August 2001
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Contents Back Issues April 2001 May 2001 June 2001 July 2001 Investing Buy & Sell Stocks for traders Model Portfolio Sold Bought Model Portfolio Chart |
Investors are still waiting for the summer rally but its nowhere in sight. Furthermore, as major tech heavyweights such as EMC Corporation (NYSE symbol: EMC) and Advanced Micro Devices (NYSE symbol: AMD) warned (continued in: Investing). Research in Motion, Inc. (NASDAQ symbol: RIMM) makes Black Berry ™ two-way pagers. These tiny devices have built-in keyboards that allow users to type in text messages. (continued in: Buy & Sell ). Speculators who like to trade frequently could buy stocks listed in this section. Investors should be aware that short-term trading involves much greater risk, and preferably no more than 10% of the portfolio may be invested in these stocks. Many of the stocks in the technology sector should be bought at recent low levels. Speculators could achieve short-term gains up to 100%, or higher, on some of these stocks. EMC Corporation (NYSE symbol: EMC) is the major supplier of enterprise storage devices, software, and services. The company’s top of the line Symmetrix® system can hold 19 terabytes of data on 384 individual drives. (continued in: Stocks for traders). Advanced Micro Devices, Inc. (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce ( continued in Model Portfolio). |
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Investing Investors are still waiting for the summer rally but its nowhere in sight. Furthermore, as major tech heavyweights such as EMC Corporation (NYSE symbol: EMC) and Advanced Micro Devices (NYSE symbol: AMD) warned that they would miss their quarterly earnings forecasts, the NASDAQ went from a sideways trend, to a free-fall. These warnings could affect the whole tech sector negatively and the Nasdaq Composite Index could continue its downward trend until August 4, 2001. This year, summer rally may start later than usual, perhaps in the second week of August and end by September 6, 2001. In our opinion, the Fed could continue to ease and may lower rates by 25 basis points, or a quarter of a percent in August. This would add more zip to the summer rally. Two months ago, in the section: Stocks for traders, we stated that if the stock of EMC Corporation (NYSE symbol: EMC) were to break through its support level of $30.25, then it could fall to the next support level of $25 per share by June 19, 2001, and then resume its upward trend. We suggested that investors monitor this stock on a daily basis and buy it at its lowest level. On June 22, 2001, EMC closed at $26.41 per share and then proceeded to establish an upward trend. To our surprise, this stock closed at a high level of $31.62 per share on July 3, 2001. At that time it looked as if this stock would never reach our target level of $25 per share. What a difference a few days made. After the company issued a warning that earnings will be lower than expected, the stock fell to $21.60 per share on July 6, 2001, way below our target level of $25 per share. On July 18, 2001, EMC closed at a low level of $18.06 per share and at this price level was a screaming buy. This timely stock could establish a strong upward trend and may reach approximately $42 per share by September 4, 2001. Investors should monitor this stock daily and sell it as soon as it reaches our target level. We have lowered our target level on ADR’s of Nokia Corporation (NYSE symbol: NOK) to approximately $35, from $38. Recently, these ADR’s fell to a low level and closed at $17 per ADR, on July 18, 2001, and at this level we rate these a screaming buy. Investors and speculators should remember that it never hurts to take a profit. As soon as ADR’s of Nokia Corporation reach our target level of approximately $35, sell them immediately to lock in your short-term gain. Back to Top |
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Buy & Sell
Research in Motion, Inc. (NASDAQ symbol: RIMM) makes Black Berry ™ two-way pagers. These tiny devices have built-in keyboards that allow users to type in text messages. This stock reached a 52-week high of $132.68 on October 24, 2000, and since then has been in the downtrend. On April 3, 2001, this stock closed at a low level of $17.90 per share and then proceeded to establish a strong upward trend. In less than three weeks, this stock rose to $38 per share on April 19, 2001. The chart of this stock has already established a head and shoulders pattern and this equity is in the latest stage of its downward trend. If this stock were to break through its support level of $20.82, it could fall to $17.90 per share. Investors should monitor this stock daily. This equity may reach its low level by August 5, 2001 and then once again could start its upward trend. Speculators may buy this stock, no later then August 5, 2001, and then sell it as soon as it generates a gain of approximately $15 per share. Sell this stock no later then August 29, 2001, to lock in your short-term gain. Patient investors may buy this stock at approximately $20 per share and hold it until it reaches approximately $60 per share, perhaps by November of 2001. On July 31, 2001, RIMM closed at $23.53 per share. Siebel Systems, Inc. (NASDAQ symbol: SEBL) is a major supplier of management software for large corporations. After reaching a high of $119.32 on November 7, 2000, this stock proceeded to fall. On November 30, 2000, this stock closed at $69.88 per share and then reversed its downtrend and rose to $101.50 per share on December 11, 2000. The stock found strong resistance at this level and proceeded to fall. By December 14, 2000, this stock was down to $79.81 per share. On December 19, 2000, this stock closed at $63.38 per share, below the neckline of its head and shoulders pattern and continued its downtrend. On April 3, 2001, this stock closed at a low of $23.06 per share and then reversed its downtrend and rose to $46.43 on April 19, 2001. The chart of this equity has once again established a head and shoulders pattern between April 20, 2001, and June 18, 2001. On July 19, 2001, this stock broke below its neckline and closed at $33.04 per share. The next support level is $30 and if this stock were to break through this level it could retest its April’s support level of $23.06. Speculators may buy this stock when it reaches its low level, in August 2001, and then sell it as soon as it generates a gain of approximately $17 per share. On July 31, 2001, SEBL closed at $34.46 per share. Back to Top |
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Stocks for traders Speculators who like to trade frequently could buy stocks listed in this section. Investors should be aware that short-term trading involves much greater risk, and preferably no more than 10% of the portfolio may be invested in these stocks. Many of the stocks in the technology sector should be bought at recent low levels. Speculators could achieve short-term gains up to 100%, or higher, on some of these stocks. EMC Corporation (NYSE symbol: EMC) is the major supplier of enterprise storage devices, software, and services. The company’s top of the line Symmetrix® system can hold 19 terabytes of data on 384 individual drives. EMC Corporation has over 17,000 employees worldwide. EMC Corporation acquired Data General in October 1999, and that added a selection of mid-priced storage devices. During 1999, EMC Corporation shipped over 10,000 software licenses that generated $822 million in revenue. EMC Corporation plans to spend $1.7 billion on R&D through 2000 and 2001. Approximately 75% of this expense will be applied toward development of software. Although EMC Corporation’s hardware and software is the most expensive, 98% of customers are willing to recommend it to their colleagues and business associates. As Internet continues to grow and hundreds of millions of people go online during the next decade, we project that the need for storage devices could continue to grow in double-digits. In our opinion, EMC Corporation’s annual revenues could grow ten-fold, and reach $60 billion in 10 years. During the past decade, this was the top performing stock on NYSE. The company consistently splits its stock, and the most recent stock split was 2-for-1 on June 5, 2000. After the split, the stock continued to ascend and closed at $103.18 per share on September 20, 2000. Although we don’t expect this stock to appreciate at previous pace during the next decade, it could provide investors with a gain of approximately 1,600 percent. At such rate of return, $2,000 invested in this stock now, could reach approximately $32,000 after ten years. Patient investors may buy this stock at its low level and hold it ten years. On the other hand, speculators who like to see short-term results may trade this stock. During the recent carnage in the technology sector this stock proceeded to fall and closed at $39.76 per share on February 28, 2001. In March we stated that the stock of EMC Corporation could fall to $30 per share during the next two months. By March 12, 2001, this stock had already reached such low level. On April 30, 2001, this stock closed at a low level of $25.20 per share, down $4.12 for the day. Afterwards, as Nasdaq Composite Index moved higher, this stock build a strong upward trend and closed at $45.12 per share on April 20, 2001. On May 31, 2001, EMC closed at $31.60 per share. Last month we stated “If this stock were to break through its support level of $30.25 then it could fall to the next support level of $25 per share by June 19, 2001, and then resume its upward trend.” This stock broke through its support level of $30.25 on June 14, 2001 and closed at $28.25 per share. Although this stock did not fall to our target level of $25, it did close at $26.41 per share on June 22, 2001. On June 29, 2001, this stock closed at $29.25 per share. Last month we stated that EMC could reach approximately $50 per share by the end of July 2001. We have lowered our target level to $42 per share. This timely stock may reach it in the beginning of September 2001. On July 31, 2001, this stock closed at $19.72 per share. At this level, we rate this stock a strong short-term buy. Speculators should sell this stock as soon as it reaches our target level of approximately $42 per share to lock in short-term gain. Advanced Micro Devices, Inc., (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce enough chips due to insufficient manufacturing capacity. During that time AMD was able to increase its market share. AMD could continue to spend large percentage of its gross revenues on research and development and try to keep pace with Intel by introducing faster processors to the market. As AMD sells a larger quantity of higher priced processors, the average selling price will continue to rise, thus improving profit margins. The stock of AMD reached a high of $94.63 per share on June 21, 2000 (after the 2-for-1 stock split that was issued on August 22, 2000, this high was adjusted to $47.32). Before the company issued the split, the stock was already in a downtrend. Although this timely stock could be held long-term, speculators who trade it short-term may achieve better return on investment. During the sell-off in chip stocks, this stock closed at $13.81 per share on December 29, 2000. After reaching a high of $32.95 on May 2, 2001, this timely stock proceeded to fall. Approximately two weeks later this stock closed at $27.20 per share on May 14, 2001. On May 21, this timely stock broke through its resistance level and closed at $34.40 per share. The chart of AMD has already established a head and shoulders pattern and fell below its neckline to $16.30 per share on July 25, 2001. There is a slight probability that this stock could revisit $26 level by the end of August 2001, and once it does, speculators may sell it. This stock could fall to approximately $14 per share by the end of September, and once it does it may be bought at such level. On July 31, 2001, this stock closed at $18.26 per share. We are maintaining our target level of $60 for this equity, but due to the pricing pressure on chips it may take this stock much longer to reach this level, perhaps by the end of January 2002. We maintain our rating of strong short-term buy. Buy this stock on dips and sell as soon as it reaches our target level of $60 per share. American Power Conversion Corporation (NASDAQ symbol: APCC) designs, manufactures, and markets surge suppressors, uninterruptible power supplies and related software for computer related equipment. The company also makes equipment to protect wide area networks (WANs), local area networks (LANs), Internet equipment, telecommunications equipment and integrated services digital network (ISDN) equipment. The company has manufacturing facilities in the United States, Ireland, Denmark, Switzerland, China and the Philippines. American Power Conversion Corporation is one of the ten major worldwide companies whose sole focus is to provide power protection equipment. As the E-commerce continues to grow, the demand for power protection for servers and other equipment will continue to ascend. The company continues to introduce new products to the market, such as APC Power Stack ™, which is a rack-mount unit designed to protect hubs, routers and switches. During the past ten years, this stock was an excellent performer, and the company has issued five stock splits. This stock ascended from a low level of $15.88 in May 1999, to $45 per share reached in April 2000. Afterwards, this stock proceeded to fall. On January 23, 2001, APCC closed at $18.24 per share, and then pulled back to $11.69 on March 1, 2001. During April, this stock once again proceeded to establish a strong upward trend and closed at $15.38 per share on April 20, 2001. On July 31, 2001, this stock closed at $13.35 per share. This timely stock could reach our target level of approximately $22.50 by the end of August, or beginning of September 2001, and when it does, speculators should sell it immediately to lock in their short-term gain. LSI Logic Corporation (NYSE symbol: LSI) makes chips for: cellular phones, satellite set-top boxes, DVD products and personal computers. The company derives 58% of revenues from international sales. LSI Logic has manufacturing facilities in the United States, Europe and Japan. The company may continue to invest 15-17% of revenues in R & D. As the demand for cellular phones and set-top boxes continues to grow in double-digits, the revenues and earnings of LSI Logic could outperform the rest of the companies in the chip sector. This stock closed at $32.63 per share on October 31, 2000 and then proceeded to descend. Due to the bear market in NASDAQ, this stock broke below $20 per share and closed at a low level of $16.43 per share on December 21, 1999, way down from its high of $90.38. LSI closed at $21.78 per share on July 31, 2001. In our opinion, due to the strong demand for cellular phones and handheld wireless devices, long-term, the demand for chips made by LSI will continue to grow. Short-term, this stock may come under selling pressure and could test $15 level in September 2001. This stock will be sold as soon as it reaches approximately $60 per share, perhaps by the end of January 2002, for a probable short-term gain of approximately two hundred percent. Computer Associates International, Inc., (NYSE symbol: CA) designs business application software and systems management software that allows computers to run efficiently. In addition, the company provides software that allows corporations to manage Web infrastructure. The company is the third largest after Microsoft Corporation and Oracle Corporation. Computer Associates International has offices in 44 countries. During fiscal year 2000, the company generated $1.566 billion of cash from operations and in our opinion it is sufficient to cover the repayment of debt. In our opinion, the short-term and the long-term outlook for the company is very good. As the debt level falls, earnings could reach $2.50 a share for fiscal 2002, thus propelling the stock to a probable level of approximately $98 per share. After reaching a high of $79.44 in January 2000, the stock proceeded to descend and closed at $24.78 per share on July 31, 2000. Due to the bear market in NASDAQ, this stock proceeded to descend and closed at a low level of $19.50 on December 29, 2000. Afterwards, this timely stock proceeded to establish a strong upward trend and closed at $37.50 per share on January 30, 2001. This timely stock closed at $34.48 per share on July 31, 2001. Speculators who bought the timely stock of Computer Associates International, Inc., below $30 per share should monitor it very closely. This stock could reach approximately $40 per share before September 6, 2001, and then may pull back to approximately $31 by the end of September 2001. We have lowered our long-term target level for this stock to $65 per share, from $98 per share. Patient investors may buy this stock when it pulls back to approximately $31 per share and hold it one year. On the other hand, speculators may trade CA short-term. CMGI, Inc., (NASDAQ symbol: CMGI) finds, acquires, develops and operates Internet companies. It is one of the worlds largest Internet investment companies. CMGI consists of three venture capital funds. CMGI, Inc. has developed a strategy to acquire start-up Internet companies, and then either sell them out right, or sell a minority interest and reinvest the proceeds. The company has a history of acquiring successful Internet companies. CMGI, Inc. acquired a majority stake in Alta Vista, while Compaq retained 17% equity ownership in the Alta Vista business. To find out more about Alta Vista, visit the company’s Web site at www.altavista.com and to find out more about CMGI, Inc., visit the company’s Web site at www.CMGI.com In our opinion, tremendous growth opportunities are ahead. On January 12, 2000, the company issued a 2-for-1 stock split. It was a fourth 2-for-1 stock split issued during the past four years. This stock has been in a downtrend since March 2000. On September 27, 2000, this stock broke through our initial target level of $28 and closed at $26.63 per share. Due to the tremendous sell-off in the Internet sector, this stock broke through our revised target level of $23 per share and closed at $15.38 on October 17, 2000. Afterwards, this stock proceeded to reach new lows and closed at $1.76 per share on April 6, 2001. On May 4, 2001, this stock closed at $6.22 per share. Then, this stock proceeded to pull back and on July 31, 2001, closed at $2.02 per share. As more money continues to flow into this stock it could slowly build upward momentum. We are maintaining our target level of $90 per share but this stock could reach this level a year later than originally projected, probably in the first half of the year 2002. We maintain our rating of speculative screaming buy. Unisys Corporation (NYSE symbol: UIS) is a major provider of customer services and information services. The Company makes network servers and software. In September of 1999, this stock reached a high of $49.68 and then proceeded to fall. In February 2000, the stock proceeded to revisit its high, but after a strong resistance at $35 level descended once again. Due to the sell-off in the tech sector, this stock continued to descend and closed at $9.54 per share on July 27, 2000. After reaching a high of $18.91 per share on February 16, 2001, this stock proceeded to fall and on April 17, 2001, tested its support level and closed at $11.30 per share. On July 31, 2001, this stock closed at $11.45 per share. Due to the negative outlook for this sector this stock proceeded to trade in a very narrow range and short-term does not have much upside potential. We have revised our rating to sell from a strong short-term buy. Speculators who already own this stock may sell it now and use cash proceeds to buy ADR’s of Nokia Corporation. Boston Scientific Corporation (NYSE symbol: BSX) is among the worlds leading companies that design and market minimally invasive medical devices. The company makes coronary stents for less invasive treatment of cardiovascular disease. The stock has reached a high of $47.06 on July 19, 1999. This stock closed at a low level of $12.88 per share on November 30, 2000. In March, this stock has built a strong upward momentum and closed at $20.18 on March 30, 2001. This stock does not seem to be able to establish a strong upward trend. On July 31, 2001, this stock closed at $18.01 per share. Although there is a very slight probability that this stock could reach our target level of $25 per share during the next few months, we have downgraded this equity to a sell from accumulate. Speculators who already own this stock may sell it now and use cash proceeds to buy the stock of EMC Corporation for a short-term trade. Bank One Corporation (NYSE symbol: ONE) is among the largest bank holding companies in the United States. Due to the losses in its credit card division, earnings fell and the stock reached a low of $24.44 per share on March 7, 2000, after reaching a 52-week high of $63.54 in May of 1999. After Bank One announced that James Dimon, formerly of Citigroup Inc., would become its CEO, the stock closed at $34.25 per share, up $3.38, on March 28, 2000. Money is flowing into stocks in this sector and this timely stock proceeded to build a strong upward momentum. On January 31, 2001, this timely stock closed at $39.19 and then pulled back and closed at $35.26 per share on February 28, 2001. On April 6, 2001, this stock tested its support level and closed at $33.61 per share. Afterwards, money flowing into this equity rose substantially and the stock closed at $38.55 on May 3, 2001. On July 31, 2001, this timely stock closed at $38.71 per share. Although this stock is maintaining its slow upward trend and could reach our target level of $43 per share in a few months, we have decided to eliminate it from our list and next month it will be replaced by a tech stock. Back to Top |
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Model Portfolio Advanced Micro Devices, Inc. (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce enough chips due to insufficient manufacturing capacity. During that time AMD was able to increase its market share. AMD could continue to spend large percentage of its gross revenues on research and development and try to keep pace with Intel by introducing faster processors to the market. As AMD sells a larger quantity of higher priced processors, the average selling price will continue to rise, thus improving profit margins. The stock of AMD reached a high of $94.63 per share on June 21, 2000 (after the 2-for-1 split that was issued on August 22, 2000, this high was adjusted to $47.32). Before the Company issued the split, the stock was already in a downtrend. Although this timely stock could be held long-term, speculators who trade it short-term may achieve better return on investment. Worldwide demand for microprocessors continues to grow 17 percent annually. At this time chipmakers do not have sufficient manufacturing capacity to meet this growing demand and that will guarantee that every processor made, will be sold almost immediately. Starting in September, the sales of chips typically rise and the demand reaches the highest level by December. On January 31, 2001, this stock closed at $24.60 per share and we rated it a strong buy. The stock reached an intra-day high of $26.75 on February 15, and then edged lower to close at $21.50 per share on February 28, 2001. The chart of AMD has already established a head and shoulders pattern and fell below its neckline to $16.30 per share on July 25, 2001. There is a slight probability that this stock could revisit $26 level by the end of August 2001, and once it does, speculators may sell it. This stock could fall to approximately $14 per share by the end of September, and once it does it may be bought. On July 31, 2001, this stock closed at $18.26 per share. We are maintaining our target level of $60 for this equity, but due to the pricing pressure on chips it may take this stock much longer to reach this level, perhaps by the end of January 2002. As soon as this stock reaches our target level, 150 shares will be sold and the remaining fifty shares will be held long-term. Applied Materials, Inc. (NASDAQ symbol: AMAT) is a major supplier of wafer processing equipment that is used to produce semiconductors. The Company produces systems that use physical vapor deposition technology, chemical vapor deposition and oxide etching. The demand for the company’s equipment continues to accelerate in line with the growing sales of computers and telecommunication devices. Although short-term, there may be a temporary decline in demand for the equipment made by Applied Materials; in our opinion long-term outlook for the company is excellent. As the demand for chips continues to grow worldwide, the sales of Applied Materials could grow approximately 20 percent annually during the next five years. On October 14, 1997, and on March 16, 2000, Applied Materials split its stock 2-for-1. On July 16, 2001, this stock fell to a low level of $41.95 per share and then closed at $45.86 on July 31, 2001. There is a probability that this stock could fall to $39 per share by August 8, 2001, and at such level would be a screaming buy. Hold this stock at least four years. Boston Scientific Corporation (NYSE symbol: BSX) is one of the worlds leading companies that designs and markets minimally invasive medical devices. Sold. All three hundred shares of Boston Scientific Corporation were sold on July 25, 2001, at $18.16 per share. (read: Sold). CMGI, Inc. (NASDAQ symbol: CMGI) was added to our list “Buy 10 Tech Stocks” on November 10, 2000, at $16.25 per share. We liked the stock then, and at the recent price we like it even more. On January 30, 2001, three hundred shares of CMGI, Inc., were bought at $6.78 per share and added to our Model Portfolio. Although the risk of owning this stock is high, so is the potential for the appreciation. CMGI, Inc., is one of the worlds largest companies with stakes in the Internet start-ups. The main reason why we like this company is because it has an 83% interest in Alta Vista. CMGI planned to issue an Initial Public Offering in Alta Vista but due to the negative market condition the IPO has been postponed. When the market improves and the company does an IPO on Alta Vista, the stock of CMGI could establish a strong upward trend and may even reach $90 per share in the first half of the year 2002. On July 31, 2001, this stock closed at $2.02 per share. Once this stock reaches our revised target level of $90 per share, all three hundred shares will be sold to lock in the gain. We would like to remind investors that the risk of owning this stock is high therefore it should only be bought by speculators. To find out more about CMGI, Inc., read the section Stocks for Traders. Cisco Systems, Inc. (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. The annual revenues have grown from $2.2 billion in fiscal 1995, to $12.2 billion in fiscal 1999. John T. Chambers, who is a CEO of Cisco Systems, continues to steer the company on a path to high growth and the long-term outlook for the company is excellent. In our opinion, Cisco Systems, Inc. could continue its acquisition spree and the annual revenues may reach $50 billion in six years. Cisco Systems, Inc., is positioned to offer the latest equipment to service providers, such as IP internetworking technology which allows to host Internet applications and expand their service from basic voice traffic to broadband which can carry data, provide Internet access, and video conferencing. During the past six months this stock continued to fall. On July 31, 2001, this stock closed at $19.22 per share. This stock could test its support level and may fall to approximately $15 per share. At such level this stock would be a screaming buy. Investors who already own this stock could add to their position. Hold this stock at least ten years. Compaq Computer Corp. (NYSE symbol: CPQ) is the second largest computer manufacturer in the world. The Company designs and makes notebook personal computers, servers, consumer PCs and networking equipment. The turnaround is taking longer than expected. Although revenues continue to grow, the earnings are still below the levels reached three years ago, therefore we are changing our rating on this stock from a long-term buy, to a hold. The company sold 83% of interest in Alta Vista Web site to CMGI, Inc. Compaq Computer Corp. retained 17% equity in the Alta Vista. Both companies will promote this site. In the future it could become one of the top three sites and generate substantial amount of revenues. Due to the sell-off in the tech sector, this stock broke through its support level and closed at $15.05 per share on December 29, 2000. During January this stock proceeded to rebound and closed at $23.71 per share on January 31, 2001. Due to the negative outlook for this sector this stock closed at a low of $13.30 per share on June 20, 2001. This stock closed at $14.94 per share on July 31, 2001, and at this level may be bought by speculators and then sold if it were to reach approximately $19 per share by the end of August 2001. Patient investors may buy this stock now and hold it until it reaches approximately $29 per share, perhaps by the end of January 2002. As soon as this stock reaches our target level of approximately $29 per share, one hundred shares that are held in the Model Portfolio will be sold immediately. Compuware Corporation (NASDAQ symbol: CPWR) makes software that manages corporate networks, and improves productivity. The revenues are growing at a fast pace, and for the fiscal 1999, reached $1.65 billion. The stock of Compuware Corporation reached $40 per share in December 1999. On March 31, 2000, we have stated that there is a probability that this stock could fall to $16 per share during the next three months. When this stock fell below $13 per share, an additional 200 shares were bought at $12.38 on April 14, 2000. On December 29, 1999, this stock closed at $6.25 per share. Afterwards, this timely stock proceeded to build a strong upward momentum and closed at $12.44 per share on January 31, 2001. This stock closed at $13.70 per share on July 31, 2001, and we rate it a strong buy. Due to the negative outlook for this sector, we revised our target level to $28 per share, from $35 per share. Once this stock reaches our revised target level, two hundred shares will be sold immediately. The remaining 150 shares will be held long-term, at least three years. Delia’s, Inc. (NASDAQ symbol: DLIA) sells a variety of apparel and accessories for young women. The Company conducts sales through its Web site and through brick and mortar stores. This stock reached a 52-week high of $40 per share in April 1999, and then proceeded to fall along with other Internet stocks. By November 1999, this stock reached a low of $5.50 per share. Afterwards, the stock proceeded to rise, buoyed by optimistic expectations of higher holiday sales and reached an intra-day high of $13.25 in November 1999. On April 30, 2001, this stock closed at $2.96 per share and we rated it a speculative buy. As more money flowed into this timely stock it closed at $8 per share on June 29, 2001. Several months ago we have revised our target level for this stock downward to $25 per share. It may take a year for this stock to reach such level. Therefore, a decision was made to sell this stock as soon as it revisits its recent high of $8 per share and add cash to the existing cash in our Model Portfolio. On July 31, 2001, this stock closed at $6.60 per share. Delia’s, Inc. merged with iTurf, Inc. and after the conversion of existing stock into the newly issued shares, now there are 342 shares in our Model Portfolio. Dell Computer Corporation (NASDAQ symbol: DELL) is the third largest computer manufacturer in the world. The Company makes personal computers, notebook computers, servers and workstations. On March 5, 1999, the Company issued a 2-for-1 stock split, the seventh in the past eight years. On March 22, 2000, the stock reached an intra-day high of $59.68 per share. Then, the stock proceeded to fall. Due to the sell-off of stocks of box makers, this stock broke through its support level. On November 30, 2000, this stock closed at $19.25 per share. The stock continued its downtrend and reached a low of $16.25 per share. On February 7, 2001, this stock reached an intra-day high of $27.50 per share. Two weeks later, on February 21, this stock tested its support level of $20.43 per share. On July 31, 2001, this timely stock closed at $26.93 per share. At the present level this stock presents a great buying opportunity. Although it is not likely that the stock of Dell Computer Corporation will appreciate at such a fast pace as it did between the year 1994 and 1999, in our opinion, this stock could generate a gain of approximately 1,500% in six years. Ericsson LM Telephone (NASDAQ symbol: ERICY) is a leading supplier of mobile phones and telecommunications equipment. The company’s main manufacturing facilities are located in Sweden. Ericsson’s telecom equipment is among the most advanced in the world. The sales of equipment have increased significantly in China and surpassed the sales in U.S. Ericsson LM Telephone projects that by the year 2003 the number of mobile phone users could reach over 800 million. The long-term outlook for Ericsson is excellent. ADR’s of Ericsson split 4-for-1 on May 8, 2000. On July 31, 2001, ERICY closed at a low level of $5.36. Buy these ADR’s now and hold at least seven years. Intel Corporation (NASDAQ symbol: INTC) is the leading manufacturer of microprocessors. The company has high name recognition, and still has approximately 85% share of the market. The company continues to switch production to 0.18 micron manufacturing process that yields more semiconductors from each wafer. The stock of Intel Corporation has kept rising ever since 30 shares were bought in March of 1995, at $78.25 per share. The company issued a 100% stock dividend on June 22, 1995, another one on July 14, 1997, a 2-for-1 stock split on April 11, 1999, and another 2-for-1 split on July 30. Since the original 30 shares were bought, after these stock splits there were 480 shares in the portfolio. On October 30, 2000, two hundred shares were sold and now there are 280 shares in our Model Portfolio. This stock continued to fall and closed at $30.06 per share on December 29, 2000. As the institutional investors proceeded to buy this stock, it rebounded and closed at $37 per share on January 31, 2001. On July 31, 2001, this stock closed at $29.81 per share. Buy this stock and hold long-term. Internet Capital Group (NASDAQ symbol: ICGE) is a venture capital group that owns a stake in over 52 Internet companies. This venture capital group owns a stake in Vertical Net, a group of online trading communities where transactions for parts and raw materials are made among corporations. In July 2000, this stock traded at $45.18 per share and then proceeded to fall. Due to the carnage in the Internet sector this stock closed at a low of $3.28 per share on December 29, 2000, down from its high of $143.55 reached in March 2000. Afterwards, this stock proceeded to build a slow upward momentum and closed at $6.44 per share on January 31, 2001. There is a very slight probability that this stock could revisit its high of $143.55 per share during the next two years. We will monitor this stock closely. As soon as this stock reaches approximately $130 per share, one hundred and fifty shares will be sold immediately. The remaining fifty shares will be held long-term. On July 31, 2001, this stock closed at a very low level of $1.31 per share, and we rate it a speculative strong buy. LSI Logic Corporation (NYSE symbol: LSI) makes chips for: cellular phones, satellite set-top boxes, DVD products and personal computers. The company derives 58% of revenues from international sales. LSI Logic has manufacturing facilities in the United States, Europe and Japan. The company may continue to invest 15-17% of revenues in R & D. As the demand for cellular phones and set-top boxes continues to grow in double-digits, the revenues and earnings of LSI Logic could outperform the rest of the companies in the chip sector. This stock closed at $32.63 per share on October 31, 2000 and then proceeded to descend. Due to the bear market in NASDAQ this stock broke below $20 per share and closed at a low level of $16.43 per share on December 21, 2000, way down from its 52-week high of $71.32. On January 31, 2001, this stock closed at $24.75 per share. This stock broke through its support level of $19.80 and closed at $16.11 per share on February 28, 2001. LSI closed at $21.78 per share on July 31, 2001. In our opinion, due to the strong demand for cellular phones and handheld wireless devices, long-term, the demand for chips made by LSI will continue to grow. Short-term, this stock may come under selling pressure and could test $15 level in September 2001. This stock will be sold as soon as it reaches approximately $60 per share, perhaps by the end of January 2002, for a probable short-term gain of approximately two hundred percent. Lucent Technologies, Inc., (NYSE symbol: LU) is the largest manufacturer of the telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows the phone companies to increase the capacity and to provide a high speed Internet access. On October 30, 2000, an additional 200 shares of Lucent were bought at $20.75 per share and added to our Model Portfolio. Now, there is a total of 250 shares in our Model Portfolio. As soon as this stock reaches our target level, 150 shares will be sold. The remaining hundred shares will be held long-term, at least ten years. On January 31, 2001, this stock closed at $18.60 per share. Afterwards, this stock proceeded to test its support level and closed at $9.97 on March 30, 2001. This stock broke through its support level in April 2001, and then slowly proceeded in upward direction. On July 31, 2001, this stock closed at $6.70 per share. We rate this stock a speculative long-term buy. Investors who already own this stock may add to their position. Microsoft Corporation (NASDAQ symbol: MSFT) is the largest maker of software. The operating system made by Microsoft is used in the majority of computers. The company has no debt and has approximately $17 billion in cash and short- term investments. Although these timely stock may not appreciate at previous fast pace, it could generate a gain of 700% in six years. This stock will be held long-term, at least five years. On December 29, 2000, this stock closed at $43.38 per share and we rated it a screaming buy. This stock closed at $66.19 per share on July 31, 2001. If this stock were to break through its support level of $60.79, it could fall to $57 per share by August 11, 2001, and at such level would be a strong buy. Buy this stock and hold long-term. Motorola Inc. (NYSE symbol: MOT) is a major supplier of cellular phones, semiconductors, and pagers. The stock of Motorola continued to fall and reached an intra day low of $14 per share, an eight year low, on March 22, 2001. This stock is trading at such a low level, as if the U.S. economy were to enter a recessionary stage, even though it may not. Christopher Galvin who is the CEO of Motorola, could once again steer the company on a path of high growth and profitability. The stock of Motorola was held in our Model Portfolio between February 1995, and April 1997. On April 23, 1997, all 50 shares of Motorola were sold at $57.50 per share, with a loss of 5%. On the same day, the funds received from the sale of shares of Motorola were used to buy 50 ADRs of Nokia Corporation at $58.88. To cover the balance of this trade, $179.85 of cash was deducted from the cash position in our Model Portfolio. The stock of Motorola is great for trading. In our opinion, this stock could reach $50 per share in the year 2002, and once it does it will be sold. On July 31, 2001, this stock closed at $18.69 per share. Buy this stock on dips and hold until it reaches our target level. Nokia Corporation (NYSE symbol: NOK) is the world’s largest manufacturer of mobile phones. The Company is located in Finland, with subsidiaries in the United Kingdom and China. Nokia derives 56% of its revenues from sales in Europe and 44% from sales in other continents. The long-term outlook for Nokia is excellent, as the demand for company’s products grows worldwide. The Company issued a 2-for-1 split on April 16, 1998, one on April 11, 1999, and a 4-for-1 split on April10, 2000. ADRs of Nokia Corporation closed at $21.81 on July 31, 2001. These ADR’s could pull back to $17 by August 6, 2001, and at such level would be a screaming buy. Buy these ADRs and hold long-term, at least seven years. Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. During the past four months this stock has fallen to a low level, due to the fear of a slowdown of orders for fiber-optic network equipment. The stock is way off from its high of $86 per share. Although this stock could trade at a low level during a quarter, or two, as soon as the growth of revenues reaches approximately 50%, perhaps next year, this stock may once again resume its strong upward trend. Until last month, we were estimating that this stock could revisit its high of $86 per share in less than twelve months. Due to the continued slow-down, it could take this stock two years to reach such level. The Internet is not going away. Quiet the opposite is happening. Each month millions of new users are accessing the Internet. This greatly increases the demand for bandwidth therefore the demand for the equipment made by Nortel Networks will continue to grow worldwide. After the company announced that it will take a restructuring charge of $19.2 billion the stock fell to new low level. On July 31, 2001, this stock closed at $8 per share and we maintain our rating of screaming long-term buy. One hundred shares of Nortel Networks will be held in our Model Portfolio until the stock reaches approximately $80 per share and then this stock will be sold. Office Depot, Inc. (NYSE symbol: ODP) is a major retailer of office products, with stores located in the United States and Canada. Sold. All four hundred shares of Office Depot, Inc., were sold on July 27, 2001, at $12.75 per share. (read: Sold). Oracle Corporation (NASDAQ symbol: ORCL) is the world’s second largest software company. The company makes database management system software. Approximately 90% of corporate Web sites are using Oracle’s database software. In the year of 1999, Oracle Corporation consolidated its computer system from approximately 40 locations around the world, down to two locations. The company launched its Internet store and all of its sales will be made through this online storefront. Oracle Corporation has already achieved annual savings of $1 billion from this E-engineering. This stock fell from its 52-week high of $46.47 to as low as $13 per share. Once the summer rally starts, this stock could break through its recent resistance level and reach approximately $25 per share, perhaps in July 2001. As soon as this stock reaches our target level of approximately $25 per share, all of the shares will be sold immediately and the cash will be added to the existing cash in our Model Portfolio. On July 31, 2001, this timely stock closed at $18.08 per share. This stock could pull back to approximately $15 per share by August 4, 2001. Buy this stock on pull back and sell as soon as it reaches approximately $25 per share. Pfizer, Inc. (NYSE symbol: PFE) is a diversified manufacturer of pharmaceuticals and consumer products. Among its brand name pharmaceutical products is Norvasc for hypertension and Zoloff for depression. The latest addition is Viagra, a pill for erectile dysfunction. The company issued a 3-for-1 stock split on June 30, 1999. Warner-Lambert agreed to be acquired by Pfizer, Inc. The shareholders will receive 2.75 shares of Pfizer stock for each share of Warner-Lambert stock. The deal is valued at $85 billion. After the merger is completed, Pfizer, Inc., will become a pharmaceutical behemoth with extensive R & D department. The long-term outlook for the company is excellent. On July 31, 2001, this stock closed at $41.22 per share. Buy this stock on dips and hold long-term. Sun Microsystems, Inc.(NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce new servers, competitively priced, in order to expand its market share. Sun Microsystems revenues have doubled during the past three years, to $19 billion. In our opinion, the company could attain a greater market share during this economic slowdown, and once again double its annual revenues in three years. As additional hundreds of millions of users access the Internet, the demand for servers could grow 50% annually during the next five years. This stock will be held in our Model Portfolio approximately three years, and as soon as it generates a gain of 400%, all of the shares will be sold. On July 31, 2001, this stock closed at $16.29 per share and we rate it a strong buy. Vertical Net, Inc., (NASDAQ symbol: VERT) is an Internet incubator that owns and operates 55 Websites designed as online business-to-business communities. These Websites, known as vertical trade communities are grouped in several industry sectors such as Advanced Technologies, Communications, Environmental, Food and Packaging, Food Service, Healthcare, Manufacturing and Metals, Textile and Apparel, and Service. This stock was featured in our “Buy & Sell” section in August 2000. At that time, we have stated that this stock could fall to approximately $35 per share. Furthermore, we have stated that the risk of owning this B2B start up is high; therefore this stock could only be bought by speculators. Who would have known then that this stock would break through a $35 level and reach a ridiculously low price of $2.68 per share on February 23, 2001. In August 2000, we have stated that this stock could ascend to $140 per share, short-term. We maintain our price target level, but it could take this stock approximately two years to reach it. Once again, we would like to reiterate that this stock is not for the faint of heart and may be bought only by speculators. These two hundred shares will be held in our Model Portfolio until the stock reaches approximately $140 per share, and then these 200 shares will be sold to lock in long-term capital gain. On July 31, 2001, this stock closed at $1.39 per share and we rate it a speculative screaming buy. WorldCom, Inc., (NASDAQ symbol: WCOM) has already grown from a small telecommunications provider to a behemoth, through mergers and acquisitions. This stock is down from its high of $52.50 per share. On September 14, 1998, World Com merged with MCI Communications Corporation. Once this merger was finalized, World Com was in possession of one of the worlds largest and most advanced digital networks that connect local markets in the United States to more than 280 countries and locations worldwide. On August 4, 1998, the company acquired a 51.79% voting interest and 19.26% economic interest in Embratel, a national telecommunications provider in Brazil. World Com plans to continue expanding globally through mergers and acquisitions. In our opinion, at the recent price level this stock is undervalued and has a potential to reach $50 per share during the next twelve months. As soon as this stock reaches our target level of $50 per share, all one hundred shares will be sold to lock in a probable short-term gain of approximately 120 percent. On July 31, 2001, this stock closed at $14 per share and we maintain our rating of a strong buy. Yahoo Inc., (NASDAQ symbol: YHOO) is a global Internet media company that provides comprehensive information and shopping services to over 140 million users worldwide. The company’s Website www.yahoo.com is the most visited site and has the highest name recognition. Yahoo Inc., continues to provide the widest choice of content that has generated an average of 465 million page views per day in December 1999, an increase of 178 percent from December 1998. The Company provides Web content around the world in 12 languages. As the advertising market on the Web continued to grow, in the fourth quarter of 1999, there were 3,550 advertisers, versus 2,225 in the same quarter of 1998. Average revenue per advertiser rose to $57,000 in the fourth quarter of 1999, from $34,000 in the fourth quarter of 1998. Advertising revenues on the Web in the United States alone are projected to reach over $8 billion annually in two years. Yahoo Inc., could receive 20 percent of these revenues; thus we estimate that the company’s annual revenue could grow to approximately $1.6 billion in the year 2002. Yahoo Inc., is among the few Internet companies that already generate positive cash flow. We project that this stock could rise twenty-fold from present level, during the next four years. The risk of owning this stock is above average and it is not for a timid investor. This timely stock will be held in our Model Portfolio until it reaches our target level of $300 per share and then these one hundred shares will be sold. On July 31, 2001, this stock closed at $17.62 per share and we rate it speculative, strong long-term buy. Back to Top |
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Sold On July 25, 2001, three hundred shares of Boston Scientific Corporation (NYSE symbol: BSX) were sold at $18.16 per share. Two months ago we downgraded this stock to accumulate from a buy. Short-term, this stock may not reach our target level of $25 per share, therefore a decision was made to sell this stock and use the proceeds to buy more shares of two tech stocks. Three hundred shares of BSX were bought over a year ago, on February 7, 2000, at $18.88 per share. Although this stock was sold at a slight loss, the cash received from this sale allowed us to buy more shares of two tech stocks that have fallen to ridiculously low levels. On July 27, 2001, four hundred shares of Office Depot, Inc. (NYSE symbol: ODP) were sold at $12.75 per share. This stock was bought on June 28, 2000, at $6.25 per share, with initial objective to hold it long-term, until it reaches approximately $19 per share. The price of this timely stock has run up recently and a decision was made to sell it and lock in our long-term gain. Net cash of $5,082 received from the sale of four hundred shares of Office Depot, Inc., was added to the existing cash in our Model Portfolio and it will be used to buy tech stocks by the end of September, or beginning of October 2001. Bought On July 25, 2001, part of the cash was used to buy 200 ADR’s of Nokia Corporation (NYSE symbol: NOK) at $19.18. Due to the negative outlook for this sector these ADR’s fell to their lowest level in two years. If the summer rally were to start in the second week of August and if Nokia Corporation were to participate in this short rally, these ADR’s could reach a high of approximately $35 before September 6, 2001. Once these ADR’s reach such high level, 200 ADR’s of Nokia Corporation that were bought on July 25, 2001, will be sold immediately to lock in a short-term gain. The cash received from the sale of these ADR’s will be added to the existing cash in our Model Portfolio. Balance of cash was used to buy 200 shares of Nortel Networks Corporation (NYSE symbol: NT) on July 25, 2001, at $7.58 per share. Due to the recent write-offs, a charge of $19.4 billion and a negative short-term outlook for this sector, this equity fell to a 52-week low of $7.25 per share on July 24, 2001. We are maintaining our rating of a screaming long-term buy for this stock. This stock is for patient investors because it may take approximately two years until it reaches our target level of $80 per share. Now there is a total of 300 shares of Nortel Corporation in our Model Portfolio and the average cost basis is $10.91 per share. After these trades, there is $5,753 of cash left in our Model Portfolio. During the past seven months, several old economy stocks were sold and now our Model Portfolio is heavily weighed in tech stocks. The risk of such asset allocation is much greater than owning a portfolio of stocks in several different sectors. Back to Top |
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Model Portfolio Chart 7-31-2001
a) The quantity of shares was adjusted for a 100% stock dividend issued by Intel Corporation on June 22, 1995, a 2-for-1 stock split issued on July 14, 1997, a 2-for-1 stock split issued on April 11, 1999 and a 2-for-1 stock split issued on July 30, 2000. (There were 480 shares of INTC on October 29, 2000. On October 30, 2000, two hundred shares were sold and now there are 280 shares). c) The quantity of shares was adjusted for a 100% stock dividend issued by Applied Materials, Inc. on October 14, 1997 and a 2-for-1 stock split issued on March 16, 2000. d) The quantity of ADR’s was adjusted for a 2-for-1 split issued by Nokia Corporation on April 16, 1998, a 2-for-1 split issued on April 11, 1999, and a 4-for-1 split issued on April 10, 2000. e) The quantity of ADR’s was adjusted for a 2-for-1 split issued by Ericsson Telephone on May 22, 1998, and a 4-for-1 split issued on May 8, 2000. h) The quantity of shares was adjusted for a 2-for-1 stock split issued by Microsoft Corporation on March 26, 1999. i) The quantity of shares was adjusted for a 3-for-1 stock split issued by Pfizer on June 30, 1999. j) The quantity of shares was adjusted for a 2-for-1 stock split issued by Cisco Systems, Inc. on March 23, 2000. k) Two hundred shares of Delia’s, Inc., were bought in December 1999, at $7.19 per share. After Delia’s, Inc., merged with i Turf, Inc., these shares were converted into newly issued stock and now there are 342 shares in our Model Portfolio. The original acquisition cost has been adjusted to $4.20 per share. After the trades done on March 20, 2001, and the recent trades done on July 25, 2001, our Model Portfolio is heavily weighed in tech stocks. The risk of such asset allocation is much greater than owning a portfolio of stocks in several sectors. Furthermore, more stocks will be held short-term. Although it is not likely that a typical investor will acquire all of the stocks that are in our Model Portfolio, each investor has to be aware beforehand that short-term trading is risky, and will greatly increase tax liability. Between April 1994 and July 1998, a total of $28,336 of cash was invested in the Model Portfolio. Due to the excellent performance of the technology stocks, over the course of six years the total value of the portfolio has risen to $145,374 as of June 30, 2000. Our Model Portfolio has generated a gain of $117,038, or 413 percent in just six years (as of June 30, 2000). Investors who are just starting out should not be deterred by the size of our Model Portfolio. Notice that a total of $28,336 was invested over the course of four years, averaging an investment of $7,000 per year. Investors who are just starting out could invest as little as $2,000 each year, but be consistent and invest that amount every year. After several years, investor could have a portfolio consisting of several blue-chip stocks. Back to Top |