Update on Recently Recommended Stocks

So far I've recommended four stocks on the blog. I wanted to give an update on where these stocks stand...

Stock Date Price Today's Closing Price
Annaly Capital Management (NLY) 1/16/2008 $18.72 $20.54
US Bancorp (USB) 2/11/2008 $32.09 $32.41
Yahoo (YHOO) 2/11/2008 $29.80 $29.01
BE Aerospace (BEAV) 2/19/2008 $39.05 $38.28


I recommended Annaly Capital (NLY) because it really benefits when the Fed is cutting interest rates. Since the recommendation, the Fed has cut the Fed Funds Target Rate twice by a total of 1.25% and the stock price has responded. Last week Ben Bernanke gave another speech where he talked about economic weakness and the possibility of further rate cuts. For now, I think we should hold the stock and look to add to the position if the price drops to around $19.50. In the meantime, we will continue to collect the great 7% dividend.

I like US Bancorp (USB) as a long term holding. The stock yields over 5% and has been unscathed by the sub-prime mortgage crisis. I hope to have a more detailed report on the stock soon. For now, I plan to hold the stock and add to the position if it were to go below $30.

I recommended Yahoo (YHOO) on a rare trade scenario. After YHOO rejected the takeover offer from Miscrosft, I figured we would get an increased bid. Today, Bill Gates said that the $31 per share offer made by Microsoft was fair and that Microsoft would not be raising it. He also talked about other options Microsoft could explore to get this deal done, which tells me Microsoft is serious about buying YHOO. I think in the end, this deal will happen. We may not get a lot more than $31 per share, but we will probably get more than we paid for the stock and in today's market, that sounds pretty good.

Yesterday, I recommended BE Aerospace (BEAV) because I feel the company is going o have great earnings growth over the next few years. As with USB, I hope to have a more detailed report on the stock soon. For today I just need to note the opening price for BEAV, which was $39.05, so I could complete the recommendation.

Recommending BE Aerospace (BEAV)

As noted in my last post, I was looking to buy BE Aerospace below $40 as long as the fundamental story had not changed once the stock dropped to that level. Last Thursday an analyst with UBS downgraded the stock. The downgrade coupled with the speech given by Ben Bernanke on Thursday, which drove the entire market down, resulted in the share price dropping as low as $37.11 before ending the week at $38.04. I have now had a chance to review the conference call that the company held after their last earnings report on February, 4th. I can find nothing that leads me to believe the stock should have been downgraded. In fact, after reading the conference call, I'm very excited to be getting the opportunity to recommend the stock. The only fear I had about recommending the stock before reading the conference call was a possible further delay of the Boeing 787. But, during the conference call, management stressed that the 787 does not represent a very large portion of their current backlog. This is good news on two fronts. First, it leaves the possibility that the backlog will increase significantly once the 787 starts shipping and second, it means that the 787 has very little to do with the robust earnings and revenue growth expected this year. According to BEAV's management, the 787 is only mildly important to them in 2009 and it gets more significant from there. As with all the stocks that I recommend, I hope to put together a full report soon. For now, I can give some of the highlights about the earnings forecast given by management. The company earned $1.66 in 2007. They are projecting an increase of 38% for 2008 to $2.29 and an increase of 25% for both 2009 and 2010 to $2.80 and $3.50 respectively. I will use the opening price on Tuesday, February 19th as the basis for this recommendation.

Stocks I'm Watching

The recent action in the stock market has been confusing to me. I've been reluctant to jump out and recommend high growth stocks, instead opting for safer plays (see USB from earlier this week). I keep waiting for a pullback in some stocks before I recommend them, but so far I haven't gotten that opportunity. I don't use a lot of technical analysis, but I know that on a technical basis, the major market averages look like they may be turning positive. If I continue to wait for a pullback, I may get lucky or I may have to end up recommending some stocks at higher prices. That's just the chance I take for not acting right now. Either way, I wanted to note some stocks that I'm watching here and give a price range where I would jump in. If these stock move into the noted price range and the fundamental story is still intact, I will jump in and buy these stocks.

BE Aerospace (BEAV) - below $40
Precision Castparts (PCP) - below $110
Polo Ralph Lauren (RL) - $62.50
Dupont (DD) - below $45
Flowserve (FLS) - below $95
Burlington Northern (BNI) - below $85
Deere & Co (DE) - $82

Update on the Yahoo TRADE

Two days ago I recommended a trade on Yahoo. I said that I would put in a limit order to buy at $30 and if the order got filled, I would immediately place a limit order to sell at or above $33. I put in the buy order yesterday morning and the stock opened at $29.80. This is where I bought my shares, so the basis for this trade is now $29.80. As promised, I immediately put in a limit order to sell at or above $33. However, today rumors surfaced that Yahoo was in talks with News Corp about an alliance between the two companies which would thwart Microsoft's bid. I have now removed my limit order to sell at or above $33 because I think this will ultimately result in a higher bid from Microsoft. Hopefully Microsoft will raise their bid to at least $35 per share. I would be happy with that price and would sell, bit I'm sitting tight until we get more news on what Microsoft is thinking.

US Bancorp (USB) - Closing Price on 2/11/2008: $32.09

I'll have a report on USB within the next week. I just wanted to get on the board with the stock noting today's closing price.

Recommending a RARE Trade

I'm not usually a fan of recommending a stock on a short term basis. However, I've found a situation where I think we can make at least 10% over the next few weeks. As some of you may know, Microsoft (MSFT) offered to buy Yahoo (YHOO) on February 1st for $31 per share. Today, Yahoo rejected that offer and released a statement saying the offer, even though it represented a 61% premium to the closing price on January 31st, substantially undervalued Yahoo. I think this is just posturing on the part of Yahoo and I believe this deal will get done at a slightly higher price. I'm putting in a limit order for Tuesday, February 12th to buy Yahoo at or below $30 per share with the idea that I'll put in a limit order to sell at or above $33 per share should the buy order get filled. I'll keep you updated on this trade.

Let's get it started...

After a lot of thinking about it, I've finally done it. I've created a blog to keep track of all my thoughts on the world of investing. Since February of 1995, I have been investing in stocks. I've made some good investments and some bad investments, although I believe the good have outweighed the bad by a pretty good margin. Unfortunately, I've never had a way to keep track of it all. So, now I've created a blog to do just that. What I hope to show is that I really do know what I'm doing when it comes to investing. Either way, it will be a lot of fun!