Adding Alpha - Stock options

Thursday, December 30, 2010

12/29/10 - 2010 Dow Dogs - BA, CVX, DD, KFT, MCD, MRK, PFE, SPY, T & VZ

The following analysis was performed on 12/29/10 using closing market pricing.
The VIX was at 17.28 and the S&P 500 Index was at 1,259.78.
Symbol Name

BA Boeing Company - #1 of the group based on our analysis. RVI's amd P/E's are low, the dividend is high - what is not to like?

CVX Chevron Corp. - High RVI's and low ranking in the group. P/E's are low and no doubt the stock would do well in another group

DD E.I. Du Pont de Nemours - #3 of this group. High RVI's and low P/E's. Rising markets challenge our beliefs do they not? Overall the bottom of this group.

HD Home Depot, Inc - RVI's are high, sort of and P/E's are highish....
KFT Kraft Foods Inc. $ 4 of this group.

MCD McDonald's Corp - #9 of the group, wide range of RVI's, the stock looks rich from a Buy/Write prospective.

MRK Merk & Co, Inc - RVI's are mid! What a surprise and P/E's are good. Second to the bottom of this group from our analysis. As much as we can like the stock it just does not stand out in this group.

PFE Pfizer, Inc - RVI's are mid - must be a pharma thing. The P/E is too high but the forward is reasonable (that's why we use it).

SPY S&P Standard & Poor''s Depository Receipt - All the Beta you can ask for here. We do take SPY positions in our risk accounts. It has proven to be an inexpensive way to "own" the market.

T AT&T - #2 of this group. High RVI's and in a difficult to understand industry. We have written about communications and our concerns and the potential opportunities. We looked at T and VZ but what about Sprint? This has dominated some of our recent discussions. Who will Sprint customers be paying their bills to this time next year? They look like a buy out candidate.

VZ Verizon Communications Inc - # 7 of this group. RVI's, P/E's are all high as are the Days earning.

*Note: the tables shown are embedded .jpg files. This means that you can: 1) double left click them with your mouse to enlarge them, or 2) right click them with your mouse and choose to open them in a new window or tab, print, save, etc.
As with everything we post, we may or may not have the stock and/or strategy in place in any one of our portfolios or may add it at any time. We do not make any buy or sell recommendations. We provide basic analytical research, some short commentary of the results and encourage you to do your own thorough due diligence prior to any purchase or sale.

Sunday, December 26, 2010

12/23/10 - METAL - FCX, MT, NEU, PKX, RIO, SCCO, VALE & X

Looking at the pricing charts below from http://www.metalprices.com/ you will see why we have liked commodity and specifically metal (Basic Material sector) stocks. Metal as with nearly all commodity prices are on the rise. We know that commodity prices have unique characteristics. Supply and demand have a great impact on pricing as does inflation. Another impact that is often over looked is currency fluctuation. US Dollar weakness has had an impact on the domestic price of metals. However, I believe it is safe to say that without regard to the dollar exchange rate, worldwide prices of metals have risen. Future pricing is any body's guess, however, the stocks we show below offer tremendous statistical profiles and once you have investigated their fundamentals, I am sure you will be as impressed with them as we have been.

The following analysis was performed on 12/23/10 using closing market pricing.
The VIX was at 16.47 and the S&P 500 Index was at 1,256.77.

Symbol Name

FCX Freeport McMoRan - Phoenix, Arizona headquartered with operation is the Americas and Asia. #1 overall profile in this group. No secret we like this stock statistically and fundamentally.

MT Arcelor Mittal - Luxembourg headquartered with worldwide operations - #3 overall profile in this group. RVI's are low as are P/E's. Unfortunately, we cannot get comfortable with the available financial data.

NEU NewMarket Corp - Richmond, Virgina headquartered with worldwide operations - Our analyst slipped in this company - still in the Basic Materials section but focused on chemicals. Never the less, RVI's are high but P/E's are low

PKX POSCO Common Stock - South Korea based Company - winds of war aside. RVI's and P/E's are attractive but the dividend is low. Overall, #8 on a list of attractive stocks. We like the fundamentals based on the available annual financial data.

RIO Rio Tinto Plc - UK headquartered company with operations on nearly every Continent. RVI's are high but the P/E's are excellent. We like their Balance Sheet but are frustrated with only annual data.

SCCO Southern Copper Corp - #3 overall statistical profile based on this group. Phoenix, AZ based company with operations in Mexico and South America. High RVI's and P/E with a good forward P/E. We really like their Balance Sheet.

VALE VALE S.A. American Depository - Brazil headquartered company. High RVI's, low P/E's. We like their balance sheet, unfortunately they only provide quarterly data.

X United States Steel Copr - Tied for #2 overall based on statistical profile - Domestic US headquartered company. RVI's are mid range, dividend is weak as are P/E's. We would suggest a strong fundamental review if you were considering a purchase.

*Note: the tables shown are embedded .jpg files. This means that you can: 1) double left click them with your mouse to enlarge them, or 2) right click them with your mouse and choose to open them in a new window or tab, print, save, etc.
As with everything we post, we may or may not have the stock and/or strategy in place in any one of our portfolios or may add it at any time. We do not make any buy or sell recommendations. We provide basic analytical research, some short commentary of the results and encourage you to do your own thorough due diligence prior to any purchase or sale.

Friday, December 24, 2010

12/23/11 - POTASH - AGU, BG, IPI, MON & MOS

12/23/11 - POTASH - AGU, BG, IPI, MON & MOS

The following analysis was performed on 12/23/10 using closing market pricing.
The VIX was at 16.47 and the S&P 500 Index was at 1,256.77.

We took a liking to Potash companies a while ago. Fortunately, it was before the industry began catching other investors attentions and stock prices were more reasonably priced. Prices are very attractive now, however, way way way back then stock prices seemed too cheap. Spot prices are still mixed and we believe value remains. Not all these companies are pure fertilizer/potash plays and they are slpit in terms of capitalization with MON leading at $35.7 billion and BG trailing at $2.7 billion. Interestingly these two stocks have the lowest RVI's of the group. Although we cast our lot with MOS and MON, the others represent value and we leave to you to decide which you like best.

Definition of Potash: a potassium compound often used in agriculture and industry

Potash on wiseGEEK: Chemically, potash consists of potassium carbonate, but also might contain potassium oxide or potassium chloride, depending on how pure you consider the mixture.

Boiling hardwood ash in water creates runoff that can be processed to form either lye or potash. Potash contains high amounts of essential plant nutrients; therefore it is mostly used as an agricultural fertilizer. With a long history of mining and manufacturing, the potassium salts help form soap, glass, and dyes.

Chemically, potash consists of potassium carbonate, but also might contain potassium oxide or potassium chloride, depending on how pure you consider the mixture. Usually, potash takes the form of powdery salts. Modern methods of extraction almost all rely upon deposits mined from ores, like sylvanite.

Historically, the manufacture and trade of potash traces an interesting period in the New World's economy. As one of the largest cash crops of the late 1700s and early 1800s, potash established strong trade routes through upstate New York, Canadian provinces, and overseas to Russia and England. At a time when land covered in hardwood forests was more valuable as farmland, settlers felled hundreds of thousands of acres of trees. Not only did this create lumber for building, but also they found a way to extract even more money by creating potash.

The word potash is a compound of "pot" and "ash," showing how the salts were first made. All leftover tree material, including damaged branches and roots, were burned on a dry day. The most popular wood came from broadleaved trees, namely Elm.

When these ashes were soaked in hot water for a while, then filtered, the rudimentary stage of potash created lye. If this lye, filling huge pots in a kiln, was baked down to evaporate all the water, "black ash" resulted. Black ash was like an unfiltered kind of potash. Farmers could make far more money trading potash than either lumber or food crops.

Nowadays, our potash comes from mining and goes toward inorganic fertilizer rich in potassium. In fact, the widespread use of these kinds of fertilizers on major crops like corn, wheat, and vegetables means arable land yields more edible food per acre. Potassium protects plants against disease and pests, allows them to flexibly adjust to changing weather conditions, and encourages them to absorb more nutrients. The resulting crops are larger and more nutritious.

TICKER Stock
AGU Agrium, Inc - Pays in January therefore every scenario includes the dividend. RVI's are high as is the P/E.
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BG Bunge Limited - More than just a fun stock name to say, we have been active in Bunge for quite a while. Mid value RVI's and extremely low P/E's. If you buy the stock it is also a lot a fun to talk about especially at the end of cocktail parties.

IPI Intrepid Potash, Inc - P/E's are high even using the forward rate. RVI's are high as well. The Days are exceptional and this is the overall stock based on the metric's.

Mon Monsanto Company - RVI's are mid range, and each scenario gets the dividend and P/E's are high. This is the highest capitalized stock of the group at $35.7 billion. This was one of our personal favorites.

MOS Mosaic Company - the #2 stocks on metrics, each earns the dividend and the RVI's are fair. One of our favorites, the SSR's are attractive. This is the second highest capitalized stock of the group at $31.7 billion.

*Note: the tables shown are embedded .jpg files. This means that you can: 1) double left click them with your mouse to enlarge them, or 2) right click them with your mouse and choose to open them in a new window or tab, print, save, etc.
As with everything we post, we may or may not have the stock and/or strategy in place in any one of our portfolios or may add it at any time. We do not make any buy or sell recommendations. We provide basic analytical research, some short commentary of the results and encourage you to do your own thorough due diligence prior to any purchase or sale.