Sunday, November 06, 2016

Once a year update..really !

Last year was not particularly busy but strangely did not get a chance to update this post. But here is the update no one is really waiting for :)

Many of my favorite stocks have not done well in the last year. AAPL is trading at $108 (with P/E of 13). I sold out around $95 for a loss and this was the first time, as far as I can remember, that I took a loss on AAPL! Iphone growth has definitely slowed down, there are lot of other phones which are supposedly as good as Iphone. As for myself I did not see a point in updating my Iphone-6 to latest Iphone-7, they look the same and Iphone-6 is pretty good one. I am assuming other users are probably feeling the same way. As a note: S&P 500 is trading at $208.

On FITbit, really liked their product - Fitbit Charge. Bought one last year and bought another one this year. I stopped wearing a watch around 10 years back but with new Fitbit, I am wearing it everyday as a watch and step counter. That said, stock has done horribly in the last year. I briefly made a profit (should have taken it) but now it is trading at $9. I dont see bright future for stock yet, though they are profitable, have a cash of $800M and with market cap of $1.9bill, it does not seem expensive. Will have to wait and see.

SWKS is trading at $75 with P/E of 15. I am not making profit on this yet but I expect it to recover in the next year. I will be holding this for now. DECK is trading at $52, with P/E of 15 and seems to be bottoming out. I sold the stock around $65 and took a small loss but now I am tempted to buy some. They are not back to growth phase but things are getting less bad - GM improved to 44.5%, from 44% and overall inventory decreased 2.9% but annual sales is still down 2% from last year.

DIS is trading at $92 with P/E of 16. Still not making any profit in this but I will hold on from some more time and see where it goes.

On another note, looks like merger wave in semiconductor market is not done yet.

Qualcomm is acquiring NXP for $37bill (I think), this is while NXP is still in the process of wrapping up Freescale acquisition last year.
Avago (broadcom) is acquiring Brocade for $5.5bill.
Lattice semiconductor is being acquired by some unknown company.
Linear Technologies (LLTC) is acquired by ADI.

Companies like Cypress semi, Maxim Integrated are still running as standalone companies, dont know how long they will last in that mode.

Tuesday, December 29, 2015

Well, stocks to focus for next year.

Over the last year, AAPL, one of my long time trading/holding stock has not done well ! Though I have not sold it yet, it is probably the first time I am not making a profit on this stock. They give a good dividend, so I am planning to hold on to it. I realize smart phone market is growing less and there are not too many folks around the works willing to shell out $600 for a phone. P/E seems pretty low, so I figure it is fairly valued. At this time it is trading at $108 with P/E of 12 and forward P/E of 10. They are buying back lot of shares, so there would be net earnings growth, if not actual revenue or profit growth.

My next favorite it Fitbit (FIT). I did buy the device and using it everyday as a watch+step counter.Stock is trading at $29, I did buy some and planning to sell around $40. Lets see if it gets there !

With respect to SWKS, another stock I have been trading for sometime. I did buy it around ~$90. It is trading at $80, with P/E of 19. Earnings are growing well, in spite of slowdown in smart phone. I am planning to hold on to it and expecting price to reach around $120 !

Other two, which I think would be good stocks to hold are DIS and CTSH. DIS just had 'Force awakens' released and seems to be doing fairly well. It is trading at $107 and CTSH is trading at $60. I am planning to hold on to these two for at least an year and see how that goes.

I got few of retail stocks, since they had fallen down quite a bit but so far have not made any profits with them. Couple of them are low, KORS at $40 (with PE of 9) and SKX at $30 (with PE of 21) and staying low. But another one, DECK, has dropped more since I bought and is trading at $49 with P/E of 11 and FPE of 8. It does not make sense for me sell it, since I have lost quite a bit of my initial investment, so planning to just hold on to it for now. 

Tuesday, October 06, 2015

Merger wave..

What is going on in semiconductor market ? Few years ago it was evident that small semiconductor companies will find it hard to sustain in the new growth areas. ICs were getting more complex and more functionalities were being integrated into single chip. Once its functionality gets absorbed there is no more need for stand alone IC doing that and hence the semiconductor company doing just that IC is out of business. IC design is also moving to ever shrinking geometries. Process technologies in 16nm,14 nm or 10nm are way too expensive for even mid-size companies, let alone small companies.
All of the above facts and trend are not secret, it is well known  and was expected to drive some consolidation in the industry. In addition some of the companies were getting most of their revenue from smartphones. Slowing growth in smartphones is also pushing companies to merge or aquire others so that source of revenue is not concentrated in one industry. Here is the list of mergers/acquisitions I am aware of:

NXP+Freescale: (not sure who is acquiring who)
Intel+Altera: with Intel acquiring Altera
Avago+Braodcom: Avago acquiring Braodcom
Dialog+Ateml: Dialog acquiring Atmel.
Skyworks+PMC-sierra: Skyworks acquiring PMC sierra

Interestingly, last 3 companies, Broadcom, Dialog and Skyworks were getting most of their revenues from smartphone (Iphone and others). The last two mergers happened within a week !!

The expectation, at least from me, was that this consolidation would happen over a period of time 1 or 2 years. I was not expecting the companies to rush into this where almost every month there is a merger/acquisition news. Are they telling us something that we dont know yet ? Is smartphone growth slowing faster than expected ? Is the 13million sales number quoted by Apple for Iphone-6s, a sign of slowdown ?

We will have to wait watch how all of this plays out in the long ( 1 or 2 years !) run.

Sunday, January 04, 2015

Got one right..

After years of buying and selling stocks in almost random fashion, finally bought one based on data and good amount of confidence - SWKS. I came across this company after looking at teardown reports of Iphones.  After reading up little more about them, started thinking that no matter which smartphone maker (be it AAPL, Samsung , LG or Xiaomi) wins in the market, the component makers should do well. In addition to the smartphone business they also had other business. Overall I felt fairly confident they will do well, at that point stock was $25!

I held the stock for few quarters and in my opinion their earnings report also looked strong. But for some reason stock was in the range of $20 to $30 for whole of 2013. I started thinking may be I missed something and was not sure why the stock is not going up in spite of good reports. In 2014 it went up from $30 to $74. Unfortunately I was not there for the full ride. I started taking profits as soon as it crossed $30, and sold more after $40 and closed the position close to $50. (Bought a little bit when dipped but it is much smaller amount than original position). Beginning to understand this is a long term game - may be stick to one for 2 to 3 years to make some profit.

At the time of writing this post S&P is trading at $205 with PE of 18. In the last 5 years it has almost doubled. Like I mentioned in earlier post, I sold AAPL completely, it is not trading at $110, with PE of 17.

I am looking at few stocks now, would mention WFM and DECK. WFM has bounced back to $50, after falling from $65 to $40. With PE at 32, it does not seem too cheap. DECK at $90, with PE of 22, also seems like a good bet. Lets see what happens..

Sunday, September 07, 2014

Doing better...

Last post was talking about all time high S&P500 at $181, and as of last week it was trading even higher at $201! Following conventional wisdom, I have been waiting for pull back for about 2 years now. Looks like it is not happening any time soon.

Going to back for a quick check on AAPL, it is now trading at $99(after 7:1 split, so around $693 before split). There is a new product announcement this week, possibly a large Iphone or may be even an I-watch or some health monitoring device, who knows. But is trading at reasonable valuation with P/E of 16 but the market cap is way too high:$590billion ! In my opinion the chances of AAPL going much higher is limited. Most likely they will continue to do well but will not to be able to charge premium pricing for I-phones or the new devices, just feel it is too big for high growth. There is a 2% dividend and >25% operating margin. They could potentially provide a stable return for next 5 years.

I am looking at PNRA, trading at $155, close to 2 year low. P/E is not too low at 23, it is purely a technical trade, chart is showing higher lows and it has crossed 50-day moving average. Their same store sales has been declining. While MCD is also having the same problem, I feel PNRA is in better position just because the whole perception of MCD being junk food and move towards eating more salads or less junky food.

SWKS has done very well in the last year or so. It is now at $56 and has doubled in the last one year. Earnings are growing at 30% yoy and P/E at 33 is not too high for this earnings growth. With growth in 3G and 4G devices across the world and new IoT (internet of things), there is a growing need for RF/analog components sold by them. I sold it too early but planning to buy some and hold on for 3 years. They are expecting earnings of $5/share, so stock could potentially double from here. Will have to wait and see.
Pretty much given up on AMD after 2 bad quarters. Stock is still doing ok but decided to get out of it.

Sunday, December 01, 2013

Update for end of 2013

As I write this S&P500 is at all time highs, SPY is trading at $181. Previous post on AAPL, claiming $425 for Apple shares too low a price, turned out fairly accurate. AAPL is now trading at $556. I am taking profits and selling half of it. A new Iphone is not as exciting as it once was, and though Ipad Air is good but for consumers like me, who already have an Ipad-n, I see no reason to buy another one. One thing going in favour of AAPL is other smartphones or tablets are still not as good. So if anyone is buying a new one, they are probably giving some serious thought on getting an I-device. And there is always this new I-product, which is likely to be announced in 2014, as it has been 4 years since I-pad was announced. With 2.3% dividend   and a reasonable P/E of 14, it is good to hold some AAPL, still !

Other than that I am mostly out of ideas on what to buy, especially with the market trading at all time highs. There is a new restaurant chain NDLS, will probably try their food first, before buying the shares. Also WENdys is trying to re-invent itself, remodelling stores etc, so that will be a good short term buy. May be hold on to that for 1 or 2 quarter.

Another Tech stock trying to make a comeback is AMD, trading at $3.6. Need to read up some more on the turn around plan, especially with PC market and anything that has to with that doing badly. A speculative play is DDD, for 3-D printing. Dont have too much info on these two, but will follow them and see what they do. 

Tuesday, March 05, 2013

AAPL fallen far enough

 Ok, who wants to join me in calling a bottom for AAPL stock price at $425 ? It has a P/E ratio of 9.8, these are numbers that companies that are in deep trouble trade at. With smartphone growth still intact, AAPL should be trading at higher valuations than this.
The problem here is that cheaper phones will be selling more, there was a shortage of Iphone-4, which is atleast 2yrs old ! This is going to eat into AAPL profitability. But still P/E less than 10 is too low.