Yesterday, I decided that it was time to begin rebuilding my Goldman Sachs (GS) position.
Last year, I had sold my position when the financial stocks began taking a hit due the subprime mortgage crisis.
I feel that much of the problems are now priced into the financials and now may be a good time to begin getting back in. I would suggest starting with a small position in the best run, strongest financials.
Goldman Sachs is one of the leading firms that has weathered the past year’s problems very well. I feel quite confident in their abilities in the long term and based on my analysis the stock appears to be a very good value at the current price. I figure the company to be worth about $237/share.
Next, I initiated my position in HP (HPQ). This is a company that I’ve wanted to own for some time now.
Over the years I’ve been in business much of my technology purchases have been HP products. I have purchased (2) HP Desktops, (3) Compaq Laptops, (3) HP Printers, and a HP Business Calculator. The products have generally performed quite well for me over the years and the service has been great.
When I damaged my laptops in the past, the support would be so fast to get it repaired. I would make a phone call, DHL would be at my door the next day to pick it up in a special laptop box. Then, within 2-3 days later, the laptop would appear again at my door all fixed and most of the time the repairs were covered under the extended warranty I purchased, which was usually a great deal. I valued this service very much and it’s why I continued to be loyal.
I’ve also always thought that their products have been the best value in terms of features for price. Whenever I’m looking for a new computer or printer, I usually review all the different brands and I end up choosing the HP product as their product usually provides me the features I need at the lowest cost.
Now is a good time to get in. The stock has pulled back some with the general market problems. The company is strong and getting stronger as it continues to gain market share in the US and abroad. They are becoming a complete one-stop shop for all your IT needs, especially with their merger with EDS. The new management has been great cost reduction and should be able to do same with EDS. HP also should trend higher in the short term as it should see a spike in back to school sales.
The current price is slightly overvalued based purely on intrinsic value, but slightly undervalued compared to competitors such as Dell (DELL), so I’m starting with a small position and I’m prepared to buy more if the price dips further. However, the premium may be warranted if it can continue to increase growth in income at better than expected rates.
Full Disclosure: I own shares of Goldman Sachs and HP.
Hello to our blog readers 🙂
Jeremy was looking over my portfolio recently and thought I should comment on my holdings.
Last year, I decided to try my hand at investing by starting out with the ‘fake stock market’ as I call it, started an account with Marketocracy, but soon found their system to be very laggy with processing orders, so I decided to just follow up with my portfolio on Yahoo finance.
My methods of choosing stocks are mainly:
- Do I personally use their product?
- Do I love their product?
- Do they offer a dividend?
- Take a look at the company’s charts over the past few years to get a rough estimate of when the low points are, to obtain a pattern of when to buy in.
My first purchases were back in October of last year, (as some may speculate, usually a good time to buy in when stocks usually take a hit), started with 10 shares each of Walmart at 44.89, Hasbro at 28.65, and 20 shares of Silver: SLV at 133.87.
At the beginning of November, I grabbed 10 shares of our favorite hot dog, Nathans at 16.55.
At the beginning of February, I grabbed 15 shares each of Burger King at 26.01, and Kohls at 44.68.
Last month, I grabbed 10 shares of Petsmart at 19.17, 20 shares of Pepsi at 21.01, and 20 more shares of Nathans at 15.17.
This month so far, I’ve grabbed 20 shares of Ebay at 31.69 upon news of JetBlue using Paypal in their payment options, and also grabbed 20 shares of Yum brands this morning at 38.38.
As of this posting, I’m up over 13% overall… not too shabby for dabbling. 🙂
Full Disclosure: I do not own the following stocks mentioned above at the time of this article
The recent market sell off has created a lot of good opportunities. One I like right now is Nathan’s Famous (NATH).
Even though I already have a significant portion of my portfolio in Nathan’s, I feel that the current levels are too cheap to ignore for a company this strong.
Here are some reasons why I just bought more shares today:
- Strong brand with diversified revenue. Nathan’s has one of the top brands of hotdogs in the business that are distributed through restaurants, food service and grocery stores. People still need to eat and I don’t feel the economy will get bad enough where people cannot afford a hot dog and Nathan’s has one of the top hot dogs.
- Great balance sheet. No significant long-term debt and penty of cash ($33.2M). In a market with tightening credit, they should have no problem continuing to expand with their own money. They also have low operating costs.
- Great valuation. If you take away the cash, the company is valued at $57.54M. If you take last year’s income ($5.54M), the company is making a 13% return per year on it’s assets. The company has continued to grow revenue and income year after year.
Below is a great article from June 2007 that goes through past numbers in greater detail…
Full Disclosure: I own shares of Nathan’s Famous.