Whether you’re willing to admit it or not, we’re in the middle of a recession. If you ask anyone in the real estate industry (especially in SoCal), they’ll tell you that the worst is yet to come. So if your savings are minimal and the job security shaky, this may not be the best time to invest in stocks. If you have some cash and are willing to act a little bullish, read on.
PLEASE NOTE: The following represent my opinions. I accept no responsibility for the actual gain or loss on the portfolio or any individual stock below. Also please note, I only invest with the hope of a LONGTERM (14+ months) gain. Day traders, commitment phobs, and get-rich-quick- addicts, please look elsewhere.
Finally, I highly value your input on any of these companies and any recommendations/leads you may have.
Best,
Sepi
Stock #1: Haliburton (Cough). Ticker: HAL.
Company Info:
Halliburton Company provides various products and services to the energy industry for the exploration, development, and production of oil and gas properties worldwide.
Whether you like with the circumstance revolving around the immense success of this company or not, it’s a company worth looking at. Savvy political statements about its growth will be noted on a future blog.
Two Year Technical Analysis:
Beautiful
Income Statement Analysis:
Despite a reduction in revenue (32%) from 2006 to 2007, profits have increased by almost 50% due to a reduction in cost of revenue and operating expenses. Two thumbs up.
Balance Sheet Analysis:
The company reports a reduction in asset, largely due to a decrease in cash, receivables, and long-term investments. Not a fan. Similarly, liabilities (short term in particular) have gone down. Treasury stock has increased substantially. “We have repurchased approximately 79 million shares of our common stock for approximately $2.7 billion at an average price per share of $33.91.”
Cash Flow Analysis:
This is where things get kind of ugly. Cash flow from operating activities has gone down … and the company has put less in investing activities and more in financing. Investing activities are due to a disposition of an entity (IPOd in 2007) and an increase in PPE, also a good thing.
Key Statistics:
(From Yahoo!)
Liquidity: Superb. D/E ratio: of 0.406; Current ratio: 3.141
ROE and ROA: approx 35% and 14% respectively
Profit Margin: 22%
P/E Ratio: approx 13. Industry: 17. Good.
PEG: 1.22 Industry 0.98. Okay.
Quarterly rev growth: 19%, industry 22%
Overall:
Even though the numbers aren’t perfect, we all know this company is not going to disappear or go down the drain. Quite the opposite. Investing in HAL is now just a moral decision. That said, you’re already supporting them by paying a lot in gas prices - think of it as a way to get your $ back. Kind of.
Stock #2: Microsoft
Company Info:
You should know. Please note, I have no idea whether the Yahoo ordeal will happen or not or what kind of impact that will have on the stock. Disregarding that ordeal, this company is doing quite well by itself.
Two Year Technical Analysis:
Alright. Not steady, but good potential.
Income Statement Analysis:
Revenue and Profit UP and continuously growing since 2006.
Balance Sheet Analysis:
Assets down. Liabilities up. Equity down.
Cash Flow Analysis:
Cash from operating activities - Up. Cash from investing activities - down. Cash from financing activities: down. Altogether - this company is making many from its core business and putting money in all the right places.
Key Statistics:
ROE and ROA: 47% and 22% respectively.
Quarterly revenue growth: 30.5%. (woah)
Quarterly earnings growth: 78% (wooah)
D to E: N/A (no debt, wwoooah)
P/E ratio: 17. Industry: 23. GOOG: 40 (can you say overvalued!)
Overall:
MSFT’s chances for long term success are high (unless it pays $34/share for a company going down the drain). I’d invest. Think Long-Term.
Stock #3: Allstate
Short them. They provide terrible, terrible customer service. Today they hung up on me - after waking me up on a Saturday morning to let me know that I was not going to be reimbursed for an accident that happened 4 months ago and requested a detailed explanation for how the accident happened. #()@#*$%
