Super Stock Blog

Let's make our own bull run!

Month: May 2010

Are we in for another drop in the stock market?

We saw a massive drop in the stock market yesterday – dropping as much as 1000 points. Today we see furthur markdown of the stocks. As more people get worried, I see better valued stocks and better bargains. This is a great time to start stock picking for valued stocks. We are at stock prices from 10 years ago. If you are playing the long-term, this is a great market. If you are playing the short-term, there’s still more downturn and you can play the short side.

I see support on the SPY at 106, but if that breaks, the next support is 102. If we break these supports, we are in for more drops in the stock market. While it can continue to go down, you know we have the support of the government to prop up wall street. I doubt we will see the lows of 2009 ever again.

Here’s a couple stocks to look at: IGOI and JMBA. JMBA has been falling down since hitting a high of $3.83. It’s at $2.70 currently and it has big support there. Jamba Juice also is making big strides to become profitable. Their smoothie business continues to improve, they have new offerings of teas & coffees, and should be a major player as the US economy improves.

IGOI is still pretty undervalued at these levels. It just had earnings announcement yesterday. It stated it will be fully in Wal-mart by the end of May, it has got into Office Depot and Office Max, and it is planning to get into international markets. Link to original article.

Hugoton Royalty Trust, a Dividend Play on Natural Gas

Hugoton Royalty Trust, HGT, looks like it is ready to break out. Plus in addition to that, you get a nice dividend of over 8%. The dividend changes depending on the market fluctuations. This stock is a play on natural gas. It has been going up since a huge downturn last year.

Why be bullish?

This company was started by XTO Energy. They spun it off and own a bunch of shares in this company: “It holds a 80% net profits interests in certain natural gas producing working interest properties of XTO Energy Inc.” This trust is always producing profit and giving the money back to the shareholders. When the price of natural gas goes up, they can give more dividends. They also use the money to look for more opportunities in drilling and producing more natural gas.

Recently inventories of natural gas has been going down. This is in part to the prices of oil moving up and just natural gas being at very low prices because of the high supply of inventories that have been built up. The price will continue to increase as natural gas producers slow down. The recent statistics on home sales increasing also gave a more positive outlook that natural gas demand will increase. OPEC is also cutting back on oil production which will furthur the demand for natural gas as a substitute.

Technically HGT hit a triple top at $18.60. It’s at $19.50 currently and it did not drop with the stock market the past couple days! The volume looks good and it appears it’s time for it to move up to new territory. Before this recession, the last time it hit these highs were in 2003. It continued to rise to $40 as commodities increased during the decade. I think this stock has reached a bottom. For those seeking stocks that are defensive and want to make a play on inflation, I’d definitely suggest this stock.

Gold Looks Good for the Future

Coure D’Alene, CDE, is a commodity stock play on the gold and silver market. Their past couple years of results have not been too lucrative as they have been holding lots of gold and silver as reserves and the prices went down the roof, but the future looks might brighter with the recent gains in commodity prices. They are currently stockpiling their reserves until they find a good time to sell. They do not hedge their commodities.

Earlier this year they significantly expanded the production at Palmerjo and started operations at the Kensington mine. If you know commodities, the average gold to silver ratio is 16:1 which would mean silver would have to multiply to at least 3x the current price. It has been stated that gold will move up to $5,000 over the next decade. Their new mining operations have break-even point at $900 gold and silver at $8.50 an ounce. These break-even prices are very conservative. If gold and silver never rise, they would still be profiting at the current mining costs.

Technically, the stock price is undervalued. It just broke out of support at $17.50. Other than the downturn in 2009, the last time was 2003 when it was in the $18 level. The volume continues to look good – It doesn’t look like it will be stopping anytime soon.

Currencies are looking negative. The world is running on debt. Greece needs money to prevent a default. California continues to be desperate to raise cash. PIGS is next in line to require a bailout. United States continues to print billions of dollars to make up for the mortgage crisis.

There is a bunch of problems right now but there is always a way to profit. Institutional investors like gold mining stocks. This includes George Soros and Jim Rogers. Invest like the big guys that make money and buy CDE.

Disclosure: I own CDE (of course!).

Berkshire Meeting 2010

Last year I took the mini-van provided by Berkshire to the 2009 Berkshire Hathaway Meeting. I was staying in the middle of Omaha, NE. I thought I was running late when I left the hotel but the vans did not arrive yet and there was a bunch of people waiting outside. I ended up getting to the Qwest Center like 10 minutes before the meeting started. All the seats were taken and I had to stand for the first hour.

This year I rented a car and the goal was to get to the Qwest Center by 7:00 AM. I ended up getting there around 7:30 AM but there were still plenty of seats. I’d say it was at 60-70% full. I snagged a seat in the back of the arena in the top section. I figured most of the people that entered the arena would take the seats at the beginning. Apparently those seats are reserved for managers.

The setup is the same like last year. There are two seats for Warren Buffett and Charlie Munger. There are three big screens so we don’t have to squint our eyes on them the whole time. They talk from 9:30 AM – 3:30 PM and then have a half-hour business meeting. They added 2 more screens and more overflow rooms to manage the increase in stockholders.

This year’s meeting seemed more like a good basic approach to investing, answering the questions on Goldman Sach’s, and value investing. The meeting seemed very targetted to the new stockholders of Berkshire and showing them their philosophy to buying and holding companies with good fundamentals.

To sum up a few of the main points:
– China and India will continue to prosper and work hard to have the ‘American’ culture prosperity
– Berkshire Hathaway will not grow as fast as it has in the past. Reason is they are so huge in market cap now. However, they assured us they will always bring good shareholder value even when they pass on the company to other managers.
– Goldman Sachs was only an underwriter to the actual fraud charges that happened. They took contracts from banks that would insure the mortgage securities and took investors’ bets to short these CDOs. Here’s a good interview that explains it.