Super Stock Blog

Let's make our own bull run!

Month: March 2010

Recent Stock Picks Doing Well

MKL – $353    –>  $366
FLR – $43       –>  $45.52
ATVI $10        –>  $11.62
WU –  $16.30 –>  $16.51
PCS – $5.86   –>  $6.75
T – $25            –>  $25.828

These are the recent stock picks posted on the blog.  I wanted to see how the recent stock picks are doing.  They are all short-term and long-term trades.  Short-term wise, you should be selling them and taking in the cash.  Long-term, the stock market is moving up and you’ll continue to have more appreciation in these stocks.  They all started at a very low price so they are quite safe and should continue to make gains for quite a while.  They all have long-term value and are all profitable and gaining EPS by quarter.

Time to Invest in China

While the United States continues to waddle in the recessionary times, we will see the global economy grow.  The best way to play the future is through countries that have people working and growing rapidly.  China is the main country with this type of growth.  Jim Rogers stated that China would be the next future to boom.  He stated United States ‘time is over’.  The question is how do we invest in China.  The country being overseas and in a foreign language make it hard to learn about stocks.  However, I have done a little research and I found a gem that’s a good play.

CPHI, China Pharma Holdings, Inc., is at a low $3.50 price.  It has dropped recently from a high of $4.  There was a lot of jumping in after their annual report.  Now, it’s a nice bargain price to get in for a long run.  They are a generic Pharmaceutical based in China.  They have a low PE at 7.31.  They have had increased EPS for the past 10 years.  The past 4 years have been positive EPS.  They have no debt.  They also sell nutritional supplements.

What to look forward to?

They have reported 23% growth in sales year-over-year.  They have a 70% growth in EPS.  As China continues to grow, more people will buy supplements and medicines from their local pharma companies.  This is a micro-cap stock so there is a bit of volatility, but it seems like a pretty safe play in the long-term.

Here’s some quotes from their annual report from early March 2010:

“Clear Strategy for Growth – We are positioned in a rapidly growing industry in the fastest growing economy in the world. Within the Chinese economy, as medical care expenditures represent only about 4.5% of the Chinese GDP (compared to 15% in the United States), the healthcare segment will experience faster growth. Furthermore, the recently announced Healthcare Reform in China implies significant additional revenue opportunities for pharmaceutical enterprises supported by government initiatives. The increase in demand from these sources should allow us to grow organically at a healthy pace. Aside from our current portfolio of products, new products from our pipeline (such as Candesartan and the generic version of Crestor, or Rosuvastatin) present us with very healthy growth opportunities once these products come on line.
Finally, the Healthcare Reform will change the current landscape of the Chinese pharmaceutical industry which we think will create many attractive acquisition opportunities. We plan to use these opportunities to the fullest extent possible and hope to continue our rate of growth in the future.”

“Gross profit for the 12 months period ending December 31 2009 was $25.65 million and the gross profit margin was 42%. For the same period in 2008 gross profit was $25.29 million with gross margin being 50%. From a product-sales structure perspective, we sold more lower-margin products in 2009 compared to 2008, including products that are listed on the EDL. Going forward we expect gross margin to balance out more evenly as some of our higher margin products (such as newly launched Tiopronin and Omeprazole Sodium) achieve higher sales volume as they ramp up.”

Monsanto, food food and more food.

Monsanto (MON) could be the next big thing.  They are a food producer.  A major global food producer that gets revenue from farmers who use their seeds.  A lot of the vegetables and fruits in your market originated from a agricultural lab of Monsanto.  They are one of the largest global players in the agriculture market.

How do they make money?

They sell seeds to farmers.  When farmers make money, Monsanto makes a percentage of that cash.  The funny thing is their crops spread to whoever is next to it.  This gives their the ability to put lawsuits on other farms.  They claim the other farms are using their patented seeds without paying for it.  This is probably kind of unethical, but they do make lots of money doing this.

Why do people buy their seeds?

They have genetically modified their seeds to give the most abundant, freshest, and sweetest product.  Their seeds are made to protect against bugs and weeds.

They also have many agricultural products.  Many of them are used for crop protection. “Once a year farmers make a decision about which seed to plant. At Monsanto, we work everyday for that opportunity to serve farmers.” – Hugh Grant CEO.  ` They also sell pesticides.  Their most popular is ‘Roundup’.  You might have seen their commercials back in the day.

Here’s a video on Monsanto:
http://www.youtube.com/watch?v=OXpWR3zrT1I

Let’s do some technical work on this company.

The stock has reached it’s low point.  It’s bound to move up from here. If you read the latest SEC filings, you’ll find that many of the big management has been buying their stock recently.  There were hugh purchases made on March 2, 2010, January 20, 2010, and November 2009 by insiders.  Their purchases were in the range of $71-$76.  They have been buying since early 2008.  March 9, 2010, the John Hancock Trust fund bought $259,815,600 worth of stock.  Many of these institutional funds buy on the cheap and sell when it gets high.

I’d like to put my money with the big institutional buyers and insiders.  If the stock breaks $70, I’d be willing to sell and get rid of it, but the stock charts show that this should easily go pass $80 giving you more than a 10% gain.  This is a great short-term play.  For those playing long-term, they have EPS growth for the past 10 years.  The last two years have a huge jump on the EPS and they always make a profit every quarter.  This is another boring stock company that does not have much news, but whenever you eat, you should know that Monsanto has a little bit to making that food.

That’s my stock tip for today.  Enjoy! Happy Trading!

Electronic Arts Continues to Impress

Electronic Arts continues to grow to a better tune. They have just released Battlefield Bad Company 2. It ranks #6 on the top sellers right now on XBox. Playstation 3 is in the top 25. They also have Mass Effect 2 on the top 100. Dante’s Inferno is at the bottom, but still in the top 100. Final Fantasy XIII is ranked the top game, but many players like specific genres and not everyone is into RPG games.

ERTS looks good going forward. They have a bunch of good games coming out. Their positioned for a strong upturn for the next quarter.

Let’s take a look at their daily chart:

This small chart shows the past month.  Each candle represents one day.  There might still be a tiny drop coming, but look at that consolidation.  This stock will have a big gap up or a drop, but I think the bottom is already in.

Fluor Corporation

For those looking for exposure into a global marketplace, look no furthur than Fluor Corporation (FLR). This stock has reached lows on daily and weekly stoichastics and it’s primed to go up. The stock has been stagnant for 5 years. It reached highs in June 2008 but has continued back down to it’s 5 year lows. The financials on it look good. It has continued to increase earnings per share. The total net income has continued to increase every year.

Let’s take a look at what they do. If we read the finance summary on Yahoo’s Finance, it states it provides “engineering, procurement, construction, maintenance, and project management services worldwide.” It has multiple streams of income: oil & gas, industrial & infrastructure, government, and power. Their business seems quite complex. It’s a lot of logistics, engineering, and project management. However, it’s not any Enron. They are busy fudging numbers to get things looking good. They are providing a productive business that will create more industries. Engineering = good.

March 2, 2010, they were awarded a project valued at $450 million from Debswana Diamon Company Ltd. Here’s from the press release, “Jwaneng Cut 8 is at the forefront of a number of projects being developed by Fluor as part of a portfolio which includes a new diamond processing plant at the Orapa Diamond Mine and the expansion of the Morupule Coal Mine.”

February 28, 2010, they were awarded a project with the Singapore LNG Terminal Project. The plan is to have the terminal produce 3.5 million tons of LNG annually. I like these projects. They bring in a valued asset and Flour has a huge global presence.

Let’s take a look at their fourth quarter transcript. We’ve already reviewed their earnings so I’m looking for their guidance in the future and an explaination of waht they plan to do to keep up the growth. They have a huge backlog of mining projects including one with BHP Billiton’s Rapid Growth Project. In the United States and Europe, they are focusing on road and rail opportunities. They also are building wind farms in the coast of Scotland. They have continued contracts with Department of Energy and Defense.

Their guidance is very conservative at $2.80 to $3.20. They reduced it from $3.20 to $3.60. I think they can easily beat their numbers, but they are planning for the worse. It’s good to see a company that doesn’t exaggerate their numbers.

This looks like a good long-term hold. I’d suggest others to do their own due diligence. Boring companies like these never get heard of, but they continue to make money. I like the global presence and exposure to the US government. You are betting on US infrastructure and global growth. Both look good for the long-term. It can’t waddle at the $40s forever. I expect it has bottomed already, but if it does go furthur down, what’s keeping you from buying more of a bargain?

Markel – The Next Warren Buffett Stock

For people looking for similar to Berkshire Hathaway, I suggest Markel (MKL).  It’s like a little baby Berkshire with a stock price in the three digit range.  Actually when you purchase this stock you are purchasing Berkshire Hathaway since the fund invests heavily on good stocks.  The CEO follows the value investing theories of Warren Buffett and Benjamin Graham.  The price is at $353 which is close to the 5-year low.  At this price, it is a definite bargain and it won’t be there for too long.

What does Markel do? They are a insurance company, but they do ‘niche’ insurance. You won’t find them providing insurance for automobiles or health care. They insure weird stuff like derby horses, commercial buildings against disasters (hurricanes, earthquakes), high-value motorcycles, personal watercraft, airplanes, and even energy-producing activities.

If you look at the stock price, you’ll notice a huge drop in 2008. There was the immediate effect of wall street that brought the price down. In addition, there was the losses from insuring the buildings covered against the Hurricane Ike and Gustav. However, it still managed to pull off a profit for 2009. The secret sauce is lots of the company is just like Berkshire. They invest in other companies.

Tom Gayner, Chief Information Officer, follows the Warren Buffet philosophy. He looks for companies that are long-term profitable, high return on equity, and a low stock price. About $1.3 billion of the company consists of a large portfolio of big name stocks – 3M Co. (MMM), Abbott Laboratories (ABT), Campbell Soup Co. (CPB), The Walt Disney Co. (DIS), General Electric Co. (GE), International Business Machines Corp. (IBM), PepsiCo Inc. (PEP), The Procter & Gamble Co. (PG), and Wal-Mart Stores Inc. (WMT). Markel’s largest holding is probably Berkshire Hathaway (898 Class A shares valued at about $91 million and 31,418 Class B shares, worth about $106 million). With a market cap is $3.46 billion, their stock portfolio makes up a huge source of their business.

For those that are looking to buy long-term stocks , Markel might be a good one to look at. You don’t need to do the research of individually picking the stocks. You got a financially savvy stock guru that holds billions of dollars to back up your investment. If you read their latest 4th quarter report, Gayner states that his company is ready to handle the rising inflation. He’s prepared for the future and I’m willing to bet some money to agree with that.

Berkshire Hathaway and Warren Buffet’s 2009 Annual Shareholder Statement

Warren Buffett has again given us his great knowledge into the future and all things beyond.  His 2009 statement provides his thoughts on the future of the United States, which is positive and his thoughts on the events that have occurred at Berkshire Hathaway for the past year.  He’s positive for the future of the US economy.  He even states that his company Clayton Homes will become more profitable.  His theory is that the amount of ‘housing starts’ has bottomed out.  He shows the amount of homes being built has decreased largely for the 2009 year.  This means the housing inventory is kept stable allowing for the foreclosed homes to be bought.  This stabilizes the housing prices and keeps current home owners from turning off their house.

Since the 50-to-1 split, Berkshire Hathaway has been making a sudden move up.  The price of the stock makes it an easy buy for index funds and mutual funds to add it in their profile.  As the stock improves, it will eventually move into the S&P 500.  This in turn will make S&P funds purchase more of it.  Hence you see the price moving up even with this bad economy.

I’ll be posting another article in the next day of a company that performs similarly to Berkshire Hathaway. They follow the same philosophy and are a pretty ‘unknown’ company to many. It should be a good investment opportunity for people that want a safe investment.