The Long and the Short of it All
July 15, 2009
We are presenting a list of companies which we believe are currently mispriced, based on our estimate of fair value, by the market. We develop our fair value ranges by projected free cash flow out one year and estimating an appropriate FCF multiple based on our assessment of risk and the strength of the balance sheet.
Cisco Systems [CSCO: 20.38, +0.12 (+0.59%)] Recent Price $17.04 Value Range 21.86 – $38.41
Cisco Systems, Inc. designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use. Read more
The Banking System Is Sitting On It’s Hands
July 13, 2009
It’s time for another quick look at the United States banking system. Whoops! Nothing happening there. Are they still alive?
Federal Reserve Bank Credit has increased by $1.2 trillion over the past twelve months. What has increased in the banking system? Excess reserves in the commercial banking system have increased by about $800 billion. Tracing this “stuff” a little further, in round figures, the currency in circulation outside of the banking system has increased about $100 billion over the past year, about $100 billion has gone to foreign central banks in liquidity swaps, so there is another $200 or so in funds that the Fed has pumped into the system that is somewhere in Treasury accounts. But who is counting? Read more
China Mobile: The Foreign Giant
July 12, 2009
When most investors think of the telecom sector and wireless providers, Verizon [VZ: 29.944, -0.316 (-1.04%)] and AT&T [T: 27.2509, -0.0991 (-0.36%)] come to mind first. These two companies form a duopoly of the domestic market. Market penetration is nearing 90% in the US, so growth is limited, as these two companies are forced to compete for existing clients to survive as well as continue to steal market share from Sprint-Nextel [S: 4.32, +0.18 (+4.35%)] and T-Mobile. They are also attempting to jump into uniq
ue markets everyday in hopes of adding revenue and improving margins. For instance, VZ and T have been rolling out fiber optic backbones for even faster internet speeds and enhanced TV picture quality. Read more
McDonald’s New Angus Burger – A Green Shoot?
July 10, 2009
I’m sure quite a few eyes rolled when reading the title of this article. “Green Shoot” has been thrown around the financial media incessantly over the past few months, to the dismay of many. The thought that a new menu item at McDonald’s [MCD: 74.98, +0.44 (+0.59%)] is a glimmer of hope for the economy is, admittedly, a little preposterous. While I don’t believe the the 1/3 pound premium sandwich signals a recovery, it does say something about the future of consumer spending. If there is one company that knows a little something about the everyday consumer, it is McDonald’s.
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