Stock Selections for Summer 2015

There have been stock sales in some of the portfolios so we will have another round of stock selections.  Here are the choices.

INTERNATIONAL

  1. Vale ADR (VALE) – $7, ($5 – $14 over 52 weeks), $35B market capitalization, 5.5% yield, $35B in debt.  The Brazilian mining giant has been hit hard by the reduction in demand for the commodities that it produces as well as difficulties in Brazil as the economy is stagnant and the currency is falling.  With these factors it is a solid candidate for a rebound in future years if they can continue to focus on efficiency and cost reductions
  2. Alibaba (BABA) – $88, ($77 – $120 over 52 weeks), $220B market capitalization, no dividend, $8B in debt.  Alibaba is a Chinese e-commerce giant.  They are listed directly on the NYSE and not an ADR.  While the Chinese stock market has made a huge advance recently, Alibaba has slowed as the company re-groups and reduces hiring and focuses on execution.  If you already own Yahoo don’t buy Alibaba because Yahoo has ownership of a portion of their stock which is already reflected in Yahoo’s value
  3. Infosys ADR (INFY) – $31, ($25 – $37 over 52 weeks), $35B market capitalization, 1.6% yield, no debt.  The Indian outsourcing and consulting company is poised to grow with India and benefits from the strong dollar since much of its costs are in Indian currency but much of its revenues are received in dollars

US Market

  1. Celgene (CELG) – $115, ($72 – $129 over 52 weeks), $91B market capitalization, no dividend, $7B in debt.     Celgene is a US biotech / drug company with a variety of drugs under patent and a pipeline of many other potential future products
  2. Juniper Networks (JNPR) – $27, ($18 – $27 over 52 weeks), $11B market capitalization, 1.5% yield, $2B in debt. Juniper Networking is a high technology company specializing in fast networking gear.  The company is well run and has beaten analyst profit estimates recently
  3. Dow Chemical (DOW) – $51, ($41 – $54 over 52 weeks), $59B market capitalization, 3.3% yield, $20B in debt.  Dow Chemical provides processed material for manufacturing and agriculture.  The company benefits from lower US natural gas costs which provide advantages since it is a major component of their products.  The company recently fended off an activist investor which reduced their stock price.
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One thought on “Stock Selections for Summer 2015”

  1. An update on how these picks did…

    – Vale – what a disaster. The Brazilian real continues to fall, corporate governance / corruption issues dog Brazil, and now commodities, in particular iron ore, collapse in price. The question is – is Vale too far down to recover or is this a giant buying opportunity?

    -Alibaba is a strange one. It is a Chinese internet stock on a US exchange. It listed on the US exchange to allow for its dual stock structure which enables the founders to hold control even if they don’t own a majority of the shares (like Google or Facebook). Then it looked like listing in the US was a dumb idea when Chinese stocks skyrocketed but now it doesn’t look so bad since they’ve crashed (or halted trading). Alibaba is down but hard to tell exactly why

    – Infosys – has done well, India is on the rise (unlike gyrating and slowing-down China) and exchange rate moves are favorable to Infosys (they pay their staff in Rupee and get paid from US customers in dollars)

    – Celgene – has done well, along with the general drug and medical industry, despite claims of doom when Obamacare came out. In general we don’t have a lot of exposure to this class of stock, which in hindsight is a mistake

    – Juniper – did OK

    – Dow – up a lot then down a bunch recently. May be a buying opportunity

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