February 2001
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Contents Back Issues Oct. 2000 Nov. 2000 Dec. 2000 Jan. 2001 Investing Buy & Sell Stocks for traders Model Portfolio Sold Bought Model Portfolio Chart |
Investors will remember the year 2000 for a long time. At the beginning of the year, the market continued its strong upward trend and it seemed that there was no end in sight. On March 9, 2000, Nasdaq Composite index closed above the 5000 level for the first time and finished the day at 5046.86 points, with a gain of 149.60 points, on a heavy volume of 1.9 billion shares. Tech stocks such as Cisco Systems (continued in: Investing). As the price of oil fell to $12 a barrel in 1998, oil producers curtailed their oil exploration and as a result, the revenues of oil drillers fell as much as 40 percent. Throughout the year 2000, the price of oil has risen sharply and reached $37 a barrel. The demand for services of oil exploration companies (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. 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. (continued in: Stocks for traders). Albertson’s, Inc. (NYSE symbol: ABS) is the second largest food-drug chain in the United States. After the merger with American Stores Company that was finalized on June 23, 1999, Albertson’s operates over 2,400 stores in 38 states. Among the stores operated by the Company are Albertson’s, Save-On, Osco Drug, Lucky Stores, Jewel, and Acme Markets. The merger will allow the Company to achieve greater ( continued in Model Portfolio). |
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Investing Investors will remember the year 2000 for a long time. At the beginning of the year the market continued its strong upward trend and it seemed that there was no end in sight. On March 9, 2000, Nasdaq Composite index closed above the 5000 level for the first time and finished the day at 5046.86 points, with a gain of 149.60 points, on a heavy volume of 1.9 billion shares. Tech stocks such as Cisco Systems, Sun Microsystems, EMC Corporation, and Intel propelled the index to lofty levels. Many of the tech stocks were trading at valuation levels as high as 100 times earnings. Analysts continued to justify these sky-high valuation levels due to the high growth of revenues, and earnings. That was less than a year ago! Now, some of these tech stocks are down 50% from their 52-week high and analysts are still downgrading them. There were many investors who bought these stocks at high levels, with intention of holding them long-term. In our opinion, these investors should continue to hold these blue-chip tech stocks long-term and if they have cash on the sidelines, should buy more shares at the recent low levels. In June 2000, fifty shares of Lucent Technologies were bought at $57.88 per share and added to our Model Portfolio. Who would have known then, that this stock could continue to fall and reach a 52-week low of $12.21 per share. On October 30, 2000, an additional 200 shares of Lucent Technologies were bought at $20.75 per share and added to our Model Portfolio. We remain optimistic about this stock. This equity is for patient investors who are willing to wait approximately two years for the stock to reach $80 per share. As soon as this stock reaches our target level, one hundred and fifty shares will be sold, and the remaining 100 shares will be held long-term, at least ten years. We will never know what caused the recent bear market. Was it the six-interest rate hikes initiated by the Fed, the high price of oil, or the slow down in the manufacturing sector due to the inclement winter weather? Perhaps all of these factors played a role in bringing the market down from its lofty level. Several months ago, we have stated that in our opinion the Fed had over tightened and should soon reverse its course and start easing. In our opinion, the Fed waited too long, but finally on January 3, 2001, the Fed cut rates by 50 basis points, or half a percent. On January 31, 2001, the Fed followed through with another rate cut and lowered interest rates by an additional 50 basis points, or half a percent. The Fed eased by 100 basis points, or a full one percent in January. Alan Greenspan could continue to cut rates throughout the following months. In our opinion the Nasdaq Composite index could continue to trade in a narrow range through the first half of this year. We anticipate that the Fed could continue to ease and the Fed funds rate could fall to 4.75% by May 2001. Furthermore, if President George W. Bush initiates his tax cuts and these get approved, the psychological affect alone could improve consumer confidence, prompting the public to continue purchasing durable goods and we may not have a recession. If such optimistic scenario were to occur, the market could start rebounding by the second half of this year. We remain very optimistic about the tech sector, because this is the sector where revenues and earnings could continue to grow in double-digits. In our opinion, tech stocks could continue to outperform the market and some of the stocks in this sector could generate short-term return of 100%, or higher, but investors have to be very selective. This is the time of the year when the taxpayers start rummaging through their files to gather all of the necessary paperwork to fill out their Income Tax return. Individuals have to pay attention and make sure that they claim all of the available deductions. Here are some of the things you can do. First of all, gather all of your paperwork. Provide your tax preparer with a copy of your last year’s tax return and your W-2 form. Don’t forget to deduct mortgage interest, and taxes paid on your residence. Also, be sure to provide your tax preparer with a list of medical expenses, if you had any. Second of all, make sure you deduct your IRA (Individual Retirement Account), or 401 (k) contributions. If you have not made a contribution for the past year, you may still contribute $2,000 to your IRA before you file your Tax return, but not later than April 14. Furthermore, taxpayers who are married can contribute $2,000 to their own IRA, and $2,000 to an IRA established for a spouse who is not employed. Third of all, consider converting your existing IRA to a Roth IRA. Such a conversion will be considered a taxable distribution from your IRA and will be taxable, but will not be subject to the 10 percent penalty for early withdrawal. The taxable amount on the regular IRA that was converted into a Roth IRA will be due in the year when the conversion was done. One of the biggest advantages of a Roth IRA is that no taxes are due on qualified withdrawals, while withdrawals from traditional IRA are taxable. Before you convert your traditional IRA into Roth IRA discuss it with your financial planner, or a CPA An investor does not have to convert all of the assets at once from the traditional IRA to a Roth IRA. Each year, a partial conversion may be made, in the amount of $10,000 or less, in order to minimize the tax consequences. Once again, each scenario is different therefore this should be discussed with a CPA. It is not too early to start planning for the next year. Ask your tax preparer what you can do. Perhaps you may contribute more to your 401(k)-retirement plan. Improve your record keeping and be prepared. Do not wait until late March to have your tax return prepared. At that stage your tax preparer may be very busy and may not spend more than an hour preparing your return, thereby missing some tax deductions. Remember, every tax dollar saved and invested may grow to $8 ten years later, or $64 after twenty years. Make sure that you claim all of the tax deductions due you because every $1,000 saved in taxes and invested today could grow to $64,000 after twenty years. Back to Top |
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Buy & Sell
As the price of oil fell to $12 a barrel in 1998, oil producers curtailed their oil exploration and as a result, the revenues of oil drillers fell as much as 40 percent. Throughout the year 2000, the price of oil has risen sharply and reached $37 a barrel. The demand for services of oil exploration companies continued to grow, and along with it, the revenues proceeded to reach lofty levels. As earnings improved, a majority of stocks in this sector generated a gain of approximately 50% in the year 2000. Over the course of the past eight weeks the price of oil proceeded to fall and if it were to reach approximately $20 a barrel during the next five months, oil producers may once again curtail their outsourcing for oil exploration and the revenues of the companies in this sector could contract. In our opinion, a majority of stocks in this sector are fully valued, therefore the upside potential for appreciation of these equities is low. On the other hand, all it takes is a single negative event such as the renewed violence in the middle-east, and if it were to escalate, the price of crude oil could once again reach $37 a barrel and the revenues of the companies in this sector could continue to expand. Due to the narrow exposure to the oil exploration, the stocks of companies in this sector are very volatile and as the oil companies are affected positively, or negatively by the price of crude oil on the open market, the earnings of the companies in this sector could change drastically within a short time frame. Atwood Oceanics, Inc. (NYSE symbol: ATW) along with its wholly owned subsidiaries, provides offshore drilling. The company also develops oil and gas wells. In addition to these services, the company provides management and consulting services. Atwood Oceanics, Inc., owns and operates seven mobile offshore rigs and one modular platform rig. In addition, the company also has a 50 % interest in a latest generation platform rig. The company also manages the operations of two operator-owned platform rigs in Australia. Atwood Oceanics, Inc., conducts operations in the territorial waters of Australia, Egypt, Israel, Malaysia, Philippines, India and the United States. Among the company’s major customers are, Shell Philippines Exploration BaV/ Sabah Shell Petroleum Company Limited, British-Borneo Petroleum, Inc., ESSO Australia Limited/ESSO Production Malaysia, Inc., and Mobil Equatorial Guinea, Inc. As of September 30, 1999, there were 13,649 shares outstanding. The annual revenues edged lower, to $150 million for the fiscal year ended September 30, 1999, down from $151.8 million for fiscal 1998. For fiscal 1999, the company reported a net income of $27.720 million, or $2.01 a share, down from $39.364 million, or $2.84 a share for fiscal 1998. The shareholder equity rose to $192.229 million, from $163.766 million for fiscal 1998. As of September 30, 1999, long-term debt was $54 million, down from $72 million a year earlier. During fiscal 1999, utilization rate for in-service rigs fell to 77%, down from 100% for 1998. Atwood Oceanics, Inc., is engaged in offshore contract drilling for major oil and gas exploration companies. The duration of the contracts range from one year to three years. As the utilization rate fell during fiscal 1999, it immediately placed a downward pressure on earnings. In our opinion, the risk in this sector is such that if the company were not able to utilize a majority of its oil exploration rigs, it could post a loss for a particular fiscal year. During the quarter ending December 31, 1998, the stock reached a high of $61.63 per share and then proceeded to descend. A year later, during the quarter ending December 1999, the stock fell to a low of $15.88 per share. As the earnings improved, in April 2000, this stock reached an intra-day high of $69.87 per share and then once again proceeded to fall. On December 14, 2000, this stock reached an intra-day low of $32.95 per share, then reversed its downward trend and reached an intra-day high of $45 per share on December 28, 2000. In our opinion, there is a strong probability that this stock could once again test its low of $32.95 during the next two months. If this stock were to break through its support level of $32.95 per share, it could fall to $20 per share. Speculators should monitor this stock closely. Once this equity reaches its bottom, speculators could buy it for a short-term trade. Afterwards, if this stock were to appreciate by 50% in less than three months, speculators should sell it immediately to lock in their gains (on January 31, price $42.11, dividend Nil, and P/E 25). Barnwell Industries, Inc., (ASE symbol: BRN) is engaged in business of exploring for, developing, producing, and selling oil and natural gas in Canada. In addition, the company holds land leases in Hawaii, and also drills wells and maintains water wells in Hawaii. (or: and also drills and maintains water wells in Hawaii). The company’s headquarters are located in Honolulu, Hawaii. In December 1998, the company commenced delivery of natural gas through a natural gas pipeline running from Alberta, Canada, to Chicago, Illinois. This pipeline is capable of delivering over 700 million cubic feet of natural gas per day, and has allowed the company to increase the penetration of the U.S. market. Independent petroleum engineers estimated that as of September 30, 1999, the company’s proved developed oil and natural gas properties are projected to generate future after-tax net cash flows of approximately $48,600,000. Such projections were based on current prices and assumed no price increases. In general the prices for oil and natural gas usually increase over the life of the reserves. As of September 30, 1999, there were 1,316,952 common shares outstanding. Barnwell Industries, Inc., had an excellent year. For the fiscal year that ended September 30, 1999, revenues rose to $15.160 million, from $11.920 million for 1998. The company reported a net income of $520,000, or $0.39 a share for fiscal 1999, versus a loss of $3,890,000 or $2.95 a share for fiscal 1998. During fiscal 1999, contract drilling revenues rose to $4.23 million, an increase of $2.72 million, or 180%, from $1.51 million for fiscal 1998. The drilling expenses increased $1,556,000, or 85%, to $3,378,000 in fiscal 1999, versus $1,822,000 in fiscal 1998, due to additional contracts for the Hawaii Scientific Drilling Project and a geothermal well. As a result, the company reported operating profit before depreciation of $852,000 for fiscal 1999, versus a loss of $482,000 in fiscal 1998. During fiscal 1999, the company has drilled 15 wells, 13 of which were successful. This stock is thinly traded and on some days as few as 500 shares change hands. In January 2000, this stock traded as low as $12.75 per share. Since then, the stock has built a strong upward momentum and on December 28, 2000, closed at a high level of $21 per share. This stock is trading at a historically high level. At this level only speculators could consider buying this stock for a short-term trade. If this stock does not break through its resistance level of $17 per share, it could maintain its upward trend and reach $26 per share during the next two months (on January 31, price $18.50, annual dividend $0.25, yield 1.4%, and P/E 14). Dynamic Oil & Gas, Inc., (NASDAQ symbol: DYOLF) is a natural gas company operating in Canada. In addition, the company also distributes natural gas liquids. Dynamic Oil & Gas, Inc., owns an interest in eighteen active gas wells. Furthermore, the company has an average working interest of 50% in additional eighteen gas wells, and a 25% working interest in six oil wells. As of June 30, 2000, there were 19.709 million shares outstanding. The annual revenues rose to $15.77 million for fiscal 2000, an increase of 66% from $9.495 million for fiscal 1999. Net income rose to $4,079 million, or $0.21 a share, up from $1.212 million, or $0.06 a share for fiscal 1999. During fiscal 2000, the prices of natural gas have risen above historic levels and this has contributed to the high growth of revenues and earnings. The company acquired Orion, a 23,328 acre exploration property located in northeast British Columbia, for $1.6 million. This newly acquired exploration property has the potential to greatly expand the company’s reserve base of natural gas. During fiscal 2000, the average return on equity rose to 41%, an increase of 141% over 17% for fiscal 1999. The management plans to extract full intrinsic value out of the company. During fiscal 2000, the company acquired a new, high-end seismic computer that will significantly reduce the time for interpreting large, 3-D seismic programs. Furthermore, the company has computerized its database of land records, lease obligations and detailed land agreements. As the demand for natural gas and natural gas liquids continues to grow, the cash flow could continue to rise significantly. In January 2000, this stock fell to a low level of $1 per share. Throughout the year this stock has traded in a very narrow range, between $1 and $1.63 per share. Finally, on December 29, 2000, this stock reached an intra-day high of $2 per share. In our opinion, this stock is fully valued and should be sold (on January 31, price $1.59, and P/E 8). Midcoast Energy Resources, Inc., (ASE symbol: MRS) transports, gathers, processes and markets natural gas and other petroleum products. The company owns and operates approximately 80 pipeline systems that cover almost 4,000 miles. Midcoast Energy Resources, Inc., conducts its operations in the Gulf Coast and Midwest. The company has over 80 natural gas liquids and crude oil tank trucks, and railcars. Midcoast’s headquarters are located in Houston, Texas. The company has regional offices in Alabama, Kansas, Louisiana, Mississippi, and Alberta, Canada. As of December 31, 1999, the company had 223 full-time employees, and there were 9.2 million shares outstanding. The company had another great year. For the year ended December 31, 1999, revenues rose to $391.571 million, an increase of 67% from $234.069 million for 1998. Net income rose to $14.2 million, or $1.51 a share, from $9.1 million, or $1.25 a share for 1998. Shareholders equity rose to $160.7 million, from $66.3 million for 1998. In 1989, long-term debt rose to $240 million, a 207% increase from $78 million in 1998. Midcoast Energy Resources, Inc., completed over $235 million in acquisitions in 1999. The biggest acquisition was the purchase of Kansas Pipeline Company for $195 million, that has almost doubled Midcoast’s asset base. The company purchased Calmar natural gas gathering and treating plant in Alberta, Canada. In addition, the company purchased the Manyberries crude oil gathering pipeline and Provost natural gas gathering pipeline system in Alberta, Canada. In March 1999, Midcoast acquired a 70% interest in Sea Crest Pipeline, L.L.C., that owns a 165 mile natural gas gathering pipeline located off the Louisiana and Texas coastlines. During the past four years, the company has acquired various pipeline systems for a total cost of $368.9 million. These acquisitions have been funded partially by four common stock offerings that generated a total net proceeds of approximately $128 million, and through bank financing. The company’s long-term debt to total capitalization ratio rose to a high level of 60% by December 31, 1999. In December 2000, this stock reached an intra-day low of $15.25 and then proceeded slowly in the upward direction. By the end of December 2000, this stock reached an intra-day high of $22.25 per share. As the prices of natural gas continue to rise, the revenues and earnings could continue to grow and the stock could reach approximately $30 per share during the next twelve months. Patient investors may hold this stock (on January 31, price $21.02, annual dividend $0.28, yield 1.3%, and P/E 15). Transocean Sedco Forex, Inc., (NYSE symbol: RIG) is the world’s major oil contractor that provides the most deepwater oil-drilling units in the industry. The company’s off-shore drilling rigs are located throughout the U.S. Gulf of Mexico, Canada, Brazil, United Kingdom, Norway, Africa, Middle East and Asia, in some of the harshest environments. Out of the 73 mobile offshore drilling rigs, 22 rigs are capable of drilling to the depths of 3,000 feet. Transocean Sedco Forrex’s drilling rigs are located throughout the world, therefore the company can limit the distance at which the rigs must travel to reach the customers drilling site. As of December 31, 1999, there were 110 million shares outstanding. Due to the underutilization of the offshore drilling rigs, the revenues fell to $648.2 million for 1999, down from $1.1 billion for 1998. Net income fell to $58.1 million, or $0.53 a share, down from $341.6 million, or $3.12 a share for 1998. As the utilization rate of the company’s offshore drilling rigs continues to rise, the earnings could continue to grow and rebound to the high level of $3.12 a share reached in 1998. Furthermore, the company could continue to expand through acquisitions. In November 2000, the stock of Transocean Sedco Forex, Inc., reached a high of $55.50 per share and then proceeded to descend. In December 2000, the stock reached a low of $35 per share. Afterwards, the stock proceeded to ascend and reached an intra-day high of $47.30 on January 2, 2001. This stock could once again test its support level of $35 per share. If the stock were to reach this low level in February, speculators could buy it and then sell it as soon as it reaches approximately $45 per share, for a probable short-term gain of approximately 29% in less than three months (on January 31, price $45.45, annual dividend $0.12, yield 0.3%, and P/E 88). 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. 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, way down from its 52-week high of $90.38. On January 31, this stock closed at $24.75 per share. This stock could test its support level of $19.80 per share and then once again resume its upward trend. In our opinion, due to the strong demand for cellular phones and handheld wireless devices the demand for chips made by LSI will continue to grow. While the long-term outlook for LSI Logic is positive, we recommend this stock to speculators to buy it now and sell as soon as it reaches approximately $60 per share for a probable short-term gain of 200 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. For the fiscal 2000, ended March 31, 2000, revenues rose to $6.1 billion, from $4.666 billion for fiscal 1999. Net income rose to $696 million, or $1.25 a share, from $626 million, or $1.11 a share for fiscal 1999. The Company took a charge of $800 million for purchased research and development. In our opinion, without this charge earnings could have been as high as $2.68 a share. Computer Associates International acquired Platinum Technology International for $3.5 billion in cash. The Company also acquired Sterling Software, Inc. As of March 31, 2000, total outstanding debt reached $5.4 billion. During fiscal 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 52-week high of $79.44 in January 2000, the stock proceeded to descend and closed at $24.78 per share on July 31, 2000. On September 7, this stock closed at $32.55 and then proceeded to fall. The stock retested its low of $25 on September 21, and then proceeded to ascend to $33.30 per share on November 2, 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. Last month this timely stock proceeded to establish a strong upward trend and closed at $37.50 per share on January 30, 2001. This stock could once again test its support level and may fall to approximately $27 per share. As this timely stock nears this level, it should be bought by speculators and held until it reaches our target level of $78 per share. Once this stock reaches our target level, it should be sold immediately to lock in the short-term gain. In our opinion, this timely stock has potential to revisit its 52-week high during the next six months. 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. CMG Ventures III that was launched in 1998 has a minority interest in Raging Bull www.ragingbull.com a web site dedicated to investors, and a minority interest in Virtual, Inc. 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. David Wetherell, who is a CEO of CMGI, Inc., continues to steer the company on the Internet path to high growth. In our opinion, the best decision was to form a strategic partnership with Compaq Computer Corporation (NYSE symbol: CPQ). CMGI, Inc. acquired a majority stake in Alta Vista, while Compaq retained 17% equity ownership in the Alta Vista business. Through this partnership, both companies plan to establish Alta Vista as one of the worlds leading Internet networks. 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. Although the stock of CMGI is trading at a high P/E ratio, in our opinion earnings could grow 60% annually and bring the price to earnings ratio down to a reasonable P/E 50 in two years. 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 three years. This stock has been in a downtrend since March 2000. On September 27, 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 $5.59 per share on December 29, 2000. This stock could reach approximately $90 per share during the first half of 2001. On the other hand, this is a very conservative target level and there is a probability that this stock could test its previous 52-week high of $163.50 per share toward the end of 2001. Although patient investors could acquire this stock and hold it long-term, due to the high volatility and a wide trading range, this stock could be traded by speculators. On January 31, this stock closed at $6.13 per share and we maintain our rating of screaming buy on this speculative stock. We are very optimistic about the stocks of Internet incubators such as CMGI, Inc., and Internet Capital Group. On October 30, 2000, two hundred shares of Internet Capital Group were bought at $11.63 per share and added to our 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, 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 52-week 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. 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 August 31, this stock closed at $37.63 per share. During September this stock proceeded to descend, broke through our initial target level of $24 per share and closed at $23.63 on September 29, 2000. Three months ago, we have stated that this stock could test $18 level. On October 18, AMD closed at $18.125 per share and then proceeded in the upward direction. During the sell-off in chip stocks, this stock closed at $13.81 per share on December 29, 2000. On January 31, 2001, this timely stock closed at $24.60 per share and we rate it a strong buy. During the first half of 2001, AMD could reach approximately $81 per share and speculators should sell it immediately to lock-in a probable gain of 250 percent, or higher. Unisys Corporation (NYSE symbol: UIS) is a major provider of customer services and information services. The Company makes network servers and software. Unisys derives 67 percent of revenues from services, where profit margins are much higher than margins on hardware. The Company projects that in a few years, services business could generate approximately 75 percent of annual revenues. In September of 1999, the stock reached a high of $49.68 and then during the following months fell below $25 per share. In February 2000, the stock proceeded to revisit its high, but due to strong resistance at $35 level proceeded to descend once again. Due to the sell-off in the tech sector, this stock continued to descend in July and closed at $9.54 per share on July 27. This stock could retest its recent high, but in our opinion will find strong resistance at $20 level. Nevertheless, if this were to happen, it could provide speculators with a short-term gain of approximately $7.25 per share, or 60 percent, during the next six weeks. On the other hand, patient investors could buy this stock now and hold until it revisits its previous high of $49.68 per share reached during September 1999. As the services business continues to grow, profit margins could accelerate and the earnings for the year 2001 could rise above $2 a share, the stock could break through the previous high and provide investors with a probable gain of $40 per share, or 300 percent in approximately one year. This stock was included in our section Stocks for traders, in July 2000. Since then the stock fell an additional five points and on July 31, closed at $9.68 per share. After testing its bottom in July, this stock proceeded to reverse its downtrend and closed at $13 per share on August 31, 2000. This stock rose to $14.38 on September 8, 2000. Afterwards, the stock proceeded to fall and found strong support at $10.18 on September 26, 2000. This timely stock is trading at a low P/E multiple. On January 31, this timely stock closed at $17.16 per share. We still rate this stock a strong short-term buy and a screaming long-term buy, depending on the objective and the time frame of the investor. Boston Scientific Corporation (NYSE symbol: BSX) is one of the worlds leading companies that designs and markets 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. Afterwards, the stock proceeded to fall at a fast pace and by October 1999, fell to an intra-day low of $17.55 per share. Recently this stock proceeded to ascend and reached $19.06 per share on September 11. Afterwards, the stock proceeded to fall and closed at $12.88 per share on November 30, 2000. We have downgraded this stock to accumulate from buy. After reaching $17.43 on January 29, this stock edged lower and closed at $16.76 per share on January 31. Speculators who are willing to wait, could buy BSX at this level and if it were to reach approximately $34 per share by June of 2001, sell it immediately. 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 up $3.38 on March 28, 2000. In April we stated that this stock could pull back to approximately $28 per share and speculators could start accumulating it at that level. On May 8, the stock of Bank One Corporation reached an intra-day low of $28.75 and then resumed its upward momentum. Money is flowing into stocks in this sector and this timely stock proceeded to build a strong upward momentum. On January 31, this timely stock closed at $39.19 per share. We maintain a buy rating on this stock. The Fed started lowering interest rates in January and this should improve earnings in this sector. This stock could reach our target level of $50 per share during the next six months. Once this stock reaches our target level, speculators should sell it immediately. 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, 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 52-week high of $94.63 per share on June 21, 2000 (after the recent 2-for-1 split 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 August 31, this stock closed at $37.63 per share. During September this stock proceeded to descend, broke through our initial target level of $24 per share and closed at $23.63 on September 29, 2000. On January 31, this timely stock closed at $24.60 per share and we rate it a strong buy. In our opinion, this stock could reach approximately $81 per share during the first half of 2001. As son as this stock reaches our target level, one hundred and fifty shares will be sold and the remaining fifty shares will be held long-term. Albertson’s, Inc. (NYSE symbol: ABS) is the second largest food-drug chain in the United States. After the merger with American Stores Company that was finalized on June 23, 1999, Albertson’s operates over 2,400 stores in 38 states. Among the stores operated by the Company are Albertson’s, Save-On, Osco Drug, Lucky Stores, Jewel, and Acme Markets. The merger will allow the Company to achieve greater economy of scale, thus improving profit margins. Last year, on June 1, 2000, the stock closed at $38.87 per share. Three years ago the stock of Albertson’s displayed a similar trading pattern and it could once again repeat itself. Typically, the fourth fiscal quarter that ends in January is the best in this sector. We have revised the time frame that it could take this equity to reach our target level. This stock could reach our target level of $36 per share by February 2001. On January 31, this stock closed at $28.35 per share. As soon as this stock reaches our target level of $36 per share, these 200 shares will be sold immediately. 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. Applied Materials estimates that the market for wafer fabricating equipment could double in two years to $43 billion annually. The long-term outlook for the Company is excellent. On October 14, 1997, and on March 16, 2000, Applied Materials split its stock 2-for-1. On January 31, this stock closed at $50.31 per share. Buy this stock on dips and hold long-term. Boston Scientific Corporation (NYSE symbol: BSX) is one of the worlds leading companies that designs and markets minimally invasive medical devices. The Company makes coronary stents for less invasive treatment of cardiovascular disease. This stock has reached a high of $47.06 per share on July 19, 1999. A month later, the stock proceeded to fall at a very fast pace and by October 1999, fell to an intra-day low of $17.43 per share. On June 30, this stock closed at $21.94 per share and then proceeded to descend. After reaching $19.06 on September 11, this stock proceeded to fall and closed at $12.88 per share on November 30, 2000. On January 31, this stock closed at $16.76 per share. We have downgraded this stock to accumulate from buy. Speculators who are willing to wait, could buy this stock now and if it were to reach our revised target level of $34 per share by May 2001, sell it immediately. 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. Since 1994 the stock of Cisco Systems, Inc. has risen twenty-fold 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 might 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. On March 23, 2000, this stock split 2-for-1. During the past fifteen weeks this stock edged lower. On January 31, this timely stock closed at $37.44 per share and at this level we rate it a strong buy. 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 two years ago, therefore we recommend this stock to patient investors who are willing to hold it at least five years. The Company has efficient manufacturing operation and manages to turn over its inventory of PCs eleven times per year. Compaq sold 83% of interest in Alta Vista Web site to CMGI, Inc. Compaq 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. This stock has a strong potential to gain 500% in five years. 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. Patient investors could buy this stock on dips and hold it long-term. 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, 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. Due to the negative sentiment for this sector, we have revised our short-term target level to $28 per share, from $35 per share. On December 29, 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. Once this stock reaches our revised target level, these 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 January 31, 2001, this stock closed at $3.47 per share and we rate it a speculative buy. This stock will be held in the Model Portfolio until it reaches our revised target level of $25 per share and then all of the shares will be sold. Recently, Delias, Inc. merged with iTurf, Inc. and after the conversion of existing stock into the newly issued shares, now there are 342 shares in the 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. During the past twelve months the price of the stock has almost stood still compared to the previous years. On March 22, the stock reached an intra-day high of $59.68 per share. Then, the stock proceeded to pull back. During summer, sales of computers are slower than at other time of the year. The sales should start rising in September and the stock could reach a new high of $65 per share before the end of this year. Although it is not likely that the stock of Dell Computer will appreciate at such a fast pace as it did during the past five years, in our opinion, the stock could generate a gain of 1,500% in six years. Due to the recent sell-off of box makers, this stock broke through its support level. On November 30, this stock closed at $19.25 per share. The stock continued its downtrend and reached a low of $16.25 per share. Afterwards, this timely stock rebounded from its oversold level to $26.13 on January 31. This stock could test its support level of $20 per share in February 2001, and then once again resume its upward trend and could reach $32 per share in March. 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 rise to over 800 million. The long-term outlook for Ericsson is excellent. ADR’s of Ericsson split 4-for-1 on May 8, 2000. On January 31, ADR’s closed at $11.88. 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. For 1999, revenues rose to $29.4 billion, from $26.3 billion for 1998. Net income rose to $7.3 billion, or $2.11 a share, from $6.1 billion, or $1.73 a share for 1998. The Company continues to switch production to 0.18 micron manufacturing process that yields more semiconductors from each wafer. During the past ten years earnings grew 32% annually. 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 the Model Portfolio. This stock continued to fall and closed at $30.06 per share on December 29. As the institutional investors proceeded to buy this stock, it rebounded and closed at $37 per share on January 31, 2001. Buy this stock on dips 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. Just four months ago, in July 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 52-week high of $212 per share. Afterwards, this stock proceeded to build a slow upward momentum and closed at $6.44 per share on January 31. We rate this stock a speculative strong buy. There is a slight probability that this stock could revisit its 52-week high of $212 per share during the next twelve months. We will monitor this stock closely. As soon as this stock reaches approximately $150 per share, one hundred and fifty shares will be sold immediately, and the remaining fifty shares will be held long-term. 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. During the year of 1999, the stock continued its strong upward momentum and reached a 52-week high of $84 3/16 per share in December. Then, in January 2000, the stock fell at an extremely fast pace and closed at a 52-week low of $49.79 per share. Afterwards, the stock proceeded to ascend and reached an intra-day high of $75.38 per share on March 1, 2000. During the recent correction, the stock tested its bottom again. As the telecommunications providers buy new equipment, the annual revenues of Lucent could grow in double digits and may reach $80 billion in five years, a double from present annual revenues. In our opinion, the long-term outlook for the Company is excellent. On October 30, an additional 200 shares of Lucent were bought at $20.75 per share. Now, there is a total of 250 shares in the Model Portfolio. This stock is for patient investors who are willing to wait two years for the stock to reach $80 per share. As soon as this stock reaches our target level, one hundred and fifty shares will be sold and the remaining 100 shares will be held long-term, at least ten years. Due to the sell-off in this sector, the stock closed at a low of $13.50 per share on December 29, 2000. On January 31, 2001, this timely stock closed at $18.60 per share. We maintain our rating of screaming long-term buy on this large-cap stock. Merck & Co., Inc. (NYSE symbol: MRK) manufactures a variety of pharmaceutical products. Major brand names include Vasotec, Mevacor, Zocor, Crixivan, and Propecia. The Company derives 34 percent of revenues from international sales. Merck continues to spend substantial percentage of gross revenues, on research and development. Merck & Co. split its stock 2-for-1 on February 17, 1999, and now there are one hundred shares in the Model Portfolio. On January 31, this stock closed at $82.18 per share. Buy this stock and hold long-term. 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. For fiscal 1999, ended June 30, 1999, revenues rose to $19.747 billion, from $15.262 billion for fiscal 1998. Net income rose to $7.785 billion, or $1.42 a share, from $4.490 billion, or $0.84 a share for fiscal 1998. Stockholders equity rose to $28.438 billion from $16.627 billion for fiscal 1998. On March 29, 1999, the Company issued a 2-for-1 stock split. The anti-trust trial affected the stock negatively. While the Justice Department accused Microsoft Corporation of wielding a monopoly power, the company denied any wrongdoing. Is the break-up of Microsoft Corporation the only solution? Of course not. As soon as this chapter in Microsoft’s history is closed, the stock could resume its strong upward momentum, but in the meantime this stock will be very volatile. Although these timely shares may not appreciate at previous fast pace, this stock 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 timely stock closed at $61.06 per share on January 31, 2001. Buy this stock on dips and hold long-term. Nokia Corporation (NYSE symbol: NOK) is the world’s second 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. These timely ADRs closed at $34.35 on January 31, and at this level we rate these a screaming buy. Hold these ADRs at least seven years. Office Depot, Inc. (NYSE symbol: ODP) is a major retailer of office products, with stores located in the United States and Canada. The Company also conducts sales through its Web site at www.officedepot.com and through a catalog. For the year of 1999, revenues rose to $10.27 billion, from $9 billion for 1998. Earnings rose to $0.69 a share, from $0.60 a share for 1998. On April 12, 2000, the stock rose to $14 3/16 per share on a heavy volume of 4.45 million shares, and then proceeded to fall. Four weeks later, on May 12, the stock closed at $11 per share, on a low volume of 688,000 shares. Then, on May 26, the stock fell 3 from the previous close, and finished the day at $7.32 per share, on a very heavy volume of 16 million shares. In our opinion, this stock is oversold. On January 31, the stock closed at $10.02 per share. This stock is trading at eleven times earnings, and at this low level we rate it a strong buy. This stock will be held in our Model Portfolio until it reaches our target level of $19 per share, and then all four hundred shares will be sold, for a probable long-term gain of 200 percent. PepsiCo, Inc. (NYSE symbol: PEP) makes soft drinks, Doritos, Sun Chips, Ruffles potato chips and Lays potato chips. For 1999, revenues edged lower to $20.4 billion, from $22.3 billion for 1998. Net income rose to $2 billion, or $1.37 a share from $1.99 billion, or $1.31 a share for 1998. In 1998, PepsiCo acquired Tropicana and several snack chip businesses in Europe, Australia and Chile. In the past forty years, PepsiCo sales grew an average of 16% per year. After the Company had spun-off its restaurants in 1997, the return on assets deployed rose from 9.5% in 1996, to 16.2% in 1997. PepsiCo, Inc. offered to acquire Quaker Oats Company for $13 billion in stock. If this offer were accepted, PepsiCo would become the largest supplier of sports drinks. On January 31, stock of PepsiCo closed at $44.07 per share. This stock has run-up during the past six months and in our opinion is trading near its full valuation level. Short-term this stock does not have much of upside potential therefore we have revised our rating from a buy to a hold. On January 31, 2001, one hundred share of PepsiCo were sold at $44.06 per share, with a gain of approximately 198 percent. The remaining 100 shares of PepsiCo will be held long-term. 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. For 1999, revenues rose to $16.2 billion, up 20 percent from $13.54 billion for 1998. Net income edged lower, to $3.18 billion, or 82 cents a share, from $3.35 billion, or 85 cents a share for 1998. All data is adjusted for the 3-for-1 stock split issued 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 January 31, this stock closed at $45.15 per share. Buy this stock on dips and hold long-term. Back to Top |
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Sold On January 30, 2001, one hundred shares of PepsicoCo Inc.,(NYSE symbol: PEP) were sold at $44.06 per share, with a gain of approximately 198 percent. This stock was held in our Model Portfolio for six and half years. In July of 1994, one hundred shares of PepsiCo were bought at $30.63 and added to our Model Portfolio. The company issued a 100% stock dividend on June 3rd ,1996 and since then there were 200 shares of PepsiCo in our Model Portfolio (thus, the cost basis for this stock, adjusted for stock dividend is $15.32 per share). Although this stock was a steady performer, in our opinion, at the recent price level these shares are fully valued. A decision was made to lock in a gain on this stock. The remaining 100 hundred shares of PepsiCo, Inc., will be held in our Model Portfolio long-term. Bought On January 30, 2001, one hundred shares of World Com, Inc., (NASDAQ symbol: WCOM) were bought at $22.50 per share. This stock is down from its 52-week high of $52.50 per share. World Com, Inc., has already grown from a small telecommunications provider to a behemoth, through mergers and acquisitions. 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 of one hundred shares will be sold to lock in a probable short-term gain of 120 percent. The balance of cash was used to buy 300 shares of CMGI, Inc. (NASDAQ symbol: CMGI) at $6.78 per share on January 30, 2001. We really like this stock. CMGI, Inc., 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. 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 in the beginning of this year, 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 $100 per share during the next twelve months. Once this stock reaches our target level of $100 per share, all of 300 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 preferably it should only be bought by speculators. To find out more about CMGI, Inc., read the section Stocks for traders. After these trades there is $494 of cash left in our Model Portfolio. Back to Top |
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Model Portfolio Chart 1-31-2001
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). b) The quantity of shares was adjusted for a 100% stock dividend issued by PepsiCo, Inc. on June 3rd, 1996. (There were 200 shares of PepsiCo on January 29, 2001. On January 30, 2001, one hundred shares were sold and now there are 100 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. g) The quantity of shares was adjusted for a 2-for-1 stock split issued by Merck & Co. Inc. on February 17,1999. 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. 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. 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 |