Remember the goal of investing is for income – period. Whether that is value plays (through dividends and a return to intrinsic value), swing plays or covered calls, the goal is the same – income. In saying this, from our own results, our time has to be spent mostly on idea-generation. The trader/investor with the most good ideas invariably wins.
Here are the best of the bunch which we researched this week concerning solid setups for
- Discounted value play
- Swing trade
- Covered call trade
We are eyeing up the Movado group for a long-term play. The video below has a monthly chart going back about 15 years and like we always say to our followers, long-term charts are extremely important. The technical analysis approach is all about history repeating itself and investing in-line with the underlying trend. Remember that it takes so much more effort for a long-term Trend to reverse rather than continue. Although shares have been making higher highs over the past few years, they are caught at present in a trading range where they have consistently tested key support levels. We outline in the video why there is no rush getting long the stock at present despite the company´s very attractive valuation of a book multiple of just over 1.0 and a sales multiple of 0.8.
Posted in Movado
When we look at any long-term prospect, we like to get a feel for what the company has achieved in terms of growth over the past decade at least. LKQ Corporation (LKQ), for example, has an enviable record with respect to its 10-year financials. With revenues currently coming in at $12.47 billion over a trailing twelve-month average, this means that the 10-year top-line growth average comes in at almost 20%. Operating profit over the same time frame has a growth average of close to 16.5%. These are very impressive numbers, to say the least.
Read the rest of the article here
If we got a convincing rally above the 10 week moving average this coming week, then crude oil could have just started a brand new intermediate cycle. This coming week will be 33 weeks since that December low last year. We definitely are in the timing band. Lets see what this week brings. $56.22 per barrel is the first line in the sand the crude oil price needs to cross.
Posted in Oil
Readers who follow our work will know that we are advocates for investing in out of favor stocks. Many times, the problem with investing in ultra oversold stocks is timing. Value investors know that patience is key as many times the respective investment can take months if not years to recover.
The flip-side of the above scenario though is that the investment never recovers. Then instead of having researched or invested in a value play, the risk is that one could have actually invested in something known as a value trap. Many times, these companies can go bankrupt which basically leaves the investor with nothing to show for the initial investment.
Investing in Instruments such as commodities and ETF’s protect against any bankruptcy. A commodity such as gold , oil or natural gas can never trade at $0 as they all have intrinsic value. Furthermore the probability of an exchange traded fund which holds a basket of stocks going to $0 is also practically zero when you think of the diversification in those funds.
One such commodity which we have been watching carefully has been Natural Gas. The commodity continues to drift lower as it seems to seeking out a daily cycle low if not a more broader intermediate cycle low. The lower it goes, the more potential we see in this asset class when the commodity turns in earnest. Therefore from this standpoint, let’s have a look at the its charts to see how they have been cycling. We will start off with the long term monthly chart.
Read the rest of the mid-week report here