Rocky Ride To The Poor House

It has been a rough couple of months for the stock market the Dow fell from its high of just over 14000 down to under 8000 at one point! What a vicious drop that was... by far the worst I have traded through in my career. So what should you do now?

Well things certainly aren't looking that good with the overall economy, but the real question is how long can this downturn last? 6 months? A year? 2 years? Either way you need to consider your time horizons for your investments. Being that I tend to hold on to a position for over a year I am not worried. In fact, now is one of the best entry points I have ever seen. The valuations of stocks have come down so much that even with companies making less money then in previous years there are plenty of companies out there worth investing in. Sure it could get worse, but I think we have already put in the bottom on this downturn.

Of course if you follow the blog I kinda start to sound like a broken record, but it is important to understand. First of all don't buy all at once, as you can tell from the recent volatility in the stock market putting all your money in at once just doesn't make any sense. If you scale into a position and have a long time horizon you will do fine.

My personal recommendations at this point are ESLR, GOOG, RY, SU, ORA and YUM...

Time To Buy Canadian Banks

With the banking industry continuing to be in free fall all around the world a new report has just come out that names Canada as the soundest banks in the world. As the banking situation continues to weaken around the world this puts Canadian banks in a good place. Royal Bank Of Canada is, and has been my favorite banking stock since even before this whole mess started. Their stock price has been holding up much better than most other banking stocks as well, but they have taken a hit in just the last week as the markets sunk. Still even off of their 52 week low this stock is still a buy. Royal Bank Of Canada provides a fat 5% dividend at this price level of $36.10 so this is a stock that pays you to own! While you might think it is crazy for someone to be recommended a banking stock in this environment, things will turn around eventually. There might even be a v shaped recovery if all goes well. As long as you have a long term view on things, now is the time to be buying, not selling. Concentrate on the future and you should do fine...

Google Is A Screaming Long Term Buy

As I watched Google fall over 5% today I couldn't help but think there was some force pulling it down. I mean with the market up so much you would think that beaten down GOOG would shine, but just the opposite. Now in after hours Google announces a major partnership with NBC Universal to run TV ads. This stock has come down from $747 hard to find itself at nearly $420. With just a 27 P/E ratio this stock has literally never been this cheap! It really boggles the brain to even think about it. They have almost 13 billion in cash and are still raking in the money. Sure they are not smashing the park out of the numbers from last year, but you have to consider the law of large numbers and the fact that Google is throwing money in a lot of different places. They have the money to burn and they are taking advantage of that so they can reap the benefits in the years to come. I don't know about you, but I am going to be buying some Google, these price levels are just an unbelievable entry point.

Vasco Data Securities Reports Better Than Expected 2nd Quarter Earnings

Vasco Data Securities surprised Wall Street with a solid quarter lifting the stock almost 18% on over 8 times average volume. Here is what the big whig had to say about the quarter...

"We are pleased with the progress we saw in the business in Q2," stated
T. Kendall Hunt, Chairman & CEO. "Not only did we report a record level of
revenues for a quarter, but we also increased our deferred revenues and saw
a strong order flow throughout the quarter. The current order flow
reinforces our belief that our growth rates over 2007 will accelerate in
the second half of the year. We are, however, reducing our revenue guidance
for two primary reasons. One is to more fully consider the impact of our
business strategies where a larger portion of our business activity relates
to recurring software revenue, which may be deferred and recognized in
future periods. The second is to reflect a more conservative outlook for
the full year given the uncertainty of the world economies."

Net income for the second quarter ended June 30, 2008 was $7.5 million, or $0.20 per share, up 9% from $6.9 million, or $0.18 per share in the same period last year and exceeded the $0.15 predicted by the analysts.

Revenue grew by 9% to $35.4 million for the second quarter from $32.4 million in the corresponding period of the previous year, and topped Street analysts consensus estimate of $34.20 million.

Net income for the first six months of 2008 increased to $12.4 million, or $0.32 per share on revenues of $64.3 million from $11.8 million or $0.31 per share on revenues of $58.8 million in the year-ago period.

Here are a few more of the highlights from the quarter...

    Operational and Other Highlights:
 -- VASCO won 516 new customers in Q2 2008 (79 new banks and 437 new
    enterprise security customers).  For the first six months of 2008,
    VASCO won 1,107 new customers (150 banks and 957 enterprise security
    customers).
 -- Banco Itau (Brazil) secures more than 1.6 million end users with VACMAN
    Controller/Digipass GO3
 -- Independent Bankers' Bank (U.S.) secures online banking with VACMAN
    Controller/Digipass GO6
 -- Mizuho Bank (Japan), Intesa Sanpaolo (Italy) and Banco Itau (Brazil)
    receive VASCO's Market Vision Award
 -- Digipass integrated into SonicWall SSL-VPN
 -- VASCO opens subsidiary in Mumbai India
 -- VASCO expands US Channel Partner Program
 -- VASCO ranks 5th in Fortune Small Business Top 100 and 14th in
    BusinessWeek's Hot Growth Companies top 50.

Congratulations to all the longs... I still think that this is a great long term investment as the world turns more and more to online banking and security. Don't forget that Vasco Data Securities just jump up almost 17% on a day that all the major averages tumbled.

Evergreen Solar Announces 1 Billion In Contracts

Evergreen Solar (eslr) surged over 20% yesterday as it announced that is had signed two contracts worth approximately 1 billion dollars. Evergreen Solar and German-based Ralos Vertriebs GmbH signed an agreement valued at approximately $750 million for panel deliveries beginning in 2008 and extending through 2013. They also signed an agreement just last week with an unnamed United States-based installer, for approximately $250 million. Both of these contracts are going to be manufactured in their Devens, Massachusetts plant.

In addition to the two contracts listed above Evergreen Solar (eslr) already has a backlog of $850 million from six different sources to be completed in Ever-Q, it's German based joint venture.

Here is what the big whigs at Evergreen Solar had to say about the recent contracts...

“We offer our customers a long-term value proposition because our string ribbon technology consumes less than half of the polysilicon as compared to the industry average, which enables us to provide a unique combination of cost and cell conversion efficiency," said Richard M. Feldt, Evergreen Solar's president and chief executive officer. “We will enter into selective long-term supply agreements with additional companies that also bring differentiated value to their customers and serve markets that are at the forefront of solar growth.”


So, here we are watching a company that has 1.85 billion dollar in backlog yet the entire company itself is only worth 1.32 billion by market cap! Based on this factor alone it would appear that Evergreen Solar is grossly undervalue at these levels. One of the biggest problems with solar companies is the perceived shortage of polysilicon. Evergreen has this covered already though as they have signed several long term supply agreements over the past year.

Here at Stock Picky we have been behind ESLR for a long, long time and we still believe that it is a great buy even at these much higher levels then just a couple days ago. The key of course is to not buy all at once, take advantage of the dips and always invest for the long-term. After all, this stock was a buy at $100 oil, but now at $135 people will be flocking to alternative energy plays like this one. To research more into this company check out all of our Evergreen Solar articles here!

Appetite For Destruction Or Just Risk?

As an investor it is very important to realize where you are in your life, and what exactly your investment goals are. Generally, if you are a younger investor you can tend to take on more risk or more "speculative plays" if you will. Now, this doesn't mean you should go out and buy all risky stocks, you always need those stable dividend paying stocks.

In fact, one of the ways the rich get richer is that they just purchase a few high paying, stable, dividend paying stocks. Then take those cash dividends that you receive quarterly, and invest them into more speculative stocks. Once you make a bit of mad money on your speculative stocks, cash out some, or all of them, and re-invest into your high paying dividend stocks or other safer investments. Rinse and repeat...

Of course, this does take a lot of money/stock to generate much in the form of cash dividends, but it is none the less very possible. I am sure there are many rich investors out there taking advantage of it all the time. As a small investor though, you might just not be aware of this trick of the trade.

Now, if you are an older individual it is more important to have steady stocks that pay large dividends as you can use this as a source income. Not only this, but you should have a fair amount of bonds, mutual funds and even cds as a source of income. The most boring investments after all, are the safest, and that it what you need going into retirement.

So, before you invest make sure you know what your goals are... and be sure not to take on too much risk as you can get burned. Since this is Stock Picky, I will leave you with two long term investments. Google (goog) for all you young fellows out there... there's this new thing called the Internet perhaps you've heard of it, and Royal Bank Of Canada (ry) for all of you grey haired folks which pays out a hefty dividend and has always been dedicated to increasing shareholder value.

Good luck with all your investments and let me know if you have any questions...

Time To Revisit Evergreen Solar

Over the past couple years it has been quite easy to see the correlation between solar stock prices and oil prices, but lately with the markets have been self destructing, and no one has been ready to take on any "speculative" solar plays like Evergreen Solar (ESLR). This is a stock that was just trading at $18.85 just three months ago! Today even with the Dow surging 420 points Evergreen Solar is sitting at $8.23 while oil is well over $100 per barrel.

So why did the stock plummet like that in just three months is the question you need to ask yourself. Well, first of all the market in general has been horrible, the number of companies hitting 52 week lows has been downright astonishing. That of course is not the whole story though, Evergreen Solar just finish a offering of stock at $9.50 per share. Evergreen Solar expects to use the net proceeds from the offering, together with funds it expects to raise by way of future debt financing and its operating activities, (i) to complete phase I of its new manufacturing facility in Devens, Massachusetts, (ii) to plan, construct and equip phase II of the Devens manufacturing facility and (iii) for general corporate purposes, including purchases or prepayments for raw materials, including polysilicon, and working capital. This offering further dilutes shares and investors can tend to see this as a negative, especially in the type of environment.

None the less, the future of this company is still looking quite bright from my point of view. Just this past year they announced several polysilicon supply agreements which will provide a generous supply of the material needed to make solar panels for the next 10 years. They have ramped up production on their Devens plant and expect to start shipping solar panels out of that location in mid-2008. Not too mention Evergreen Solar touts the most green solar panels on the market, which simply means they have the smallest carbon footprint of any panels on the market. With oil over $100 a barrel I am shocked to see ESLR trading so low, and I have been taking advantage by added to my long term position at these levels. The long term bull market in solar power and other alternative energies is here to stay and Evergreen Solar is a great way to play it.

What can I say though it was hard to single out ESLR with so many stocks having been tossed in the garbage as the markets crashed. I still like Google, CECO Environmental Corp, Zoltek, Vasco Data Securities, Royal Bank Of Canada, and YUM Brands all at these levels. As a younger investor this downturn in the market has been like a God send. What an opportunity to get into great companies at bargain basement prices.

Better hurry though these sales aren't going to last long I am afraid...

As a side note our pole here at Stock Picky has closed and the major of voters say that 2008 will be a bear market. So far the bears do have the upper hand, but I think that by years end we will see the market averages hit new highs.

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.

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...

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...

Making A List, Checking It Twice

With the Fed's decision to only cut interest rates by 0.25%, we should all be reminded that it is certainly not wise to buy all at once. No matter how great your stock is, there are other factors out there in the market that could affect your stocks performance, even if the company is raking in the money. What you need to realize is the difference between a stock that has been taken down along with the market, and one that truly does deserve to go down based on it's future earnings and fundamentals.

So, when you have a great company that you have invested in, and you believe can be even better in the future, you need to stop and take a look at the bigger picture. All stocks take unjustified hits from time to time. This is were following the general stock market can help because on some days, almost everything goes down. Remember, long term investing allows you to purchase shares of a single company at many different prices over time to build your position in the stock.

As long as the long term story of a company is still in tact you can feel at least a bit more confident that you are making a good financial choice when you add to your investment at a lower price, and in turn lower your cost basis. (Cost basis is simply your break even point on the stock)

Even though the market is very unpredictable, one thing is for certain when you look at the scheme of things. While the banks, mortgage companies, and many other business maybe in trouble , there are way more companies that are thriving in a booming global economy. Just because the "precious" United States hits a financial speed bump the rest of the world will just look on and continue to expand at it's rapid pace.

Now for my prediction for next week, and the week after that, and the year after that... BA, GOOG, CECE, VDSI, and YUM! Merry Christmas From Stock Picky!