Barnes and Noble

Three Garbage Stocks

Three Garbage Stocks

The market goes up everyday… This two-year chart represents the thirty varsity players on the U.S. economic court. You might look at this 100% gain in two years and think that this bull market is overdue for a correction. But don’t worry. Uncle Ben, our fair Chairman over at the United States Federal Reserve, has it all in hand. This is not the time to fret over debt, inflation, taxes, or unemployment… Don’t fight the Fed This market is simple. The Fed is pumping liquidity into the market at an unprecedented rate. There is an old Wall Street platitude that says “Don’t Fight the Fed.” It means you buy stocks when interest rates are dropping and sell when they are going up. The current Fed fund rate is at 0.25%. It can’t get much lower, and no one expects them to hike rates in the near future. What are you waiting for… zero percent? People heed the Bernanke It looks like folks just like you and me are putting the hard times behind them… The adjusted retail numbers for December showed $380.9 billion in sales, an increase of 0.6 percent from the previous month, and 7.9 percent above December 2009. Total sales for 2010 were up 6.6 percent. For the fourth quarter, they were up 7.8 percent. Car sales jumped 14.7 percent over last year. For non-store retailers like Amazon, sales jumped 15 percent. The unofficial numbers for January show a 4.1 percent gain from a year ago. This is great stuff. Amazon investors liked it so much that the company now trades at twice the price it did during the dot-com bubble in 1999. Amazing. ~~SIGNUP_WD~~ The screen It’s a good idea to screen for stocks at least once a week. I generally screen for low P/E, small market capitalization, and good dividend. From there, I go through the list and look for red flags and growth potential. I like the companies that are under $250 million in market value, with high future growth and fat margins. I also look at debt ratios. I call these “garbage stocks” because they ain’t for widows and orphans, but they tend to run under the right circumstances. Today, three companies in the retail sector popped up on my screen. All three shared my garbage stock credentials. And they have something else in common: They cater to the petite bourgeois. They are Books-A-Million (NASDAQ: BAMM), Collectors Universe (NASDAQ: CLCT), and CPI Corp. (NYSE: CPY). The merchant of Wal-Mart All of these companies sell products to the middle class, but none of their products are necessities… Books-A-Million runs 223 discount bookstores in the Southeastern United States. Collectors Universe provides third-party authentication, grading, and related services for rare collectibles like coins, trading cards, and sports memorabilia. CPI runs Wal-Mart Portrait Studios and PictureMe Portrait Studios. BAMM has a market cap of $92 million and a trailing P/E of 6.62. The company had a negative revenue growth of 5.5% year over year, but it does pay a fat 5.2% dividend. (They could also be a beneficiary of Barnes and Noble going bankrupt.) CLCT has a market cap of $109.34 million, a P/E of 6.6, gross margins of 60%, quarterly revenue growth of 8%, and a dividend yield of 9%. CPY has a market cap of $152 million, a P/E of 8.06, 8% margins, a flat quarterly revenue growth, and a 5.10% dividend yield. …

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Google’s Endless Ambition

Google’s Endless Ambition

It’s an exciting time for Google investors. Over the last few years, the company has positioned itself brilliantly. And it’s starting to pay off. Not only did they maintain their massive lead in search, they managed to grow it. And management made shrewd investments in other key areas. For example, in 2005 Google bought a little startup named Android. In 2005, most of us didn’t realize how quickly the smartphone market would take off. Google did, apparently. They moved into the space at just the right time. Google’s latest branded phone, the Nexus S Here we are five years later, and Google’s early investments are paying off in spades. Every day, 200,000 new Android devices are activated worldwide. Units sold rose 1373% in Q3, compared with the same period a year ago. That’s 20 million units sold last quarter, versus 1.4 million in Q3 of 2009. That is simply explosive growth. Dozens more Google-powered gadgets are in the pipeline at big manufacturers like Motorla, HTC, and LG; smart phones, e-readers, and tablets. They also just announced the Nexus S — their second Google-branded smart phone — a follow-up to the mediocre Nexus One . The new phone is the product of a partnership with Samsung. It does some unique tricks, like 3d graphics and some Nintendo Wii-like sensor functions. It’s slick-looking too, vastly more polished than its predecessor. Having a slick product is critical, as Apple has taught us. Tech retail isn’t easy, but Google is learning fast. PC World has a nice writeup on how the Nexus S stacks up against the iPhone 4 here . The S will be sold directly by Google, as opposed to most Android-powered phones, which are marketed independently. Best Buy secured the exclusive deal to sell the phone. I expect it to do well, especially with all the recent attention Android’s been getting. Google stands to make money from each Android-powered device sold by partners, as well. What’s that you ask? If Android is open source (free), how will they make money off it? Good question. Mobile ads, for one. Smartphone ad revenue will top $1 billion this year, and is growing at an incredible pace. With their dominant Adwords search platform, and their recent acquisition Admob, a leader in mobiles ads, Google was already set to dominate this market. Android’s success expands their reach in the space even further. Their apps marketplace will be another revenue driver. Apple has been making a killing selling apps and games for years, and Google is finally catching up. Android will drive revenue in other ways, too. But Google isn’t getting greedy, they’re focused on grabbing the most market share possible. Smartphones are still a young market, hard as that is to believe. Android could be a significant growth driver for decades to come. Getting the lead early, and keeping it, will be critical. Don’t think they forgot…

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Amazon (Nasdaq:AMZN), Wal-Mart (NYSE:WMT) Offering Best Shipping Deals

Consumers will be the big winners this Christmas season as retailers compete for their dollars by offering free shipping, with Wal-Mart (NYSE:WMT) and Amazon (Nasdaq:AMZN) unsurprisingly leading the way. Wal-Mart was the first retailer to strike, saying they would offer free shipping on about 60,000 items. Contrary to some competitors, they offer it with no minimum purchase. Amazon quickly

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