Lazy Man and Money

Let’s Go Bargain Stock Hunting

by 1 Comment

I have a watchlist of 24 stocks and mutual funds. They are all companies that I either own, have thought about owning at some point, or an MLM company that I keep track of (for when the FTC inevitably acts on Herbalife).

Just recently, I’ve noticed a few of the stocks have “gone on sale.” That is to say that they’ve gone pretty low in pricing. However, they are big companies and brands that you know… at P/E ratios that a bargain hunter can love. This isn’t a deep dive… I’m using no stock screener. It’s just an observation. I’m thinking about investing in them (except for the one I already own) for the long term and I want to share that.

The three on my watch list that stand out are:

Wal-Mart

You might have noticed that Wal-Mart dropped 10% yesterday. When one of your 24 stocks has a double digit move, it is hard not to notice it. I was extremely busy, but I did some quick research. It’s not enough to make a stock buying decision on, but this is my take from what I’ve read.

Wal-Mart is expecting lower profits for perhaps the next couple of years. It’s heavily investing in infrastructure to help speed future growth. It is expanding its stock buy-back program to $20 billion and it pays a decent dividend. It’s easy to see the bad news and I don’t want to overlook that. However, a historically rock-solid company is trading at a P/E of around 12.5 and seems to be doing the right things for the long-term.

If you are a buy-and-hold investor, I think you could do a lot worse than picking up Wal-Mart at 30% off year to date.

IBM

This is a stock I’ve held for probably more than a year now. It’s another company with some bad news. They’ve had declining revenue for what seems to be 6 trillion straight quarters. The huge company had a lot of momentum into technology that isn’t very profitable. They’ve been steadily moving away from those from those business and towards more profitable businesses, but it is a slow process.

I do like what IBM has done while they restructure. They’ve been buying back tons of shares. That has steadily grown their earnings per share and lowered their P/E to under 10. It pays a healthy dividend. There’s some huge growth potential with their Watson technology.

I read that IBM is Warren Buffett’s biggest holding. Overall, it feels like when I had Apple at $70 and it jumped up to more than $125.

Ebay

For years I’ve watched this stock trade in the 50s. The other day I saw it around $23. I was apparently away from my computer the day that Paypal spun off and took that value out of Ebay.

Ebay has a $30 billion market-cap, which is much smaller than the previous two Goliaths. I view that as having more room to grow. It has a monopoly in the online auction business. Truth be told, I simply use Buy It Now, so it is more like a store to me, but the lack of competition is notable.

Finally, it too has a P/E under 10, so there’s value there. It’s also on a 15% off sale after the Paypal divestiture. Unfortunately, it doesn’t pay a dividend.

Consider a pick for a little variety compared to the previous two.

Summing It Up

If you are interested in holding stocks for the long haul, I think you could do lot worse than these three stocks. There’s a saying that you make money on the buy and not the sell. I believe that’s the case here. It feels like the right time to buy.

That said, I also thought it was the right time to buy SodaStream at various points as the company has crashed from $50 to $15. Something would have to go terribly wrong, like losing 2/3rd of their earnings, for any of these companies to do something like that. I don’t see it happening.

If you are going to buying stocks, you are going to need a brokerage. It’s been a long time since I looked at the best ones, but I do like the idea of Motif Investing. You can create a basket of all these stocks in just one trade. They’ll even give you up to $150 to get started.

Bought a New Television Today… Finally

by 6 Comments

If you’ve been following the blog the last couple of days you’ll notice that I have been a little preoccupied with my search for a new television. I thought I had a nice Samsung 3D, almost every bell and whistle for $2000 when I wrote: Buying an Expensive Television and Dealing with a Moral Dilemma. However, it wasn’t to be. On big purchases, and $2000 qualifies for me, I like to take a little extra time to make sure that I’m comfortable with the value that I’m getting. On this purchase I waited too long and Amazon raised the price to around $2500. It was time to move on and look elsewhere for the right TV at the right price. My search took me to a number of places including Fry’s where I found that they hate customers.

My search ended this morning. Last night while I was looking in the FatWallet forums, I came across a deal on a 55″ inch LCD TV at Walmart for $749. It clearly isn’t going to compete with the Samsung that I had in mind. It isn’t 240hz. It isn’t 3D. It isn’t LED LCD. It is an Element, which sounds more like an ugly, boxy Honda than a reputable television brand. At least the ratings weren’t bad. I still wanted to sleep on it. I woke up this morning and found that the television had been lowered to $699. (If you are one of those people who use cash back and have the right credit card, you can save even more money.) That clinched it for me. I got the feeling that it might sell out sooner rather than later.

Why go for a television on the opposite end of the spectrum? I was talking to a friend and I believe that you can go two ways with technology. You can go biggest and best and try to stave off obsolescence as long as possible. Or you can live a little behind the curve and save some bucks. With the $2000 Samsung, I was planning on getting at least 10 years from that television. That might have been more than a little optimistic. However, even at that rate it would have been $200 a year (probably $260 if you get into warranties, tax, environmental fees, 3D glasses) and I’m not sure what kind of resale value it would have.

By going with the cheaper solution, I walked typed out of Walmart’s online store for $876… which includes CA state tax (a killer that’s just a shade under 10%), CA waste tax (I don’t mind paying to keeping our environment clean), and an a 3-year extended warranty that starts a year after the manufacturer’s warranty. Having the problems that I have with my current set, I’m okay with paying $88 to guarantee me four years of peace of mind. That’s a little less than $220 for those four years, and I have a feeling that it will still have resale value if I want to upgrade at that point.

Am I going to be happy with the LCD instead of the LED LCD that looked better in the stores? That seems to be the biggest open question. My feeling is that I’ll be happy with it since the 1080p is going to be an upgrade over my current 1080i television. It’s been rare that I’ve upgraded and thought, “Man, this product isn’t good at all, I should have upgraded even more.” I also remembered a conversation I had with my friend when he told me a tale of two televisions… I told him to go with the cheaper one and put the money aside for the next television (or something else) in the future. So how could I not take my own advice. My budget for a television in more than four years from now, already has over $1200 in it. Come to think of it, that’s almost a mortgage payment right there. Maybe that’s a sign that I shouldn’t earmark the money towards a television in the future after all.

Every Restaurant Wants to Save Me Money

by 7 Comments

I couldn’t help but notice restaurants have a new plan to try to drum up business in these tough times. It’s a good thing they have some ideas, because one of the first things people cut when money is tight is going out to eat. Let’s look at what just a few national chains are advertising.

Denny’s $4 Weekday Express Slam Breakfast

“It’s one thing to bail out Wall Street, but who’s going to bail you out? Denny’s!” Their Weekday Express Slam is just $4. I’m not the only one laughing at this Denny’s commercial. Of course, earlier today, I saw a commercial from Kellogg’s and Walmart touting that cereal costs 50 cents… including milk. So even the bargain at Denny’s looks pretty poor in comparison to cereal that you can make at home.

Sizzler’s Ultimate Value Menu

For years I thought Sizzler had gone out of business. Instead they just pulled out of New England. It’s not typically the first restaurant I think of going to considering I’m too tempted by the unhealthy foods there. That said, it seems like very good value to have an 8oz steak and their endless salad bar for $9.99.

KFC $10 Challenge

In this commercial, KFC challenges a family to get all the ingredients to make a 7-piece of chicken meal for less the $10. The meal that the family has to make has to include a side dish and biscuits, just like you can get at KFC for $9.99. The camera follows them into the store as they give it a shot. Unfortunately the 30-second shot only seems to show a girl surprised by the cost of 7 pieces of chicken, them packing in a whole bag of flour, and of course asking where to find the “secret herbs and spices.” The thing that isn’t mentioned is that a bag of flour not only makes 7-pieces of chicken, but it makes around 100 pieces. Most of the ingredients are like that, you can get a lot more for a small price. So maybe it ends up costing you $13, but then you have enough for a lot more meals.

This is just a small sampling of the deals at restaurants that I noticed recently. If you are going to go out, I still think the best plan is to practice these tips to save money at restaurants. Of course, a cheaper plan is almost always to make food at home.