The Investment Thread

  • Thread starter Thread starter LA
  • Start date Start date
L

LA

Well-Known Member
In this thread we will discuss all things related to investments: securities, commodities, currency exchange, pertaining news articles, etc, as well as methods and ideas that will help create a new business and/or product.
 
LA said:
In this thread we will discuss all things related to investments: securities, commodities, currency exchange, pertaining news articles, etc, as well as methods and ideas that will help create a new business and/or product.
Click to expand...


I'm interested.
You start.....
?
 
An interesting article that I read the other day...

"Only buy stocks that are likely to hit the fences." That's what a number of seasoned stock pickers say -- and they make a bundle doing just that.

The hot-hand investors don't settle for a 15% or 25% return -- they aim for home runs. More specifically, they are in stock investing to double their money. True, these aren't your run-of-the-mill money managers, but such a feat can be achieved on a regular basis. These stock pickers are, however, rigidly disciplined about sticking to their own hard and fast rules.

Before I mention several stocks that might double your investment dollars, let's name some that actually did just that in about a year.

Stocks That Have Doubled

Novellus Systems (NVLS), TriQuint Semiconductor (TQNT), Holy Corp. (HOC), Mercer International (MERC), and Apple (AAPL) are some of the stocks that doubled within a year, although they represent only a small fraction of the 8,000 stocks that trade in the U.S. Some investors caught them at the right time and reaped 100% gains.

Robert C. Auer, senior portfolio manager at Auer Growth Fund (AUERX) and founder of SBAuer Funds, is one of the few investors who religiously adheres to a "double-your-money" strategy. SBAuer now manages some $235 million, having started with just $2 million in 1999.
"We canvass and screen all stocks trading in the U.S., and applying our dedicated investing principles, we have counted only 114 stocks, so far, that we believe would be capable of doubling in a year -- and we bought shares in all of them without exception," says Auer.

Auer first purchased 165,100 shares of Novellus on Feb. 10, 2010, at $21 a share, and sold them in March 2011 at $42. It's now trading at $37. In the case of TriQuint, the doubling in price took just seven months. Auer bought shares at $6.57 each and sold them at $13.21 on Jan. 5, 2011. In the case of Holy, he bought at $26.29 in November 2010 and sold when the stock reached $52 on Feb. 2, 2011. With Mercer, it took only three and a half months for Auer to double his investment. He bought shares at $5.89 in December 2010 and sold them on Feb. 15, 2011 at $12.79.

Sticking to Your Investing Principles

Apple is the one stock that got away. Auer wished he had bought shares early on because the stock doubled on several occasions. Auer didn't buy into Apple, however tempting, because it didn't meet one of his three principles for buying stocks: a price-to-earnings ratio below 12.

From the time investors caught on to the magic of Steve Jobs and Apple, the stock's price-to-earnings ratio ranged between 14 and 20.

Auer's two other seemingly simple, but tough investing principles are:

- A company's earnings growth in the most recent quarter should be at least 25% above the previous year, and

- Revenue growth in the most recent quarter should be at least 20% higher than the year before.
"We don't bother to know or decipher what kind of companies they are because we don't want to be distracted by factors other than our three cardinal buying principles," says Auer. So what are some of the stocks that qualify?

Doubling Your Money

Here are four companies that aren't household names but meet Auer's stringent "double-your-money" buying principles:

Cliff Natural Resources (CLF), the largest supplier of iron ore pellets in the North American steel industry, currently trades at $98.25 a share. In its latest quarter, the company posted earnings growth of 98%, compared to a loss a year ago. Revenues jumped 50% during the quarter. Despite such impressive results, the stock is trading at a price-to-earnings ratio of just 11. Auer bought shares at $58.72 a share in August 2010. It's not too far from a double at this point.

Rubicon Technology (RBCN), now trading at $27.46 a share, makes mono-crystalline sapphire used for light-emitting diodes mainly for cell phones and video screens, as well in semiconductor manufacturing and laser imaging. Auer bought shares on Feb. 15, 2011 at $23, then trading with a 10 price-to-earnings multiple. What's impressive about Rubicon is it posted an unbelievable 100% jump in earnings in its most recent quarter, on revenues that leaped about 80%. The stock is now at $26 a share.

KLA-Tencor (KLAC), the world's leading maker of yield-monitoring and process control systems for semiconductor companies, is trading at $47.25 a share. It posted a stunning 393% earnings growth in its most recent quarter, on revenues that advanced 74%. Auer bought shares in early March at $45 a share, then trading with a price-to-earnings ratio of 10.5. Auer says the company expects sales to leap even more because of exploding demand for its products from makers of tablet computers, such as the Apple's iPad, and iPhones.

Cimarex Energy (XEC), an independent oil and gas exploration and production company with operations in the Midwest, Permian Basin, and the Gulf of Mexico, is trading at $115 a share. Its production is 61% natural gas and 39% oil. Auer accumulated shares between $70.46 and $79.82 in November 2010, when its price-to-earnings ratio stood at around 10. The stock is currently trading at $116.87. "It has been a fast-moving stock, and I am sure it's on its way to doubling in price," says Auer.

So far this year, there are only nine stocks that have doubled during the first quarter of 2011, based on Auer's investing guidelines. For investors seeking such huge returns, and who are impressed with Aeur's investing principles and track record, the four stocks among the 114 he has targeted look attractive, indeed.

See full article from DailyFinance: http://srph.it/gWc1ex

​
Click to expand...
...
 
After reading that article, I've decided to adhere to those principles and see what kind of results I come up with.

I'm currently using Scottrade and have yet to delve in to commodities, dividends, bonds or options. In the near future, I plan on getting more into those means of exchange.

I'm currently holding positions in Lululemon Athletica Inc (LULU) and (SINA). Both of these stocks price per share have reached their 52 week high and are now retracting.

More news on LULU:

The company also intends to do a two-for-one split of its Special Voting Stock and increase the company’s authorized Special Voting Stock from 30,000,000 shares to 60,000,000 shares.


According to the stock split strategy, Lululemon will be able to increase its shares outstanding by offering two shares for one share. This is expected to be effective following approval from stockholders at the annual meeting scheduled for June 8, 2011.


Lululemon’s decision to implement the stock split sprung from the belief that investors were overvaluing the stock. A higher stock price was thus preventing new investors from buying the shares. Since a split reduces a stock's per-share price by increasing a percentage of outstanding shares, it consequently makes shares seem more affordable for small investors.


Full story: http://www.zacks.com/stock/news/50306/Lululemon+Announces+Stock+Split?adid=
Click to expand...
SINA is also overheating right now and will see a dip in price until the end of the week.

Other stocks that I am currently watching are (BIDU), (KKR), (SIRI), (MCP) as well as a few others that I will name later.

I frequent www.bloggingstocks.com , www.investors.com , and AOL Finance for my daily dose of news related information.
 
Recently I've gotten into forex trading. For those of you unfamiliar its trading on foreign currency. That's a blog I usually get some good information from.
http://www.forexblog.org/

The only down fall to forex trading it's extremely volatile since you markets are constantly changing and require you to pay attention to the news daily. Slight political or economic shifts could mean hundreds of pips per day. You guys should check it out.
 
LA said:
After reading that article, I've decided to adhere to those principles and see what kind of results I come up with.

I'm currently using Scottrade and have yet to delve in to commodities, dividends, bonds or options. In the near future, I plan on getting more into those means of exchange.

I'm currently holding positions in Lululemon Athletica Inc (LULU) and (SINA). Both of these stocks price per share have reached their 52 week high and are now retracting.

More news on LULU:

SINA is also overheating right now and will see a dip in price until the end of the week.

Other stocks that I am currently watching are (BIDU), (KKR), (SIRI), (MCP) as well as a few others that I will name later.

I frequent www.bloggingstocks.com , www.investors.com , and AOL Finance for my daily dose of news related information.
Click to expand...

I'm going to have to look into this. Lulu lemon is huge out here. Thanks.
 
What has helped in the past choose some investments, which I enjoy at the same time because I like business in a general/academic sense, is to read. I read several magazines and newspapers everyday including your typical run of the mill Bloomberg BusinessWeek, Time, WSJ, etc. Even if they don't outright tip you off, a lot of time if you are receptive, you will pick things up between the lines that tell you, "look into this company."
 
FRESH said:
What has helped in the past choose some investments, which I enjoy at the same time because I like business in a general/academic sense, is to read. I read several magazines and newspapers everyday including your typical run of the mill Bloomberg BusinessWeek, Time, WSJ, etc. Even if they don't outright tip you off, a lot of time if you are receptive, you will pick things up between the lines that tell you, "look into this company."
Click to expand...

Check out Black Enterprise as well fam. Its a great magazine they even give you five companies to look at every issue.
 
From the market trends i am looking at, i see the market being flat and then tanking within the next 3-6 months. Margins have been high; the main reason the market has been up; but there are a lot of market pressures such as the ECU rates increasing, the middle east crisis and the related gas and oil price spike, the weak job/wage growth. Add all of these together, and the situation is very similar to 2007. Once the margins start going down, the market will defintely start plummeting. I'd keep an eye on earnings report and profit margins.

Also keep in mind the very simple axiom, buy low and sell high. Now is not a time to find pricing at lows, necessarily, though there are some interesting markets out there that will do well even during the expected downturn.

Edit: Also keep in mind that there will be a heavy swath of budget cuts all through out the local and state governments. This will definitely impact spending and consumer confidence, leading to a market down turn. It's gonna be a vicious cycle.
 
Last edited:
subtlenote said:
From the market trends i am looking at, i see the market being flat and then tanking within the next 3-6 months. Margins have been high; the main reason the market has been up; but there are a lot of market pressures such as the ECU rates increasing, the middle east crisis and the related gas and oil price spike, the weak job/wage growth. Add all of these together, and the situation is very similar to 2007. Once the margins start going down, the market will defintely start plummeting. I'd keep an eye on earnings report and profit margins.

Also keep in mind the very simple axiom, buy low and sell high. Now is not a time to find pricing at lows, necessarily, though there are some interesting markets out there that will do well even during the expected downturn.

Edit: Also keep in mind that there will be a heavy swath of budget cuts all through out the local and state governments. This will definitely impact spending and consumer confidence, leading to a market down turn. It's gonna be a vicious cycle.
Click to expand...

So true but there has to be a way to capitalize on it. Maybe saving as much capital as possible so that we can profit on the coming downturn?
 
MrFantastic said:
So true but there has to be a way to capitalize on it. Maybe saving as much capital as possible so that we can profit on the coming downturn?
Click to expand...
That's exactly right. I wish I would have been prepared for the economic downturn that bottomed out in March 2009. There was lots of money to be made from that.

In the midst of a downturn, you can profit by shorting the stocks you see most volatile to crashing. Shorting involves borrowing shares with the intent that they will go down in price and then profiting from it.

I have yet to do any shorting but am learning more about it each day. You will need a margin account in order to use this method.

In addition to shorting as the prices are falling, you can eventually accumulate tons of shares at a much lower price so that you get 200-300+% gains once they bounce back.

Some stocks still haven't bounced back since the market crash of 08-09.
 
LA said:
That's exactly right. I wish I would have been prepared for the economic downturn that bottomed out in March 2009. There was lots of money to be made from that.

In the midst of a downturn, you can profit by shorting the stocks you see most volatile to crashing. Shorting involves borrowing shares with the intent that they will go down in price and then profiting from it.

I have yet to do any shorting but am learning more about it each day. You will need a margin account in order to use this method.

In addition to shorting as the prices are falling, you can eventually accumulate tons of shares at a much lower price so that you get 200-300+% gains once they bounce back.

Some stocks still haven't bounced back since the market crash of 08-09.
Click to expand...

I did something similar with by buying Sirius. I bought in at .30 cents a share and it's up 1.16 last time I checked. I'm only sorry I didn't buy in at .06 like I wanted to. I followed a friend's bad advice. I took the Warren Buffet approach to investing and invested in something I know and use. I banked on the fact that during a down turn people still need entertainment and if its not too expensive people will still get it. One of the many reasons FB is so huge and valued at 50 billion.
 
LA said:
That's exactly right. I wish I would have been prepared for the economic downturn that bottomed out in March 2009. There was lots of money to be made from that.

In the midst of a downturn, you can profit by shorting the stocks you see most volatile to crashing. Shorting involves borrowing shares with the intent that they will go down in price and then profiting from it.

I have yet to do any shorting but am learning more about it each day. You will need a margin account in order to use this method.

In addition to shorting as the prices are falling, you can eventually accumulate tons of shares at a much lower price so that you get 200-300+% gains once they bounce back.

Some stocks still haven't bounced back since the market crash of 08-09.
Click to expand...

There are a lot more regs around short selling after the last market crash; much harder to do.
 
subtlenote said:
From the market trends i am looking at, i see the market being flat and then tanking within the next 3-6 months. Margins have been high; the main reason the market has been up; but there are a lot of market pressures such as the ECU rates increasing, the middle east crisis and the related gas and oil price spike, the weak job/wage growth. Add all of these together, and the situation is very similar to 2007. Once the margins start going down, the market will defintely start plummeting. I'd keep an eye on earnings report and profit margins.

Also keep in mind the very simple axiom, buy low and sell high. Now is not a time to find pricing at lows, necessarily, though there are some interesting markets out there that will do well even during the expected downturn.

Edit: Also keep in mind that there will be a heavy swath of budget cuts all through out the local and state governments. This will definitely impact spending and consumer confidence, leading to a market down turn. It's gonna be a vicious cycle.
Click to expand...

As long as Employment/Unemployment stats aren't working in our favor, the market is going to bleed. All the bull years have something(s) that drives that growth, well we don't have anything to drive that growth, be it truth like growth and expansion, or fake like the technology bubble.

Speaking of bubbles...one that has much potential, school loans. All those subsidized and unsubsidized loans that people aren't necessarily capitalizing on by finishing school or making enough income to offset the initial investment into themselves. I don't know if this debt as a whole has the end game volatility like the housing bust, but as I read things don't look good in that specific area. Plus we've already had the school v. work debate which plays heavily into this topic...
 
You must log in or register to reply here.
Back
Top Bottom