Written Thursday, May 6, 2010 (See, we were talking about the Euro zone troubles over a year ago!!!)
May has arrived, the United States economic recovery engine is chugging
along nicely. Retail outlook is decent, it is still down from last
year, there are signs of improvement. Nearly every industry sector is
reporting something rosy. While the US is looking good overall, the
negative news at the moment is focused heavily on the sovereign debt
issues facing particular member nations of the EU (e.g. Greece, Spain,
Portugal).
Retail Sales
For March and April, Internet
sales soared up 15.6%, Electronic sales were up 9.7%. Consumer
confidence for the same time period was up; however, Conference Board
business group's index remains below the level that's considered
healthy. Also noted that unemployment is still high. AAPL (Apple)
announced recently that they sold 1 million iPads already, you can bet
that it was part of the 9.7% of electronic sales.
Full Article on Retail:
http://finance.yahoo.com/news/Retail-data-Consumers-took-a-apf-1861174646.html?x=0 (No longer available)
Tech
NFLX (Netflix)
AAPL (Apple)
BIDU (Baidu)
GOOG (Google)
Netflix
(NFLX) has rocketing stock, check it out on Google Finance or whatever
stock ticker you follow and you'll know why people have bandwagoned on
this hot stock. It has cooled with European debt issues at the fore
front of investors and with a current P/E of 45, one has to be cautious
for entry. NFLX has become "monster" stock status of the likes of GOOG,
AAPL and MSFT (Mircosoft) in terms of rapid growth.
The parent
company of Hollywood Video's, Movie Gallery has gone bankrupt for the
second time in three years, all thanks due to NFLX powerful business
prowess through mail, and being a "first-mover" in offering streaming
movies directly to customer to DVR providers.
Coinstar (CSTR)
operated Redbox's slightly won in Movie Gallery's demise, while
Blockbuster (BBI) has survived for another day, but the question is how
long?
Things to watch: NFLX is poised for future growth,
however, competition from Wal-Mart and Best Buy (WMT & BBY,
respectfully) are rolling out development of online movie streaming
content in the future which can cut into NFLX's business.
Montley Fool on Following Monster Stock Search:
Tomorrow's Monster Stock - Montley Fool
Apple...
Apple, what can be said more about them. They already sold 1 million
iPads since they officially announced it back in late january. It
finally broke for a vicious run from it's price barrier around $217 per
share to a whopping $272 per share around April 23rd. We pretty much
know the new iPhone is coming now via an Apple engineer who left it
about in a California bar that started "Applegate"... something we're
looking forward towards as time goes on.
Long on AAPL due to large cash position and strong customer loyalty.
Baidu
(BIDU) is something of a monster stock, although the price of riding
the stock requires about $700 for one share for their ADS (American
depositary shares) share. They also sell a Class A ordinary shares
(however, I haven't found the stock index for that one). Very soon
however, they recently announced that ADS is splitting 10 to 1,
effective May 10th. It should reflect this difference by dropping to
about $70 a share when this occurs.
If you don't know what BIDU
is, it is a Chinese search engine... and the only search engine in China
now since Google pulled out of China due to privacy breaches and
censorship issues. This stock wins due to no competition and a large
customer base of 1 billion people... with no US or Europe exposure, a
pure China play.
"Baidu has returned 78%, annually, since 2007.
Even in light of the downgrade by Credit Suisse, Baidu has risen 11% in
the past week. Sell-side analysts remain overwhelmingly bullish on
Baidu, with 17, or 71%, rating its shares "buy", six rating them "hold"
and one ranking them "sell." RBC(RY) offers a price target of $954,
leaving a potential 34% return. JPMorgan(JPM) predicts the stock will
climb to $850."
Credit Suisse predicts a 27% slide to $519 as the
lone one out. So watch BIDU's growth is attached to how fast it can
penetrate more areas of China for grabbing more users. Current
penetration for China for internet is 30% compared to US 70%.
As
I've said earlier, Google's pull out of China, it's stock price has not
recovered from it's level about $590-$600 to $520. Nobody's expecting a
swift recovery to that level until maybe end of the year if things go
well.
Hold-Buy BIDU, Neutral-Sell GOOG
10-For-1 Split from BIDU News:
Baidu is splitting stock 10 for 1. How about you Google?
BIDU Valuation Concerns News:
BIDU Valuation Concerns Article
European Trouble
It's
good to be short Euro as EU deals with Greece debt problems, and two
well-known analysts, Dennis Gartman, involved in the markets since 1974,
he publishes the "Gartman Letter" , which touch on the political,
economic, and social trends shaping the world's markets on a daily
basis. He frequents CNBC and Bloomberg business channels, and people
listen when he speaks.
"Yes. For all intents, I think the euro is
doomed. There were many who said they didn't think the euro would make
it past the first important recession. Well, this is really the first
important recession since the creation of the euro. And I've been
surprised it has lasted as long as it has. Honestly, I think the euro is
a doomed currency.
But these things take time to play out. The
euro will still be extant by Feb. 28. It will still be around by March
30. It'll probably still be around by the end of April, and the end of
this year, and it will probably still be here a year and a half, two
years from now. But I think these are terminal problems that the
monetary union and the political union are facing, and it's only a
matter of time before it ceases to exist. Will it happen overnight? No.
It will happen in a slow, very painful, long-standing, horribly
drawn-out, ugly affair." - Gartman
Gartman is short Euro and long
dollars (US, Canada, NZ, and Austraila), Japanese Yen, and Gold
(Purchased through Euros, sterling, yen, Swiss franc and so on)
Full Article of Dennis Gartman Interview:
The Euro is doomed - Dennis Gartman
To counterbalance Gartman's argument of doom-and-gloom, David Kotok of Cumberland Advisers said:
"We
do not expect the euro to fail as a currency and we do not expect the
ECB or the EU to dismember. This is true even if Greece defaults.
Would the United States dismember if Rhode Island defaulted on its
municipal bonds? We think not. Did the revelations about Robert Citron
and the Orange County California pool and bankruptcy dismember the
entire US Muni market? No. But it did create a terrific buying
opportunity when the market swooned and all Munis sold off for a few
weeks."
"Also, note that the crisis is strengthening the dollar
since it is now the default currency choice in the world. A stronger
dollar means any inflation pressures that the US economy may experience
are diminishing. The Fed knows this which is why it will remain on a
low interest rate program for the rest of this year."
Cumberland is also short on Euro as well, and long in USD.
Read
more:
David Kotok - Coming weakness will make Euro stronger
Also more: Eurozone Breakup = Mother of all finanical crisises - Business Insider
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