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Dipping a toe in the water

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September 20, 2011 – Comments (1) | RELATED TICKERS: INTC , UA , LULU

I had been overweight Intel since I mentioned it at 19 and change in this spot a few months ago.  Sporting a 4% dividend yield, a historically low cash-adjusted P/E of 8, a huge cash pile, no debt, and a capex figure that would run a small nation, I felt it was trading at least 15% below what anyone could conceive of as fair value even if it never grew earnings or revenue again (an outcome, incidentally, that I find unlikely.)

I have a number I think of as a 'position size' in my portfolio; I had a double helping of Intel because of my conviction.  I exited half the position today, booking the 15% gain that I was so certain was baked in.

I am happy to hold the rest of the INTC and collect the dividend a while, with the prospect of future price appreciation as well.  I am going to leave the proceeds of the sale in cash while I hunt around for a dip or a pullback in a speculative name.  I think there may be the usual 4Q headwinds to stock prices so I am hoping to buy a name on a discount.

I'd like to buy the next CMG, but I think CMG itself may have come a bit far too fast.  Already own some BWLD so to diversify would be looking in a different sector.  Feel like energy, financials and materials are dead money for the next year, and Lord only knows what happens with healthcare - Congress will decide, not the market.  So I am looking at tech, cons disc; TNDM, UA, LULU stand out.  APOL has promise too.

For the first time in my career I am substantially regretting not shorting a stock - NFLX.  I may yet short them.

Any Fools™ got their eyes on a possible 5 bagger?  What are your highest conviction names at the moment?

1 Comments – Post Your Own

#1) On September 30, 2011 at 1:45 AM, ikkyu2 (99.32) wrote:

Chris Barker, the eloquent TMFSinchiruna, named PPP his highest conviction name just a few days after this post.  I think the guy's smart and his pitch had reason, so I bought some.  We'll see what it does.

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