Weekend Open Thread   14 comments

funny-pictures-cat-asks-you-to-be-quiet-because-he-is-hunting-rabbits(hat tip to The Unwanted Blog for the pic)

As promised, here is the weekend open thread, where you can discuss any topic you like.

For your consideration, I offer, in honor of this Easter weekend…rabbit songs!

Unfortunately, there aren’t many rabbit songs, although the best has to be Jefferson Airplane’s White Rabbit:

For the last two songs, they only get included for mentioning rabbits in the lyrics.

Next is Pink Floyd’s Breathe, from their Dark Side of the Moon album (which I consider one of the all-time great albums):

Finally, there is Paul McCartney’s Band on the Run:

All in all, rabbits get a bad rep in music: drugs, depression, and crime.

Try not to think about the rabbits as you enjoy your Easter weekend!

Posted April 18, 2014 by edmcgon in Music, Open Thread

April 17th: Ed’s Daily IRA Summary   Leave a comment

Another day, and still no time to trade, so no changes in my IRA. But you get an open thread in the deal!

By the way, I will be posting the usual weekend open thread tomorrow morning, due to the markets being closed tomorrow.

Posted April 17, 2014 by edmcgon in Open Thread, Portfolio

Traders Corner   23 comments

S&P 500 Daily Momentum: Bearish (weakening)
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral
S&P 500 Futures (June): Negative
Overall: Options expiration today! On top of this, we get no Federal Reserve treasury purchases today, and tomorrow is a market holiday. This looks like a day made for bears, and the futures reflect that.

The S&P 500 levels to watch today:

UPSIDE: 1867 (February’s high), 1872 (2 data points), 1882-1885 (3 data points and March’s high), 1893 (2 data points), and 1897 (April 4th’s high and top of the Bollinger Bands and the all-time high).
LAST CLOSE: 1862, inside the 1862-1864 (3 data points) range.
DOWNSIDE: 1858 (20 day moving average), 1854 (April 8th’s high), 1852 (April 9th’s low), 1849-1850 (January’s high and December’s high), 1848 (50 day moving average), 1846 (April 16th’s low), 1844 (April 15th’s high), 1841 (April 7th’s low), 1837 (April 8th’s low), 1834-1835 (2 data points and March’s low), 1830 (April 10th’s low), 1829 (100 day moving average), 1820 (bottom of the Bollinger Bands), 1814-1816 (3 data points), 1796 (150 day moving average), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), and 1764 (200 day moving average).

Google misses: Ed’s Daily Notes for April 17th   3 comments

Google

Bloomberg: Google Revenue Falls Short of Estimates, Ad Prices Drop

Bad news for Google:

Google Inc. (GOOG)’s costs are rising as the search provider finds it harder to keep up with a shift to advertising on mobile phones and sales fell short of estimates.

Revenue, excluding sales passed on to partners, was $12.2 billion in the first quarter, missing a projection by analysts for $12.3 billion, according to data compiled by Bloomberg.

Google’s audience is steadily migrating to smartphones, where the company gets less money for marketing spots than on desktops and tablets. Facebook Inc. (FB) and other rivals are also challenging Google’s dominance in the online market. Even though Chief Executive Officer Larry Page is getting more advertisers to buy promotions, with total volume rising 26 percent, the average price for an ad fell 9 percent.

“Mobile is perceived as the single biggest risk over the near-term,” said Scott Kessler, an analyst at S&P Capital IQ Inc., who has the equivalent of a buy rating on the stock. “Mobile is definitely helping Google and many others in the number of volume-related metrics, but mobile has also had a notable negative impact on pricing.”

Net income rose to $3.45 billion, or $5.04 a share during the first three months of 2014, from $3.35 billion, or $4.97, a year earlier.

…Google is also spending more to expand its services, with costs rising faster than total sales, which rose 19 percent. Expenses climbed 23 percent to $11.3 billion in the latest quarter.

Chief Financial Officer Patrick Pichette said on a conference call that the increase in operating expenses was largely tied to legal costs and other spending related to acquisitions, especially of home-automation service provider Nest Labs. The search company is in good shape amid rising revenue and healthy profits, he said.

…Google’s other revenue, which includes the mobile Play store and hardware such as Chromecast, rose 48 percent from the year ago-period to $1.55 billion.

Overall, I am not concerned about Google. Google is still growing, and that is the main thing. Missing estimates just means Wall Street was too optimistic for this quarter.

The Daily Caller: The USPS wants to mine and sell data gathered from your mail

We were just discussing this the other day, so I had to include this story:

The United States Postal Service is looking to get in on the big-data-for-profit game played by tech giants like Facebook and Google, and begin mining and selling private data gathered from personal mail sent from and received by Americans everywhere.

USPS chief marketing and sales officer Nagisa Manabe recently told the forward-looking PostalVision 2020 conference that the post office is “actively looking for ways to build new business lines around what not long ago might have been considered science fiction,” eCommerce Bytes reports.

While some of those ideas included new delivery services from partnerships like grocery chains, others seek to increase revenues from advertising by mining, storing and analyzing customer data. By mapping those datasets and determining consumer behavior, advertisers and retailers could target more effectively through traditional mail, much the same way Facebook and Google target ads based on search, profile, email and other data.

Manabe described an example scenario in which a woman test drives two different types of cars and two different dealerships while trying to decide which to buy.

“We’re at the point where, all too soon… We’re going to know exactly that she was shopping at two different car dealers looking at cars, and both of those car dealers should be mailing her communication about that vehicle, right?” Manabe said.

Posted April 17, 2014 by edmcgon in Earnings Season, News, Stocks, Technology

April 16th: Ed’s Daily IRA Summary   Leave a comment

Again, no changes to report today since I didn’t do any trading. It has been a busy week for me. As for you, have an open thread!

Posted April 16, 2014 by edmcgon in Uncategorized

Buy SeaDrill Limited (SDRL)   25 comments

I am going against my own macro-economic, as well as market-related, views on this one: SeaDrill Limited (SDRL) is a strong buy at current price levels. At a little over $33/share, they are close to their 52 week low.

However, the offshore drillers have been knocked down so low that even in a bearish market, it is hard to see much downside here.

Even if a world recession were to happen, it is hard to imagine an economy so bad that people quit using oil (if it gets that bad, most stocks will be pretty worthless).

Looking at SeaDrill’s numbers, it is the definition of cheap:

Market Cap: $15 billion
Enterprise Value: $29 billion
Trailing P/E: 6.07
Forward P/E: 8.60
PEG Ratio: 0.50
Profit margin: 53%
Operating margin: 40%
Revenue: $5 billion
Operating cash flow: +$1.7 billion
Quarterly Revenue Growth (yoy, from December 2013): 24.5%
Dividend Payout Ratio: 51%
Dividend yield (annual, paid quarterly): 11.8%

Stocks don’t get cheap without a reason. Aside from issues with the entire offshore drilling sector, here are a few problems with SeaDrill’s financials:

Price/book: 2.11
Debt/equity ratio: 1.86
Levered free cash flow: -$1.5 billion

The dividend is what makes SDRL worth taking a chance on right now, even with the headwinds. I will be adding it to my long-term 401(k) portfolio today, and I will add an update when the order goes through.

UPDATE: Including trading fees, I added SDRL at $33.25.

Posted April 16, 2014 by edmcgon in 401(k), Portfolio Moves

Traders Corner   18 comments

S&P 500 Daily Momentum: Bearish (weakening slightly)
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bearish
S&P 500 Weekly Overbought/oversold: Neutral
S&P 500 Futures (June): Positive
Overall: We might be seeing the start of the next bull run, although the bears still own the momentum.

The S&P 500 levels to watch today:

UPSIDE: 1844 (April 15th’s high), 1846 (50 day moving average), 1849-1850 (January’s high and December’s high), 1852 (April 9th’s low), 1854 (April 8th’s high), 1858 (20 day moving average), 1863-1864 (2 data points), 1867 (February’s high), 1872 (2 data points), 1882-1885 (3 data points and March’s high), 1893 (2 data points), 1896 (top of the Bollinger Bands), and 1897 (April 4th’s high and the all-time high).
LAST CLOSE: 1842.
DOWNSIDE: 1841 (April 7th’s low), 1837 (April 8th’s low), 1834-1835 (2 data points and March’s low), 1830 (April 10th’s low), 1829 (100 day moving average), 1820 (bottom of the Bollinger Bands), 1814-1816 (3 data points), 1795 (150 day moving average), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), and 1763 (200 day moving average).

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