Stocks on my radar and other random thoughts
July 07, 2010
– Comments (11) |
RELATED TICKERS: JNJ
, WAG
, STR
I've been swamped with work lately, but I found a dew minutes to post a few quick thoughts here on CAPS.
- I told you that Tesla was a slam dunk short. timing is everything though. After the stock didn't pop right out the gate like I thought it would I figured it was safe to short here in CAPS...boy was that wrong. What a roller-coaster. My score on TSLA went from negative 50 to positive 11 in the span of a couple trading days. I expect TSLA's share price to continue to fall until it either comes out with a technology that's so revolutionary and disruptive before everyone else that it gets bought out by a major automaker at a decent price (unlikely) or it comes out with similar technology to what other manufacturers are bound to introduce and it just fades away / gets bought out at a price well below its IPO (more likely).
- Questar's (STR) spin-off of its E&P operations is complete. I find both of the companies intriguing. I went long STR prior to the event. I'm not sure because the spin is not yet being accounted for accurately in CAPS (my score shows -60 something) but I believe that it has resulted in positive CAPS points already. When work calms down in a week or two I plan to take a very close look at STR and its newly spun-off company QEP. I will probably end up adding at least the latter to CAPS.
- While my score is currently negative 11.5, I still think that Walgreens (WAG) is a solid CAPS bet and that it will outperform the S&P 500 over the next several years. Its exposure to the consumer does scare me a little, but many of the things that it sells are non-discretionary. Pharmacies have two huge tailwinds coming down the pipe, 1) an increase in the number of people who have healthcare coverage and in turn will go to their stores to buy stuff and 2) the introduction of a huge number of generic drugs over the next several years...which are significantly more profitable for pharmacies than brand name drugs. I personally chose to play these trends using CVS, which was cheaper than WAG at the time I bought it and has the added kicker of its Caremark benefits manager division. Here's a couple of good articles on the company:
Walgreen Set for Turnaround
http://online.barrons.com/article/SB50001424052970203296004575351011164297550.html
Walgreen -- A Rare Opportunity With Little Downside And Huge Upside
http://www.gurufocus.com/news.php?id=99094
- Speaking of pharmacies, my personal boycott of all Johnson and Johnson (NJN) products continues. What the heck is up with an iconic American company running its factories where it produces medicine for CHILDREN like they're located in some third world country. Heck, I bet that Chinese factories have better quality control than the recently shut down JNJ plant had. I've been forking over extra hard-earned money for "premium" medication for my kids all these years only to find out that the quality of the generic stuff is actually better? From now on I plan to buy only store-brand generic medicines. I'm sure that my boycott will really hurt this zillion dollar behemoth :). I could never short a cheap stock like JNJ in real life. In fact, it's probably a buy at this point. Most people will probably forget all about this incident...but I won't. My protest play was to go long Perrigo (PRGO) the generic competitor to many of JNJ's products.
- Since everybody else is talking about it, why not. There's absolutely no way that LeBron James is going to the Knicks. The Dolans, who retain control of the recently spun-off MSG, are theeeeeeeee worst owners in sports. It's one thing to have an owner who is just plain cheap and won't spend money to improve your team. That would be annoying, but the Dolans have thrown away hundreds of millions of dollars on terrible contracts over the past decade. Amare Stoudemire is a good player, but he's not worth even close to $100 million. The Knicks weren't even bidding against anybody else for his services. He wasn't going to go back to Phoenix. I suppose that they felt as though they had to pay as much as they could to get some big name in ASAP, getting shut out in free agency after tanking two years on purpose to get to this point would have been a disaster, but the Knicks overpaid for a non-max player who is an injury risk. Who knows if this makes MSG a short in CAPS, but I definitely would not be long it.
- Other special situation news:
Frontier Communications, FTR, Down On Huge Volume
http://stockspinoffblog.com/2010/07/06/frontier-communications-ftr-down-on-huge-volume/
I hate land lines, but if everyone else does too this stock might just get interesting
McDermott spinning off Babcock & Wilcox
http://finance.yahoo.com/news/McDermott-spinning-off-apf-1164562431.html?x=0&.v=1
Motorola to Split in Two, Hopes to Regain Overseas Strength
http://www.minyanville.com/businessmarkets/articles/motorola-mobile-phones-smartphone-wireless-subscribers/7/6/2010/id/29047?camp=syndication&medium=portals&from=yahoo
Motorola sucks, but this is interesting.
Gotta Go.
Deej
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