One Stock I'm Obsessed With
Liz is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Numerous articles on investing have been written which sing the praises of "boring." Both Peter Lynch and King Buffett are fans and agree that when evaluating companies and industries boring is attractive, boring is dependable, boring is profitable. It's the bland picks that you can count on to deliver in both the short-and long-term. Stocks like P&G, Wal-Mart (NYSE: WMT) and Coca-Cola come to mind. They have a low beta, a consistent dividend yield, and Wal-Mart for example has returned an average annual equity growth of 11.3% over the last ten years.
For some of us however, these mundane money-makers may be just too analogous to having the dependable, pleasant spouse who is always on time, dresses appropriately, and fits in with any crowd. There's no liability, no risk, no stomach-churning agita, just pure, proven predictability. And while we've all been with that person and/or some of us may even be that person - it's monotonous. So we sometimes think about the other type. The ones that get your stomach aflutter, your better judgment reeling, and your Mother worried.
You most likely know what I'm talking about. It's just like that other sort of investment, or gamble if you will. To continue with our analogy, it's the man or woman who walks into a room, hair disheveled (what were you doing 15 minutes earlier?), clothes slightly askew (or inappropriate), with too loud a laugh or too intense a stare. And whether you like it or not, you end up watching them. Matter-of-fact, you cannot take your eyes off them. It's almost annoying as you keep looking back over, obsessed with what they may or may not be doing.
This same obsessive scenario can happen with a stock, and for me it's happened with Groupon (NASDAQ: GRPN) And no, I wasn't manic enough to actually buy the stock at $31, $15, $10 or even now at its new low of $4.00/share, but that doesn't seem to matter. I still check on it throughout the day like it's a newborn baby. And as evidenced by my posts, I write about it whenever I can. I pay much more attention to Groupon than any of the boring, predictable stocks that I actually own and make money on. Yes, it's crazy and just when I think that I can pull myself away . . . something happens that has me clamoring for more!
Some Groupon news for August was the departure of two key sales executives. Both Jayna Cooke (VP Business Development and top saleswoman) and Lee Brown (Senior Sales Executive) announced their departure the week of August 20th. Also of interest is the two-step of insiders Eric Lefkofsky and Brad Keywell who together have 36% voting power. It seems they have put some money behind a couple of potentially competitive start-ups called Lightbank and Belly. So if Groupon is on the way out - no worries for them as it's on to the next hopeful marketplace game-changer. Further on the consumer side of things, today I received a Groupon offer where Groupon itself (not a retail participant) is offering anyone $15 off the purchase of their "first Groupon," and this applies to any purchase. What an expensive attempt to drive trial and subsidize gross sales! Could the plummeting stock price be the reason? Could the lack of consumer loyalty/commitment/trial be the problem? Could it be that more than 50% of retailers who try Groupon plan never to use it again? It's hard to pick just one but perhaps this rich consumer offer will pump up the gross sales enough to buy Groupon management some more time on the street.
For some people, watching Facebook fall from grace may provide the same guilty pleasure, but for me it's not as compelling. Like that hot mess at the party, Groupon just about arrived out of thin-air in November 2011, and seems to be returning back to thin air! What the heck happened? Maybe without a business plan that was sustainably profitable, a defensible market position, a way to translate email connections into real sales and profits, an untenable growth scenario and the insider greed that pushed it all forward in a nice over-valued IPO frenzy, Groupon had no where to go but down. Not like the boring stocks that populate our portfolios and keep our capital safe, rather, Groupon stood for excitement with unbridled growth opportunities and unlimited potential profits. And with some analysts projecting a share price of under $ 3.00 - as long as you don't dare to invest - it's really good fun to watch!
CoachLizzy has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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.If you have questions about this post or the Fool’s blog network, click here for information.