Here are some highlights from this week, or as I used to call my Friday weekly column on Real Money, here are some "weekend vittles" to munch on.
"The prevailing wisdom is that markets are always right. I take the opposite position. I assume that markets are always wrong." A fascinating quote from George Soros that has been stuck in my mind all week since I read it for the first time.
Do a Google search for "Apple undervalued" -- It's shocking how many articles have been written on this topic over the years and also just in the last week. For the first few years after I bought Apple (AAPL) back in 2003, it seemed like nobody believed the company could deliver a sustainably mainstream hit, so the stock was cheap vs. forward earnings most of the time. For the last five years, it seems like nobody believes Apple can deliver strong growth because of the law of large numbers. But the company keeps growing more quickly than most small-cap tech companies. I think we should accept that AAPL will probably always trade at a discount to most of the market.
GoPro Goes Amateur (again) and Trade Alert: Kicking out this loser -- I posted a Trade Alert yesterday about how I'm pulling the plug on my GoPro (GPRO) long: "I noted in the most recent Latest Positions roundup that GoPro was my smallest position, but that's little solace given the fact that I should have known better than to have ever gone bullish on this specific name for very specific reasons based on my own analysis. I'm taking my small loss on this loser company and moving on. Mea culpa."
Public service announcement/reminder -- A true story about how penny stocks really work and Simple rule: Don't ever buy a penny stock. I've gotten a few emails asking about various penny/pink sheet/OTC stocks lately. Let me be frank: These stocks are often just scams for insiders to sell stocks to sucker retail investors. Be careful with your hard-earned capital!
Twitter: Down 7%; Stifel Ups to Buy; Analysts Hold Out Hope for Dorsey -- Not much new came out of last night's earnings report from Twitter (TWTR) to change what I wrote yesterday: "The problem with TWTR right now is partly that its user growth has itself stalled. The company will grow revenue per user quite quickly for the next few years and it has 300 million users, so there's growth to be had there. But unless Twitter gets to 500 million users over the next two or three years, the revenue there will stall. That said, Periscope itself could add hundreds of millions of users over the next three to five years and that would create a new revenue stream for Twitter anyway." On the report and on the conference call commentary last night, Twitter basically confirmed everything I wrote there.
Potential Walgreens (WBA)-Rite Aid (RAD) Deal Faces Substantial Antitrust Risk and Walgreens and Rite Aid: Am I the Only One Who Hates This -- There goes the retail pharmacy market into becoming a full-blown oligopoly/cartel. Why do we have antitrust laws if we don't enforce them? Consumers will get screwed by a monopoly in beers and by rolled-up oligopolies in retail pharmacy, banking, airlines, car rental companies, semiconductors, media companies, etc. (Apple, Twitter and Walgreens are part of TheStreet's Action Alerts PLUS portfolio.)
Goldcorp (GG) Q3 Results: Cost, Debt and Underperforming Mines -- Gold-miner stocks are almost all loaded down with debt and are going to need sustainably higher gold prices, say $1,250 or above, to start generating enough real cash to cover their dividend and be able to avoid any financial problems. If gold stays at least above $1,100, Goldcorp will likely survive the next couple of years despite all that debt. I wish I could find a gold-miner stock with little debt to provide a cushion over the next year or two, and that would probably be the one I'd be most likely to consider actually risking some capital on. For example, I just looked at Goldcorp's balance sheet and it's about as wrecked as most of the other gold miners: $400 million cash but $3.5 billion(!) in debt. GG is basically a call option on gold in the next year. If gold gets to $1,500, GG would probably be at $25 or $30 based on the increased earnings potential bringing increased financial flexibility. At $1,300, GG could be in the high teens.
Super Bowl Odds: Patriots the Favorites Entering Week 8 -- I wouldn't count out Green Bay to win the Super Bowl this year. Green Bay vs. Cincinnati would be my bet for the Super Bowl with Green Bay winning. I also wouldn't count out Pittsburgh or the Colts. I'm sort of growing into a grump when it comes to the Patriots and am not sure I'm able to be objective. Glad I do stocks and not NFL betting for a living because I find it much easier to be objective with stocks than with teams and their owners, players and coaches.
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