Tech Bargains
As the market for “new” tech stocks has gone wild again (see LinkedIn, Groupon, and the omnipresent chatter about Facebook), my interest has been piqued by the surfeit of tech bargains that seem to have appeared in the “old” tech stocks of yore. Cisco, Intel, Apple, Microsoft, Hewlett-Packard, all are trading at less than 7x Enterprise Value/EBITDA, throwing off significant cash flow, and sitting on cash positive (sometimes dramatically cash positive) balance sheets. Moreover, aside from Apple and Google, low valuations and shareholder grumblings have pushed these tech stocks to start offering dividends and share buybacks out of their cash hoard. And, with the luster off their stocks, the traditional fear of M&A based value destruction is (at least somewhat) mitigated.
Though some believe that we may be in a secular shift away from “old tech,” this is a sector that I’m getting more and more conviction around. If you, too, are a patient, long-term oriented investor, the risk reward may be interesting for you as well. In fact, we may not have to wait long before the market shifts its views.
Full Disclosure: Author is long shares of MSFT and AAPL at the time of writing
SP500 to Gold
Once again, thanks to Zero Hedge, saw this very interesting chart in an article promoting a return to the gold standard. To be honest, I have no idea what it means to return to the gold standard or what merit it’s perceived to bring. The comments on the Zero Hedge post are just a mess, so I’m reaching out to what’s left of The Curious Investor community! Anyone have any insight on the case for the gold standard that they’d like to share?
Effect of Oil Prices on the US Consumer
Great chart courtesy of Zero Hedge. This is part of the reason that from a portfolio perspective, I always like to keep some oil exposure for diversification.
Full Disclosure: Author long shares of TOT and LINE at the time of writing
In Defense of Groupon – Part I
It seems that Google is poised to make a potential $6 billion acquisition of Groupon which has been described as $5.3 billion in upfront consideration and $700 million in performance awards for management. Investor reaction yesterday was negative with the stock falling 4.5% and the internet appears to be on fire with bloggers and journalists bashing Google’s reckless spending. Afterall, $6 billion is double the value Google paid for Doubleclick. It’s $2 billion more than current rumored valuations for Twitter! Such an inflated purchase price for Groupon must surely be a sign that Google just doesn’t know what to do …
Is there good cash flow and bad cash flow?
Motley Fool printed an interesting article, “Can you trust the cash flow at Johnson & Johnson?,” yesterday. The author points out that “not all cash flow is equal” and shows this graph analyzing the sources of Johnson & Johnson’s freecash flow:
Johnson & Johnson shareholders can breathe a sigh of relief as the author of this article comes to the conclusion that very little of JNJ’s cash flow comes from “questionable sources.” In fact, the author claims just 0.9% of JNJ’s cash flow is questionable. The author describes questionable cash flow as “changes in …
Net1 UEPS Technologies
It’s been a while and for that I apologize. Truth be told, I had gotten my portfolio almost fully invested by mid-last year. And, as the stock intense rally we’ve seen in stocks through 2009 has turned flat since the new year, I’ve been much less aggressive with my personal portfolio and as such have had a lot less to say. Though, for those of you who follow my Covestor account, you’ll know that I have not been completely out of the markets. I’m increasingly interested in companies which do the bulk of their business …
