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Rocks in My Shoe Pennies in My Pocket

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June 26, 2007 – Comments (3)

I keep reading these Foolish articles about the different metrics used for stock selection, and I gotta tell you, if folks are investing in these stocks based on the information in the last article I read, I think there are going to be a helluva lot of upset folks.

I admit that the article, 6 More Stocks for Fast Cash , was very well done and I enjoyed reading it. But at the end of the day I had an extremely hard time trying to determine why there was any fast cash to be made by investing in a company that makes shoes.

Certainly the title was clever, I mean the work fast was used. But it was the word cash that caught my attention in the first place, and cash was something I never found.

Maybe it’s the cynic in me, maybe it’s just that in the years I’ve been investing, I’ve seen most of this stuff come and go more than once. Whatever the reason, I have to ask, what does the Cash Conversion Cycle have to do with the reasonable value of a stock?

I also have to wonder what the Cash Conversion Cycle and the CAPS rating together are telling me?

I looked and looked and looked and never saw anything mentioned in the article about earnings, earnings as in what a company needs to stay in business regardless of how fast it turns inventory into cash.

I mean just because Johnny Ray sticks his finger in his cheek as he twists is boot in something I wouldn’t want to get on my carpet and says he likes a stock because the cash conversion cycle is wonderful, just doesn’t give me the warm fuzzies. Sorry, but it’s just the way I am.

I did look through my watch list, and oddly enough all of the stocks from the article are on it. Not so oddly though is that with the exception of Skechers USA, Inc. (NYSE: SKX), which I have as a hold, all the rest of the stocks I have as a sell.

As the matter of fact, in just glancing at what I have on my watch list versus what I found in CAPS, I have to wonder if a short (underperform) may not be the way to go, if someone actually wanted to rate these stocks?

To my mind, as long as the stocks from the article are being rated, and not being purchased, they may be sort of fun to play with.

Then again, so is a dog, and I don’t have one of those either.

Wax

3 Comments – Post Your Own

#1) On June 26, 2007 at 11:47 AM, Calegro (< 20) wrote:

I like your last line "So is a dog..."  I'd definitely recommend a DOG at this moment ... to Short the DOW.

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#2) On June 27, 2007 at 5:58 AM, wax (97.05) wrote:

Calegro;

When the markets start to roil lots of folks start thinking the same way you do. But if you'll take the time to move beyond the group as a whole, and allow each stock to stand on it's own merits, you may be pleasantly surprised.

Take Pfizer, Inc. (NYSE: PFE) for instance. While I personally can't stand the company because I think company managagement is poor at best the company has a PE of around 9.

That should be a sign to investors that in the case of Pfizer, the stock price at around $25.50 is cheap.

It should also tell investors that as the economy continues to flail about and the idiots try and second guess the Fed and the Fed continues to try and second guess the economy and nobody has the first clue about anything, large cap stocks such as those in the Dow are going to be somewhat insulated.

So when the markets fall on their collective rear ends, these large cap stocks will initially become even cheaper than many of them are now.

But long before the markets stage a comeback, these large cap stocks, led by the Dow 30, should start to run up, and they should stay in run up mode until the wizards of Wall Street proclaim a new day.

As I say, I' not a big Pfizer fan, nor am I really a large cap stock fan, but if parking some dough in several large cap stocks is what I need to do to weather a storm, I certainly don't have a problem owning a few.

All I'm suggesting to you is if you can't find what you want in the whole, examine the parts. You might just be amazed at the value you uncover.

Wax 

 

 

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#3) On July 02, 2007 at 4:36 PM, freunddoggy (98.61) wrote:

Wax, you are absolutely brilliant and should be everyone's #1 favorite. Your patience and insight truly astound me. Nice work.

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