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: 23.82, -0.1101 (-0.46%)] 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
Boeing’s Stock Grounded, How to Capitalize
June 26, 2009
The week of June 26th was very bad to Boeing. After continued reassurance from CEO Jim McNerney that the company’s much anticipated (and previously delayed) Dreamliner 787 would be delivered by the 23rd, Boeing once again came up short. To investors, this was simply one slip-up too many… and a company that cannot fulfill promises is a company worth selling. Making matters worse, the next day, the U.S. Department of Defense terminated the land warfare weapons program headed by BA’s Integrated Defense Systems unit worth an estimated $160 billion. Thinking that there was no possible way to add more grief onto shares of Boeing, Qantas Airways canceled orders for 15 Boeing 787 Dreamliners after being “disappointed” by Boeing’s management. Read more
Stocks For An Economic Recovery – Industrials
June 15, 2009
As industrial markets have fallen over the past two years, companies previously bought hand-over-fist due to strong international presence have been put in their place; diversified product portfolios have become recession backfires; cost-restructuring plans and management shakeups have become costly uncertainties and cash has become the worlds most valuable commodity. Despite the negativity, markets over the past few months have shown major signs of improvement as economic indicators from construction spending to consumer confidence continue to get “no worse.” Read more
Industrial Names That Haven’t Gotten Ahead of Themselves
May 29, 2009
Today’s markets maintain a level of anxiety that another leg-down is coming, namely the notion that we may revisit our former lows of March. As the more bullish investors continue to invest in financial and IT names, it would seem that the vast majority of market movers are taking profits off of the table in the industrial sector of the economy. But while the money seems to be rotating out of the early-cycle names that seem to have gotten ahead of themselves, many of which are up considerably from the bottom, I reiterate that there remains significant opportunity in cyclical-aerospace. Read more
Best Stocks of 2009 Review: The First Third
May 10, 2009
More than a third of the year has passed and the markets have rebounded nicely from their lows to turn a small profit on the year. It seems that the worst may be behind us when it comes to equity prices as many stocks have rallied more than 50% this year alone. Here at Bullish Bankers, we published a “Best Stocks of 2009″ newsletter at the beginning of the year, and our equities have performed very admirably when compared to our benchmark, the S&P 500. This article is designed to give a recap of how our equities have performed and give some additional explanation to our initial stock picking process. Through Friday, May 8th, our BB2009 Index has outperformed the S&P 500 by 11.51% on a geometric basis ex-dividend payments. Beside each of the sectors I have listed our three picks and the comparable ETF to show our relative performance on a sector by sector basis. Read more
Re-building From the Ground Up
April 19, 2009
Although the industrial sector had a rough year in 2008, there were some sectors, like conglomerates, rails, and aerospace and defense sub-sectors, that were able to help boost some of the lagging sub-sectors that relied heavily on residential construction and business spending. The net effect was an out performance in the first three quarters of the year. In Q4 2008 and the beginning of 2009, we’ve seen the performance of the Industrials ETF, the XLI [XLI: 26.88, +0.24 (+0.90%)], significantly underperform the S&P 500 as the more attractive sub-sectors in 2008 began to plummet based on economic factors such as the expected 2010 defense report for the defense sector, and lower volumes for the railroad companies. Read more
Early-Cycle Industrial Plays for a Turnaround
March 27, 2009
After a recent market rally to new short-term highs in the Dow Jones Industrial Average, investors should start shifting their strategy to position for future growth in the international economy. Clearly, if the recent rally has shown us anything, it is that investors still believe that there is a fundamental reason to hold equities despite horrendous conditions. As bad news continues to pour in, we should concentrate on re-positioning for an eventual global recovery. To do this, I turn your focus to some historically strong global conglomerates that are at attractive levels in a suppressed market. Read more
Is Going Long GE… Out Of The Question?
March 4, 2009
On Tuesday, options trading on General Electric was very hectic. Recently, we’ve seen investors continue to bet on the untimely demise of this American industrial bellwether. According to OptionMONSTER, we saw a flurry of activity toward June 2.50 put options on Tuesday, March 3rd. Moving deeper into this figure, normal levels would yield volume of 41,963 contracts… but we saw a staggering volume of 81,740 contracts traded on the day. As GE [GE: 15.33, +0.90 (+6.24%)] leads the financial sector lower, the question remains… should GE be leading the financial sector lower!? Read more
Small-Cap Water Infrastructure Plays for the Stimulus Package
February 20, 2009
One of the major themes of 2009 to this point has been investor speculation on global infrastructure. With the recent $787 U.S. stimulus package signed into law by President Barack Obama, analysts are at a crossroads in looking where to invest to get the best exposure to bailout money. But where exactly is the money going to be? After digging into the stimulus, it seems to me that all signs are pointing to the road and water infrastructure as leading areas of the package. Read more
The Best Industrial Stocks of 2009
February 19, 2009
With the S&P Industrial sector down 38.5% for 2008, investors have for the most part steered clear of this manufacturing-driven area of the market. With housing companies relying on things like transportation, volume, government spending and fresh construction projects, it’s hard to imagine that there is high confidence in the the air. Read more
