Sunday, December 19, 2010

19 December 2010 Don’t Leave home Without It

BAGAKOAA; 19 December 2010 Don’t Leave home Without It

We made it from Dove Canyon to Utah in about 11 hours, a normal run. I was not going to leave before my Barron’s showed up, but that was not a worry as we did not get on the road till about 8:30 am, one of our latest departures ever.

My plan today was to devour the Barron’s and enjoy some football. Instead I get to spend a wonderful day with my son shopping for Mom. Yes I was doing my environmental scanning and saw quite a few people, but not crazy busy. There were a lot of fold without bags. We did notice some commons sizes missing off the racks.

Jack and I managed to get our shopping done and got home in time to catch the end of the first half of the Oakland Denver game. Then we went mouse hunting. We had a mouse play havoc with our pantry while we were gone.

So tonight about 8:00 we got to look at our magazine. Again this is a great article and since this will probably be a quiet week it is a good issue for you run out and pick up. Besides some bullish articles about quite a few companies, there are some interesting articles about the year ahead. One of the best is Kopi Tan’s look at 2011. As usually he has done a well researched lengthy study of dozens of strategists and fund managers. All but one were fairly bullish with S & P 500 expectations rising from 7-17%. The average is 10%. My gues will be published here some day this week, but I am probably going to be slightly more bullish.

Now were are at the tail end, the dredges if you will of earnings season. Alcoa kicks off a new season on January 10. We hope you are doing some house cleaning as we suggested. We are in research mode so if you want us to kick the tires on ANY of your holdings, drop me a note at

Anyway I suggest you get this week’s Barron’s and give it a read. Here are a couple of heads up and maybe a couple of plays for the week ahead.

Let’s look at some earnings first. PAYX Paychex, Inc., together with its subsidiaries, provides payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses in the United States and Germany. Like ADP, they are good tell of the economic environment as it concerns employment. They are to report 35 cents a share on Monday and we feel it might be a bit better, but more importantly they might have some positive things to say about the employment situation.

Adobe reports on Monday and they are supposed to pull down 52 cents a share. We are thinking a near miss. The one to watch is JBL Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. We thinkest they will blow by the 55 cents consensus estimate. If I was not asleep at the wheel, we would have picked up some call options.

If your hungry for a decent earnings call, check out DRI Darden Restaurants, Inc., through its subsidiaries, engages in the ownership and operation of full-service restaurants primarily in the United States and Canada. The company operates restaurants primarily under Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52 names. They are expected to hit 54 cents a share. (They should, but future commodities will squeeze margins.

Regarding your favorite, economic data, you are off the hook on Monday and Tuesday. There is NOTHING to report. To add to your euphoria, I want to give you a gift. Most of the economic data I use is from my digital subscriptions to Barron’s. Technically is the All Things Digital from Dow Jones. I just found out that the economic data called Econoday . Most of the content is free and even the subscription is reasonable. But I warn you it all about economics.

Getting back to Tuesday’s earnings, keep an eye on Finish Line and Nike. They should both beat analysts estimates. I am really liking FINL Their fundamentals are pretty. Same Store Sales for November were very good. Their multiple is 13 and change and when you back out the 4.67 a share in cash it is really cheap. If you like them long, do your homework. I am going to play it as a call option. I am going to try and catch a May 20 call for $1.50. If the report comes in strong as I think, we could see a double or at least 60% gain. Unless if the CEO talks it down.

In Closing, before heading out of town we made a couple of tweaks to The Salve Lucrum account. After doing some homework on AAPL, we are still seeing a lot of growth and added to our position. This was a long buy not an option. The Bristol Meyers bad news last week brought all of the Pharms down and we picked up more PFE Pfizer on the drop. Both of these are core holdings and we will look to add on drops. My target price for AAPL is 440 and my target price for PFE is 22. Those are 12-24 month prices.

Salve Lucrum


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