fishing for stock ideas

Fishing For Stock Picks

Fishing for Stock Picks is how I describe my stock investment research process. The analogy is a bit cheesy. But bear with me.

Because there are a number of reasons looking for stock investments is like fishing. Do you want to know why?

Well, to be honest, researching stock picks and going fishing have a lot in common. Seriously!

Because in both cases…

You’re going to be doing a lot of sitting around without much result. If you want to fish you need to have lots of patience. And the same goes for diligent stock investment research.

If you still don’t believe me, here are a couple of more specific examples…

Fishing for Stock Picks with Nets

I’m a big fan of using free online stock screeners to speed up your investment research. Of course stock screeners aren’t perfect (they’re constrained by GAAP and can only focus on statistics not management commentary).

stock research net fishingBut stock screens are still a great starting place to accelerate the pace of your investment research.

And in terms of fishing for stock picks…

Researching stock ideas using stock screeners is a lot like fishing with big nets. You put the nets (or stock screens) out in the ocean and you periodically check in to see what comes up.

By putting fishing nets in your favourite spots (or screening for your favourite investment criteria) you have a standing tool to help you see who’s passing through that part of the ocean.

It’s working for you. And you can check in whenever you like. This is especially true when you save your favourite stock screens on sites like and check in on them regularly.

But there are other ways to fish for stock picks too…

Fishing for Stock Picks with a Spear Gun:

Sometimes, you see a specific stock investing opportunity and you need to act immediately. Maybe it’s a new IPO, a stock idea that has gotten oversold or it’s just a new stock pick you really want to get a piece of.

In this case, researching stock ideas is kind of like fishing with a spear gun or harpoon. You are out and about cruising the seas for fish (or reading your favourite value investing blogs for ideas) when something catches you eye. You zoom in on the one fish of interest and nail it down as fast as you can.

You’re totally focused on one meaty idea and you do everything you can to get a piece of it as fast as you can.

Fishing for Stock Picks with a Rod:

rod fishing stock researchFinally, researching stock ideas can also be like fishing with a rod.

You pick an investment publication, read it quietly, and see what bites.

The best part of this kind of stock research is…

You don’t have to get wet! And the whole process might even be relaxing.

Sure, fishing with a rod might not be the most effective approach. But it can work if you’re in the right place at the right time. And it doesn’t require any fancy tools.

If you’re just getting familiar with a new area of investment research (or a new body of water) this is an easy way to get acquainted. You might not get lucky with any bites but you’ll start to familiarize yourself with where you should lay your nets or aim your harpoon.

The key of course is to use the right lure and hang your line at just the right depth. Have a vague idea what you’re looking for and be open to possibilities. And be patient.

In Summary…

The whole fishing for stock picks analogy might be a little bit silly. But it pays to think seriously about the different ways you can research stock picks and analyze investment ideas. And if you can teach yourself to fish you’ll always have plenty of opportunity coming your way.

So be effective with your time and conscious of your methodologies. Make sure you’re researching your stock picks effectively – or you’re definitely going to go hungry.

And By The Way: If you’re looking for more investing ideas and tactics to improve your approach to the stock market I encourage you to download the free eBook below. You’ll also get free weekly updates with my favourite tools and tips to help you improve your investing and stock trading decisions.

Happy Easter (and One Year of Stock Ideas)

happy easter from stock ideas

Happy Easter from!

Happy Easter! I hope this holiday long weekend treats you well. And that you’re able to spend some time friends and family forgetting about the never-ending caprices of the stock market.

It’s time like these that I like to take a step back and remember why I put so much time and effort into finding, analyzing and sharing investment ideas.

After all, if you aren’t able to enjoy friends, family and some holiday food and drink then what’s the point of working so hard?

Speaking of hard work and gratitude:

Easter weekend also marks the first anniversary of It was just about a year ago that I found this domain and decided to start writing more actively about the stock market. In that time, this little web blog has exceeded all of my expectations. We’re now getting tens of thousands of visitors a month, hundreds of email subscribers and lots of great stock ideas, analysis and discussion each and every day. So…

Thank you to everyone who has come by the site, left a comment and shared a link. I truly appreciate everyone who has reached out to me with compliment or constructive criticism.

If nothing else: has taught me there are tens of thousands of amazing investors and traders online. The access to information and analysis is amazing and I genuinely feel lucky to be alive in a time when financial markets are so easy to access and anyone can take financial freedom into their own hands.

Thank you to all the authors who sent me books for review, thanks for all the commenters who asked insightful and thought-provoking questions and thanks to all the email subscribers who gave great content ideas for what they wanted to see on


If you’re bored waiting for Easter dinner, check out these investing books, stock pick analysis or finance documentaries. Or maybe you will enjoy the most popular blog post on, Seth Klarman’s Margin of Safety. Whatever you’re looking for, there’s plenty of great content on to keep you entertain and amused this Easter long weekend.

Thanks again and have a wonderful weekend.

best technology investments for 2014

Best Tech Investments For 2014

What are the best technology investments for 2014? It’s a good question. Especially since high beta social media and biotech stocks have really under performed in the last month. So you might be wondering…

And are there any tech stocks that can make for a great investment in 2014?

Luckily, the answer is yes.  And even though the Nasdaq is down over 1% this year there are lots of great technology investments you can exploit in 2014 to try and make your portfolio outperform. So do you want to know what the best tech investments are for 2014?

The Best (Old) Technology Investments For 2014:

To be sure, there are a lot of exciting developments in technology going into 2014. For example, graphene companies are starting to gain a lot of traction. And cyber security companies remain in the spotlight following the increase in malicious software and hacking of major companies and governments.

old school technology stocks 2014

Are old school tech stocks coming back in style for 2014?

But to be honest…

I think the best technology investments for 2014 are some of the “older” technology companies. 

Let me explain what I mean by that:

A lot of the “bluer chip” value technology stocks that have proven track records of revenue generation have been left behind by investors going in to 2014.

For example…

While there are lots of new technology companies going public, and biotech stocks are forming a “blow off top,” old school technology stocks like Microsoft, Oracle and Apple seem to have been forgotten about by investors.

Just look at the relative performance of Apple vs. Facebook over the last year to see what I mean:

Best Technology Stocks Analysis in 2014

Can social media stocks really keep outperforming other technology investments in 2014?

At some point, it’s hard to believe that investors will continue to ignore older and more established technology companies. So where specifically should you be looking?

Some Technology Stock Picks for 2014:

As we head into the second quarter of 2014, I remain focused on finding high quality technology companies trading below intrinsic value. Rather than obsess over momentum favourites, this approach allows for investing in cash generating businesses at a fair price.

And after all, that’s the Warren Buffett Strategy for investing. So some of the tech companies I’m analyzing in 2014 are…

In addition to the list above, I’m also interested in ORCL and MSFT. But I haven’t gotten around to analyzing them in depth yet. For now, the list above could be a good place to get started looking for long term value in technology stocks.

But it’s not always smooth sailing when you’re investing in technology…

The Best Technology Stocks in 2014 – A Word of Warning:

To be sure, nothing in the stock market is a sure thing. And as these enterprise technology companies adopt to the future of cloud computing there will definitely be some bumps along the road. But…

Rather than give up on proven company’s like IBM when they miss earnings, long term investors might be able to find a nice entry point at a discounted price. If you do your homework there could be some great profits in the right technology investments in 2014.

And by diversifying across some of these “old technology” favourites you can reduce your risk further, by owning a nice basket of cash-flow generating technology stocks at very reasonable valuations. Now given the recent Nasdaq correction I’m not diving in head first. But I’m doing lots of investment research and adding these stocks to my stock market watch list so I can be proactive with investing opportunities when the time is right.

If you’re investing for the long term and looking to find value I think these technology stocks present an interesting opportunity. What do you think make the best tech investments in 2014?

And By The Way: If you want more information on how to analyze technology companies in 2014 you might enjoy my free ebook below. I created the ebook to share what I wish I had known when first refining my approach to the stock market. You’ll also get free tips and tools sent each week with the best resources for improving your stock market investments.

Get a clear view of what works with a stock market watch list.

The Importance of a Stock Market Watch List

The Importance of a Stock Market Watch List cannot be over-estimated. It’s hard to stay oriented without one. And that’s why using a watch list to manage your stock market portfolio and potential investing opportunities is a winning strategy used by successful stock traders and investors everywhere.


In this blog post we’ll look at why a stock market watch list is so important. I’ll also share some ideas you can use to build your own stock market watch list. This way, you’ll be able to track opportunities and strike when the time is right.

Now on that note…

Let’s get into the benefits of a stock market watch list:

Why a Stock Market Watch List Can Improve Your P&L:

The reason you’re probably interested in a stock market watch list is because it can improve your profit and loss statements. In fact, in my experience, using a stock market watch list is truly the best way to consistently stack the deck in your favour.

Just think about it…

stock market watch list examples

Get a clear view of what works with a stock market watch list…

When you build, maintain and regularly update your stock market watch list, it’s like you have a dashboard of all the best trading or investing opportunities right in front of you.

Using a stock market watch list lets you be proactive. It lets you make a trading plan and be ready to exploit investing opportunities just when the time is right. And it puts you back in the driver’s seat.

Without a stock market watch list you’ll always be on your heels reacting to the latest financial news headline. On the other hand…

When you use a stock market watch list effectively you can start investing on your own terms and being proactive about where you choose to place your capital. A watch list makes sense for a lot of reasons.

But we haven’t even mentioned the best part about stock market watch lists…

The Best Part of Stock Market Watch Lists:

The best aspect of using a stock market watch list is that there isn’t really one single best practice version of stock market watch lists you should refer to.


You can build a customized and totally personalized stock market watch list that shares the information you need most. That way, you only get the important facts – and you can see everything with one quick glance. Sounds pretty good, right?

What you include in your spreadsheet will primarily be a matter of whether you are a short-term trader or a longer term investor. If you’re a trader looking to track technical patterns then your stock market watch list will have a lot more information about price trend, volume and relative strength.

Whereas, if you’re a longer term investor looking for buy and hold opportunities your stock market watch list will contain fundamental measures and valuation metrics to help you compare different investing opportunities.

The beauty of a stock market watch list is that you can choose what to include. The only important thing is that it reflects your trading or investing style and allows you to compare different stock ideas against the same criteria.


Getting started making your stock market watch list is really easy. All you have to do is it fire up your favourite spreadsheet program (be it Microsoft Excel, Apple Numbers or Google Spreadsheets). And then create a table to compare your favourite stock market characteristics. For example…

Here’s a screenshot of one of my stock market watch lists:

Stock Market Watch List ExampleAs you can see from my stock market watch list above, things don’t have to be that complicated. The left hand side contains information on the name and ticker of the company. Then I look at the current price, my ideal entry and a target price based on intrinsic value calculations. The rest of the spreadsheet is just about other fundamental criteria that I want to keep an eye on.

But do you know what the most important part of this stock market watch list is?

One Take Home Point for Building a Stock Market Watch List:

One of the things I find most useful about the stock market watch list example shared above is the ability to rank stocks based on their potential percentage gain (column G). Why is that so important?

When you catalogue your stock ideas and use objective measures to determine entry and exit targets then you can also get a critical look at your potential percentage gain if the trade goes right. By ranking your stocks based on profit potential you get valuable perspective on where you should put your money.


This approach works for both fundamental investors and technical traders. The only difference will be the factors that help you determine your price target and entry price. But at the end of the day…

When you can clearly see where your money can be earning the highest return it really helps you improve your portfolio returns. This way you’re focused on the highest profit opportunities, rather than the exciting news headline of the day or a recommendation from a broker or Twitter follower. Make sense?

And By The Way: Using a stock market watch list is just one of the tips I recommend to help you make the most out of your stock market investing. If you want more free tools and resources I encourage you to sign up for updates below. You’ll also get a copy of my free value investing/swing trading ebook. Check it out for free below!

agco your agriculture company stock analysis

Your Agriculture Company (NYSE:AGCO) Investment Analysis

Introduction and Overview – Analysis of AGCO:

Your Agriculture Company (NYSE:AGCO) is the world’s largest farm equipment manufacturer, selling tractors, combines, and all kinds of other farm equipment to customer all around the world. When this AGCO analysis was written AGCO had a market capitalization of $5.1B and shares are trading around $55.

So let me tell you what the AGCO investment case is all about…

AGCO has roots going back to the 1800′s. But it’s current form was founded in 1990 by the purchase of Deutz Allis Corporation from Kloeckner-Humboldt-Deutz AG.  Since then AGCO has continued to expand through organic market growth and strategic acquisitions.

Now luckily…

The AGCO business model is pretty easy to understand. I need to dig deeper into the specific sales channels and how the company retains customers. But despite competition from the likes of John Deere and CNHI, it seems that making and distributing farm equipment through a network of dealers  is relatively straightforward.

On that note, let’s take a closer look at the market AGCO operates in, and the products it sells.

AGCO Competitive and Market Analysis:

At first glance the farm equipment business might not be that exciting. But at the end of the day, everyone needs food. So learning where it comes from, and what’s changing in the farming industry is important to understanding the competitive advantage of AGCO.

So as an investor…

You’ll be pleased to know AGCO appear to be at the leading edge of farm productivity. They are innovators with their precision farming  platform. And while you might not think growing and harvesting crops is high tech business, agricultural output gains in productivity enabled by technology are impressive. From a recent interview with AGCO (emphasis mine):

“Frankly, we have a lot of customers who are looking for efficiency tools, and one of the advantage of new equipment is the efficiencies we build into these machines be it a baler or a tractor. You can talk about fuel economy, the ability to get more work done, the ability to make a bigger or more dense bale of hay; all of those things contribute to the farmers ability to make money, and they’ll prove their worth in a market like we have in 2014.”

See for yourself, from this AGCO analyst day presentation,

AGCO market opportunity analysis

AGCO sees a lot of opportunity in emerging and developing markets based on their ability to improve farming efficiency.

From the slide above you can see AGCO sees a lot of opportunity to have an impact and improve quality of life in emerging markets. AGCO is also investing aggressively in R&D to keep finding new solutions and innovative product offerings.

AGCO R&D Analysis

AGCO continues to grow their investments in R&D – driving their strong pipeline of new products.

In addition to actively exploiting the future of farming, AGCO management has built (and acquired) some leading brands over the years. You can read the full AGCO history here. Fendt, Massey and Valtra are all respected brands in their respective markets.

AGCO Product Line Analysis

AGCO has developed and acquired a competitive offering of brands.

So as you can see, AGCO is pretty well-positioned in the farm equipment business. And global population growth continues to drive demand for their products. Now that you have an overview of AGCO and the market they operate in, let’s start analyzing the performance of AGCO shares over the last couple years.

Price Performance Analysis of AGCO Stock:

Shares of AGCO have had lumpy price performance over the last couple of years. Just take a look at the weekly chart below.

AGCO Long Term Weekly Chart Technical Analysis

AGCO Long term technical analysis shows lumpy price performance over the last couple of years. Keep reading to learn what this means to investors.

You should be able to see for yourself that shareholders of AGCO have been jerked around a little bit. The good news is, while AGCO stock has been slow to recapture prior highs, it isn’t overvalued either. And even based on conservative intrinsic value calculations I think AGCO has significant upside from here.

So although it’s not entirely smooth sailing from a technical analysis perspective, AGCO should be able to keep pressing higher. Just don’t expect any sudden explosions in price (upside earnings surprises not withstanding). Speaking of earnings, let’s look at the current valuation of AGCO.

If you’re a value investor like me, I think you’ll like what you find…

AGCO Fundamental Analysis – Financial Valuation

AGCO initially caught my eye because the stock appeared to be pretty well valued. At a glance, AGCO is appealing because it’s trading only about 25% above book value. And with a P/E hovering around 9 it’s hard to argue this stock is expensive relative to earnings.

The PEG ratio also comes in below 1, (0.94 to be precise), which is consistent with managements 2014 guidance of $6 EPS - showing future earnings aren’t being valued at a premium by the market. And I’m not the only one who thinks AGCO’s low expectations may make it a buy.

But wait. It gets better…

You see while these fundamental metrics are interesting, the long term performance of AGCO is even more impressive. Here are the key stats from Morningstar:

AGCO Key Financials Fundamental Analysis

AGCO has consistently grown revenue, earnings, free cash flow and book value. To a long term investor this looks like a pretty good track record. (Click to enlarge)

The fundamental picture for AGCO looks pretty good. Top and bottom line growth have improved quite a bit.  This boring old farm equipment company has a cap rate of almost 15%, which in this inflated stock market is a rare find. And operating margins have slowly improved due to factory efficiency upgrades.

AGCO is also throwing off large free cash flows. These revenue streams appear to be sustainable. And when FCF is discounted back to present value, future cash reflect an intrinsic value closer to $70 per share, even when using conservative growth rates.

I love finding investment opportunities that show a margin of safety even with conservative assumptions. I think AGCO is starting to fit the bill. But…

Even though AGCO might already be an interesting investment opportunity, let’s take a more in-depth look at the growth potential anyways.

AGCO 2014 Growth Narrative and Analysis:

AGCO has consistently grown over the years, so mid-single digit growth seems like a reasonable expectation going forward. Management has consistently said AGCO will continue to expand with an emphasis on slow profitable growth, rather than buying market share. As capital-conscious investors that’s what we like to see.

So where does the earnings growth come from? Interestingly enough AGCO has a nice global footprint driving revenue, as seen in their recent 4Q13 earnings results

AGCO global growth analysis

This large global exposure is nice to see in a farm equipment supplier because it provides some diversification against being exposed to nature’s whims in any one part of the globe. With operations on a number of different continents AGCO has some insulation from the hardship of farmers in one locality.

In the coming years, AGCO management is positioned to take advantage of market opportunities in Brazil, Russia and Africa.

That said, earnings for 2014 are expected to be flat compared to the year prior so there may be better opportunities to buy AGCO if there is a sustained stock market correction.

While management is doing a good job tempering shareholder expectations for growth this year, they’re trying to unlock value in other ways. Keep reading to see what I mean.

Analysis: Is AGCO Management Shareholder Friendly?

The AGCO management team seems to be increasingly focused on unlocking shareholder value. Not only are they advocating for profitable growth, but they’re also increasing dividends and authorizing a $500M share buy back. There’s a nice discussion of the merits in this AGCO Seeking Alpha article.

As an investor, it’s nice to see management actively trying to return cash to shareholders. While the dividend yield is still under 1%, there is lots of room for growth given the 7-8% payout ratio.

You might say this is just the beginning. And even more interesting to me…

A $500M share buyback is equivalent to 10% of the float of AGCO shares. This pretty clearly indicates that management thinks the stock is undervalued (as do I). By reducing the outstanding shares they can use their large free cash flows to further boost EPS. Interestingly enough, AGCO insiders are also buying shares at a frenetic pace.

With a management team focused on profitable growth, returning capital to shareholders and macroeconomic tailwinds it seems like the AGCO share price might continue to climb up. Of course, an investment in AGCO isn’t without risk.

Analyzing the Risks of Investing in AGCO:

It’s always hard to analyze the risks of an investment. And AGCO is no different. One risk to keep in mind is the opportunity cost of AGCO. After all…

agco farm equipment market analysis

Farming: Slow and steady wins the race.

The farm equipment market is a little bit boring. This is not a photo sharing app that Facebook will buy out tomorrow for $20B. But it’s also slow and steady. While year to year results might be a little lumpy due to market trends, AGCO has shown over the last 10 years that they can continue to deliver value to shareholders.

And to be sure: People will always need to eat.


I guess there is some risk from Google growing hamburgers in a petri dish. That said, I’m not sure this is an immediate disruption investors need to realistically worry about. Plus, even if lab-grown protein really does take off, I imagine there will always be a higher end segment of consumers who want REAL animal protein that comes from a farm.

A lot of the risks you might think would face a farm equipment company, AGCO is relatively well insulated against. That’s because they have a diverse global footprint that helps reduce impact from regional events like drought or flood. They also operate at various levels of the farm equipment value chain – so in addition to just tractors they provide the answers to irrigation problems and food storage solutions after harvesting.

Management execution is another risk for AGCO, but again, the 10 year track record says “so far so good.” I wouldn’t blame you for being cautiously optimistic here. As long as AGCO management continues acting diligently and executing effectively with an emphasis on earning high returns on capital I think it’s okay to be a little bullish.

While this analysis is neither a recommendation to buy or sell AGCO or any other security, I hope it has educated you about this agriculture company and whether or not it’s worth further due diligence.

And By The Way: If you want to learn to improve your own investment analysis I encourage you to download my free ebook below. You’ll also get weekly tips and tools to help you improve your approach to the stock market.

Apple Inc (NASDAQ:AAPL) Investment Analysis

Read this Apple Inc. (NASDAQ:AAPL) Investment Analysis to see if AAPL is worthy of further investment research. Now let’s get down to business…

AAPL Investment Analysis: Overview and Introduction

aapl stock fundamental analysis

Read this article to learn if investing in Apple make sense.

AAPL is a premium supplier of consumer technology products. The company is well-known for it’s mobile, desktop, laptop and tablet devices, as well as the software products and offerings supported by these devices.

And as you probably know…

Apple generates a ton of cash by selling these devices and services on its website, app store and through retail stores. AAPL has a global foot print, but is headquartered in Cupertino California.

None of this should come as a surprise to you. So let’s start digging into what the market thinks of AAPL as an investment opportunity.

Have Investors Lost Faith in Apple?

AAPL shares used to be all the craze of stock market investors. In fact…

During late 2012 investors were so smitten with AAPL that shares climbed up to around $700 in price! But money managers are a fickle crowd. And after the enormous run-up, AAPL quickly fell over 40% in value. Without Steve Jobs, and facing increasing competition in the smartphone category, investors seem to have lost faith in the shares of Apple.

Just see for yourself:

Apple Price History Analysis

Apple’s share price has seen better days. Since peaking in 2012 AAPL stock has languished.

But is this market perception of AAPL share price overly-pessimistic? 

In this investment analysis of AAPL, we’ll look at why investors might be over-reacting to the shortcomings of AAPL. And what questions you should research to find out if AAPL presents the right investment opportunity for you. As you can see above…

Since the decline, shares of AAPL have bottomed out around $400, and slowly climbed back, before settling in to a trading range just above $500. So let’s look at what the market has priced in at this current price, okay?

Apple Fundamental Valuation Analysis:

Apple maintains a market cap of about $465B at time of writing (corresponding to a per share price of about $520). The company is in a strong capital position and does not have any liquidity issues or large amounts of short term debt. At this price, AAPL is showing a PE ratio of less than 13 and a free cash flow yield of just under 10%. And really…

That’s not bad for a best-in-class technology hardware company, right?

When we dig a bit deeper into an intrinsic value calculation, it becomes clear that the market isn’t expecting much of Apple. The good news is…

With such a low cost of capital and sustainable free cash flow, even if Apple earnings languish lower by a couple percent points in the coming years it is still worth about $550 per share based on the discounted present value of future cash flows. (And this speaks nothing of the 2.35% dividend.)

On the other hand…

If you look at AAPL’s key statistics from Morningstar, Apple has an impressive track record of growing revenue, EPS and free cash flow over the last 10 years. Check it out:

Apple Cash Flow and Revenue History Analysis

At the current price, the market is discounting Apple’s track record of growth. (All numbers in Mil USD)

To be fair:

Figuring out the intrinsic value of a company isn’t always easy – and the assumptions aren’t always straightforward. But by looking at the conservative growth case we can find opportunities that give us a low-risk option on profiting from future growth. In this case…

The market is currently discounting Apple’s track record of growth… and… that’s a bet I might be interested in taking the other side of.


The case for investing in Apple becomes even more attractive when you start to look for catalysts to unlock shareholder value.

For example…

The Icahn Indicator – Do Activist Investors Present Value Catalyst for AAPL Shareholders?

carl icahn apple activist investor analysis

Do you want to partner with AAPL activist investor Carl Icahn?

Apple is a potential under-valued mega cap stock. This anomaly has attracted some of the most exciting activist investors to the scene. And these big players might just present a catalyst for Apple to unlock shareholder value.

Most notably…

Famed investor Carl Icahn has been showing an incredibly active interest in Apple, as of late. Icahn has a track record of building shareholder value, so having him as your partner isn’t a terrible thing. Icahn was originally demanding ever-increasing share buybacks from Apple (to put their large cash pile to use). But after tabling these demands and still holding $4B worth AAPL, investors might speculate Icahn is in it for the long haul.

But Icahn isn’t the only activist investor to voice support. Previously David Einhorn’s hedge fund Greenlight Capital called on Apple to institute a dividend and better manage capital for shareholders. Greenlight has remained an advocate of Apple into mid 2013, citing the dividend and share buyback programs as investor-friendly activities.

A more tacit endorsement comes from Joel Greenblatt’s Magic Formula Stock Screen, where AAPL is currently showing up as a “buy.”

But besides relying on others, what other catalysts are there for Apple?

New AAPL Product Launch Could Excite Investors:

google glass vs iwatch analysis

Will AAPL announce a new product to compete with technologies like Google Glass?

In the last couple of years, Apple CEO Tim Cook has taken the baton from the late Steve Jobs. But other than the iPhone 5C and a couple new operating systems, we haven’t seen any new products from Apple.

In the meantime, it seems like rivals Samsung and Google are diving deep into the world of high tech hardware.

These competitive pressures (especially in the mobile device market) might be responsible for eroding investor exuberance in shares of Apple.

While it’s a bit speculative to bet an investment strategy on a successful new product, such as an iWatch, any new device or compelling product extension could remind investors that AAPL is a growth-focused company with a track record of innovation. Were the stock market to price AAPL shares for growth, they could easily see 15-25% appreciation from current prices (which don’t seem to factor in growth).

Without the catalyst of an activist investor or new produce launch, AAPL shareholders might just have to wait for regularly improving quarterly earnings announcements to paint a picture of ongoing profitability and revenue growth.

Again, the good news for AAPL bulls is that not even low single-digit growth is currently priced in to AAPL shares; so, even without a catalyst there may be potential upside for those considering an investment in AAPL.

But what are the risks of holding an investment in Apple?

Analyzing the Risks of Investing in AAPL Stock:

There are a number of risks associated with investing in Apple stock. And no matter what your opinion on AAPL after reading this article I encourage you to do more of your own thorough due diligence. My interest in buying AAPL is not a recommendation in any way shape or form to you, especially considering the many risks of investing in Apple.

As for the specific risks of investing in AAPL stock:

To be sure: Apple isn’t exactly a small cap start-up anymore. It’s a massive mega-cap company with a strong cash position, established high margin sales channels and one of the most powerful brands in the world.

But the flip side is…

This also means that money managers, hedge funds and major institutional investors are jumping in and out of AAPL stock. This could mean that while AAPL is definitely liquid it’s also likely to be pushed around. If you’re investing AAPL you should be ready for some short-term volatility given the interest by these big players and the major financial news media. You might have to actively guard against getting shaken our of your position.


Even though AAPL isn’t going bankrupt any time soon, the market perception is pricing in relatively stable cash flow. If cash flows deteriorate significantly in the future, AAPL shares may continue to languish. This slow burn in the share price will be exacerbated if AAPL can’t excite investors with new or improved products. Without a catalyst (either in the form of a new product launch, an activist investor unlocking value or even improved earnings and sales growth), you might be stuck holding “dead money” for awhile if you invest in AAPL. Given the dividend and the margin of safety, this is a risk I’m comfortable with, but you should evaluate it for yourself.


While AAPL has a lot of the same top talent it’s always had, some naysayers will undoubtedly proclaim that AAPL died with Steve Jobs. This is made worse because Tim Cook is perceived as a boring but efficient operator/logistician. I think the current valuation reflects this and it’s already baked into the price. But it’s something worthy of consideration.

AAPL Investment Analysis – The Final Word:

Based on the quick fundamental analysis above, I think AAPL presents an interesting opportunity for conservative long term investors, especially those who are fans of AAPL already.

That’s because the current stock price of AAPL is not pricing in any type of growth, and even mid-single digit growth could lead to double digit returns for patient investors in the years to come. Additionally, there is a small dividend of 2.35% and no immediate risks for permanent destruction of capital. For these reasons I encourage you to do more of your own research on AAPL and see if it’s a good investment for you (this article is not a recommendation to do anything in any capacity).

For full disclosure: I own a small AAPL position at a cost basis slightly above the current price. I’m interested in buying more shares of AAPL if the stock slides to 500 or lower.

And By The Way: If you want more information on how to analyze companies yourself, I encourage you to download my free eBook below. You’ll get interesting insight into how to improve your approach to the stock market. I’ll also send you free tools and tips each week to help you improve your long term investing returns.

The Little Book That Still Beats the Market Book Review

little book that still beats the market book reviewThe Little Book That Still Beats the Market, by Joel Greenblatt, shares a “magic formula” for investing.

And in case you didn’t know, the Author Joel Greenblatt is a very successful hedge fund manager. He also wrote the best selling book, “You Can Be a Stock Market Genius.”

So how does The Little Book That Still Beats the Market hold up? Well in this book review I’ll tell you why I believe The Little Book That Still Beats the Market is the best investing book you can read in less than 24 hours.

Plus, I’ll share my favorite parts of the book.

And just so we’re on the same page, I just finished reading this book yesterday. So the ideas presented in this best-selling investment book are still very fresh in my mind. Now let’s get down to business…

What Is The Little Book That Still Beats the Market?

The Little Book That Still Beats the Market is a very popular investing book written by Joel Greenblatt. And actually…

The book was originally published in 1006 as “The Little Book that Beats the Market.” The Little Book That Still Beats the Markets is the slightly updated 2010 edition, which is the book I’m reviewing here.

So with that in mind:

Greenblatt himself says The Little Book That Still Beats the Markets was created when he tried to condense all the most important knowledge he absorbed as a hedge fund manager into an easy to understand book that his kids could learn from. In this capacity, The Little Book That Still Beats the Markets definitely delivers.

The book is short, easy to read and  focused on a single (yet very powerful) investment approach. I’ve written before about magic formula investing. But this book gives the official outlook on how you can use the magic formula to outperform the stock market. So what’s the best part about The Little Book That Still Beats the Market?

Best Part About The Little Book That Still Beats the Market:

The best part about The Little Book That Still Beats the Market is how easy and actionable the approach is. The whole book is designed to give you a ready-to-use strategy that you can put in place today to start outperforming the market.

But The Little Book That Still Beats the Market doesn’t just give you the keys to success. This investing book also gives you a lot of context so that you have the conviction to believe in the magic formula contained within it’s pages.

And actually:

Understanding how the magic formula was devised and the basic principles behind it made a big difference for me.  felt the magic formula advocated in The Little Book That Still Beats the Market was much more credible after understanding where it came from.

And Greenblatt does cover the most important components of value investing – like why you should look for a margin of safety, and to be weary of Mr. Market.

Almost as soon as I picked up The Little Book That Still Beats the Market I wanted to finish it so I could put the magic formula into action for myself. Luckily it’s a really fast read.

But for some traders, therein lies the problem.

What The Little Book That Still Beats the Market Leaves Out:

The Little Book That Still Beats the Market is a really short book. It’s only about 180 pages (and the pages are very small – the book itself is literally little). So in some ways, this strength is a weakness. Since the book is so short it can’t cover everything.

While The Little Book That Still Beats the Market is a great easy to understand read for everyone, you’ll probably get more out of the book if you have some basic understanding of value investing. You don’t have to read The Intelligent Investor to benefit from The Little Book That Still Beats the Market. But if you love Ben Graham I think you’ll enjoy Greenblatt’s book too.

The Little Book That Still Beats the Market is a straightforward book that shows you the exact steps to apply value investing in today’s market. Since the book is so short it doesn’t talk about too much of the other principles of value investing. But it’s still a good read.

Now let’s wrap this book review up.

The Little Book That Still Beats the Market – The Final Word:

The Little Book That Still Beats the Market  is a great book that you can read in less than 24 hours. If you need a book for the beach this summer The Little Book That Still Beats the Market  might be the perfect book for you. It’s fast to read and easy to understand.

The Little Book That Still Beats the Market is incredibly actionable, and for that reason I recommend you buy The Little Book That Still Beats the Market on Amazon today. And if you still want a little more information, check out the short video book review below…

The Little Book That Still Beats the Market Video Book Review:

Fooling Some of The People All of The Time (Book Review)

Fooling Some of The People All of The Time Book Review

Read this Book Review of Fooling Some of The People All of The Time…

Fooling Some of The People All of The Time, by David Einhorn, is a “Long (short) Story” about Greenlight Capital’s battle against Allied Capital.

Fooling Some of The People All of The Time is an exciting and eye-opening read into the high intensity world of event-driven hedge funds. The book is a factual recount of a true story. And once you start reading it’s a hard book to put down.

So in this book review of Fooling Some of The People All of The Time I’ll tell you a little bit more about what this book is about and why I liked it so much. By the time you finish reading this book review you should have a very good idea whether or not Fooling Some of The People All of The Time is the right investing book for you.

Since I just finished reading this book all the details are very fresh in my mind. And I can’t wait to share this exciting story with you.

The Story of Fooling Some of The People All of The Time:

Fooling Some of The People All of The Time is a book about David Einhorn’s hedge fund, Greenlight Capital, and it’s battle against a publicly traded stock called Allied Capital. Here’s how it goes down…

The book starts out giving you a little background information on Einhorn and his hedge fund. You get a pretty good feel for how he got into the business and why he was successful from the outset.

This introductory context is actually really inspiring in it’s own right – as Einhorn took a $900,000 investment and turned it into a multi-billion dollar fund. Once you realize how successful he’s been it’s hard not to be interested in what he has to say.

From there…

Fooling Some of The People All of The Time quickly moves forward into Einhorn’s short thesis about Allied Capital and why it became so public. The book quickly moves forward into a riveting tale. It’s a 400 page battle between short sellers and management of a popular publicly traded company. And each page is better than the last

Fooling Some of The People All of The Time moves at a very quick pace and covers a lot of information. Luckily Einhorn’s writing style is easy, enjoyable and injected with a sense of humour. The book has just the right amount of details to keep things moving while still giving you a thorough picture of what’s going on.

Speaking of…

Here’s What I Liked Best About Fooling Some of The People All of The Time:

The story of Fooling Some of The People All of The Time is actually almost unbelievable (even though it’s completely true). The things that happen as Einhorn and Allied duke it out are actually insane.

There were many points in the book where I wanted to tear my hair out in frustration. But ironically. That was the best part of the book.

You see…

Fooling Some of The People All of The Time gives an incredibly in-depth portrayal of how things actually work for high-conviction short sellers. I  never appreciated the intense pressure, scrutiny and downright disdain that these major-league short sellers have to overcome.

And to be honest…

The inside look at “the system” was absolutely enlightening. And it acts as a stark wake up call to optimistic investors who are predisposed to taking management at their word. I seriously couldn’t believe the fight Einhorn had to put up, and the things that management of a publicly traded company were doing to keep the “status quo” in tact.

Fooling Some of The People All of The Time really drives home the lesson that if you want to invest you are taking the risk. And you shouldn’t rely on regulators or analysts to fill in the blanks for you. You need to be accountable for your money or you’re likely to be the next person that gets fool.

But while I really enjoyed Fooling Some of The People All of The Time, I don’t want you to buy this book for the wrong reason. So you should know…

What Fooling Some of The People All of The Time Leaves Out:

Fooling Some of The People All of The Time is a really great account of Einhorn’s battle with Allied Capital. It’s truly a gripping tale that will leave your jaw hanging open in disbelief. But Fooling Some of The People All of The Time isn’t entirely actionable.

While Fooling Some of The People All of The Time definitely taught me to be more skeptical of management, and identified some accounting tricks to be aware of… the book feels more like a cautionary tale than an instructional guide on how to short sell stocks.

To be honest, I’m quite happy with the allegorical warning. And it makes for a really interesting and entertaining read. But if you’re looking for something along the line of Stan Weinstein’s How to Profit in Bull and Bear Markets, you’re barking up the wrong tree with Fooling Some of The People All of The Time. Make sense?

So is Fooling Some of The People All of The Time an investment book worth reading?

Fooling Some of The People All of The Time – The Final Word:

Fooling Some of The People All of The Time is an excellent investment book. I really enjoyed learning about the battle between Allied and Greenlight. At multiple times throughout the book I almost couldn’t believe what I was reading. And it definitely serves as a valuable warning tale for optimistic investors. So…

For these reasons (and all the others listed above) I recommend you buy Fooling Some of the People All of The Time on Amazon. I think you’ll enjoy it. And if you’re still a little curious you can check out the video book review below.

Fooling Some of The People All of The Time – Video Book Review:

International Business Machines (IBM) Stock Analysis

International Business Machines Inc (NYSE:IBM) is one of the world’s biggest technology companies. So of course we’re going to do a quick IBM stock analysis here at

Now keep in mind…

IBM hasn’t really gone anywhere for the last year. But don’t take my word for it. Just look at the IBM long term weekly chart below:

ibm long term chart

As you can see from this long term weekly chart, IBM had a nice run. But has traded sideways for the last year (Click to enlarge).

Yet when you zoom in a little bit, you’ll find IBM is starting to show some nice relative strength, And it might have even put in a short term bottom. Now could it be on the verge of breaking out above previous resistance?

See for yourself…

ibm daily chart april 2014

On the daily chart above you can see IBM is starting to trend higher, and even holding above the shorter moving averages. (Click to Enlarge)

As you can see from the technical analysis above, IBM stock is starting to see more buying. RSI is trending up. And IBM is holding above the short-term moving averages. So since IBM looks like it might be setting up for a push higher, let’s look at whether or not the fundamental analysis of the IBM stock supports this potential technical set up.

Now to be sure…

IBM is a massive and multi-faceted company. So it’s necessarily difficult to analyze it comprehensively all in one article. But this blog post will identify some of the more pressing fundamental factors influencing IBM.

And of course, since IBM is such a popular blue chip company, I’m not the first one to try and analyze it. Others have have indicated a $255 price target based on a 5 year dividend discount model. Others point to shareholder friendly IBM management. While my personal favorite, Crossing Wall Street, says to buy IBM up to $197 per share

IBM Fundamental Analysis – Financial Valuation:

IBM is a company at an interesting point. When you look at IBM’s financial stats, Revenue growth has slowed over the last 18 months, and this has been reflected in the stock price. But don’t despair…

This international technology company has continued to grow book value. And Mr. Market may have over-reacted. IBM is currently selling for about $200B in market cap and 11 times earnings, paying a 2.3% dividend.

ibm stock analysis

Does IBM stock present an enticing investment opportunity?

As for the balance sheet, IBM has just shy of $19B in net assets and around $6B in net current assets, with most of it in cash and receivables.

While IBM doesn’t have any immediate balance sheet risk, most of the valuation comes from strong cash flows and (until recently) consistent revenue growth.

Last year’s full-year free cash flow was $13.35B, or $12.10 a share (and $14.94 EPS). So what does that mean?

With a basic intrinsic value calculation, using a conservative 0% growth rate, I determined that IBM is fairly priced around $200/share. That means at these prices, the market is not really pricing in any future revenue growth. If IBM can grow earnings over the next year or two, IBM’s fair value could easily move 10% higher or more.

So that lead’s us to the next question… can IBM grow earnings and shareholder value?

IBM Fundamental Analysis – Growth Narrative:

IBM is definitely a global leader and a world class organization with a track record of execution. But that doesn’t mean it’s smooth sailing ahead. IBM’s hardware business has languished and it’s divesting these less profitable business units. In the meantime IBM is trying to aggressively grow the cloud computing aspects of it’s company.

But that might be a bumpy road…

The cloud services space is competitive, with companies like Amazon (NASDAQ:AMZN), Oracle (NASDAQ:ORCL) and Microsoft (NASDQ:MSFT) also making plays for the corporate cloud. And arguably IBM still has somewhat of a fragmented cloud services offering. Plus, while IBM is more globally diversified it’s still struggling against declining sales in international growth markets.

Nonetheless, IBM management seems staunchly committed to growing earnings and delivering value to shareholders. They’ve even staked their bonuses on it!

From their January 2014 earnings release:

IBM CEO Analysis

IBM CEO Virginia Rometty is tying her bonus to share price. Can she pull it off?

“We continued to drive strong results across much of our portfolio and again grew earnings per share in 2013. While we made solid progress in businesses that are powering our future, in view of the company’s overall full year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013,” said Ginni Rometty, IBM chairman, president and chief executive officer.

”As we enter 2014, we will continue to transform our business and invest aggressively in the areas that will drive growth and higher value. We remain on track toward our 2015 roadmap for operating EPS of at least $20, a step in our long-term strategy of industry leadership and continuous transformation.”

The second paragraph is especially illuminating. And if IBM management can capitalize on their plans, shareholders are sure to benefit. But again, nothing in the future is promised. Not even to IBM. So don’t stop reading yet.

Potential Risks to Investors Identified by IBM Stock Analysis:

While it’s tempting to paint an optimistic picture of IBM, it’s important to be aware of the risks as well. As we said above, the growth story is far from assured, – especially in international markets. And remember how competitive the cloud market is for IBM.

So although management’s track record provides some re-assurance, achievement of the publicly stated targets is not guaranteed. Rumor in the comment’s section of IBM’s Seeking Alpha page is that IBM has an old-school sales force that’s not going to be able to keep up (take that with a grain of salt). And luckily, at the current stock price this appears to be priced in.

Another common critique of IBM is that the company is using debt and selling assets to pay out dividends and bolster revenue. While investors are right to be skeptical, this “might” make sense. Maybe IBM management is taking on long term debt now, when interest rates are good. And so far, their asset sales have been limited to divesting low margin business units.

But skeptical investors are right to keep an eye on these developments. And it’s definitely something I’ll pay attention to going forward. And finally…

The biggest risk with an investment in IBM might be the opportunity cost. While IBM appears to be a reasonable investment, there might be other companies worthy of your capital. AAPL, MSFT and ORCL are also tempting investments at these prices.

I currently don’t own any shares of IBM. I might buy a small position. But this blog post is not any sort of recommendation to buy or sell IBM or anything else. What do you think about IBM as an investment opportunity?

And By The Way: If you want to get more stock market analysis feel free to download my ebook below. You’ll learn how I developed my market methodologies. And you’ll get weekly email updates sharing the best stock market tools and tips to help you become a more intelligent investor.