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Video: Thoughts on the economy, market, and individual stocks

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July 12, 2008 – Comments (4) | RELATED TICKERS: MNST , CMG , MIDD

This is a very rough video, badly-edited, not-well-done video, but nonetheless I am hoping to get better at this and hopefully get a somewhat consistent routine going. Your thoughts, comments, and criticisms are very much appreciated as always.

4 Comments – Post Your Own

#1) On July 12, 2008 at 6:56 PM, hansthered0 (< 20) wrote:

David,

 I am surprised that your pencils fund has not been outperforming the market to date. Your caps rating is very high. Are you doing something different with your fund than your CAPS selections?

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#2) On July 12, 2008 at 7:12 PM, TMFPencils (99.79) wrote:

Hi hansthered0,

The problem with a real money portfolio is that you need money to take advantage of bargains when they come along. With CAPS it is very easy for me to rate companies when I see strong bargains and rate them underperform when I feel they are overpriced. My cash situation is inconsistent because I have to pay a good amount every year for school tuition, but I'm getting some money together and I will take advantage of some of the many bargains presented today. Long-term, I have full confidence that the Pencils Fund will outperform the market. I invest in a lot of small, riskier small-cap businesses, and all you really need is one or two great winning businesses/stocks to beat the market in the long run. So, I'm very confident although the volatility is frustrating and sometimes scary. ;-)

Best,

DK

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#3) On July 12, 2008 at 8:29 PM, DemonDoug (82.98) wrote:

Out of the 3 stocks you linked onto this blog, I like HANS the best.  I can't see investing in MIDD with the entire restaurant industry about to go into a huge contraction.  CMG I think will do okay, but HANS I see as continuing to grow their business, especially if they can tap into international markets as they have been planning.  I've got HANS as outperform on CAPS.  It's very volatile but I'm with you on it.  Their biggest problem might come with corn prices but I have a feeling corn prices will moderate from current levels.  At a p/e of 15, you are buying the company at an earnings ratio that is below their growth percentage.  CMG p/e around 32 - too high for any restaurant stock.

My biggest stock position that I'm advocating for right now is MMM.  I know it's a large cap, won't give you huge share price appreciation, but it's paying almost 3% dividend at a p/e below 13, and in the last bear market from 00-03 it was up 35% from peak to trough of that bear market.  Dunno if you do the large cap blue chip thing but I'm always looking for differing opinions.

BTW not bad on the videos.  Most kids your age I see are doing glowsticking videos and whatnot. :)

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#4) On July 12, 2008 at 9:07 PM, TMFPencils (99.79) wrote:

Hi DD,

I agree that HANS is at great levels. It probably makes up 20% or so of my portfolio now that I've invested four or five times in it by now. ;-) I've been accumulating shares on dips since 2006 and since that time the business has just gotten better and better while the stock remains extremely volatile giving us these great opportunities. 

I don't see CMG being expensive with a P/E around 29 for the B shares. The company has consistently grown earnings at 40%+ since going public a couple years ago, and the balance sheet and cash flow production can't be beat. With the higher-than-average P/E as far as restaurants go, it may indeed push the price down even more. I'm hoping the B shares reach $60, but the more I think about it the more I realize that waiting for a month or two or even more probably isn't the worst idea with CMG. It will be interesting to see earnings on the 23rd. 

Out of the three, I am most cautious with MIDD. I see this as a good, somewhat safe long-term investment, but I don't think it will be treated especially well if things continue to stay sluggish. One to keep an eye on, though, IMO. 

Thanks for your comments!

DK

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