I have looked at IBM many times within the past year but I have not made a purchase yet. One of the main reasons is that big investors like Warren Buffet continue to purchase more and more stock every quarter. With a low PE and a nice dividend, there really isn’t much downside in the stock. We have seen a recent run up in the stock price and it looks like it could have reached a bottom. It started a decline beginning in 2015 but there is plenty of growth to go into the stock.
Why haven’t you invested in it yet?
I still need to do my due diligence in the fundamentals and technicals. I still don’t understand all parts of the business. The numbers look good. The technical indicators need some more positives. I’m willing to wait until I see a good trend on the technical side but I also need to see some good recommendations for the stock.
When Warren Buffett continues to buy, he must know something that normal investors do not have access to or inherit knowledge that it will be a great long-term play in the future. Naysayers will say that he does not invest in technology stocks so his purchasers might be risky to his investors.
It would be nice if some more big names start accumulating IBM. I believe we should see this happen more often as the technical indicators work to the positive. This wouldn’t be a stock I would purchase right now but I would continue to watch and add to your radar. In the past week, I have already mentioned a couple stocks Ford (F) and Walmart (WMT) that will work well for you since you get a nice dividend while you wait for the stock price to rise to its market value.
Warren Buffett likes to buy when people are fearful and sell when people are outright bullish. He is an investor that is mainly for long-term growth but is known to make mistakes as well. He bought Tesco thinking it would be a great global player in the retail space but he had to sell when he found out that it would take much longer than expected to get the returns to his investor and he was not happy with the management.
IBM still could be in a downward trend and Warren Buffet would happily continue to purchase if he believes the long-term growth play. I recommend you watch his purchases quarterly. Of course, if he ends up making a mistake, it is much easier for us to get out compared to him. You might see him sell a little saying that he needs to “rebalance the portfolio” or any other reason. I would see this as a reason to sell or remove it from your radar. Either way, I think this is one to look further at and it should play out nicely in your portfolio.
Chevron is a major oil & gas play that has seen bad times in a couple recent quarters. It has a yearly high of $112.20. It has dropped more than 20% since that high and even reached lows at $69.58. For the long-term investor, expect this stock to eventually reach the highs and surpass it. In the recent times, you can even get a nice dividend of almost 5%.
It’s not possible to get that dividend in your savings account. You can expect this stock to only to continue to move up as the economy improves globally. Oil is still the main resource used for energy and it will only to continue to be used more in the future. You can be patient with this stock and I actually would just hold on to it. I have no reason to sell when I get a nice dividend and fundamentally sound stock like Chevron.
Ford was at a bottom at $11.45 in the last week. It has leaped up a nice 15% since it achieved this new 3 year low. This increase was caused by a 20% increase in sales in February which included increases in passenger cars, utilities, trucks, and overall sales in 2016. This is the first big stock increase we have seen in over a year. It should see some downward action soon as people try to break even and close up stock positions before the tax date
For the long-term investor, you get a nice 4% dividend while you wait for this stock to get back to proper stock valuation. Remember, many people still are holding onto their cars approaching or over 10 years old. Most people would change cars in 3 to 4 years but the economic downturn has caused a damper on the consumer spending. This should change in the new few years and I expect for the patient investor that they will be rewarded greatly by Ford’s stock price and dividend.
Chevron has taken a nice leap this morning of over 4% after one of the analyst upgraded the PT to $96. Weren’t there just naysayers saying that oil will never rise again? I think this stock is still undervalued and there is plenty of room to the upside. Even if it doesn’t go up, you still get a nice dividend of over 4%. I don’t see much downside especially for a company that focuses on energy through not only oil but through natural gas, solar, wind, and energies of the future.
When I go to Walmart (WMT), I always see long lines of people buying tons of stuff in a huge warehouse that contains goods for eating, playing, working, and everything that you need to do whatever you want and need. It is one of the only warehouse where their are crowds of people that are coming in and out of a store. It sometimes is annoying to have to stop and go for the crowd of people because any Walmart is always so crowded with shoppers.
Also living nearby their distribution center for Walmart.com, I know that they are taking great strides to play in the internet market. They know that internet distribution is key but they also have the volume and revenue to play in a space only reserved for Amazon.com. The great thing about brick and mortar stores that have an online presence is they can offer you the option to not only order and deliver to your house but the more quick option would be the pick-up at their stores where you can get in two hours.
Remember, that they also have the Sam’s Club brand which competes with the fiercely competitive Costco warehouse stores. In February 2016, they started accepting Visa which means they allow all major credit cards which also include American Express, Discover, and Mastercard. This will allow a huge network of consumers to shop in their stores and it should mean more growth for the company overall.
Employee morale is higher with proper hourly wages. They have gotten rid of the strange welcome people in their stores and replaced them with security to check the consumers purchased items before exiting the store. I feel that they are making all the necessary steps to perform at a much more competitive market. They recently had a beat in their quarterly earnings and I expect this to continue in the future. With a PE that is less than 15, there is really not much downside in the stock. It has already seen the worse and it will continue to improve going forward.
I’m been an advocate of Ford and their transition to make better cars, better design, and an overall better product for the customer. Their stock has not reflected these changes well and it has been on a decline for over three years. However, there were also prevailing market conditions such as oil that has affected its stock price. You must also say that the current oil prices though will help Ford achieve a new top in stock price. Gasoline is rather cheap right now even with the recent jump and people will be more inclined to buy new vehicles.
Remember, Ford has the popular Ford F-150 truck that gets much better gas mileage through the use of aluminum build. They are the first company to use the lighter aluminum on their trucks. In any industry, you have be planning to innovate to be the market leader. The competitors will, of course, copy their aluminum design as they continue to see Ford’s increase truck sales but also that the customers have a better experience and a reason to start buying a new truck.
Ford also is working on some big things that will affect the industry long-term. They are studying driver-less cars just like Tesla motors. Unlike Tesla, they have a lot more volume and they are on a better spot to take an expensive technology and find ways to lessen the price for the customer.
How did I miss this stock? We get so busy looking at our portfolio that we miss these opportunities. Well, it just so happens that I was viewing the tweets on StockTwits and someone mentioned that Facebook (FB) has taken a higher market value than Wal-Mart (WMT). They put the stock chart side-by-side and my surprise was seeing that Wal-Mart has dropped rapidly the past 3 months.
Ok, so yes, Facebook (FB) has higher marketshare and it definitely can keep moving up higher. However, we need to have some conservative stocks that will also continue to do well for the long-term. Wal-Mart is the answer to the conservation stock picker that wants to get long-term growth, appreciation, and a steady winner.
Fundamentals are really good for Wal-Mart. It currently trades at a PE of 14.7. Compare that to its competitors Target that is running at a PE of 20.5 and you have a winner of a stock that is under-valued, under-appreciated, and you know it won’t last forever. You also get to collect a nice 2.7% dividend for owning WMT.
Can it go down further?
Of course the stock can go down further, no one holds a crystal ball. However, I’m sure big companies like Berkshire Hathaway know what they are doing when almost 5% of their portfolio is invested in Wal-Mart.
The Twitter CEO recently stepped down. The interim founder Jack Dorsey has come in to replace in the mean time. The stock market has not been happy with this strategy. There is still potential for Twitter (TWTR) but it will take longer than expected to see the value. This is turning to more of a long-term value stock.
Technically, Ocwen is looking bullish. It has shown a nice bottoming pattern and a nice slow step back up finally. This is after a huge drop at the end of 2014 from $58 to $6. YTD that is a huge drop of 70.9% and YTD drop of 32.1%. Even with these poor technical formations, there has been widespread activity purchasing the stock.
Seth Klarman has been buying since 3rd quarter of 2014. He was buying when the stock was averaging $30. He also bought 4th quarter 2014 and 1st quarter of 2015. He’s continues to accumulate as it goes down in price. This is a true value investment and I have to believe when a guru like Seth is putting millions of his money and having this stock as a majority in his portfolio that he really believes it will do well in the future.
Seth Klarman is a well-known billionaire stock investor that runs the Baupost fund. He has a very great record of amassing big wealth through his value-based purchases. In the past quarter, he bought Ocwen (OCN) that was over $55 just a couple years ago and then it reached bottom at $6 just this year. He’s known to make safe investments that will do really well or else will only lose a little money at the end. I think that is his strategy with this company. As risky a play that Ocwen looks, it does look like it technically has hit the bottom and its time for it to rise.
Fundamentally, JP Morgan recently bought a bunch of Ocwen’s agency backed loans. The company has also sold these loans to Nationstar as well. The company wants to focus on non-agency subprime which they believe would make their customer service better for owners of these loans.
I recommend looking at OCN and putting a small percentage in it for a 20% gain at $12. Also, a stop at $9 just in case things go sour!