WelchCorpInvesting

Verizon a big flop

2009-12-04T21:48:00.000-08:00

Company type: Verizon Communications Inc. (Verizon) is a provider of communications services. The Company has two primary reportable segments: Domestic Wireless and Wireline. Domestic Wireless's products and services include wireless voice, data services and other value-added services and equipment sales across the United States. Wireline's communications services include voice, Internet access, broadband video and data, next generation Internet protocol (IP) network services, network access, long distance and other services. It provides these services to consumers, carriers, businesses and government customers both in the United States and internationally in 150 countries.

Company ratios: Book value per share: 15.2
Tangible book value: -20.37
Revenue per share: 37.09
Current Ratio: 0.81
Total Debt to Equity: 1.45
Payout ratio: 95.13

Review of Company: Although the company is in a good field I would not purchase this company. The debt is far too high for the company to be able to pay it off, and with a company trading at only twice its book value and not being able to pay off its debts is a poorly managed company.
Also, from the outside looking in, the company has invested way too much in the expansion of their cable service, and it is far too expensive in this economic climate. Consumers will not pay the service fee for Verizon’s cable when they already have Comcast, which will not have to come in and lay cable. Perhaps if we were in an inflationary market Fios would be an option, but not now.

This is seen in the ratios The book value ratio states how much each share is actually worth if the company became insolvent, the tangible book value however is what the common shareholder should be looking at.

If Verizon became insolvent the common shareholder would be expected to receive nothing. Verizon cannot pay the shareholder if it becomes insolvent.
Further more the current ratio and total debt to equity also shows how poorly Verizon’s management has been.

The total debt to equity is used as a basis of determining if a company is balanced, typically most companies in the communications field try to stay at under 1 Verizon however is approaching a debt to equity that would rival GM before the bankruptcy.

The current ratio always strives to be under 1, once a company reaches one it becomes very risky, the company then cannot meet its required payments and then the total debt to equity will catch up and shortly there after the tangible book value.

Getting out of Gold...

2009-12-04T11:31:00.000-08:00

Gold has indeed been in a bull market for the past 10 years and has offered an amazing return year after year. The problem with gold however is that the “return” that it offers is not a rate of return, it is preservation of capital. This can be seen by the fact gold is gold; you cannot invest gold into gold and get a return on your gold. Before the fiat currency systems were established if you wanted to make a return on your money you had to take your gold and invest it in something of tangible value. A shipping company, real estate with true economic wealth: Trees, water, animals, central location, or maybe a gold mine. However you could not go to a bank deposit your gold and get a return in gold.

So, the first error people make is when they believe they are “investing” in gold, investing in terms of gaining a larger return then initially invested. When I had my clients in 2002-3 buy gold I explained that what they were doing is simply converting the cash into gold and when they sell the gold they are receiving their cash back. It is a glorified hedge not a true investment. So by purchasing gold at $300 an ounce and selling at $1000 an ounce you hedged yourself from the devaluing of the dollar. Your buying power has been little affected, considering gold is a commodity is moves with other commodities the biggest example would be oil, in 2003 you could get a gallon for $1.30 today it is closer to 2.60 double that of 10 years ago.

Now that we understand gold is not an investment it is a hedge we can begin to truly analyze the value of gold. This is going to be very technical as I have been receiving several emails asking why I sold gold, and a simple “it is forming a bubble and an $800 an ounce return was enough for me” is not cutting it for a lot of people.

First thing I look at when valuing an investment is, “What happens if I am wrong, and how to I avoid being wrong or cutting my losses?” With gold that was very easy, I am also an avid coin collector so valuing the gold coins dating back to the late 80s the coins always gained a premium. So I knew no matter what I would still generate a profit. I then continued to part two.

Second thing “Is this the best use of my money? Is my opportunity cost best spent on this?” So I had to do a lot of digging and what I found was and bear with me: People weren’t buying gold, the stock market was starting to bounce back after the dotcom bomb, and the most interesting thing... We were now in a war. I took each and researched to see if my projections were right.

People were not buying gold: That means gold is undervalued, supply and demand, if you have more supply then demand gold is down in price simple.

Investing in the stock market blindly like every bull market, Biotech the future, and lets go buy 2 or 3 houses! A blind investment is a bubble investment: Shipping companies in the 1540’s, tulip companies in the 1620’, Florida real estate 1920’s all blind investments and all bubbles popped. I knew from history that when the market pops gold tends to move because it is safe.

The war, commodity prices ALWAYS surge during a war, every nation begins buying more and more and in turn raises prices for every commodity, oil is needed by farmers who grow food, cattle feed, coffee, everything. So, when nations begin to buy commodities surge!

So, with all this information in hand, I slept comfortably telling my clients to purchase oil, and to purchase gold. However the analysis did not end there.

There is this thing called the DOW/Gold ratio. Essentially what happens is you take the price of the DOW and divide it by the current price of gold, and when the ratio is one the market is in perfect harmony. The DOW/Gold ratio at the time of purchase was 8896/300 = 29.65 and in order for it to touch one gold had to climb or the US market would collapse to bring the ratio back even. However historically speaking this ratio rarely if ever has touched 1, it normally stays between 8 and 15. Now things are becoming clear as to why I sold my gold. Dow at the time of writing is at 10343, and gold is sitting on a very off day at 1150 which brings the ratio to 8.9 when I sold the ratio was closer to 10. So, if history repeats itself (as it did when I told my clients to buy) then perhaps our ratio is about to bottom?

Beyond the ratio, we now have companies piling out of the woodwork wanting you to buy gold and to sell gold. Similar to the shipping companies in the 1500s and biotech bubble of the 1970s and the .com bubble of the late 1990s, why is this bubble different? They have not changed in over 500 years and will not change. Or perhaps we should look at the last bubble, buying a house with no money down. Once the bubble gets popped the hedge that gold provides will be gone and those who have invested in gold over $700 an ounce are going to get burned.

So, yes I am out of gold. The ratio is to low for the gamble; people are to happy buying gold as they have been buying into any bubble, and once the fed raises their rates institutional investors will get rid of gold like pirates on a sinking ship leaving many individual investors holding shiny rocks.

If you would like to know where I am investing now email me,
~Mayo

Gold bubble: may last into next year depending on commerical real estate, however if that crisis is avoided third quarter next year gold will lose signifcant value.
I personally am looking into gold calls at 2000/ounce for Febuary, just incase I am wrong.. Always hedging my investments.

Silver: Full circle

2009-09-18T08:54:00.000-07:00

Silver

Good buy: Silver is one of the most heavily used industrial precious metals in the world. It is used almost every job field. Jewelers-Doctors-Engineers need silver, and silver production is slowing down. This will create a limited supply and increase the equilibrium price, and increase our profit.

Gold/Silver: Gold and silver have historically shared a ratio, and the ratio is 1/15-1/40, this means that it will take 15-40 ounces of silver to purchase one ounce of gold. Currently the ratio is at 1/60 (roughly) this indicates silver is undervalued. The way we know silver is undervalued and gold is not over valued is looking at the gold/dow ratio. The gold/dow ratio in March was 7.35, so it would take 7.35 ounces of gold to purchase one share of the dow's top 30. The ratio is currently 9/1 so it would take 9 ounces of gold to purchase one share of the dow's top 30.

However the price of gold has not fluctuated the DOW has fluctuated, and unless we foresee the DOW climbing over 20,000 the ratio is balanced. This is due to inflation that the gold ratio appears to be skewed.

So, Gold is fairly valued and silver is undervalued by roughly 10$/ounce in my opinion.

Silver is slated for a run in the coming months: It needs to catch up in ratio, it is a commodity and the CPI in September increased by .02% which shows inflation is creeping up on the economy. That coupled with October historically being the worst month for the markets could make silver the perfect buy.
If that is not enough, the price of natural gas has been increasing over the past several months, and again supply and demand will soon kick in as the weather gets cooler, which will help fuel inflation, and devalue the dollar. This was seen in December 07 and February 08.

Then the homerun, China has lifted the ban on privately owned silver, and has been encouraging their citizens to purchase silver. That will be an increase in 1.2 billion people wanting to buy silver, which translates into at least 1.2 billion ounces of silver to be sold in China. China has also put a barrier on silver exporting, which will also decrease the global supply of silver.

Silver is undervalued and a perfect buying opportunity

SilverETF (SLV)
Buy: 16.90-17.10
Sell: 22.00-23.50
Term: Short
September-February

Qwest Communications: Rough Year Ahead.

2008-07-05T00:36:00.000-07:00

Qwest communications (Q) is a global; wireless, voice, and data-transfer company. The company is currently operating most of its business in 14 states: Arizona, Colorado, Idaho, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Washington, and Wyoming.The company operates through three major services: Wire line, Wireless, Other.
I advise against the purchase of this stock. The market is currently going through a bear market, which means most sectors are dropping. Qwest has released several documents indicating that the core of the company is not solid; this is represented by the union strikes that appear to be common occurrence.

Technical analysis of the stock also shows weakness. Qwest is showing a P/E ratio of 2.52, which is low, a good P/E ratio is 18~24.An examination of Qwest’s income sheet shows that they are actually losing money when comparing the first quarter from last year to the first quarter of this year. A solid stock will have strong solid quarters increasing in value for one to three years.Typically when purchasing stock, the news will have an almost direct effect on the value of the stock price. Currently quest just had shaky news released on it, so it is quite possible that the stock will drop below $3.65 on Monday.

Qwest (Q)
Purchase: NO
Current stock value: $3.76
Future value: $3.30

The Truth about Foreclosures;

2008-07-02T22:16:00.000-07:00

Many people believe that if their house is going to be foreclosed there is nothing they can do. This is not true, especially this year. Many people over the past year or two have been talking about how the banks are getting greedy and just wanting to kick people out of their houses, which isn’t true neither; the bank really does not want your home.
The bank really does not want your home, in fact if both parties are willing then the bank may be able to work with the individual and they might be able to keep the house. This is actually a very empowering feeling and should not be a defeated feeling.

Why the bank does not want your home.
* It will be more of a hassle to take a house from an owner
* It will be more costly to take a house from an owner
* Banks want you to pay interest on the money they gave you, if they take your house then they won’t make money.
* The housing market is horrible, so the bank can’t turn a profit on a house. So, they would rather let you keep your house.

In a nutshell, the bank really can’t afford to take your house. So, do not be discouraged if you are having difficulties. I would advise calling your mortgage company and schedule an appointment to go over the situation.

Investing for the Future
~WelchCorp Advisor

Yahoo!; Act quickly or you will miss it!

2008-06-13T09:37:00.001-07:00

Yahoo! Inc. (YHOO) as we are all familiar with is a web search engine that provides many features such as; Messaging, Search Engine, Web Sites, Blogs, Emails, ect. . .
The company has recently hit a very rough patch and has recently turned down a bid from Microsoft (MSFT.) Upon doing this the stock plummeted almost $4.00 which puts this stock at an undervalued price of $22.00.
I would advise purchasing this stock between the prices of $22.00-$23.00, because Google (GOOG) is currently offering a rather large business deal with “Yahoo!” and frankly “Yahoo!” can’t really pick and choose at this point, which means a deal is imminent.
So, That is my pick for today.

Yahoo! (YHOO)
Entry: $22.00-$23.00
Exit: $25.00-$27.00

It doesn’t appear to be a killing, but it will suffice for ending this week and starting next week on a high note.

~Investing for the Future~
WelchCorp. Advisor

Dynamic Media Holdings Inc.; Could be Dynamic enough to work!

2008-06-12T13:22:00.000-07:00

Dynamic Media Holdings Inc. (DYMH) is a service providing, and consumer goods providing company. In simple terms, the company has two different ways to generate revenue. The first is by providing services for different companies ranging from advertising to web design.

The company has worked with the following in their web design division: Tateossian Jewelers, Cognizant Technology Solutions, Metaline/Mobos, db Prize Poker, Context Hosting Solutions, 138 Graphics, Medical Marquis, Vanguard Forex, BandsOnABudget.com, The Navesink Networking Group, Measurement Specialties Inc (Nasdaq MEAS), Open-Passage Executive and Personal Coaching, Barry Promotions & Marketing, MyCollegeSolution.com, Redbank.com

The company also works as a publisher and is currently working on many magazines that will soon be in print. They also work as a private publisher for different companies, which generates a third type of income.
The company also has a “Continuing Medical Education” division where it publishes ads as well as other media for national medical conferences. They have published media for Haymarket Medical, Physicians Weekly Genecom and Science and Medicine.

The company also has a third division, “Island Cool” which has marketed a styling hairspray that will protect the scalp and leave your hair healthy and manageable. That is the fourth stream of income.

Technical
The company appears to have established itself with a decent amount of income and the stock is relatively new. It has just withdrawn 300million common shares of the stock, which has made a slightly more desirable company due to supply and demand. However I cannot advise more on this company at the current time, there are just too many variables.

The day after writing about this company it appears to have grabbed media attention and is currently climbing the charts. Right now it is trading at 20¢ a share, with the limited data on the company I cannot tell if this is undervalued or over valued and I will leave that in your hands this time.

Dynamic Media Holding Inc. (DYMH)
Entry: 10¢ - 20¢
Exit: ??*

~Investing for the Future~
WelchCorp. Advisor

*The reason for the exit price being ?? is simply that I don’t fully have a grasp of the companies earnings to directly project an accurate exit price.

Apple Inc.- A Swing-Trader's Dream?

2008-06-09T19:52:00.000-07:00

Apple Inc. (AAPL) is a software/hardware company and is taking the world by storm. The company started out small and stayed small for many years and in 2005 really started rocketing skyward.
The company went from $40.00 a share to $202 high in 2007! That is a phenomenal gain. The reason for the company’s success is related to one of the hottest marketed trends we have eve seen, and that is the “I-Pod,” and through viral marketing is making the Macintosh computer systems extremely popular.
I have been watching Apple Inc. for over a month now, and I am almost convinced that there is money to be made while swing trading this stock. It appears to be very volatile to the economic surge of the market.
An example being; if the markets drop the stock will drop, but when the markets go up the stock will go up. I have seen this stock trade at $188 one day and then it drop to $181 the following day only to ride back up $188 the next day.
I am going to start following its chart patterns and news feeds more closely to see if I can pinpoint the signs for this stock. My theory is though on a good swing trading day you could see 8$ a share a day.

Apple Inc. (AAPL)
Entry: Below $183
Exit: Above $186

*Short-Entry: Above $186
*Cover: Below $184

~Investing for the Future~
Welch Corp. Advisor

*Shorting a stock is considered by many to be an advanced practice; as there is a higher risk in shorting a stock.

Broadcast: A New Strategy for Growth Investing is coming!

2008-06-08T19:45:00.000-07:00

Okay, this weekend has been hectic, and I am not advising any stock at the moment, I would like to see where this week’s market is going to trend. To be honest, it is not a good idea to be in the market at the moment.
Oil is hitting record highs, and summer is really starting to kick into high gear, which will have an overall effect on the market performance. Then to top the scales it is an election year, which has historically been a bad year to invest.
So, over the next week or so I will be introducing a low risk high yield alternative for investing a larger sum of money.

I apologize for not presenting a stock this time around, but if I don’t feel confident enough in a stock to put my money in it I will not advise anyone to buy it.

~Investing for the future~
Welch Corp. Advisor

Silver; A Money Making Commodity

2008-06-07T09:12:00.000-07:00

Silver is starting to rally again, due to the prolonged economic plight facing America, and the plight will continue to progress throughout the summer while oil will surge higher unless the government steps in and corrects the situation.
My prediction is if the government cannot think of a way to lower oil prices by the end of the Summer oil will be pushing $150/barrel, which would lead to gas being close if not more then $5/gallon. That would be horrible this year.
The nation currently is experiencing the worst unemployment rate since 1986. This appears to cause a very shaky and undesirable investing market, and many people are moving their money out of the markets which are causing many companies listed on the stock-market to plummet. Companies’ profits are dwindling due to higher gas prices, which affect the shipping market.
Long story short, as long as the markets are going down, the precious metal market will go up. Thus silver is typically used as a hedge, but I would advise using it as an investment vehicle through this rough time.

Silver (U.S Silver Eagles)
Entry: 18.90
Sell: 22.00

~Investing for the future~
Welch Corp. Advisor

Orbital Sciences: A Turtle Looking to Win the Race!

2008-06-02T21:30:00.000-07:00

Orbital Sciences (ORB) is a growing aerospace company based in Dulles, VA. The company was started in 1987, and is currently in competition with “Lockheed Martin” one of the nations largest aerospace firms.
Over the past several years Orbital Sciences has secured several contracts over “Lockheed Martin” and has worked with “Lockheed Martin” on many government contracts. In April Orbital Sciences received a $50 million dollar contract by the U.S Department of Defense for a research and development of a “suborbital space vehicle.”
Orbital Sciences has also announced a $50 million dollar “Common Stock Buy Back Plan.” This is where a company will purchase there common stock from the market over a 12 month span for a total of $50 million dollars.
This is good for many reasons, but the most basic reason is ‘supply and demand.’ Typically when this happens the company will either cause the price of the stock to surge, or it will keep the stock’s price steady in a bear market.
The second reason this is a good stock to buy is because Mutual Funds will purchase stock in block similarly to a “Common Stock Buy Back Plan” except they will only do it once, but it will cause the stock to surge, which could mean a new high and a new resistance line for Orbital Sciences by the end of the summer.
The third reason to buy is because their revenue has increased exponentially over the past three years. The company has grown, and is currently acquiring many new contracts.
The fourth reason is because they have recently sold a subsidiary company “Transportation Management Systems Business” for the sum of 43$ Million dollars.

So, in a nutshell; Orbital Sciences has increased revenue by 15% in 2006, and 35% in 2007. This is an indication as to where orbital is heading, and I am predicting this stock will be pushing $30/share come December, and maybe more depending on how many financial institutions begin to buy Orbital Sciences.

Orbital Sciences (ORB)
Entry: $22.00-$26.00
Exit: $30.00-$35.00

Power Play
If you enter at the marks mentioned above it is highly unlikely you will lose money on the stock, but I would caution you if you are to enter at $26.00 as that is a bit risky until we see the stock break through its $27.00 resistance line.
This play is a slow play and will not net quick gains, but rather a steady climb.

~Investing for the future~
Welch Corp. Advisor

Hewlett Packard: The New IBM

2008-05-31T12:22:00.000-07:00

Hewlett-Packard Company (HPQ) is a computer and computer accessory manufacturing and selling company which has recently (2006) out performed one of its largest competitors “Dell Inc.”
Hewlett-Packard Company has increased computer sells and accessory sales in the global market, and this year alone have increased their printer sells by 4%. They plan on expanding into the new China market that is currently blooming thus establishing a strong commercial base in one of the largest countries in the world.
The company is currently acquiring "Electronic Data Systems Corporation" (EDS), which is been now on hold due to a lawsuit filed by EDS shareholders. This is not to detour one from purchasing HPQ, but this lawsuit will lower the shares of HPQ for a short time. This would be buy time. They are contracted at the moment to purchase EDS for $25.00 per share buy out.
The buyout will make HPQ the second largest computer service in the world, just under “International Business Machines Corp.” which is currently trading at $129.73 a share. So, my prediction is by December we could see an easy 15% gain in the stock value.

Hewlett-Packard Company (HPQ)
Entry: $45.00-47.50
Sell: $55.00-$65.00

I would like to mention, the sell price is just for those that would like to see a quick realized gain. If you would hold the stock longer I would predict possibly by 3rd quarter of next year the stock to be breaking $100 a share.

~Investing for the future~
Welch Corp. Advisor

American Eagle; A confusing play.

2008-05-29T20:03:00.000-07:00

Okay, This is the way I see "American Eagle Outfitters" or AEO
It's earnings are down about 12cents a share, which is not good. However in this economy they are actually doing quite well, they are still expanding and have enough assets to cover their loss, and without boring you with calculations, their share is undervalued by about 3 dollars at the moment. I would personally be conservative and sell the stock at 21$ a share, because that appears to be the threshold.

Or you could take a very aggressive and risky play, which would be to short the stock. If you were to short it tomorrow when it hits 21$ you will probably make more money then investing in it long.
So, in a nutshell.....

AEO
Entry:$19.10
Sell:$21.20
Short:$21.10
Cover:$17.50

You should be able to play off the Long position tomorrow, and the short position next Friday.

Happy Investing,
WelchCorp: Investor

StarBucks: Profit in hard times

2008-05-28T16:55:00.000-07:00

My first pick from this morning was Star Bucks Coffee(SBUX)
Star Bucks appears to match perfectly with the “CANSLIM” approach to trading. Earnings are up, it is a trending market, and from the news it appears to be expanding which will create a hedge against inflation of different nations, also many funds are starting to buy Star Bucks, which will affect the price of the stock.

SBUX
Open: $17.60
Close: $17.83
Profit: $00.23

Target: $18.00

It might not be the biggest bang for your buck, but it is a steady gain, and it should persist through tomorrow. Although, this stock has been volatile around these levels, which means many investors are going to get itchy fingers and sell the stock for a profit when the stock hits 18$ a share.
If this occurs, and you have the time, I would advise watching for the trigger (When the price starts to fall about $00.15.) and if you can, short the stock, shorting the stock at $17.90 and covering it when it hits $17.60 will net you $00.30 a share.
If the stock stays strong and pushes against its resistance tomorrow it could go up as high as $18.20 a share. Either play will net you a larger profit for tomorrows trading day.