The good ones almost always seem expensive
Carl is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Paraphrasing a lesson from the Bible and many others’ basic investment strategies: ‘…put into seven, even eight because you don’t know which will bring fruit or which will fail…”
Therefore, it’s good to have the pension, another retirement income vehicle, and even five or six other projects, hobbies, and interests that could become a gainful activity. The hard thing on that list has been deciding where to put the IRA contribution to continue building our personal mutual fund. More of either of the holdings right now would be fine but that’s not diversifying a core. So my shopping list a few months ago had GE, Intel, Marathon Oil, or some other natural gas play.
The “other natural gas play” doesn’t fit my current conservative phase of building a strong core, so I will chat about Fuel Systems Solutions, Inc. (NASDAQ: FSYS), Clean Energy Fuels Corp. (NASDAQ: CLNE), Chesapeake Energy (NYSE: CHK), Westport Innovations (NASDAQ: WPRT)…some time soon.
I’d kept loose eyes on Marathon Oil (NYSE: MRO). After about six months, they spun-off of their retail sales into Marathon Petroleum (NYSE: MPC), June 30, 2011. Then I watched this new stock perform as a winner since it opened for trading. The parent traded near $22 in late October of 2008, up and down to a closing $52.68 on June 30, 2011…$21.09 on October 4, 2011…a well-established base of about $30 most of Q4, 2012 to above $34 last week, and a new closing 52-week high on Valentine’s Day. My 100 shares will cost more than I have to spend. Marathon Oil is a quality play in oil and gas with:
1) the properties they hold
2) the fairly good dividend they pay (very near 2% at $34.96/share and maybe to grow?)
3) the price growth potential
4) one of the big and literally “ground-up” developers in the current natural gas industry.
This would be a good one for long-term (maybe even decades) growth, stability, and income. T Boone Pickens saw something. One must pay for quality, but at the 52-week high? Two older stock rules I know: 1) Quality stocks making 52-week highs tend to keep making them for a while…2) A market pullback is inevitable after it rises, and by extension, all the stocks that went up so much will come back down some.
How about one of those two dogs?
Intel (NASDAQ: INTC) is in the news about interactive television using a set-top box and list of current business partners that doesn’t include any households, unless the computer parts count in my PC. Intel and AMD come to mind in the flip of a nano-switch when I think about computer insides. It is alleged that INTEL TV is already being tested according to an article headline I saw published by “paidContent.org.” Revenue for 2011 topped 2010, about $43.6+ vs. $53.9+ billion. 2012 looks to be about flat with a Q4 like 2011. Cash flow looks like it has grown at first glance. The current 4.2% dividend is good, the shrinking (not much) -3% quarterly revenue and -26+% earnings growth per year doesn’t sound good at first.
This dog may only be a little shaggy-looking now, but this would be a good time to buy if one wanted some ‘wildcat risk’ of the tech field with this new television product and not the field outdoors and energy stocks. This one doesn’t fit my goals for the core as nicely as Marathon Oil.
That leaves General Electric (NYSE: GE), an international conglomerate with products including everything from light bulbs to jet engines and nuclear power plants. The extremely recent sale of their 49% stake in NBC to Comcast was enough to move the stock to a $23.39 close, from a low of $20 onJuly 25, 2012. Last years’ earnings of 34 cents, 38 cents, 36 cents, and 44 cents for Q1-Q4, along with 14%+ growth in revenue yearly, 7%+ growth in earnings yearly, forward P/E<13, 26% current payout ratio, Jeffrey Immelt at the helm, business growth in infrastructure like a deal with Clean Energy Fuels for the NATURAL GAS HIGHWAY as it is called, locomotive tech and equipment with Russia, jet engine tech despite the Boeing 787 fiasco to drop a few stories of the past 6 months…(this part is bad…) that financial arm that damaged GE so badly getting pruned but still present in a big way, a high debt/equity ratio, stock nearly at yearly highs…
I’m not excited to buy a stock that has moved up nearly 20% in two months, most of the stock price gain for the past year not counting the dividends. I do not want to bust the nice little stock block that 100 shares remains for a small-fry so I can buy a higher-priced one. If one wants anything of quality, one should be willing to pay. Maybe GE’s newly-fruiting focus, recovery from their finance arm trouble, dividend, and growth potential are enough for you. Maybe GE will pull back in the next month to that $22 or so level…in that market pullback that may or may not happen soon.
1intheBlackSwamp has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Intel, and Westport Innovations. The Motley Fool owns shares of General Electric Company, Intel, and Westport Innovations and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!