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Varchild2008 (84.37)

Varchild's WARNING to all DPS investors



August 14, 2009 – Comments (2) | RELATED TICKERS: DPS , ATVI

Since I'm an investor that values DPS as a Retirement Stock and has accumulated thus far 476 shares of DPS, I have to issue a HUGE WARNING ever since the insanely positive earnings report.

Why?  Cause as investors the worst thing that can happen is to get all euphoric and feel all IMMORTAL over having X number of shares of DPS.  I mean I feel like sticking my tounge out at every single investors that DOES NOT have any shares of DPS.


But, the reality is DPS can and will produce a disappointing Earnings Quarter.  This normally wouldn't be a big deal for the company to do so.  We are in a recession after all.... So, who cares if Q3 somehow is bad?  Right?????  *WRONG*

Dr. Pepper Snapple Group has produced 4 Earnings Beats and 1 Earnings Miss.   This is a track record of 4 out of 5.  That has finally given (DPS) the coveted "Momentum" status.

It is super rare..... but tremendous amounts of fun to have your slow growth stock suddenly sent into ORBIT and given the blessing by Wall Street as a "Momentum Stock."

But, things can quickly get waaaaaay out of hand.  They can get waaaaaay ahead of themselves....

DPS can be priced in the same manner as (HANS)....What can happen litterally is DPS will be sent up $10 from now to 6-12 months out (for example only) and then when DPS produces a MISS it will send the stock price back a full year.. maybe even SEVERAL YEARS of gains completely wiped out.

That's right.. While you are sitting there enjoying the stock getting bid up like crazy....while occasionally adding to your overall stake....thinking you can buy and increase your stake at virtually any Share Price.....Fire At Will the BUY button..... What not.....  All it takes is for 1 earnings Miss to completely WIPE YOU OUT and set the stock price back to Square 1.

Is that fair????   NO!!

But Wall Street and Fairness  are Oxymorons.  Incompatible.  Stock Analysts always tend to get overly bullish on a stock and then immediately turn overly bearish on the slightest disappointment.

A Long term Investor must then have a plan... What to do about this?

Sit and stew??       Whine????  Cry????  Call your Mommie???  Suck your Thumb???

No.... There are solutions to prepare yourself for the next *CRISIS* of Panic Selling and Panic Shorting against your investment....

1)  Seriously start buying some PUTS... Next Week Monday is a good day to create some solid PUTs out at least 6 months from now...  Price it at $24.00  a share.  Cause an earnings miss could send this to $20.00 easily.  You can just sit and hope/expect $30.00 a share to happen when road blocks can get in your way.. things can happen...

"SNAPPLE Sales are still HORRIBLE!!!"     A turn-a-round on Snapple Sales will take some time.
The beverage has hit bottom in June but a sales increase will be slow going!

2)  BUY the Beverage Company's products.  Don't just hold onto some shares while completely ignoring the beverages the company sells..   I don't invest in things long term that I don't buy.

I stock my Refridgerator full of Dr. Pepper Snapple Drinks.   Given the Success story with DPS I am seriously thinking of switching to 6 PACKs  of Snapple instead of Singles.  It seems to me from the conference call that DPS does better if I go out and buy the 6 Packs instead of the Singles.

I figure I'll buy 1 pack of Green Tea + 1 Pack of NONI Berry.   Swapping to Pink Lemonade /Mango Madness Packs from time to time. 

So my purchasing of drinks of DPS is going to ramp up a bit now....  This helps .. seriously...YOU CAN HELP your investments.

Since DPS has earned me THOUSANDS of dollars this year... the least I can do is stock up on their drinks....

So to re-iterate.....   BUY PUTS..............BUY DRINKS...... 

People in Grocery Stores eyeballing you putting SNAPPLE in your shopping cart does sometimes influence THEM to consider buying SNAPPLE themselves.   I have seen customers walk over and stare at me as I grabbed a 7up or a Dr. Pepper and placed it in my cart.... It does happen!

Heck....  People take notice when I pluck an Activision Blizzard Video Game into my Shopping Cart when I am shopping at Best Buy,

I own shares of (DPS) and (ATVI) and I also own their products.

2 Comments – Post Your Own

#1) On August 15, 2009 at 12:19 AM, awallejr (34.60) wrote:

Buying PUTS 6 months out near strike price gets pretty expensive.  Might want to consider some kind of "collar" play instead in order to finance those puts.  Feb 2010 has 25s at 2.50 and 22.50s at 1.50 on the asks.

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#2) On August 15, 2009 at 12:29 AM, tfirst (74.54) wrote:

How do you think the recent rise in sugar prices will affect DPS...

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