JeffreyLipsey.com

So in the last 2-3 weeks my stocks have gone down the drain. Well, the main difference is the fact that my once large gains with EP and NBR have dropped considerable, and FRO continues to be as high variance as ever. The others haven’t really changed much, although since I last wrote a summary I have since purchased more MTW at $30 a share and it then dropped another 15% from that point.


I don’t think my stocks are all that bad really, the market itself was down just as much as my portfolio, whether or not I’d have sold my gains is another story.


Basis: $11686.29



+ $141 Gain from ESV Sale


+ $110 Dividend from FRO


+ $20 Cash


Total Account Value: $10912.20


Net Loss: -$774.09


I told you guys I had a huge downswing lol. I went from + $800 to -$1000 in 3 weeks, a net change of over 15%. And I’m diversified! I do have the ability to buy more stocks on margin if I think the market will get better (and I do). I’ll have to do a recap too to actually see if I do want to buy any more of my positions.

I took advantage of a huge drop in price today to nearly double my position on Manitowoc (MTW) at $29.57 per share. I had been waiting for the news to come in that they won the auction to purchase Enodis. Its funny, as soon as it did their stock price dropped like crazy. I really don’t get why though but I assume it has something to do with the crazy market right now.


If you look at the financials, NOTHING HAS CHANGED. They still have all the great ratios and numbers that they had when I first bought it, but now its at a much cheaper price. Not only that, the PE Ratio is now under 10 and the company just affirmed its EPS for the year as to be the same as ever. Plus, the company still has large growth expectations! What isn’t there to like?


The new purchase is going to increase their 2009 Earnings and will help them move into the high-growth area of Asian food markets. Not buying this right now doesn’t make any sense. That said, this purchase dropped my average cost from $39.50 to now $34.50, nearly 15% in total. I expect it to go back way up when people realize what value is in this company right now.


On a side note, FRO took a huge dip today terrorizing my profits. Volatile market conditions blow ass!

It’s been a couple weeks since I did an update. If I timed my updates better I could make it look like my stocks do nothing but go up up up! In fact last week I dropped a ton of my profit back but fortunately I’m still up!


Basis: $11686.29





+$141 from gain of ESV sale


+$999.56 Cash (Including $120 dividend from FRO)


Total Account Value: $12,127.17


Total Gain: $440.88 (3.77 %)


Heh, I’m actually up since my last update, but I would be up a lot more but I dropped close to $400 in profit in the last week alone, and as you can see its mainly from MTW, CMCO, and MMM. Luckily FRO and NBR have made up for it in gains themselves. I’ll have to look more deeply into my 3 losers and see if I still like them now as much as I did when I first bought them. If I do, I may decide to purchase some more MTW or MMM if I think they’re going to do well.

This market is so volatile that trying to predict what is going to happen just leads to frustration. I’m confident in my stocks and I don’t have much time to keep up on them since I’m out here in Vegas. Basically I’m just trying to stay afloat and I don’t plan on making any moves until after I get back.


I did decide to buy more CMCO and I did so at my target price of $26 per share. My new cost basis for CMCO is now $27.31 per share compared to $28 per share. My gains from MTW retreated but were made up by the fact that both EP and NBR were up 3 % again on the week. FRO pretty much broke even and MMM went down about 1 %. The dividend from FRO has yet to be recorded but that should be done by the end of next week.


Basis: $11686.29





+$141 from gain of ESV sale


+$879 Cash


Total Account Value: $12054.41


Total Gain:$368.12 (3.15%)


I probably wont buy any more stock until my dividend gets paid to me in a week or two. I wont do any stock lists or anything until I get back from Vegas.

Before I start let me give a background. Jim Cramer recommends that you number your positions from 1 to 4, with 1 being a stock you want to buy right now and 4 being a stock you want to sell right now. 2 is a stock you want to buy more of if it falls 5-7 percent in price and 3 is a stock you want to sell if it increases 5-7 percent in price.


The 4’s


None! Woo-hoo. Thankfully I got rid of most of my garbage right now and I’m not exactly hating any of my positions right now.


The 3’s


The last time I did this both MTW and CMCO were on this list, although I’m feeling differently about both. I am actually feeling confident in most my original picks and I don’t think I was as hasty as I originally thought I was. MTW has since increased close to 10 % since that list, and I’m liking it even more. I may end up selling it though if it increases another 5-7 % but I’ll have to make another decision if it does, in fact, get that high.


EP is up 6% since I made my previous list and I had it as part of my 3 list too, but it is my largest gain and I want to let it ride. Nothing has changed since then information wise regarding the stock so I think I’m going to keep it as a 3 and look at it again if it continues to increase.


Also, I think I’ll put FRO on this list that, if it increases 5-7 % then I may think about selling it. Truthfully I don’t want to sell it right now as I believe in it but, if it does increase this much then I may have a reason to think about selling it. Cramer should really have a ‘Hold’ number lol.


The 2’s


MMM is one of a couple stocks that have ended down since that list two weeks ago, and I’m still liking it. However, it is only down about 3 % and mostly from today’s huge market drop. If it drops this much again, I’ll look into buying more.


I still am looking to buy more of NBR if it decreases 5-7 % of its current price, but it has budged more than 2 % up or down from that price 2 weeks ago. But if it does drop some, and I’m still liking it, look for me to buy more and possible unload my EP to do so.


The 1’s


CMCO took a huge hit today, and for no good reason too. I’m going to look for a good price to buy into this but I know it gained back much of what it lost in after-hour tradings. Anywhere around the $26 mark will do fine.


My two other stocks I mentioned a couple weeks ago, DLTR and ITRN have done better than expected and I no longer want to buy them right now. Right after I mentioned my interest in buying it, DLTR shot up 15 % in only a couple days and still trades higher than 10 % of my own target price. I wanted to purchase ITRN at $12/share as my emerging markets investment, however it is still hover at $13 a share and at that price I’m not as interested.

The entire market took a downturn today due to a lot of bad news. Poor job outlook, oil rising a record rate for 2nd day in a row and the possibility that the LIBOR rate will increase (hurting the US Dollar) all sent stocks in a downward spiral. When I looked at my stocks today I expected something horrid, but was pleasantly surprised.


Truthfully, I was positive on the day up until the final hour or so until market closed, most due to a comeback from FRO, as that increased around 5% today alone. If it wasn’t for that stock though, My MMM and CMCO would have surely tanked my portfolio. However, that is why we diversify!


This whole week my portfolio was quite swingy. I had a real nice upswing on Thursday before a couple small positive days on Tuesday and Wednesday, even though on Tuesday and Wednesday I was up quite a bit mid day only to lose it back.


So, here goes my summary for the week. I realized I should determine market returns based off my cash levels too only to make my returns fair.


Basis: $11,686.29



+$141 Gain from ESV Sale


+$1716 Cash


Total Account Value: $12,079.94
Total Gain: $393.65 (3.37%)


EP was up 6 % on the week, NBR was up 3%, MTW was up 10 %, while CMCO dropped 6 %, FRO dropped 1.2 %, and MMM dropped 3.5 %.

+$141 Net Gain from the Sale of ESV (after commissions)


Total Gain: $341.56


A bit of an improvement since last week, although not much. I’m pretty much done on my purchases for the time being and I don’t plan on selling anything else any time soon. One of my stocks on my wish list, Dollar Tree, had a sick week and the price jumped so high that it is hardly worth waiting for it to come down.


I’m still going to continue looking for better companies than the ones I own, as that just makes the most sense. That, and it is and takes my mind off of poker. I probably wont get any research done this weekend (obviously) but maybe one day next week.

I have to say, looking for a decent Blue Chip stock was a little bit easier than looking for a good retail or financial stock. My two stocks I’m researching are Cramer’s favorites Waste Management (WMI) and 3M Company (MMM).


Waste Management


Debt Ratio: .72 (Not great)
Current Ratio: .95 (pretty shitty)
Gross Margin: 35.9 %
Positive Cash Flow: Positive last quarter, negative last 2 years
P/E Ratio: 16.45
Market Cap: $18.35 Billion
Dividend Yield: 2.90 %
Growth: Fairly steady, averages out to about 8% over the next couple years.


3M Company


Debt Ratio: .534
Current Ratio: 1.69
Gross Margin: 47.9 %
Positive Cash Flow: Yes, but only because of an increase in long term debt
P/E Ratio: 14.88
Market Cap: $53.65 Billion
Dividend Yield: 2.60 %
Growth: Steady 9 % over a long period


Summary: There really isn’t a big comparison here as I feel that 3M is doing much better right now. Not only does it have higher growth prospects, it has a better balance sheet and gross margin and is trading at a cheaper price. No question: MMM is the better Blue Chip; it also is trading at or near its trading bottom so it isn’t likely it will go any lower. I’m going to look to purchase this around the $75-76 dollar range and just buy all at once; its not likely to drop much at all to justify the extra commissions.

Trying to find good companies with strong prospects and good balance sheets in the retail sector is pretty hard. I started with places that I like to shop at and went from there. The 2 Stocks I’m looking at are: Dollar Tree and Family Dollar.


Dollar Tree (DLTR):


Financial Statement Analysis:


Debt Ratio: .45
Current Ratio: 1.94
Gross Margin: 34.4 %
Positive Cash Flow: Yes for last quarter, no for last year
P/E Ratio: 16.11
Market Cap: $2.98 Billion
Dividend Yield: N/A
Growth: Steady 10 % growth through the next 8 quarters


Family Dollar (FDO):


Financial Statement Analysis:


Debt Ratio: .553
Current Ratio: 1.36
Gross Margin: 32.7 %
Positive Cash Flow: No for last quarter, yes for last year
P/E Ratio: 13.48
Market Cap: $2.81 Billion
Dividend Yield: 2.5 %
Growth: 12% for next quarter but negative 7 % for the current year.


Summary and Comparison: This is a good example of two similar companies competing against each other and there is no clear cut choice of which one is better. FDO trades at a lower multiple, at 13.5 compared to DLTR’s 16.1 but it also has a slightly lower market cap. DLTR has a significantly better balance sheet and a higher gross margin than FDO; however FDO has a 2.5 % dividend. The cash flows between DLTR and FDO cancel each other out.


However, I think the deciding factor between FDO and DLTR is the growth rate. I believe DLTR deserves a higher multiple than FDO because of a steady growth forecast of 10%, compared to FDO’s lackluster growth prospects.


I think DLTR is the best buy of these two, even without the annual dividend. It currently trades at roughly $33.50 per share, I’m going to look to buy some at $32.75 and then more at $32.00.

About ITRN: ITRN is engaged in the area of location-based services, consisting of stolen vehicle recovery and tracking services. The Company also provides wireless communication products used in connection with its location-based services and various other applications.


Financial Statement Analysis:


Debt Ratio: .31
Current Ratio: 3.11
Gross Margin: .44
Positive Cash Flow: Yes
P/E Ratio: 18.5 x current EPS, 14.3 x 2009 EPS
Market Cap: $306 Million
Dividend Yield: 10.30 %


Revenue Breakdown:


Israel 58 %
Brazil 32 %
Argentina 7 %
US 3 %


Summary: ITRN has an excellent balance sheet and counts as an emerging market and small cap stock. The revenue breakdown is pretty intriguing, as I got that after listening to their latest conference call. Yahoo and Fool lists the P/E Ratio at 6 which is based off the numbers from 2 years ago, but I re-calculated it based on current year’s earnings and it still is pretty good. I’m thinking if this stock with down about 3 % I’d buy some.