A Fool's Stock Picks: The Good,The Bad and The Ugly!
Shaunak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I believe there are three kinds of stocks in the market. The good ones help you make money. The bad ones don’t do much to your money, but they might only slightly decrease it. And then there are the outright ugly: these are the ones that’ll take your money, show you signs of hope, and then all of a sudden pull you down into darkness. These are the vicious ones, the ones you should stay far away from!
Microsoft (NASDAQ: MSFT) is sitting on top of a pile of cash that totals $63 billion and includes investments, an amount that’s barely offset by a $12 billion debt load. This defines cash rich. Microsoft is one of the richest firms in the technology sector, second only to Apple's billions!
Microsoft dominated its sector just a few decades ago but its hold was chewed off bit by bit over the years by Apple. Apple's Mac has been a source of continuous annoyance for Windows-based products. Despite the emergence of Macs and the growth of their popularity, Microsoft products remain successful, dependable, and user friendly. Microsoft’s PC offerings are still successful and profitable despite, the underperformance of products like Zune and its small presence the mobile smartphone sector.
To be honest, Microsoft has not yet begun to fight in the smartphone sector. Its real foray into this industry will be with the release of Windows 8 and with MS Surface. In fact, this is where Microsoft’s is pinning its hopes after having had a difficult time with Mobile, Vista and Bing.
A nearly 3% dividend and a lucrative Windows business should mean that investors are kept happy.
Intuit's (NASDAQ: INTU) TurboTax, Quicken, and QuickBooks are facing stiff competition from other, cheaper alternatives in spite of having a strong foothold in the accounting software market. As a result, shares experienced a loss that exceeded analyst’s projections for third-quarter 2012. In fact, Intuit is expected to announce a dividend cut.
The lack of growth is the root of all problems for Intuit. Its availability of cash resources tides the company over after tax season, well but its premium offering (TurboTax) isn’t delivering as expected. Customers prefer other free alternatives, and sometimes Intuit’s own in-house free tax filing products.
Despite the competition, Intuit will not face a major cash crunch anytime soon, and the firm is expected to bring in around a billion dollars each year. What is disappointing is that Intuit had twice as much of a cash cushion just about a year ago.
The thing that is of real concern, according to analysts, is that as more cash is spent in search of growth this year, the company’s dividend may fall from its current 1.16%.
General Motors (NYSE: GM) has had an unimpressive 2012 ,with the shares of the automaker having moved around 13% higher since January, falling a couple of hundred basis points shy of the S&P 500’s performance over the same period.
Analysts believe that it’s a signal that there’s a glut of supply of shares at $25. In other words, it’s a price where sellers are more eager to sell and take gains than buyers are to buy.
I look at it this way: taxpayers have put in $50 billion into the company, and what has GM delivered in return? A failed hybrid and high hopes of a research program to bear fruit?
Share prices are down nearly 25% or more over the past two years. The Wall Street Journal recently reported that if the government sold its current 26.5% stake in GM today, taxpayers would lose $15 billion. GM’s share price would need to reach $53 for the US to break even.
To add to its sorrows, almost all automotive markets around the world are moving into a slowdown, and this doesn’t make GM’s case any better. Get rid of GM shares, sooner rather than later
With that I'll wrap my stock picks up. There may be many more Good, Bad and Ugly’s in the market, but these are the ones that came up for me. Till next time, Invest Wisely!
Interested in Additional Analysis?
It's been a frustrating path for Microsoft investors, who've watched their company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand new premium report on Microsoft Fool analysts explain that while the opportunity is huge, the challenges are many. Also provided are regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.
Shaunak88 has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend General Motors Company. 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.