Filed under: Google (GOOG), Apple Inc (AAPL), Cisco Systems (CSCO), Time Warner (TWX), Home Depot (HD), Berkshire Hathaway (BRK.A), China, Halliburton (HAL), Altria Group (MO), NYSE Euronext (NYX), Goldman Sachs Group (GS), Duke Energy (DUK), Dow Chemical (DOW), Top Picks 2007, Valero Energy (VLO), PetroChina Co Ltd ADR (PTR), Huaneng Power Intl ADS (HNP), Level 3 Communications (LVLT), Kraft Foods’A’ (KFT), Chasing Value, Oil, S and P 500, DJIA, Stocks to Buy, Rite Aid Corp (RAD), Savient Pharmaceuticals (SVNT)

This year has been a stock picker’s market extraordinaire! This month’s review provides ample evidence of this, as you’ll note that Google (NASDAQ: GOOG), which I included for fun because of its popularity, beat all else as a portfolio of one. The average of my seven picks came in second, beating James Cramer’s average based on his nine picks. Both Cramer and I beat each of the three indices I am tracking, and therefore beat the average as well, with the largest and most stable, the Standard & Poor’s 500 coming in last.

Of course, this could easily change given recent market volatility. A sharp downturn in the market could reverse our fortunes. A lot can happen in the remaining two months — I take nothing for granted.

While Google shined brightly this year, Cramer and I have each made one pick that shined brighter. Cramer’s best, Apple (NASDAQ: AAPL) has gone into orbit this year on the wings of the iPhone, iPod, and growing Mac sales. Benefiting from rising oil prices, shortages in China and the Chinese government allowing a 10% price hike, my PetroChina ADR (NYSE: PTR) has rocketed, becoming the second-largest capitalized company in the world. PTR has done this even in the shadow of Berkshire Hathaway (NYSE: BRK.A) selling its shares and Warren Buffett questioning the huge appreciation of the Chinese stock market and stocks overall.

Through September and October, the market benefited from a half-percent interest rate cut by the Federal Reserve Board, recovering much of August’s losses. However the Fed’s quarter-point cut on Wednesday did not have the desired effect, and yesterday the Dow tumbled. This has also stimulated oil and gold prices to new highs and caused the dollar to decline overseas. I think this boosted foreign stocks significantly, most notably Huaneng Power International ADS, which derives 100% of its revenue outside the United States. Last December, I made a strong case for HNP; prior to its recent rise, I did so again for our Volatile Market picks: Huaneng Power (HNP) is my pick for the next 50 years.

The Dow Jones Industrial Average is once again approaching its high of 14,000, and looks like there might be room to exceed it. The housing market and subprime loans continue to worry investors, but unlike last month when an interest rate cut was not a certainty, the market got its wish but not as much as hoped, with some concern that future cuts are less likely.

The month of October continued the trend of stock-picking outperforming the indices. Quarterly earnings reports have been mixed, and more reports are coming out daily. The global economy is still clicking along in a positive direction, but with much greater angst. U.S. interest rates, the devalued dollar, rising oil prices, and international entanglements of all kinds are creating uncertainty. Mergers and acquisitions are slowing or being renegotiated. It has been another month where Chinese stocks did very well, but more people are questioning how long this can continue, including “My Pal Warren.”

Summary of Results:

• Google (NASDAQ: GOOG) continues to race into uncharted territory, doubling its year-to-date growth since last month. The prognosticators are so crowded on that proverbial bandwagon that they have to refrain from jumping on it because there’s little room left. August lulls, and two stories in Barron’s (subscription required) that sought to temper investor enthusiasm (questioning ROIC and sustained advertising income in a slowing economy), are a distant memory. Few investors have even paused to take a breath in October. GOOG closed at $707, for a solid +52.85% gain through the first 10 months of the year, holding the top spot again, and by a widening margin.
• My picks continued to advance considerably through October, improving to a 18.14% gain year-to-date. Adding the dividend portion of 2.41% (2.89% x 0.833) brings the total return to +20.55%, a very solid total performance. Dividends make a difference when the returns are modest, although this month they were less important. PetroChina ADR (NYSE: PTR) replaced Valero Energy (NYSE: VLO) as my biggest winner, leaping forward for almost an 85% YTD gain. Nevertheless, VLO has been the most consistent all year, and Huaneng Power International ADS (NYSE: HNP), another crowd pleaser, was third. My biggest disappointment is Time Warner Inc. (NYSE: TWX), which is down 17%. I just can’t believe so much potential goes under-utilized and undervalued.
• Jim Cramer’s average return on his nine picks was 17.14% over the 10 months, beating the Standard & Poor’s index, the DJIA and the NASDAQ, and changing positions with me this month. Adding the dividend portion of 0.55% (0.66% x 0.833), brings Cramer’s gain to +17.69%. Apple (NASDAQ: AAPL) was his best pick of the year. Given new product and software launches and the continuation of current products and programs, there is every reason to believe 2007 will finish as another one for Apple’s record books.
• All of the indices gained ground in October, with the DJIA, NASDAQ and S&P all making a good showing for an overall average of +12.68% year-to-date. Adding their portion of the dividend yield of 1.5% (1.8% x 0.833) brings it up to a total gain of +14.28%, a notable return on investment, beating out most fixed income securities. They also beat the long-term market averages. This is a reminder that just by being in the market, the most conservative of investors would have done very well.

Note that portional dividends have been added to the results. This is one of the criteria I use in my stock picks, and it is having an impact on the results thus far. Only three of Cramer’s picks pay dividends, averaging about 0.66%. The indices pay a higher average of 1.8%, and my picks average still higher at about 2.89%. Google does not pay a dividend. The flatter the market is, the more dividends are a factor in overall returns.

Google wavered in the first half of the year, took off and then cooled over the summer, being the most speculative of stocks early on, but it was the best bet for the fourth month in a row, and has been on fire the last two months. I still maintain that Value will beat Growth and Indexing over the long run, but I must give Google its due — it has been great.

Two of my picks continue to be mentioned as buyout candidates but the rhetoric has died down considerably: The Dow Chemical Co. (NYSE: DOW) and The Home Depot (NYSE: HD). Home Depot continues to receive the most negative sentiment, and the crushed housing market is keeping it from rebounding despite what many market watchers see as a deeply discounted turnaround play and I would agree.

The following are the closing prices as of December 28, 2006 and 10 month returns for the seven stocks I recommended, plus the addition of Spectra Energy Corp. (NYSE: SE) that was spun out of Duke Energy (NYSE: DUK). Among Cramer’s picks, Kraft Foods (NYSE: KFT), which was spun out of Altria Group, Inc. (NYSE: MO), is included in the calculations.

1. The Dow Chemical Company: (NYSE: DOW) $40.02 is Up to $45.04 (+12.04%) 3.54% yield
2. Duke Energy: (NYSE: DUK) $33.02 (incl. of Spectra Energy (NYSE: SE) is Down to $32.16 (-2.6%) 4.31% yield
3. The Home Depot Inc.: (NYSE: HD) $39.73 is Down to $31.51 (-20.69%) 2.31% yield
4. Huaneng Power International ADS: (NYSE: HNP) $36 is Up to $48.05 (+33.47%) 3.62% yield
5. PetroChina ADR: (NYSE: PTR) $142.12 is Up to $262.60 (+84.77%) 4.5% yield
6. Time Warner Inc. (NYSE: TWX) $22.00 is Down to $18.26 (-17.83%) 1.1% yield
7. Valero Energy: (NYSE: VLO) $51.61 is Up to $70.43 (+36.47%) 0.84% yield

The following index comparisons are also from December 28, 2006 :

• Dow Jones Industrial Average: 12,501.52 is Up to 13,930.01 (+11.43%)
• NASDAQ Composite Index: 2,425.57 is Up to 2,859.12 (+17.8%)
• Standard & Poor’s 500 Index: ($INX): 1,424.73 is Up to 1,549.38 (+7.16%)

The Cramer Speculative Stocks for 2007:

1) Level 3 Communications (NASDAQ: LVLT) $5.66 is Down to $3.03 (-46.47%) No dividend
2) Rite Aid (NYSE: RAD) $5.49 is Down to $3.91 (-28.78%) No dividend
3) Savient Pharmaceuticals (NASDAQ: SVNT) $12.01 is Up to $14.08. (+17.24%) No dividend

The Cramer Growth Picks are:
1) New York Stock Exchange Group (NYSE: NYX) $97.51 Down to $93.87 (-3.73%) No dividend
2) Apple Inc. (NASDAQ: AAPL) $80.87 Up to $189.95 (+134.88%) No dividend
3) Cisco Systems (NASDAQ: CSCO) $27.42 Up to $33.06 (+20.57%) No dividend

The Cramer Value Picks are:
1) Altria Group (NYSE: MO) $86.23 Up to $72.93 +(Kraft at .692024 x $33.41 = 23.12) to $96.05 (+11.41%) 4.12% yield
2) Goldman Sachs Group (NYSE: GS) $200.80 Up to $216.74 (+23%) .72% yield
3) Halliburton Co. (NYSE: HAL) $31.26 Up to $38.40 (+26.1%) .97% yield

The New Powerhouse Google

What an amazing month for Google, up significantly, and passing its high prior to dropping after its last quarterly report. The Wall Street darling is being tracked since it is of broad interest to the investing public and internet users alike. Google closed December 28, 2006 at $462.56, rose in January, then traded downward for a few months before hitting new highs in June, followed by another all-time high of $558.58 in July. A 3-cent earnings miss, based on analysts’ expectations, caused an immediate drop of about 10%. But coming on strong, Google ended October at $707.00, for a solid YTD gain of $244.44 per share (+52.85%), more than doubling last month’s YTD gain. Google does not pay a dividend.

In Closing

I continue to watch the sad state of affairs at Time Warner, which has faltered all year long for what I consider to be no good reason, or maybe there is: Time Warner (TWX): No catalyst or no leadership? Some comparisons. I am still waiting for my invitation to a board meeting to share my thoughts personally. No doubt Jim Cramer would like to do the same with the boards of Rite Aid, as well as Level Three, considering it is a tech stock but has been a disaster for him. I will continue to report during the week following the closing stock prices each month.

James Cramer of TheStreet.com has the distinction of making both the best and worst picks of the year so far. The past few months have been dismal for the financial sector and anything lingering near its giant shadow. Neither of us wandered near the banks although Cramer does have Goldman Sachs, which has been on a roller coaster ride. No telling where it will end up.

This Chasing Value post marks my 436th story for BloggingStocks over the last 19 months, and the 10th report where I compare my stock picks to Cramer’s and the indices. Some months have been remarkable, and some have been rather blasé. Many of our readers have contributed some thought-provoking commentary and made this time a more interesting journey.

I created the Chasing Value section after discussions with Senior Editor Amey Stone, and it seems to be doing well with a modest but growing following. I hope readers appreciate the depth to which I am sharing ideas and eating my own cooking. The ideas I present are the basis of our investment strategy for my own small private investment company and personal portfolios. I hope readers will continue to share their ideas, I am still learning too.

I must close again with this: It would be very unusual for someone to expect a beginning investor or novice to hold just a single stock in their portfolio, but if they did, that stock could very well be Google. For that reason, in this unique circumstance, such a person would have beaten Cramer and myself at stock picking, and 99% of Wall Street, and tripled the return of the indices as well. You all know it’s often better to be lucky than good, and this proves it again!

Disclosure: I own shares of BRK.B, DOW, DUK, HNP, PTR, SE, TWX, and VLO.

To find more potential opportunities and verify my track record read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. Check out his other posts for BloggingStocks here.

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Filed under: Google (GOOG), Microsoft (MSFT), Cisco Systems (CSCO), Citigroup Inc. (C), Gannett Co (GCI), Stocks to Buy, Stocks to Sell, Videos

We’re probably in a bear market now, Doug McIntyre says in the latest edition of StockWatch: Between the Bells. The editor of financial news site 24/7 Wall St. and prolific BloggingStocks contributor cites two factors that demand investors’ attention: the rising, record price of oil — underscoring the falling value of the dollar — and an increase in homeowners defaulting on their mortgages in the coming year.

Steer clear of housing and lenders for now — Doug says it’s too soon to buy depressed shares like Beazer Homes (NYSE: BZH) and Citigroup (NYSE: C). Newspaper stocks like USA Today publisher Gannett (NYSE: GCI) will fall further as well — it’s still too early to buy.

So where should you put your money instead? Take refuge in the big technology companies, Doug says. With new products and expanding markets, giants like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and Cisco Systems (NYSE: CSCO) can stiff-arm any recession to come.

Want more StockWatch? Check out these recent interviews:

• Minyanville founder and CEO Todd Harrison
• Masters 100 fund portfolio manager Ken Kam
• Midas Funds portfolio manager Thomas Winmill
• Timothy Sykes, author of An American Hedge Fund
• AOL Money Coach Hilary Kramer

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Filed under: Earnings reports, Google (GOOG), General Electric (GE), Time Warner (TWX), Starbucks (SBUX), Employees, Walt Disney (DIS), Viacom (VIA), Sony Corp ADR (SNE), CBS Corp ‘B’ (CBS), News Corp’B’ (NWS)

The New York Times reports that 200,000 Hollywood workers are about to be affected by the imminent strike of the writers. And Teamsters — while not on strike — are not likely to cross the writers’ picket lines. The fight is over how the DVD and Internet pies get split between producers and writers. Which stocks will be winners and losers?

One winner is Starbucks Corp. (NASDAQ: SBUX) as its shops will undoubtedly attract writers who normally would be reporting to a corporate office. They’ll spend time using Starbucks wireless Internet access and drinking its over-priced Joe. In addition to all the people who will stop watching their favorite TV shows, the corporate losers from the strike will include the following:

• CBS Corp. (NYSE: CBS) - David Letterman’s writers will stop writing jokes and it will be interesting to see whether CBS will just start with the re-runs.
• The Walt Disney Companies (NYSE: DIS) - ABC will be able to run a few new episodes of Boston Legal, Lost, Grey’s Anatomy, and Desperate Housewives before its audience gets bored with the re-runs.

• General Electric (NYSE: GE) - NBC Universal will probably run out of jokes for Jay Leno and scripts for 30 Rock after a few shows, unless the writers and producers can agree.
• News Corp. (NYSE: NWS) - I am not sure how many new episodes of The Simpsons are already written, but will News Corp. lose its audience when the re-runs start?
• Sony Corp. (NYSE: SNE) - I am not sure what shows or movies Sony is involved with but it will surely be hurt if it can’t produce new movies.
• Time Warner (NYSE: TWX), parent of BloggingStocks, will surely be hurt if its HBO unit can’t produce new shows and its Warner Brothers can’t complete new movies (no worries though, BloggingStocks writers will keep on writing).
• Viacom (NYSE: VIA) will lose the audiences of its Comedy Central shows — such as John Stewart’s Daily Show and Stephen Colbert’s Colbert Report. This morning’s announcement that Viacom earned 96 cents a share — beating analysts’ 59 cents a share estimate — could be a last hurrah since so much of that profit was due to the success of Transformers. It could be a while before the sequel can be written.

How much will the strike cost these companies? It depends on how long it lasts and how much the audience dwindles as they start showing re-runs. Advertisers will start to look elsewhere during the strike — maybe the Internet. And if these advertisers do shift more money to the Web, will they come back to TV once the strike is over?

This suggests another possible winner — Google Inc. (NASDAQ: GOOG). Can $1,000 a share be far away?

Which shows will you miss the most? Which other winners and losers do you see from the strike?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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Filed under: Earnings reports, Stocks to Buy

Generally, an investment strategy that focuses the total average annual return on equity over longer time periods tends to avoid an evaluation of companies that are about to or that have recently reported quarterly earnings. But there are exceptions, and International Paper (NYSE: IP) is one.

International Paper Friday reported unspectacular Q3 EPS of 57 cents compared to the Reuters consensus estimate of 57 cents. IP also reported Q3 revenue of $5.54 billion versus the Reuters consensus estimate of $5.36 billion. In other words, IP’s performance barely met the Wall Street’s expectations, and the Street was not overjoyed, with IP’s shares declining 68 cents to $35.39 in Friday afternoon trading.

Still, the IP investment thesis remains largely intact. A restructuring has re-aligned its product mix and cut costs, while balance sheet improvements mean the company can more-quickly make investments in faster-growth regions. Further, while domestic free sheet (used in copiers, envelopes, forms) and linerboard (used in corrugated boxes) demand is expected to remain soft in 2008, international demand should grow at an acceptable rate.

Continue reading International Paper’s slightly down, but not nearly out

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Filed under: Earnings reports, Red Hat Inc (RHT), Stocks to Buy

Historically, North Carolina was well-known for tobacco, furniture production, and textiles. Though the Tar Heel state is still a leading textiles employer, both textiles and furniture production have been diminished by offshoring; North Carolina is one of the states most affected by job loss to other parts of the world. The state also remains a leader in tobacco production, but concerns about the loss of government subsidies have prompted many farmers to switch to other crops or to quit farming altogether.

Today, Charlotte, North Carolina, is known as the second largest financial center in the U.S., and the Raleigh-Durham area is a tech and research district. Carlisle Cos. (NYSE: CSL), Commscope Inc. (NYSE: CTV), and Red Hat Inc. (NYSE: RHT) can be found in the state.

The Forbes 2007 list of the 100 best mid cap stocks included two from North Carolina. One of those is Charlotte-based Carlisle, a manufacturer of such diverse products as brakes for heavy-duty trucks, roofing materials, food service equipment, and aerospace cabling assemblies. Carlisle appointed a new CEO in June, and in August it marked its 31st consecutive year of dividend increases. Carlisle’s five-year EPS growth rate of 19.4% is better than its industry average, but less than the S&P 500. Earnings missed Wall Street estimates in the first three quarters of 2007, the company reporting 84 cents per share in the recent third quarter report, missing expectations by three cents, but 14 cents more than in the same period last year. The share price began to slide even before Carlisle trimmed its full-year guidance again in October, to open at $39.43 on Friday, down from the 52-week high of $51.57 in August.

Continue reading Investing in North Carolina: Red Hat (RHT), Carlisle (CSL), Commscope (CTV)

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Filed under: Berkshire Hathaway (BRK.A), Teva Pharm Indus ADR (TEVA), Israel

At IsraelNewsletter, we focus on opportunities to find undiscovered Israeli companies. More than 120 Israeli companies trade on U.S. exchanges and even more trade on global exchanges. Most of these companies are small and mid caps, while a few, like generic pharmaceutical giant, Teva Pharmaceutical (NASDAQ: TEVA) are large caps. This provides diligent investors with ample opportunities to make money.

Warren Buffet knows this, and that’s why he made his largest ever international investment by purchasing 80% of Israeli metalworks company, Iscar, for $4 billion last year. Buffet said, on his first visit to Israel, that “Berkshire Hathaway (NYSE:BRK.A) and Israel will be here forever, as Israel and the U.S. will be here forever.” The Donald (Trump) signed two huge realty deals in Israel last year: a partnership in purchasing a building in Ramat Gan for USD 44 million, and a contract to erect a luxury hotel bearing his name on a sea-side cliff in Netanya.

Israeli companies are hot and many of them are looking for growth internationally. Bloomberg reported this week about international expansion by a few of the leading Israeli conglomerates. The article describes plans by Israeli billionaire Nochi Danker and his firm, IDB, to partner with fellow Israeli investor, Yitzhak Tshuva to invest as much as $8 billion in constructing a Las Vegas casino.

Continue reading Smart investors follow Buffet into the Promised Land (that’s Israel)

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Filed under: Exxon Mobil (XOM), Chevron Corp (CVX), ConocoPhillips (COP), Commodities, Oil

The markets have two additional oil industry data points to digest Friday, and through the weekend:

First the good news: OPEC (Organization of Petroleum Exporting Countries) has increased oil production in response to sustained +$90 per barrel prices.

OPEC’s 10 members bound by output targets, all except Iraq and Angola, pumped 26.98 million barrels per day, up 180,000 barrels per day from September 2007, according to the survey of oil firms, traders, OPEC officials and analysts, Reuters reported Friday.

Continue reading Two new oil data points: One positive, one negative

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Filed under: Earnings reports, Caterpillar (CAT), Technical Analysis, Deere and Co (DE), Stocks to Buy

Ever wonder what became of some of those big-time agricultural equipment companies that passed into history … names like International Harvester, Case and Massey Ferguson? Well, a Dutch outfit got the first two, but Massey Ferguson was picked up by an American firm headquartered in Duluth, Georgia.

AGCO Corporation (NYSE: AG) is a global manufacturer of agricultural equipment, offering a full product line of tractors, combines, hay tools, sprayers, forage, tillage equipment and implements. The firm markets such brands as AGCO, Massey Ferguson and Fendt through more than 3,200 independent dealers and distributors in over 140 countries. It has acquired Caterpillar (NYSE: CAT)’s high-tech MT series tractor line, as part of a strategy to expand its offerings. Deere (NYSE: DE) is a major competitor.

Continue reading AGCO Corporation (AG): Shares display a bullish ‘pennant’ consolidation pattern

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Filed under: Earnings reports, Forecasts, Conventions and conferences, Annual meetings, Yahoo! (YHOO), Wal-Mart (WMT), Walt Disney (DIS), Gap Inc (GPS), Abercrombie and Fitch (ANF), Burger King Hldgs (BKC), Goldcorp Inc (GG)

Monday, November 5

• BorgWarner (NYSE: BWA) to give business update at 10am.
• Burger King (NYSE: BKC) to report Q1 earnings; conference call at 10am.

Tuesday, November 6

• Merrill Lynch to host conference call discussing Focus Media’s (NASDAQ: FMCN) secondary offering at 11am.
• Yahoo (NASDAQ: YHOO) CEO Jerry Yang, Senior VP Michael Callahan & General Counsel to testify before the House Foreign Affairs Committee on how their company gave false information to Congress relating to their role in a human rights case in China which resulted in a journalist being sent to jail for 10 years.

Wednesday, November 7

• Symmetry Medical (NYSE: SMA) to give Q3 business update at 8am.
• Fluor (NYSE: FLR) to report Q3 earnings; conference call at 9:30am.
• Hot Topic (NASDAQ: HOTT) to report October sales at 4pm, American Eagle (NASDAQ: AEO) to report Oct. sales at 5pm.

Thursday, November 8

• Disney (NYSE: DIS) to report Q4 earnings; conference call at 4:30pm.
• CyberSource (NASDAQ: CYBS) to give 2007 guidance at 4:30pm.
• Gap (NYSE: GPS) and Wal-Mart Stores (NYSE: WMT) to report Oct. sales at 8am, Abercrombie & Fitch (NYSE: ANF) to report Oct. sales at 8:15am.

Friday, November 9

• Halozyme Therapeutics (NASDAQ: HALO) to give business update at 11am.
• Goldcorp (NYSE: GG) to report Q3 earnings; conference call at 1pm.

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Filed under: Rants and raves, Federal Reserve

I often try to put clever titles on my “Chasing Value” column here at BloggingStocks. But today I have to hand it to my fellow BloggingStocks contributor Jim Cramer, who came up with a doozy this morning. His post is titled, “Fed has grounds to cut to zero.” In it, he suggests that the economy is in such poor shape that the Federal Reserve could actually cut rates back to ZERO — yes 0%.

Is Cramer’s close association to Wall Street fogging his thinking? If interest rates get anywhere near 0%, you can sign me up now for all the money in all the banks. I guess than we won’t need the Fed anymore since I will have all the money. Everyone can sit by their favorite form of media, waiting to hear what I think about where the economy is going. Of course that won’t matter either because if I have all the money the economy will go where I say it will go — or maybe not?

Then again if the interest rates go to zero, perhaps the value of the dollar will go to zero as well. Cramer needs to look beyond the needs of Wall Street.

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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