Good prospects and undervalued (USA)

[London Minnow]

(At the risk of sounding totally ridiculous)
JC Penney, if you see retail numbers for Q4 beating expectations. I think the black friday/early Christmas sales point to it. As a long-term play it absolutely sucks, but I think it has the most of the retailers to gain from a better-than-expected 4th quarter.

I'd sell at $21

 

[james1989]

Sell RBC bearings at $48 for close to a 10% gain, it will no doubt go higher, but the margin of safety isn't there.

 

[james1989]

Quick portion of praise for t2w members. Thank you to those who challenged me earlier in the thread, it made me more determined to take away the wealth of others and it also prompted much more study to limit any downside, both have been successful.

Advice. Investment is not hard, think logically throughout each step.

Note. You may find a compounding calculator at the following link: http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

It is apparent that the many have poor characteristics for making money, not your fault, just human nature and nurture. Put yourself in a position where you cant get excited or scared i.e. by investing regularly in an index such as the s&p500.

May you have a prosperous Christmas period!

 

[danishone]

A replication of my thread on the UK equities section, however, this thread shall have the sole aim of identifying US listed undervalued equities.

Again, please note that no investment advice is intended.

I don't believe in undervalue investments!

 

[wackypete2]

I don't believe in undervalue investments!

but you do believe in spamming t2w, eh?

Peter

 

[james1989]

Quick note on RGA, on the surface the business is performing great (using GAAP (deeply flawed)), but it is difficult to analyse what cash will be generated in the future due to anomalies in the cash statements. I will conduct further analysis but for now it should be taken as a sell at around $60.

A note on RBC Bearings which I decided to sell at $48 for only a 10% profit, upon closer inspection I conclude I was right and more to the point wrong, the business is not absolutely undervalued (right), but it is undervalued. I was wrong about the ability of the business to generate substantial real cash (which it can, but to a greater extent than thought) which in turn drives shareholder value and business value, hence makes the business much more attractive at the price I bought. Examining cash flows requires a detailed analytical approach, and I clearly failed to do either appropriately.

As always, when trying to estimate free cash flows, do so in a flexible pragmatic way. Wall Street pushes the standard free cash flow figure, and sometimes they fail to do even that. Operating cash flow minus capital expenditures is not a way to derive free cash flow, it is in the purest sense but not for an investor trying to estimate future cash. Everything is relative and you should always be comparative.

As for DTV (absolutely cheap) and KRFT, both continue to exhibit tenets of fantastic businesses and sit in value territory.

Happy new year all!

 

[james1989]

Fresenius Medical Care Corporation ADR (FMS) looks attractive at around $33.

 

[james1989]

This thread may now be closed.

 

[wackypete2]

This thread may now be closed.

Why?

Peter

 

[neil]

Why?

Peter

Yes- why? Add a chart per comment and this could be a good thread on a site dominated by forex

 

[james1989]

The fact that my style of investment doesn't hold much appeal to forum members coupled with my ever growing workload make sharing research uninviting.

I believe those who see the merit in my investment rationale can deduce enough from the latter part of the thread to become successful. I emphasise limiting downside, and adhere to not losing money, hence you should be buying quality cheap.

Quality must be determined, this ties in with limiting downside, hence predictability should be paramount. Growth factors should be present, both business wise and financially, look for material happenings. Value shouldn't be on any single metric, such as book, valuation requires just a small amount of logic, probably the easiest part.

Thanks for visiting and contributing.

 

[james1989]

Just to make it clear, I would not personally invest in Apple.

The fundamentals look great, but the sector is brutal, however discretion is advised as I could and most certainly will be wrong in the shorter term.

Putting a buy price on AAPL, it comes in around $125 with fair value at around $425.

Best Regards

For those still interested in Apple and like its prospects, it is now undervalued.

The fair value of Apple has moved northward since I wrote $425, and is currently trading at around a 17% discount to fair value. If I was a gambling man, $405 would be my entry, looking for a 50% bounce.

 

[gib123]

The fact that my style of investment doesn't hold much appeal to forum members coupled with my ever growing workload make sharing research uninviting.

I believe those who see the merit in my investment rationale can deduce enough from the latter part of the thread to become successful. I emphasise limiting downside, and adhere to not losing money, hence you should be buying quality cheap.

Quality must be determined, this ties in with limiting downside, hence predictability should be paramount. Growth factors should be present, both business wise and financially, look for material happenings. Value shouldn't be on any single metric, such as book, valuation requires just a small amount of logic, probably the easiest part.

Thanks for visiting and contributing.

Hey James,

Would you still do analysis by request if being kindly asked by people on this forum?

Thanks.

 

[james1989]

Hey James,

Would you still do analysis by request if being kindly asked by people on this forum?

Thanks.

Hi Gib, of course, if you're interested in discussing an investment idea with me I would be happy to help.

 

[gib123]

James,

I have been particular interested in Aruba Networks (ARUN) over the last few years, however financial analysis isn't my strength. Is is possible for you to take a brief look into this company and identify its values.

Thanks,
Gibson

 

[Predicabo]

The only thing undervalued in the US at present is real estate. Worth a buy and hold over the next 10 years. If you're after undervalued assets in stocks then the UK market is the place to be buying also for a similar holding period. For shorter term speculation look at bonds med EU sovs. and sell CDS premium on same.

 

[james1989]

Hi Gibson,

I would usually stray from tech stocks such as these due to unproven economics and innovative competitors which could ruin the business immediately. However, Aruba is beginning to show signs of promise and it does provide somewhat of an invaluable service to a broad base of customers as does its competitor Cisco.

I would personally buy something a little more predictable, however, if you feel comfortable with the business, I would assign a buy price of around $20 today.

 

[gib123]

Hi Gibson,

I would usually stray from tech stocks such as these due to unproven economics and innovative competitors which could ruin the business immediately. However, Aruba is beginning to show signs of promise and it does provide somewhat of an invaluable service to a broad base of customers as does its competitor Cisco.

I would personally buy something a little more predictable, however, if you feel comfortable with the business, I would assign a buy price of around $20 today.

Thanks a lot James,

Any particular equity you would recommend for the market right now? What's your opinion on CPL. (CPFL Energia S.A) it seems to be discounted at this price and a much stabler business, with a high dividend rate.

Gibson

 

[james1989]

Thanks a lot James,

Any particular equity you would recommend for the market right now? What's your opinion on CPL. (CPFL Energia S.A) it seems to be discounted at this price and a much stabler business, with a high dividend rate.

Gibson

CPL came to my attention recently, partly due to its low price and fantastic fundamentals.

However, you must be careful when considering businesses that are or may be subject to regulation. CPFL is involved in the distribution of electricity in Brazil where prices have been soaring. The Brazilian government has pledged to bring down prices which will impact CPFL's profits, hence the share price valuation.

For me, a business in the utility sector is far too risky, especially in South America.

James

 

[james1989]

National Oilwell Varco which I bought at $67.

I'm also looking to increase my stake in FMS at around 32.

And of course DTV at current price.