Wednesday, April 27, 2005

High Yield Savings Accounts

Looking for a high yield savings account? Bank online and all you have to do is link the account to your checking account. You never need to visit a branch.

Western Financial Bank 3.30%
UFB Direct 3.30% 3.25%
Capital One 3.15%
Virtual Bank 3.05%
ING Direct 3.00%

Big Ben's Stock Picks for 2005-06

Below are my stock picks for 2005-2006. My opinions may change. You should not solely rely on me for investment decisions. Do your own research. Read annual reports, listen to conference calls, and read the Value Line & S&P reports. I may own some of the stocks below.

Chesapeake Energy (NYSE: CHK) (Own)
An excellent natural gas play.
Good entry point under $19.50.
Target Price: $25-28

Halliburton Holding Company (NYSE: HAL) SOLD
Has two units. Energy Service & Construction (KBR). Well managed company with a potential to sell off its construction unit to create additional value.
Good entry point under $42.00 ($21 Split Adjusted)
Target Price: $48-50 ($25 Split Adjusted)

Tyco (NYSE: TYC) DROPPED 10/19/05 ( -20%)
Great company that is significantly under valued.
Good entry point under $35.00
Target Price: $40.00

General Electric (NYSE: GE)
Good entry point under $35.50
Target Price: 41.00

Consumer Products

Altria (NYSE: MO) (Own)
People always buy tobacco. Plus this company has a 4.5% dividend. This is my favorite stock for 2005-06. There is litigation risk factored into the low P/E. Still a very solid company.
Good entry point under $66
Target Price: $73

Proctor & Gamble (NYSE: PG)
Best consumer products company that is adding the Gillete brand to their elite list. They also get Duracell in the Gillete deal. P&G has a terrific product line and they just increased their dividend.
Good entry point under: $55
Target Price: $65

Coca-Cola (Own) or Pepsi are both other good stocks in this group. Coke has a little higher dividend but Pepsi is growing earnings faster.

Largest pharma in the world. Has a nice 2.7% dividend. One of the most undervalued companies on Wall Street.
Good entry point under $28
Target Price: $32

United Health Care (NYSE: UNH) (Own)
Earnings have grown 35% over the past five years. Earnings should grow over twenty percent the next five years. This is a must own company that does not have the litigation risk of big pharma. My favorite healthcare stock.
Good entry point under $100. ($50 Split Adjusted)
Target Price: $125

Financial Services
Citigroup (NYSE: C) (Own)
World largest bank and nearly yields 4%. Another solid company that is undervalued.
Good entry point under $48
Target Price: $58

Goldman Sachs Group (NYSE: GS)
The leader in investment banking. Will benefit from increased M&A activity. S&P has a 2005 target price of $150. I am not that bullish, but I still like GS.
Good entry point under $110
Target Price: $130

I really don't like tech stocks for 2005-06.

Qualcomm (Nasdaq: QCOM) SOLD
Will be further implementing their CDMA wireless technology this year. It is far superior to current technologies used by Sprint & Cingular.
Good entry point under $35
Target Price $45

Stock Pick Corner: Tyco

Tyco International (NYSE:TYC)
Tyco is a diversified international conglomerate. Half of their revenues in 2004 were from the US and the other half were international. Tyco has a great new management team that is making this the turnaround company of the decade.

In 2005, Tyco should look to earn close to $2.00 per share. The stock currently trades at 22 times trailing earnings and 14 times 2005 earnings. Look for earnings growth between 12-20% per year for the next three years. I believe Tyco can trade at 20 times earnings and this gives me a $40.00 price target for mid 2006. Tyco just recently increased their dividend, another sign a company is growing and becoming more profitable.

What does Tyco do?
4% Revenue from Plastics & Adheseves
15% Revenue from Engineered Products & Services
23% Revenue from Healthcare
29% Revenue from Fire & Security
29% Revenue from Electronics

For more information visit the Tyco website.

Ben is currently long Tyco at the time of this post. His position may change without notice.

Stocks That You Must Sell!

I recommend that you sell these stocks. I don't own any of them and I am not short any of them (you might want to consider shorting them). Invest at your own risk. Do significant research before making a financial decision. I am not liable for any gains or losses you may incur by following my advice.

Sell the cyclical stocks. They have had a great run but it is time to sell. They don't do well when interest rates are rising and the economy is gradually slowing back to a more normal pace of growth.

This is only a sampling. There are many more companies in these industries that must be sold.

US Steel (NYSE: X)
Cleveland Cliffs (NYSE: CLF)
Caterpillar (NYSE: CAT)
Ingersol Rand (NYSE: IR)
Dow Chemical (NYSE: DOW)
Eastmen Chemical (NYSE: EMN)
Oregon Steel Mills (NYSE: OS)
Novamerican Steel (Nasdaq: TONS)
Olympic Steel (Nasdaq: ZEUS)
Phelps Dodge(PD)
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX)
Nucor (NYSE: NUC)

Tuesday, April 12, 2005

Finding a Brokerage Firm

There are many online brokerages but don’t just pick the one with the cheapest commissions. You must read the fine print and see if the services offered are enough to make you happy. Also many advertise dirt cheap commissions requiring you to trade frequently to get a discount on the commission. Some brokerages charge extra for trading more than a 1,000 shares. Check the pricing. Everyone wants the best deal but if you don’t trade often and you trade over $1,000 per transaction then a $7 commission vs. a $10 or $5 commission should not make a difference in which brokerage firm you choose.
I am with Ameritrade Izone ($5 Internet trades) but they don’t have telephone customer service or local offices. I only need the minimum bells and whistles. Some like a little extra.

Below are just a few names to check out and research. Check message boards to see how satisfied people are with each firm.
Also check out Consumer Search Which has links to articles reviewing brokerage firms:

Ameritrade ($10.99 Equity) ($10.99 + $0.75 Per Options Contract)
Ameritrade Izone ($5) ($8 + $1.75)
Brownco ($5 Market/$10 Limit) (10 Contract $20 Market/$25 Limit)
Choicetrade ($5) (99 Cents: $2.97 min.) (Can “test drive” a demo account)
Etrade ($14.99 for <5)
Firsttrade ($6.95) ($6.95+$1.25)
HarrisDirect ($19.95) ($25 + $1.75)
Schwab ($9.95-19.95) (9.95-19.95 + 0.95) **Read Pricing Terms
Scottrade ($7) ($7+1.25)
Sharebuilder ($4 Tuesday Trade***: $15.95 for Real Time Trades)
TD Waterhouse ($17.95) ($17.95+$1.75)

Investment Terms for New Investors

Investment Terms Provided By Citigroup

Assets - All of a company's possessions, including but not limited to property, cash, equipment, and financial investments

Book Value - the value of an asset as it appears on the balance sheet

Broker - Registered representative who earns a commission for executing trades on behalf of buyers and sellers in the marketplace

Debt - Money borrowed through loans or the sale of bonds

Dividend Per Share - total amount paid out in dividends divided by the number of shares that the dividend is paid on.
Example: You own 100 shares of Coke, each quarter you will receive $0.28 per share x 100 shares = $28.00 in cash or you can have it reinvested in more shares of Coke. In a given year you would receive $112.00. Dividends may be raised or lowered at any time. Not all stocks have dividends. Dividends are taxable by law. Dividend stocks generally outperform non-dividend paying stocks.

Note: EX-Dividend- in order to get a dividend on a stock you must own the stock the day before the ex-dividend date.

EPS - earnings per share, calculated by the firm's total post-tax earnings divided by the number of shares outstanding.

Equity - Money borrowed through the sale of stock. A company's share capital. It is permanently employed in the business and does not have to be repaid, unless the company is liquidated. The term is most commonly used to mean shareholders' equity.

P/E Ratio - Price/earnings ratio. The company's share price divided by its earnings per share.

Stock - Also known as shares or equities, stock signifies partial ownership of a corporation. Such securities entitle the shareholder to dividends, or a percentage of the company's annual net earnings and may provide additional privileges, such as the right to vote. Two basic types of stock are common and preferred.
Generally when you purchase stock on the secondary market through a broker you purchase common stock.

Welcome To My Blog

This is the first of many posts! Hopefully we can learn a lot about investing and make some money!