Weekly Memo: "Always wonder if you are being pumped while the other person is doing the dumping."
Before I rifle off a collection of amusing; short investing stories, a simple reminder to everyone out there to do their homework on individuals sharing advice. Check their LinkedIn profiles, check regular sites and obviously check YouTube for recent appearances.
Why do I bring something up that should be abundantly clear. For two reasons. First, suddenly all human beings that deal in gold were bears at the top. Maybe a minority was, but damn near a majority? Heck no.
Second, day in and day out lately, I hear people that miraculously predicted the market's recent pullback amidst a hardcore pitch for S&P 500 1,700 by year-end. Really? Do me a favor and send those notes along with the sentences underlined explicitly stating that guidance. Absurdity of this kind gives the do-gooders a bad name and makes individuals that are badly in need of investing help too afraid to grab hold of it.
That said, I don't have any specific stock selections to present you, only a disclosure that I put on a trade on Sketchers (SKX) for clients Thursday that has worked well. Hey, this fundamentally-dog-of-a-company's stock was noticeably outperforming the S&P 500 since earlier in the week. Why not green light a name that had a chance at adding positive returns to a portfolio, quickly. What I do have, on the other hand, are short stories comprised from various readings and media appearances this week.
There is no place like home
Ingest a chill pill on the mortgage rate scare for a second and peer into the souls of earnings reports from Lennar (LEN) and KB Home (KBH). Where is the overarching strength? The West Coast. How should you be thinking as a strategic investor that wants to bag loot? Game on for a retailer tied to housing with a good chunk of stores situated east of Mississippi. That name: Home Depot (HD), which has 11.4% of its store base in California alone. Disclosure: buy rating on Home Depot shares.
Quick, do you have tables that compare five relevant sector stats for each company that competes with a company's stock you own? Why not? I have one for homebuilders in order to keep track of who is winning (tracking such items as cancellation rates, backlog, etc.) and who is sucking wind.
How to analytically run all over Nike's earnings report
Broad-based sales strength plus better-than-expected gross margin plus stable future orders in Greater China minus expected (if you actually researched beforehand, the slow start to FY2014 should have been no shock) slow start to first quarter equals a name to consider on weakness into a huge operational tailwind in World Cup 2014.
Chris Brown says deuces to $BKS
I have serious reservations on Barnes & Noble's (BKS) management team, as is, being able to steer it away from an epic demise longer term. The entire Nook division from software to hardware is eating the company from the inside out (in other words, killing the relevance of the physical stores). Ultimately, look for Barnes & Noble to tap its credit revolver more significantly if the founder doesn't swoop in post stock rout with a lowball bid. Here is an entertaining Bloomberg radio segment I did on this topic, free to listen of course (scroll to the bottom right of the page): /
Paula loses, but you could win
The winners in the Paula Deen mess: Kohl's (KSS) (sells the Food Network line) and ironically, 500+ JC Penney (JCP) stores that sell cheap stuff sourced from China in a cool new second floor setting. Can't believe I went live on Monday with a buy rating on JC Penney's stock, $UGH.
This is what you need to pray for
If you are buying stocks today, best pray for a sub 150,000 headline June non-farm payrolls report.
Hey, Men's WearHouse's CEO is the victim!
Boo hoo to Men's Wearhouse (MW) founder George Zimmer. Bottom line is that the stock has ripped 50% plus because the CEO (you know, the guy in charge of overseeing day to day operations and setting strategy) decided to shop that loser of a K&G division. I bought my first suit (job: broker trainee) at that place fresh from college, the place is a dump. No exposure to Men's Wearhouse shares suggested by yours truly. A company boasting strong free cash flow and on the surface, "attractive valuation", doesn't immediately render it a slam dunk price-to-earnings deal. For starters, Men's Wearhouse is a silly promotional business with a severely outdated store base/website (meaning it will require massive investment by a sponsor that may balk given projected future returns). The company has essentially grown into its valuation!
These stats are geeky but cool
Share these stats on social media, say they came from me: (1) according to estimates, 1.7 million households have escaped negative equity in the past year; and, (2) household debt service ratio is at the lowest levels since records began in 1980.