Thursday, January 31, 2008

Google Misses By A Penny, Does It Matter In The Long Term?

Well if you are a long term investor no, but the short term could be a little rough as people digest the numbers. First of all, let me just say that most companies would kill for these kind of numbers, but Google is not most companies.

Google (goog) reported revenues of $4.83 billion for the quarter ended December 31, 2007, representing a 51% increase over fourth quarter 2006 revenues of $3.21 billion and a 14% increase over third quarter 2007 revenues of $4.23 billion. Analysts were looking for $4.44 earnings per share and Google came in at $4.43, compared to $3.91 in the third quarter of 2007.

One very important number to look at is aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 30% over the fourth quarter of 2006 and approximately 9% over the third quarter of 2007. This shows you that the core business of Google is still remarkable strong.

Google does not issue guidance so it is not too surprising that the analysts weren't right on. At any rate this stock has already been hammered the past month, and is continuing to get hammered in afterhours. It is trading at a major discount to just a month ago and after this earnings report it looks like it is going to create a great entry point. I know that I will be taking this opportunity to build to my position. Google is a global story, and as the world becomes more connected through the Internet Google will only continue this amazing growth...

For more information about Google stock check out this post.

Wednesday, January 30, 2008

Evergreen Solar Reports Surprise Profit

Evergreen solar (eslr) reported results for the fourth quarter 2007 this afternoon. The results surprised many who follow the stock. Analysis on average were looking for a loss of 4 cents per share. ESLR today reported a small profit of 1 cent per share.

Revenue in the fourth quarter was $22.2 million, which was also above Wall Street's average estimate of $20.2 million. The strength of EverQ accounted for $5.3 million of the company's revenue. Gross margins also improved to 28.1% compared to 24.9% for the third quarter of 2007.

Of course, here at Stock Picky we have been behind Evergreen solar since $9.60... The stock now stands at $12.33 after falling from as much as $18.85 after it announced a 10 year supply agreement for polysilicon. Things seem to be getting better and better for Evergreen Solar the company, and it will only take so long before the stock follows suit and begins to push higher.

Even here in the states Evergreen has teamed up for a four year project with the Massachusetts Municipal Wholesale Electric Co. and Governor Deval Patrick's Commonwealth Solar program to install photocoltaic systems on schools and other high-profile public buildings. This kind of free goodwill advertising is just what Evergreen needs to bring this company into the mainstream...

A big congratulations to all the longs out there on this profitable quarter. For more reasons to consider building a position in Evergreen Solar check out our original post for October!

Wednesday, January 23, 2008

The Beginning Of A New Bull Market?

With the amazing price action in the markets today you might just be suffering from motion sickness. The Dow traded today in a 600 point range... that's right it was down over 300 points at one time during the day, but came back and closed up 298 points in a flurry of short covering and long term bulls.

Needless to say this is a very good sign... With the fed's decision to cut interest rates by 75 basis points yesterday, news of bail outs for loan companies today and a stimulus package from the US government, we are forming a bottom in the markets.

This January was shaping up to be the worst on record before today... As an investor what you need to ask yourself is how bad was it out there for my company? For most stocks in the mortgage and US banks markets, it couldn't get much worse, but there is plenty of companies out there that aren't really affected by a slowdown. They were just taken down with the rest of the market, and are at bargain prices compared to just a month ago.

Since this blog is all about long-term investments these might be fairly redundant but, Royal Bank Of Canada, Zoltek, Google, Evergreen Solar, Boeing, CECO, Vasco Data Securities and Yum brands are all looking tempting at their levels. If you are a first time investor, or have been waiting on the sidelines with cash waiting to get in you had better hurry. The market is oversold, and it is only a matter of time before the fundmentals and long-term outlooks begin to matter again...

Monday, January 21, 2008

Picking Up The Pieces

Tomorrow looks like it is going to be a blood bath for the bulls... The Dow futures are down as much as 520 points as global markets around the world are being hammered. If you are a long-term investors these are the hardest times to take. It is tough to see your hard fought gains go down the drain as the bears take over and short everything in site.

The fact of the matter though, is that stocks have outperformed every asset class over a 20-year period. If you are in it for a the long haul you will be alright, in fact you should be doing some buying of quality companies on sale as the dust settles and people realize that the global economies aren't just going to collapse.

Technology companies will continue to make money, alternative energy will still be a huge growth area, whether or not a bank or insurance company goes under. People will still consume, and companies will still make money...

Most of this decline is simply due to the fact that the banks lent out money to people who couldn't afford to pay after they jacked up rates. I mean isn't it the banks job to make sure it's clients can payback loans even if interest rates jumped? Either way, there is one simple solution and that is an emergency fed meeting, and a large rate cut. The bulls have been on the sidelines simply waiting for the next fed meeting. If this doesn't happen tomorrow it will get ugly... very ugly.

Well, Mr. Ben Bernanke, now is your time to shine...

Tuesday, January 15, 2008

Fueling The Winds Of Change With Zoltek

First of all, I just want to say that the market has been very hard to take the past month or two. What you need to remember, is that we are in it for the long haul. If you are an investor that thinks long-term, you should be drooling over all of the values out there in the market today. Even with an "economic slow down" here in the states, it really doesn't change the global growth stories of plenty of companies out there today.

For instance, Intel just reported today only 2 cents under estimates yet it is hammered in after hours. The market is overreacting and focusing on any negative news, without even considering a tomorrow. Now is the time to be concentrating on the future, a long term investor needs to be ready to buy at these moments, not panic like some many people tend to do.

That being said, my next long term pick is the carbon fiber producer Zoltek (zolt). This company is the leading producer of the carbon fibers that go into producing wind turbines, a growing source of green energy. This relatively small company (1.26 Billion Market Cap), has signed long term supply contracts with the top manufactures of wind turbines in the entire world! Gamesa Group of Spain, DeWind and the world's largest producer Vestas Wind System will be begin to be reflected in Zoltek's bottom line very soon.

In case you missed the figures wind energy is projected to grow at 25% per year worldwide, and I personally think this is a pretty conservative estimate. As I stated earlier with Evergreen Solar and Ormat Technologies, green energy is going to become the next multi-year bull market.

Zoltek is in one of the sweet spots, and appears to have a near monopoly on a key area of this growing trend. Their revenues have been growing at a very impressive rate and should only continue to do so with it's recent announcement that it had purchased the Guadalajara, Mexico-based Crysel Acrylic Fiber.

As if that weren't enough reason to own Zoltek, they also have the potential to be huge in the automotive market as their light weight carbon fiber could easily be used in the manufacturing of more fuel efficient vehicles. Think about it, the government is just beginning it's push to increase fuel standards, and as oil rises the process will only speed up.

Yeah the market is pretty bearish right now, but there is always plenty of companies to pick up on sale at this level. Always, don't buy all at once and focus long-term... as with all things, this will pass...

Wednesday, January 9, 2008

Is Wall Street On Sale?

If your a long term investor, it is times like these that you need to be taking advantage of. The markets have just been terrible to start the year, losing everyday but today if your stocks are in the Nasdaq. As an investor you need to ask yourself, "does my stock have anything to do with Housing or a US bank", because if not the story behind when you invested in the first place hasn't changed. It might have simply been taken down artificially along with the rest of the market. Going on sale if you will...

The markets go up and the markets go down, the past week or two almost every thing has been going down though, no matter what sector. Try to focus on the future, the housing problem and the banking mess is only going to last so long. Global growth will trump any minor slowdown that we have here in the states in the long-term. Plus, the fed cutting interest rates is only going to bring the bulls back, especially if we get a quarter cut this next meeting.

Companies like Google, Boeing, Yum, Royal Bank Of Canada, and Vasco are all looking good at this level. Boeing (ba) is at a 52-week low even after it "blew past an order record it set two years ago, selling 1,413 commercial jets in 2007 while delivering 441 planes, its best showing in six years." Google (goog) unveiled several more partnerships at the CES (Consumers Electronics Show), but the market doesn't want to hear any good news at this point. Yum Brands (yum) is China the safe way, Royal Bank Of Canada (ry) has a fat and safe dividend yield. Vasco Data Securities (vdsi)is almost back to where it was after the last earnings fall. The bears have taken over all of these, and many more quality stocks. This historically means we are thankfully near the bottom.

It seems at this point though that we do need The Fed to act. If they don't we will get hammered again, whether we deserve it or not. I this that is half the reason the markets have been so jittery, no one really knows for sure what The Fed is going to do and that means fear...

Take advantage of this volatility, and pick up some of your favorites stocks on sale! Remember, you are buying over time, build a position in a stock, not buying it all at once. Another tip for market dips is to buy your dividend paying stocks. As a stock goes down it's dividend yield goes up, which means that you can get more cash or stock dividends for your dollar than you could have at a higher stock price. As a long term investor you should be owning these type of stocks for their steady dividend income.

Don't let panic cloud the future fundamentals...

Monday, January 7, 2008

Is There Any Reason To Own AMD?

One of the first things you need to realize is that there really are only two computer processor companies out there, the much bigger Intel, and Advanced Micro Devices (AMD). These two companies have been engaged in a price war for quite some time now, well... some would say it seems more like Intel was trying to run AMD out of business. Intel even went as far as sacrificing its own bottom line and in turn it's own stock price.

During this period AMD purchased graphics card maker ATI. It took them quite some time to develop, but they are beginning to bundle the processors and graphics cards together. This should help give Advanced Micro Devices a much needed edge on Intel in the future. It is even already helping them to land contracts like this one just announced with Samsung.

Another reason to conceder owning the hated AMD, is the fact that they just got some fresh, green capital from Abu Dhabi to the tune of 622 million. A very nice chunk of change, to say the least. These foreign investors obviously see long term value in this company, which is certainly a good sign. Piling on have been recent downgrades that have punished this stock even further to it's 52 week low!

The question you need to ask yourself is, "Are people going to stop buying processors"? AMD cannot continue to go down forever, and with the addition of ATI's products, I think AMD can begin to turn things around back into the green. Sure, this stock pick is a lot like catching a falling knife, but in the long term AMD shareholders could be pleasantly surprised if they begin to build a position at this point.
Having a look at the chart though you will realize that this is obviously not for individuals with a pacemaker, especially in these market conditions, but things should eventually turn around. While I did a decent job in calling the bottoms in Vasco Data Securities VDSI, and Ceradyne CRDN, I feel this pick could be even more dangerous due to all the negative momentum. Don't even dream about putting it all in at once!

The markets have been nuts, but I believe they can only take so much before people around the world begin to take notice and begin bargain hunting... Hang tight though, this is the type of market that makes you feel like you are on the cruise ship that just started passing out the barf bags.

Wednesday, January 2, 2008

The Best Lottery Ticket You Will Ever Buy!

As I got home today I remembered that I had bought a lottery ticket for the mega millions last week, of course immediately all those thoughts of the things I could do with all that money came flooding in. Hmm a new car, new house, retire... I went to the computer and looked up the numbers... guess what? I didn't have a single number on a five dollar ticket. No real surprise, as the lottery is nearly impossible to win, but the real question was why did I just throw away that five dollars?

Let's say though you take that same five dollars and all the other money that you have waisted into the stock market. Think of it as a lottery ticket that never expires, can go up an infinite amount, sometimes pays you money (dividends), and can never go under the amount that you put in. Sounds too good to be true, but that is exactly what the stock market is all about.... one big lottery.

Just think of all that money that you just throw away every day whether it be from lottery tickets or some other vice. I don't know about you, but I am ready to retire already aren't you? Think of the stock market as educated gambling. There are numerous tools that you can use to help you beat the odds. First of all, try to find yourself a hot industry that you feel will continue to grow in the future. Then find the company that has the biggest potential... this is not always the obvious choice.

Make sure the company has good fundamentals, which simply means that they have cash on hand (it's nice when it is increasing), their assets should be growing at a faster pace then their liabilities. All of this you can find at the companies website under "The Balance Sheet" (they all are designed the same so don't worry once you have seen one you have seen them all).

Next, look at a companies Income Statement which shows you how much money the company is really making. Of course this should be increasing (the quicker the better), you can also find out if the companies pays you a dividend (a cash or stock payment made normally every three months).

Sure, there are a lot of other factors that go into buying a stock, like it's float, p/e ratio, the health of it's industry, and general market conditions, but the fact remains that stocks can be your ticket to early retirement, not that lottery ticket you just waisted five bucks on...