Coffee = Overpriced
gmcr, cbou, ddrx — i dunno. i had a list somewhere of the overpriced coffee stocks. i’m just saying like in Disney’s movie Jungle 2 Jungle. Get out of Coffee.
cphi – still like it
chbp – scared, not always profitable
skbi/skbo – will look again later during when the market is open so i can look at the bid/ask. this thing is thinly traded and might be good.
hlf – not cheap enough for me to buy right now, but will likely outperform the market in the next 2 years, revenues sucked last 2 quarters
utvl – this thing is going to the NYSE. Tom suggested that there are more shares than google says there are out there, dont have time to check. mcconnel (purdue professor) suggested 5% appreciation on average before listing and 5% decline in price for 6 months post listing on NYSE.
pcap – like it
acas – like it
mcgc – like it
gnw – like it
cno – like it
ahr – like it
grvy – seems poorly managed. no increase in revenues and yet increased expenses.
gfre – guidance includes dilution, i’m scared!
jadae – most of its income is from its discontinued operations in 2008
sclx – following up with company, added to my sorting list.
utvl – huge growth potential, will it be exercised? i’ll buy some
chcg – topside catalyst: franchise strategy, downside force: decreasing profit margins, i’ll buy some – i sold at around $1.50 to buy other deals.
gtls – prolly will appreciate in price over the next 2 years. just not enough for me to mention
snen – blah, just don’t know. what happens when this loss goes away? is the business growing? you’d think so… but there isn’t a very clear trend to me. negative cash from operations lately. lets wait and see .. throw this with nwd
i need to look at
bucy, cedc, midd, and my old stocks again to dump some money into for an investor that wants a safer play.
Now — for some emails:
First, a picture: I picked the bottom on this one. Luck or skill — your choice.
So, what do we do now? It’s got a P/E of about 10, maybe a little higher than that. You are getting a 6.4% dividend here. The trailing 12 month P/E is 14.
Historically trades between $60-$70. Was as high as $50 recently.
You’re looking at 1 year upside potential of about 75% (maybe going higher than where they traded historically cause they picked up National City). I think we could very easily sell out of this around $50 here shortly — or you could just bail now and try to ride something else with more upside.
——————————————————————————————————————————————————–
T — I didn’t bet on this one. I don’t know whether it will outperform or underperform. If you don’t know, don’t bet.
You bought it at $20, which baffles me because its 52-week low was $20.90 according to Google. So, you got the bottom, luck or skill.
There’s a double bottom on this one in October and March around $21. They just increased their dividend in Q1 2009. Their dividend is sustainable and pays 6.9%. There was some huge acquisition or something at the beginning of 2007 that exploded revenues. I think from mid 2007 to mid 2008, this was overpriced because of this abnormal growth.
I’d be getting out at $30. I might even be willing to jump ship at $25 depending on if there is something else out there that’s better.
I just downloaded all the larger companies I was looking at this fall. Out of the batch of them, there are probably over half that are still improving as if there wasn’t a crisis, but are priced now as if the crisis is supposed to hurt business.
I’ll be sorting through them here shortly and if I think I can choose 2-3 of the best to replace PNC, that’s what I’ll do.
—————————————————————-
UTVL-Good call on the details. It is incredibly undervalued compared to its competitors. It just got listed on NYSE amex. There is some dilution.
Their SSD segment is losing sales fast. I don’t know if that’s due to cannibalization or what. Other segments are growing well. This last quarter they did not grow rev or earnings, but I think that’s probably due to seasonality and the worst of the recession.
I’ll probably invest a little and see what new things develop.
Tom
On Sun, May 24, 2009 at 10:02 AM, Bradford, Glen Richard
I think you are wrong here.
There were about 41M shares outstanding according to their 10K.
Then they reverse split on march 31, 2009. http://www.pinksheets.com/edgar/GetFilingHtml?FilingID=6513635
I think google’s share count is right.
What are your thoughts?
Glen
From: tcorm [mailto:tcorso] On Behalf Of Tom Corson-Knowles
Sent: Saturday, May 23, 2009 1:04 PM
To: Bradford, Glen Richard
Subject: UTVL
Hey,
UTVL has the wrong market cap shown on google finance. There are 38M share outstanding, so the real book value is almost $230 M. With $18M expected income for 2009, before dilution, that P/E seems high at over 20.
Tom
—————————————————
The price goes up about 5% on the announcement and transition weeks, then trails off 5% over the next 6 weeks
________________________________________
From: Bradford, Glen Richard
Sent: Sun 5/24/2009 10:09 AM
To: McConnell, John J
Subject: OTCBB to NYSE Stock
Hey John,
First, I’d like to thank you for passing me in Finance the 3rd module this year. Second, I want your opinion on the average stock price changes on a company that goes from OTCBB to the NYSE.
——————————————————————————-
Hi Glen,
if you like ACAS, you’ll love PCAP.
PCAP is in the same business, but has far fewer bad loans and a lower price/book, P/E and debt/equity.
They have violated bank covenants also, but only barely and recently.
Debt/equity is .96 vs 1.58 at ACAS, P/E (2010) 2.3 vs 4.2, price/book .22 vs .26
Slightly more expensive, but not much, is MCGC, which is in compliance with all covenants and will resume dividends earlier than the other two.
Among the chinese stocks, OPAI.OB is still trading at a P/E of 2, and half of book despite 30% growth.
I enjoy your articles very much. They are the best of all on SA, and I made a lot of money thanks to you.
Regards,
Fred
Reader Feedback
Hi Glen,
My portfolio has increased another 10% since Friday. Conseco blasted off on today’s 1Q earnings report. I can’t believe I picked it up at 48 cents and it’s hit a high of 3.90 today. My numbers are fast approaching $3500 and expect that to double yet again in the next few months. I’m taking a little off the top on some of my investments to further diversify my China portfolio. I’m attaching a screen capture of my 6 month returns to verify my numbers as of May 9th – plus the cash on hand from today’s sales. These numbers represent following your blog advice and nothing else. Remarkable. Simply remarkable.
Best,
D.A.Wagner
100% in 1 Month Financials
100% in 1 Month Financials
By
Glen Bradford
I think that if you’re a professional money manager and you don’t make 100% return in 1 year starting today — you should look into other forms of employment.
Jim Cramer is right. I’m going to stand up and shoot for 100% in 1 month with a couple stocks. All of them are set for huge gains when the mutual funds grab them at $5.
Conseco (CNO) — I’ve been yelling about this one since $0.33 when I backed up the truck. I came up with a 2009 EPS of $0.85 weeks before the analyst updated his estimate to include the restructure I forecasted. You too can ride this to $7 — more than 100%.
Genworth Financial (GNW) — They didn’t need the TARP. That’s a sign of strength. Just popped to $5. Next stop: $12. Get ahead of the curve and allocate your holdings where the money is heading next. Don’t wait!
American Capital (ACAS) — I am anticipating a restructure of their current debt obligations. Note that this can bring back a huge yield if you sit tight. Odds are the restructure will eat out of short term (1-2 years) profit margins, but the stock price will soar. $8 is just around the corner.
I don’t respect people that recommend things that they themselves do not own. That’s why I’m long all the companies mentioned in this article. If you’re interested in banks, shoot the middle of the road and start with the ones that are down the most over the last 2 years and up the most over the last 2 months. That way you’ll pick up bargain banks that hopefully aren’t dead beats. A couple that I own are Fifth Third Bancorp (FITB) and Huntington Bancshares (HBAN).
Disclosure: Glen and his investors own CNO, GNW, ACAS, FITB, HBAN
Glen Bradford
Purdue Industrial Engineer
Masters in Business Administration
www.glenbradford.com
Financials Set To Soar
Allow me to start off by illustrating my sentiment from January 2008 – February 2009: I hate banks and I have no idea what they are doing. I hate anything financially related.
But, I find myself not hating banks anymore. What happened? I’ve got 8 leading indicators that people might be aware of but aren’t catching headlines like they should be and I’ve got 4 monster catalysts. What do I know, I’m only the Motley Fool’s Hottest Player going into Easter Weekend. Further, My entire college tuition is riding on the stock market.
Leading Indicators:
1. Federal Funds Target Rate is nil. This means that banks can borrow as cheaply as they ever have been able to. When you borrow at these interest rates, the net present value of any opportunity where you can at least get your money back is a good one to be taking.
2. Banks as a sector cheap from a historical perspective. I wonder why? Fear, panic, disorder, lack of trust, lack of speculation — just a few ideas.
3. There is tons of cash on the sidelines. Blood is in the streets. There has definitely been “the slaughtering of the speculator” over the past year and a half. I believe now is the time when the speculator finally gets congratulated.
4. We are up 28% off the bottom according to the S&P500.
5. Global Markets are leading the way. They are up 53.4% according to EEM [iShares MSCI Emerging Markets Index (ETF)].
6. My uncle who is a banker panicked and sold out of the market at Dow 6700.
7. Mark-to-market has been relaxed to ‘mark-to-whatever-makes-us-look-good.’
8. The uptick rule might come back. In my opinion, this isn’t necessary at this point.
Monster Catalysts:
1. Citigroup and Bank of America said they were profitable in the first 2 months of 2009. Great! Now they can do whatever they want to their balance sheet with the relaxation of mark-to-market. What does that imply? How can you lose money when you get to put whatever you want on a balance sheet? Especially if you’re a bank and you thoroughly understand how to crunch numbers and make them look favorable, you’re going to be looking really good now. It’s the Enron dilemma of “mark-to-model.” I could come up with some great spreadsheet models that make me look like an undervalued opportunity.
2. It’s already happening! Wells-Fargo is coming in crushing analysts. Well, of course! What do you expect when you can borrow money to invest in opportunities and you’re not paying a significant interest rate on what you borrow?
3. Analysts are going to get caught with their pants down this week. Earnings are coming out. Tuesday: Goldman Sachs; Thursday: JPMorgan Chase; Friday: Citigroup. There is so much upside that they simply can’t see because they don’t really understand what’s going on. If they did, they wouldn’t be analysts. They’d be retired. What does this do? This sets up an opportunity for some huge price target upgrades, usually after the price actually appreciates to that target. Have you noticed that analyst price targets seem to be a lagging indicator of stock prices — or is it just me?
4. Debt upgrades. Once ‘mark-to-whatever-makes-us-look-good’ kicks into gear, the ratings agencies have to think a little more highly of these poor banks.
How to play this one:
I like a couple insurance agencies in decreasing order: CNO, GNW, PNX. I think GNW didn’t need the TARP anyway. That’s a sign of strength. Am I the only one seeing this?
I like a couple bank plays, also in decreasing order: FAS, C, BAC. I’m not into the Wells-Fargo’s and the Goldman Sach’s or even JP Morgan’s of the world — where is the upside there? 100%? Not enough.
Disclosure: Glen Bradford owns CNO, GNW, PNX, FAS, C, BAC and/or options on them in his and his investor’s accounts.
Mark-To-Profit
Allow me to start off by illustrating my sentiment from January 2008 – February 2009: I hate banks and I have no idea what they are doing. I hate anything financially related.
But, I find myself not hating banks anymore. What happened? I’ve got 8 leading indicators that people might be aware of but aren’t catching headlines like they should be and I’ve got 4 monster catalysts. What do I know, I’m only the Motley Fool’s Hottest Player going into Easter Weekend. Further, My entire college tuition is riding on the stock market.
Leading Indicators:
1. Federal Funds Target Rate is nil. This means that banks can borrow as cheaply as they ever have been able to. When you borrow at these interest rates, the net present value of any opportunity where you can at least get your money back is a good one to be taking.
2. Banks as a sector cheap from a historical perspective. I wonder why? Fear, panic, disorder, lack of trust, lack of speculation — just a few ideas.
3. There is tons of cash on the sidelines. Blood is in the streets. There has definitely been “the slaughtering of the speculator” over the past year and a half. I believe now is the time when the speculator finally gets congratulated.
4. We are up 28% off the bottom according to the S&P500.
5. Global Markets are leading the way. They are up 53.4% according to EEM [iShares MSCI Emerging Markets Index (ETF)].
6. My uncle who is a banker panicked and sold out of the market at Dow 6700.
7. Mark-to-market has been relaxed to ‘mark-to-whatever-makes-us-look-good.’ Aka: Mark-To-Profit.
8. The uptick rule might come back. In my opinion, this isn’t necessary at this point.
Monster Catalysts:
1. Citigroup and Bank of America said they were profitable in the first 2 months of 2009. Great! Now they can do whatever they want to their balance sheet with the relaxation of mark-to-market. What does that imply? How can you lose money when you get to put whatever you want on a balance sheet? Especially if you’re a bank and you thoroughly understand how to crunch numbers and make them look favorable, you’re going to be looking really good now. It’s the Enron dilemma of “mark-to-model.” I could come up with some great spreadsheet models that make me look like an undervalued opportunity.
2. It’s already happening! Wells-Fargo is coming in crushing analysts. Well, of course! What do you expect when you can borrow money to invest in opportunities and you’re not paying a significant interest rate on what you borrow?
3. Analysts are going to get caught with their pants down this week. Earnings are coming out. Tuesday: Goldman Sachs; Thursday: JPMorgan Chase; Friday: Citigroup. There is so much upside that they simply can’t see because they don’t really understand what’s going on. If they did, they wouldn’t be analysts. They’d be retired. What does this do? This sets up an opportunity for some huge price target upgrades, usually after the price actually appreciates to that target. Have you noticed that analyst price targets seem to be a lagging indicator of stock prices — or is it just me?
4. Debt upgrades. Once Mark-To-Profit kicks into full swing, the ratings agencies have to think a little more highly of these poor banks.
How to play this one:
I like a couple insurance agencies in decreasing order: CNO, GNW, PNX. I think GNW didn’t need the TARP anyway. That’s a sign of strength. Am I the only one seeing this?
I like a couple bank plays, also in decreasing order: FAS, C, BAC. I’m not into the Wells-Fargo’s and the Goldman Sach’s or even JP Morgan’s of the world — where is the upside there? 100%? Not enough.
Disclosure: Glen Bradford owns CNO, GNW, PNX, FAS, C, BAC and/or options on them in his and his investor’s accounts.
Week of April 12
For those of you who passed simple math, 2+2=4
For those of you who understand a successful merger/acquisition, the goal is the combination of the two companies to yield more than their separate parts, essentially 2+2=5
Anyway, what you saw in Wells Fargo is going to happen over the next 5 weeks to the entire banking sector as well. If you cut the rate at which banks borrow to finance their loans, that increases their profit margin. Expect either a blockbuster quarter or a write off, but the blockbuster is more likely in my opinion.
Get ready to either be positioned in these stocks or miss the boat.
Tuesday: Goldman Sachs
Thursday: JPMorgan Chase
Friday: Citigroup reports
Where is the play? FAS. Further, I like Citigroup over JPM and GS, cause — it has the most upside.
If I owned AIG, I’d sell out at $5 if it ever gets that high. The old CEO laughed at management’s decisions since he left, go figure. Pass the blame.
If you’re into insurance, GNW, PNX, and CNO are the ones I’m riding.
14 Tuition Breaking Stocks
14 Tuition Breaking Stocks
By
Glen Bradford
You might have been like my friends and family in the past 6-months — afraid to check the portfolio, afraid to accidently see the latest Dow Jones beatdown, full of upset stomach from a depreciating portfolio of Large Caps that your broker said were a great buy 2 years ago. You might be in a state of denial. You might be sitting 100% cash with 2-years of fallout supplies packed into your basement. I challenge you to open your eyes and go hunt with me for bargains.
What sets Super Markets apart from Stock Markets is pretty straight forward. At the Super Market, a 50%-0ff sale draws people from across the country to line up at 4am and stampede the bargains. At the Stock Market, a 50%-off sale is like a bomb threat in an airport. There are those that make gobs of money in times when the stock market is 50%-off. The trick is not looking around for the 50%-off items, because those really aren’t the bargains anymore. There are stocks that are 95%-off in a 50%-off sale. I call this the clearance aisle. These goods are selling less than their cost to make (book value). The trick here is differentiating ones that are high quality from those of lesser quality. I set my parameters fairly straight forward. The companies I buy have to be profitable and growing.
Then, the trick is continuously learning how companies can and may scam their investors. I look for indications of accounting fraud, and try to eliminate those companies from my lists. Did you know that companies can boast huge numbers year-after-year and not be making money?
Now, I’m not saying that all 14 of these companies are going to be up 300% 1 year from today. What I am saying is that by being certain that I am uncertain, I can diversify my college tuition nest egg into 14 of the cheapest discounted cash flow companies out of the 5,000 I’ve sorted through. I can also do my best to minimize my risk by knowing how to identify accounting fraud and not paying more than book value for a stock. By doing this, I am certain that I will candidly beat the market over time. Don’t believe me? That’s fine. All I can do for you is give you the opportunity. The choice is yours to take it, or leave it.
Below I’ve compiled a table of all the plays I am considering or possibly in. Mind you that I have been betting my college tuition on my advice. Some of the numbers have been adjusted by me in order to reflect my feelings on the stock itself as well as potential dilutions.
Earnings Price P/E P/B Growth Bust Target Boom Target Exchange Listed? Bottom?
cno $ 0.85 $ 1.35 1.59 0.15 16% $6.80 $13.60 1 1.0
ghii $ 0.13 $ 0.08 0.62 0.16 27% $1.04 $3.51 0 0.7
nwd $ 0.20 $ 0.17 0.85 0.13 13% $1.60 $2.60 1 0.3
caei $ 0.50 $ 1.00 2.00 1.06 25% $4.00 $12.50 1 0.5
chcg $ 0.51 $ 0.92 1.80 0.55 20% $4.08 $10.20 0 0.8
cyxn $ 0.19 $ 0.27 1.42 0.68 25% $1.52 $4.75 0 0.9
gnph $ 2.16 $ 4.95 2.29 0.54 12% $17.28 $25.92 0 0.5
opai $ 0.20 $ 0.14 0.70 0.18 30% $1.60 $6.00 0 0.5
ltus $ 0.24 $ 0.30 1.25 0.32 26% $1.92 $6.24 0 0.6
ckgt $ 0.14 $ 0.30 2.14 0.23 11% $1.12 $1.54 0 0.6
akrk $ 0.09 $ 0.19 2.11 0.35 20% $0.72 $1.80 0 0.6
fas $ 4.00 $ 7.20 1.80 0.3 15% $32.00 $60.00 1 0.7
cneh $ 0.70 $ 1.49 2.13 0.61 20% $5.60 $14.00 0.5 0.4
xing $ 0.65 $ 1.32 2 0.17 10% $7.60 $9.50 0 0.5
I also figure that I’ll outline my sentiment. I’m bullish financials that are down 85%+ in the last 3 years that are likely to survive this downturn. I’m neutral-bullish commodity prices. I’m neutral-bearish the US dollar; not because of this narrative fallacy of monetizing the US deficit, but because of the US-Treasury bubble bursting and the reversal of the “run to the dollar for safety” trend. I’m bullish emerging markets.
Disclaimer: Glen and his investors currently own cno, ghii, nwd, caei, chcg, cyxn, gnph, opai, ltus, fas, cneh. Glen and his investors intend to purchase the other stocks mentioned in this article.
Conseco's Got Money
Conseco’s Got Money
By
Glen Bradford
Lil’ Wayne is performing at the Conseco Fieldhouse tonight. As a tribute to the rap star I think we should all take a less on from, I’m compiling a short list of reasons why Conseco is hip and why it’s Got Money. For starters, the cash balance in the last 2 months has doubled:
Corporate liquidity
Available holding and non-life company liquidity of $59 million at 12/31/08
$108 million of liquidity at 2/27/09
First, allow me to introduce myself. I don’t believe in the efficient market hypothesis. By that, I mean that I believe that companies that make more money and are set to make more money than other companies should come with higher price tags than those other companies. Unfortunately, capital markets don’t always reflect this belief and I plan to capitalize on select opportunities. The goal is to maximize upside potential and at the same time minimize downside risk. That’s precisely what Conseco’s been doing in my opinion by spinning off Senior Health.
JK was the last person to talk about Conseco. I shot him a couple e-mails. He was more optimistic than the article suggested. I would like to quote a short part of the article that summarizes my feelings on Conseco.
Conseco has reported better numbers in the past, said Binner, the Friedman Billings analyst. But they were pumped up due to problems that have been uncovered since the 2006 arrival of CEO Jim Prieur and Chief Financial Officer Ed Bonach.
“Jim and Ed have created a better-functioning Conseco than ever really existed,” Binner said. “They are real, and they’re really fixing the company. But the economic backdrop is just so terrible right now.”
I came across Conseco through my friend Pat Davenport. He thinks that man is presently fear based, and that expecting rationality across the whole is foolish. With respect to CNO; he suggested that they won’t default, and if they do they’ll recontract their debt. Therefore, in the long run their problems are not real. However, perceptions of reality are what drive the stock. When perception and reality align, the stock should go up. So, even if they default, it won’t matter. Companies rest covenants all the time.
Profiting in the 2nd quarter is highly likely, if not the 1st. Since it takes about a quarter to go both into serious bankruptcy procedures as well as debt collection, it will be hard to convince a judge of the need for either bankruptcy or insolvency when they post a profit.
What I see here is a company that you can buy at a P/E of 0.25 of forecasted earnings assuming that they survive. They have pushed back filing their annual report because they are currently getting audited to see if they can continue as a company. The upside here is 3200%+. Conseco is less risky than their competitors because they focus on high quality fixed rate investments and have little exposure to risky assets as well as are focusing on decreasing exposure to these asset classes.
If you’re interested in some of the latest information on this company, you could try reading the Q4 2008 Transcript (Supporting Slides). My favorite part is on page 9, where a large, and in my opinion fairly uninformed, unidentified investor asks whether the insurance company could access TARP.
Risk is not knowing what you’re doing. For those who want to join me and take over a company for pennies on the dollar, Turn up the Lil’ Wayne. Imagine how risky it would be if Lil’ Wayne couldn’t remember his song lyrics. For him, performing a large concert is less risky than your average guy because Lil’ Wayne knows what he’s doing.
Disclosure: I own CNO in my account and in my investor’s accounts.
CNO 80%
http://cms.ibj.com/ASPXPages/6iframes/FrontEndArticlesDetailPage.aspx?ArticleID=33499&NoFrame=1
JK,
Thanks a bundle. I’m thinking the same thing.
Glen
From: J.K. Wall [mailto:jwa
Sent: Tuesday, March 17, 2009 2:12 PM
To: Bradford, Glen Richard
Subject: RE: Conseco
Glen,
I’m no expert, but I give Conseco 80 percent odds that it avoids bankruptcy. I don’t see how it would make sense for anyone involved, including the senior lenders. It seems the company will do more reinsurance deals first (limiting profits but boosting capital) before the brass let the company go bankrupt.
For what that’s worth.
J.K.
—–Original Message—–
From: Bradford, Glen Richard [mailto:gbrad
Sent: Sat 3/14/2009 2:09 PM
To: J.K. Wall
Subject: Conseco
Hey JK,
If you had to put a probability on it, what do you think the probability
is that Conseco equity shareholders will make it through because the
company is able to write off less discontinued operating losses in 2009
and pay off the debt obligations to Bank of America? 50/50?
Glen Bradford
Purdue University
Masters in Business Administration
Bachelors in Industrial Engineering
School of Engineering Student Ambassador
www.glenbradford.com
CNO
24 Hour Watch… Haha, not really. But today’s the day!
Boom!