limited partner interests, is owned by Plains All American Pipeline, L.P. The Partnership is headquartered in Houston, TX. Now if you have been reading the blog, you know we have a couple LNG plays at work. (UNG and MDR) They have been under pressure (That is Wall Street Speak for I am getting my butt kicked) because of the underlying value of the commodity, Natural Gas. Though we feel this is going to be our savior fuels of the future, we have way too much of the stuff. Cramer does the linkage game better than anybody I know. Too much Gas, where to you put it? Cramer did the homework, and PNG looks pretty good. Now I got lucky as the stock went up 4% today because they announce an LLP unit distribution. (Think of it as a dividend on steroids.) I did not know it was coming, neither did Cramer, it was just blind luck that it was announced a few hours after we secured out new position. And don’t ask to be put in the will because as we have suggested of late, baby steps and this position was a baby step. We will be adding as we dig up more info on the Limited Partnership. LP Fundies are a little harder to read the fundamentals but have the same SEC filing requirements so its just a question of digging.

In other Portfolio action today we added to FANUY and initiated a new position in a company out of Washington State you may have heard of called Microsoft MSFT. Yes I bit the bullet. Its time to ride the Balmer Machine. We’ll take the 2.2% pop on that today. We did not have the cash to add to AAPL today but wished we had. It was a nice buying opportunity.

We got a ton of earnings reports over the next two days. Like those boys at the Big A tonight let’s hope I can keep my average at 100%.

Salve Lucrum


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