Sunday, November 13, 2016

" This election in the US may be the most reflexive event since BREXIT and 9-11. A Republican President, Senate, and House has caused a tidal wave of movement in the expectations for this stock market"

Dow Jones Industrial Average 18,847.66  (UP and New High) Week Ending 11/11/2016
S & P 500 -  Closed at 2164.45

The last time that we had a Republican President with a Republican Senate and a Republican House was back in 1928. If you will recall, the next year we had a stock market crash in 1929 and the Great Depression which went on in to 1939. Part of the reason was that expectations were very high and credit with the financial institutions was very loose so lots of folks tried to get rich quick by borrowing money and investing it in the stock market, speculating on margin. 

So lets forward to today. The expectations have been flipped over to investing in Financials, Health care, Industrial Materials, Technology, etc. and everybody knows it. George Soros would tell you that this massive change in thought will trigger a massive change in behavior that will reflexively change the market and thus effect you even if you stay consistent in your own investing behavior. 

So I have to wonder if the run up in the stock of NVIDIA CORP. (Symbol NVDA)  by 30% on Friday is the first bud of speculation rearing its ugly head??  If you are going to participate in this new speculative game of musical chairs be sure to jump out of it very quickly with your profit (or loss). I will not be chasing these stocks myself. 

This is the kind of stock I will be looking at.

Gannett Corp Inc. (Symbol GCI, $9.38). Gannett the owner of the national distributed newspaper USA Today pays a dividend of 6.82% currently. The stock which had been as low as $7.75 in November 2016, had a bump up here because of the Trump win and market run and because of the ending of a buyout bid for Tronc , (The Chicago Tribune and the Los Angeles Times).

Gannett Inc., (GCI) , had $2.92 Billion in sales and trades at 1 times current book value and a price to sales of only 0.38.  The company is going to earn $0.99 cents per share for this year and $1.18 per share is projected for 2017. That is a forward PE of 7.1. 

The target price for GCI is $11.75 so here is my total return math for the purchase. If we hit the target price that is not far away. A gain from here of 2.37 points would be a 25.27% gain. Add on to that the 6.82% dividend and you end up with a Total Return of 32.09%. 

 That is a number I can live with and would buy the stock right here but you could get a little profit taking and pick it up at $9.25 this week. If nothing happens I still end up with almost a 7% return. 

If you want to learn more about Gannett Inc., started in 1906, you can go to the following link:

It is my hope that Gannett Corp. buys the company Twitter, (Symbol TWTR), as an extension of its NEWS organization. I think it is a good match-up. I think NEWS is Twitter's strongest brand feature asset.

 "That George Soros wrote the book, "The Alchemy of Finance".  He may be the best stock trader ever."

Freewilly  signing off.  (Need to go watch the Steelers vs. the Cowboys NFL football game!)

Sunday, November 6, 2016

"Well it all comes down to Tuesday here in Pennsylvania. This election will be the biggest battle since Rocky Balboa fought Apollo Creed. Me, I'm looking at good value stocks, no matter who wins"

Dow Jones Industrial Average 17,888.28 (Down) Week Ending 11-04-2016

When I first started buying Value Stocks , I purchased stocks that were trading with current Book values of below 1.0. These are stocks that Warren Buffett would reverently call "Cigar Butts". You find them on the ground, pick them up, and smoke them till the end then drop them. This method does work lots of times, but you can sometimes end up with a stock that is low priced for very good reason and suffer an unwanted loss of capital. 

So a better idea is to buy higher quality stocks, that for some reason are temporarily out of favor. So say companies with a PEG Ratio below 1, with quarter over quarter sales gain of 5%, and a a Book Value below 5, and a half decent Return on Equity, over say 7%.

Here is a list of 5 Value stocks that I like that fit these kind of financial parameters:

American International Group, Inc. (Symbol AIG, $57.38)

CVS Health Corp. (Symbol        CVS, $82.31)

Scripps Networks Interactive, Inc. (Symbol SNI, $64.84)

Delphi Automotive, PLC. (Symbol DLPH, $66.76)

Toll Brothers Inc. (Symbol TOL, $27.42)

So these are the kinds of stocks that I would be looking at going through this US presidential election time frame. These stocks are all good quality and are presented at a value price here.

So whether it is President Trump or President Clinton you should still be looking for excellent quality investments to start your 2017 portfolio. 

"Who are you voting for? .... Alexander Hamilton. I liked him in that NY Broadway play."

A shout out to those Chicago Cubs for winning their first World Series in a 108 years. See hard work and perseverance do eventually pay off. 

Have a great week and keep an eye out for good values.