Happy to elaborate Doomberg.
I won’t include all the P/E, dividend yield, etc. as I'm sure you'll be checking all that out as part of your own research and screening process.
I’ll share my top line thought process/analysis on each one.
SAUP – it’s a play on a slowdown in China. I don't know much about China and I'm not comfortable shorting a market that is still growing, just at a slower rate. This way I feel like I am more in control of the risk. I can’t see the AUD making huge gains on the USD from where it is – this keeps my risk acceptable to me. If the AUD starts to revert towards the mean, if a risk-off sentiment returns and/or a flight to safety happens then the USD is likely to gain ground on the AUD. It’s certainly not buy and hold but I am already seeing a bit of movement in my favour. If money printing resumes then I’ll be out of this like a shot.
VOD - I bought back in May and exited after it made new 52 week highs recently. However, I really like dividends and compounding so I’m looking out for a re-entry point with the aim of increasing my holding over time. Of course, the previous high is now support but we’ll see what happens. Profit is profit :smart:
I see VOD as a utility company these days and as well as the normal 5% divi there is also the chance of further Verizon special divis. If I happen to be holding at the right time then so much the better. The Verizon divi was announced Nov. last year (I think) so I have a window but I'm patient. I won't chase divis, price trumps it for me. The recent C&W acquisition also looks good for the future. On the downside, there is a risk of a retrospective tax bill in India, although with the new finance minister there common sense might prevail.
TSCO – there has been a lot written about Tesco but nobody seems to be factoring in the potential upside of a banking business – at least not in anything I have read. If Tesco can make a decent fist of banking then there seems a good chance of price upside and a 4%+ divi whilst waiting. Of course this is a very big IF. Actually, I almost pulled the trigger at around £3 but something about Tesco is niggling me and I can’t quite put my finger on it. Not very scientific I grant you and instead I’ve just watched it go up to £3.40.
I’ll certainly be more decisive next time should a more attractive entry point present itself again.
AV – I’ve missed the recent bounce because I remain concerned about Eurozone exposure, the divi at around 8% looked too good to be true earlier in the year and they haven’t replaced the CEO yet. On the plus side, there seems to be a plan in place to sell off assets, strengthen cash reserves and cut costs/simplify. The final divi was held but it is more at risk than the two above IMO. I think AV has a decent chance of being a turnaround stock, assuming the business can execute properly. The turnaround potential mitigates some of the downside risk of a divi cut, at least in my mind.
XRX – is still priced as a copier company but it is well on the way to being a services and outsourcing firm (post ACS acquisition). It’s into all sorts – managing toll roads, processing health insurance claims, etc. These types of business tend to be valued differently and Xerox has not been re-priced yet. The company generates cash, is paying down debt, buying back shares and pays couple of points divi. The share price has fallen after the last two earnings calls and then hauled itself back higher. After the Q2 call in July it was down to $6.40 and is now back around $7.40. Not bad for less than a month. I’m going to watch the Q3 earnings reaction like a hawk. Anywhere close to $6.50-$6.75 and I think I would bite.
GENL – Tony Hayward of BP Deep Water Horizon infamy is running Genel. His PR skills were comical but he knows how to run an oil business. Bit of a complex history this one but worth checking out - reverse take-overs and all that. It’s producing oil in Kurdistan/Iraq and sitting on a pile of cash for investment purposes. I haven’t looked that recently but from memory the cash alone equated to about £4 or £5 a share and that is before you take into account that it is actually producing oil. To be honest I need to research this more myself but it seems promising.
FB – I know this is controversial but to me this is really very simple, once you strip out all the hype. Facebook can deliver eyeballs and that = advertising revenue. They only really have one challenge as far as I can make out; how to deal with mobile viewing of the site/web/content. The company has no choice but to solve this issue. With necessity being the mother of invention, I am betting that it will get this solved one way or another. FB has a few options for this; (i) solve it themselves, (ii) provide venture capital for someone else to solve it or (iii) buy any start-up that cracks this particular nut. Any of these routes work and I think it safe to assume that FB will get this resolved. I’ll wait for confirmation of a reversal in trend but at the right price (I have no idea what that is yet) FB would be attractive to me for the longer term.
SSYS and DDD are about the only ways to play the coming boom in 3D printing, or at least the only ways I have found. They are on trend but personally, I wouldn't allocate too much to these as there is a large element of speculation. What I don’t like are the P/E ratios, they’re very racy and the prices have been on a bit of a tear this year. I’m watching for potential entry points.
I know RIMM was mentioned earlier. My two pennies FWIW: the mgmt team there would worry the hell out of me. I can’t view RIM as a turnaround stock, the trend is 'consumerisation of IT' and consumers don't want Blackberries or Playbooks. The value for me would be in the patents but I can even see the mgmt. team being able to make a mess of selling those
Hope that helps. Good luck with your research. Keep us posted – would love to know what you end up with.
