'Tis the season

With the Holidays rapidly approaching it leaves very little time to think about finance...except for how much you are spending on gifts. Hopefully you had a budget to begin with so it makes it easy to figure out how screwed you are ;-)

For the record:

Sold: I sold MEMC (WFR) today as it hit $93 which was way over my target of $85. That locked in a 27% return in just under 2 months. I am sure that it will still climb....but I am willing to sit on the sideline for now since it is so far over the price targets.

I wanted to purchase more GLS and GNK which are both pretty darn cheap right now...but I have my funds tied up in a transfer....more on that later...

I also want to buy China Digital (STV) here at $28....but need to wait a bit. I will explain all the reasons I really like this spec play in the next week.

When enough is enough...

So unless you have been under a bus lately, you have noticed that all those November Blues are finally behind us. The market is back up to almost 13,800 from a low back in Nov of ~12,800. Most of this was due to the expectation that the fed lowers rates tomorrow. Ok, but then what? We are still seeing a lot of bad news come out of the banks, the projections for the housing market next year call for about a 12% correction (from the highs in 2006), oil is projected to go higher or stay around $90-$100 and people will be selling for tax reasons come the end of the year putting some pressure on the market. So let's assume that the market rides the news tomorrow to around 13,900 or even 14,000....the historical trend suggests that the market will fall back down and take another breather. So maybe it is time to lighten up a few of those holdings or at least set that trailing stop a little tighter on the ones we are worried about.

You gotta love it!

Who amongst us doesn't love this market? I think it is absolutely fantastic....as long as you have the fortitude to stick with the roller coaster. I sincerely think that if you try to time this market you will get hosed. That is why we stick with the plan...take our profits when we have them... don't get greedy!

Another great reason to love this market...where else can a comment like this one sent the market on a massive 5% tear (D.Kohn):

"The increased turbulence of recent weeks partly reversed some of the improvement in market functioning over the late part of September and in October," Kohn said in remarks to the Council on Foreign Relations.

Huh? At least the computers all interpreted that the same way...rate cuts on the horizon. Speaking of which, I am not so sure about this market after the rate cuts. Then we get into end of year selling and more bad news on the mortgage front...kind of makes you think it is time to start looking for that exit point on most stocks...pocket those profits and don't wait around for the next wave of bad news...and then buy the drop...hmmmm

Buy: Also, I should note here that I did go and buy Apple (AAPL) at $160. The price target is ~$210 so there is ~30% upside there. It is already at $185 so hopefully that won't take too long.

Hold: And what about GOOG...some analyst came out and put a $900 price target on that baaaad boy...jeez! The official price target has inched up again to $760...go GOOG!

Buy: I bought some Genesis Lease (GLS) here at $18. They specialize in leasing jets to airlines. It has about 35% headroom to target and has a whopping 11% dividend! I really like this airline lease story since the average age of their fleet is only like 4 or 5 years old. Kind of reminds me of Southwest, Frontier and JetBlue when they started...keep the planes young...minimize repair costs...more fuel efficient jets. All good. Also they are extremely diverse with planes all over the globe so it is not a local play. Even if we just hold...11% sounds good to me ;-)

I have more but am out of time...

GNK...is back!

So yesterday on the massive slide in the market (esp. in bulk shippers)....I snapped back up a bunch of Genco Shipping. The sector has experienced a pretty big correction over the past few weeks and now the stock is sitting back down around $64 with a price target of about $80. Plus, they have a dividend coming up for those who buy before the 14th. I still like the dry bulk shippers...their day rates continue to increase and the demand will not be going away anytime soon.

And how about that GOOG....still about $720...although it was at $740 just yesterday. But the price target has increased twice and is now at $755 so we can continue to hold with no moral issue.

GOOd Gravy

So today GOOG closed at $707. Just one week ago I discussed how the price target was $730 so our trigger to sell (5%) would be about $695. Well, that came and went...but in the meantime the price target had been updated to $740. Now we are even within 5% of that mark. My issue is that this stock continues to pour out great news....great growth...expanding into new markets...etc.

So I really struggle with selling this one. I guess the safe play would be to let it stay in the game but to set a automatic sell at a lower point....say $690. That way we can stay in the game (to wait for the price target to be increased again) with minimal downside risk. Even at $690 we would be cashing out with a 44% gain.......Done.

One that got away...

Last week I was looking at MEMC Electronic Materials (WFR). It was sitting at $60 and with a $78 price target (+22%), a +25% 1 year growth target and a PEG of 0.6. In addition there was a very compelling article in Kiplinger's about what this company specializes in.....providing silicon wafers to the semiconductor industry as well as the solar industry. As you may have seen from the INTC conference call, CPU demand is high (thus silicon too) and the solar industry is red hot with double and triple digit growth rates foretasted over the next 5 years. As such, one would think that WFR is uniquely positioned to supply all that demand....and as such blow past analyst expectations (which are already in great shape).

And then I waited....and on Friday it went up 20% to about $70. Based on the following news:

In a note to clients, UBS said MEMC signed a 10-year deal to sell $7 billion to $8 billion worth of solar wafers to Conergy, and expanded its original 10-year deal with Gintech by another $700 million, for a contract now worth $3 billion to $4 billion.

Embedded in that same Friday message were these two nuggets:

1. UBS estimated that MEMC still has enough polysilicon left to sign one more customer for a 10 year deal worth $2 billion to $3 billion.
2. UBS maintained its "Buy" rating and raised its share price target to $85 from $77

Having seen the new target at $85 (vs. the price of $70) that means that there is still ~21% room left...so I picked up some shares. It rose to about $75 but has settled in about $73 now. We will see where this one will take us....

Two stocks that meet the criteria...

Two stocks which will be getting the green light today are MNST and ROH.

Monster is the parent company of Monster.com and has a price target +23%, 1 yr growth of +31% a PEG Ratio of 1.5 but no Div. I am ok with no div given the fact that this is tech and they have a growth rate greater than 30%.

Rohm Haas is a very interesting story since it is an old school materials company specializing in Coatings, Monomers, Performance Chemicals, Electronic Materials, Salt, and Adhesives and Sealants. It makes the cut because it has a price target at +21%, 1 year growth at +15%, a PEG of 1.17 and a div of 2.8%.

Tracking overall performance to date

Trying to keep a simple sheet so I can keep things straight.

The APG column is simply a quick and dirty way to try and normalize the gains with respect to the time the investment was held. The interesting thing there is that GOOG is only the third best "return" when time the position is held is factored into the equation. But it should be noted that as of today...the Dow is still at the same value as when we bought GOOG...and the Nasdaq has gained only about 10% in the same timeframe. Not bad.

Whoah...how time flies

So it has been about 4 months since I have posted here....shame on me. The worst part is that I have actually taken a few finiancial steps without posting...double shame on me. So here is what has been happening:

First, I still own GOOG. As of this afternoon it is at $675...up 40% from our original entry 5 months ago at $480. I am seriously struggling with this one....should I sell and lock in these impressive gains. In the end I need to follow my sell rules:

1. If there is news representing a fundamental shift to the original assumptions
2. If the price reaches a level within 5% of the 1 year target price

Now, the news for GOOG simply continues to get better as they smash through their earnings reports with AAPL-esque talent...so that is no reason to sell. When we bought GOOG the target was only $600...but when the stock soared through $600 the price target had already been updated to $730! So now the 5% trigger is set at $695...not quite there yet. So I guess we hold.

Second, I still own my Indian friend TTM. Now that stock is at $20...only up 10% in the past 5 months but it did climb out of a 9% hole to get back to where it is today. The news still remains positive for the most part and the target is still way up at $26...so I guess we continue to hold on to this one as well and wait for the breakout.

Third, I finally sold my oil stocks (BP and GSF). Both finally reached my sell limit of reaching 5% of the target price. BP netted +16% and GSF netted +32%.

Fourth, I bought and sold a dry bulk shipping stock called Genco Shipping (GNK). That was a quicker trade that only lasted about 2 months but rose from $52 to $69 for a nice 30% gain. This stock also carried a 4% dividend at the time and I received one payment of about 1%...taking the overall gain to about 31%.

But as you can see...I have sold everything but my GOOG and TTM. So again I am faced with finding another Cavitation value entry-point. While I am finding those next stocks...my money is safely parked in my 5% online savings account ;-)

A bump in the road

I have to admit, I was pretty discouraged by the recent dip in the market. My TTM and GOOG were flying high...both were up about 5-7% in just two weeks...and then it hit. TTM is now down 9% and GOOG is holding on to a +5%. Being an idiot, I had not put a trailing stop in place for either stock ... violating one of my fundamental rules. If I had put the trailing stops in place, I would still own GOOG but I would have sold TTM at breakeven...costing my 9% at this time. I am not worried though...I still like my Indian friend and I have confidence that it will come back. I will definitely put trailing stops on both Monday morning though...enough is enough.

And way to go Intel. Posting an impressive 4.4% gain on Friday and up 25% in the past 3 months....I guess it always helps when your only real competitor falls on their face. The interesting thing is that AMD has done that in the past and INTC stock has gone nowhere....but I guess they are so overdue that people are finally starting to buy again...instead of just holding. Anyway...way to go.