Subscribe52,000,000,000 - That’s a lot of Chickens!
November 14, 2007
There are how many people in China? Current estimate put that somewhat incomprehensible total at 1,321,851,888. What has always haunted me is the thought of pork and fowl. Here my dilemma: With that many people, you would assuredly agree that they are eating daily. (for the most part). It is also well known that the regions diet is rich in protein and starch.
Let’s go out on a limb here…Can we estimate that for each person in China, we assume that they eat one chicken a week? If so, WHERE DO THEY PUT ALL OF THOSE CHICKENS? We are talking about consumption at a rate approaching 52,000,000,000 a year! That is just unbelievable.
This is a growing concern as can be seen by the latest economic report:
(UPI) China’s Consumer Price Index rose 6.5 percent in October from year-ago level, equaling August’s 11-year high of 6.5 percent.
The National Bureau of Statistics said the October increase came after easing to 6.2 percent in September. Analysts blamed the increase largely on higher prices for food, including pork, the Xinhua news agency reported.
The CPI, the main gauge of inflation in China, increased 4.4 percent in the first 10 months of the year compared to the same period in 2006, the bureau reported.
The report said food prices jumped 17.6 percent in October and pork prices were up 54.9 percent.
Now, we can look beyond this and realize that there are a vast amount consumables the Chinese people need daily. It is obvious (not a new revelation here) that they require a great deal of materials to satisfy their ravenous appetite. This is not only constrained to food, mind you. Materials and goods such as steel, spices, oil, coal and food are seeing a tremendous supply problem on a global scale due to the population explosion we have seen over the past two decades.
This will continue to benefit U.S. companies that export, especially as we maintain our “unofficial” weak-dollar policy. The main beneficiaries continue to be the raw materials suppliers as well as many retailers. We are maintaining a bullish stance on these sectors as long as there is a seriously overpopulated planet. Rest assures, this is not something that will change anytime soon.
A few stocks that could benefit from this thesis: ZUES, WMT, PEP, ADM, SYY, AA, EP and don’t forget about SAFM (100% CHICKEN)
Horowitz & Company clients may be long and/or short companies mentioned in this post.
Screen: Dogs of the Dow - 2008 Preview
November 14, 2007
Each year, the Dogs-of-the-Dow are recalculated in January to find the 10 DJIA members with the highest dividend yield. This year there have been few changes to the names that look to be included in this strategy for 2008. Some of the reason is because of the problems that occurred in 2007 for some of the DJIA names. We also need to consider the fact that higher yielding stocks are concentrated within a small subset of the DJIA.
As we are seeing an immense level of volatility, it seems to be a good idea to look at a strategy that invests in companies that have (or at least seem to have) high quality and provide a decent dividend yield. The benefit to investors is that these are Mega-Caps and are considered “blue-chips.” The contrarian view which this strategy/screen is based on has often outpaced the DJIA. That is appealing in a time when there is such a great deal of uncertainty.
Below is the list of “Dogs” based on current prices and yields. The table also shows stocks which were included in 2007 and, by a process of elimination, reveals which stocks should be in the 2008 list.
Disclosure: Horowitz & Company clients may have long and/or short positions in the securities mentioned.
The Sharks are feeding on Crocs
November 6, 2007
What am I missing? Wasn’t it was only a few months ago that Crocs was the golden child and was going to be the next Shoe-Google. Back then, I was the “stupid one” who had no idea what he was talking about, as once again I was told over and over that this time was different. It was only a few months ago that I warned about the over-valuation of the stock and that $40 was going to be a price to watch for if the stock did not meet investor’s expectations. Today, I write this trying to find answers, not rubbing salt in an open wound.
For the past 2 years or so, the Crocs bandwagon had many well-heeled fanatics buying shares as they were hopeful of a retirement based on the a fanciful valuation of their rubber-shoe empire. Along with that, it seems that the anti-bacterial component along with slipper-like comfort, had most looking the other way from the horrific fashion statement which the bold colors represented from the over-sized hole-ridden footwear. Add that most analysts had Crox at a BUY (or better) and several well known writers/bloggers were continually defending the company at all times. It is no wonder that most investors were in continual BUY mode.
The problem is this: If only a month ago many investors owned shares with the belief that there will be a steady growth of earnings moving forward; why did the stock take such a tremendous hit after posting, albeit disappointing, yet somewhat reasonable solid results? It seems that once again, emotions are the crux of the Crox.
Look at the fundamentals and it is exceedingly hard to comprehend how the stock is trading below the level it was when the essentially all of the information is similar to what was published in May 2007. Fundamentally, not much has changed except for the fact that growth is not expanding at the rate it had been for the past several quarters. Now, unless there is more that meets the eye with the latest announcement of earnings and projections, there is much more panic than logic involved in this sell-off - But you already know that. It is a well known fact that EPS growth slows once a company moves towards maturity. Look at Dell, Microsoft or even Merck. It is not simply the EPS growth percentage, it is also the ratios that are of importance here.
The truth is that Crocs has been the favorite of the “emotional trader”, those that are playing the home-game. The reason for the past run up being so strong was based on strong emotional ties to a stock because of love of past growth. These are the same investors who are now running for the hills – simply selling at any price because they are apparently holding low-cost-basis positions that they do not want to lose on. There is no logical reason for this massive sell-off. Really…
But what does logic have to do with this stock anyway? One more question: Where are all of the die-hard writers now? You know, the ones that were screaming to buy-buy-buy! Why are they not here now, helping you with the situation when the decisions are much tougher. Frankly, running away and pretending the stock did not get cut in half will not provide comfort or direction. So, here is a life-ring: Hold on for the bounce. It is coming and will be strong.
Just to be clear: We sold/shorted at the peaks, now we are buyers in the valleys. Use logic here and profit should follow.
Horowitz & Company clients may hold LONG and/or SHORT positions in CROX.
R U the Next Peter Lynch? (IMPORTANT UPDATE)
October 23, 2007
R U the Next Peter Lynch? (Contest)
PHONE NUMBER UPDATE 1-877-623-8473
Will hold week #2 entries until end of the day October, 23 2004
Peter Lynch was a master at finding stocks. We are looking for great new ideas for investing. Maybe you see an opportunity in a great new widget because you have watched all your friends buying it. Or maybe you have heard about a new car that will revolutionize transportation.
During the next 4 weeks, call in and record your pitch… 1-877-623-8473. Start with your name and email address so we can contact you if you are one of the winners for the week. Then give us your best pitch with all the frills in one minute or less. At the end of the week, we will open it up to votes and the “pitch” with the most votes wins!
Sample “Pitch”
Weekly: $50 AMEX Gift-card and a copy of book, The Disciplined Investor.
Grand Prize: (Top Weekly(s) will be voted on for Grand Prize) a $250 AMEX Gift-card, a TDI AudioBook, a Free Day-Trading Intro Class from CyberTrading University ($295), a Nokia N95 UNLOCKED Phone ($595) and a Copy of Harry Dent’s Latest Book.
Rules: Voting is open to all but we will accept only one vote per person. Each week, the top 3 entries picked will be presented on this site and voting will be open for 7 days. Winners will be announced on The Disciplined Investor Podcast and via the web. One entry per idea please, but you are able to submit unlimited ideas. No suggestions/recommendations or ideas presented by contestants are to be construed as buy or sell recommendations of Andrew Horowitz and/or Horowitz & Company. Please, play fair.
Earnings Momentum and Analyst Upgrade Screen
October 9, 2007
I have been busy. Too busy. It has been a whirlwind of book, audiobook, podcast, clients, portfolios and much more. So, I apologize for not being close to the keyboard. That said, I realized that there were many emails and many comments about two recent posts that focused on “Quant screens” and thought that one more couldn’t hurt…
Contest with Weekly Prizes ($750 Grand Prize!) - Details on The Disciplined Investor Podcast - Listen/Subscribe }
(Excerpt from The Disciplined Investor)
The MSN Money stock-screening tool makes available some great ways to unearth sometimes buried opportunities. One that has been found to be very profitable in an upward momentum bull market is a screen that searches out the information reported by seasoned analysts. The very thought that analysts are raising their assumptions can cause the sentiment surrounding a stock to quickly change. As has been seen from the bull markets that occurred during the latter part of the 90s, earning surprises both to the up and downsides have a habit of creating either prosperity or poverty. This particular screen is meant to be used as a brainstorming tool for those stocks that may be possible short to mid-term momentum plays.
When an analyst that closely studies a certain company or sector changes his or her rating or earnings estimate for that company or sector, it is a pretty good sign that there is something more going on than meets the eye. Companies such as Zacks Investment Research are in the business of following these analysts and tracking the changes that they make to their ratings and earnings estimates.
This search focuses on the companies with the highest earnings-per-share growth projected for next year, for which the analysts have increased their estimates. It also adds additional parameters and overlays to find the stocks with the greatest recent price changes and upward-moving technical trends.
The Screen: Momentum Earnings Up
You will undoubtedly find many stocks that you have probably never heard of within these results. Caveat emptor! Try not to let yourself get sucked into the temptation of following the historic returns. Be sure to keep a cool head and think about the company and its longer-term prospects.
The screen was run on the MSN Money Site with the following criteria:
Stocks from Screen (10/9/2007) : (BGP) (EQIX) (NAVI) (LYV) (BLOG) (XTXI) (OMTR) (EYE) (MDCO) (CNO) (CNTF) (CRM) (OMRI) (OCNF) (MFA) (OHB) (SLH) (OPTM) (MMR) (WRES) (ANH) (OMN) (ONXX) (INTV) (MOGN)
Disclosure: Horowitz & Company clients may hold Lng or Short positions in the stocks mentioned
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