The Week that Was: Intel, Ford, Google and (ugh) Facebook
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Even with the Dow’s poor performance on Friday – and the week as a whole - all is not lost. Friday’s announcement of consumer confidence numbers should have been enough to leave investors cheering. The highly anticipated Thomson Reuters/University of Michigan index rose to 79.3 – the highest level in over four and half years. That’s huge, particularly when you consider consumer confidence is what drives the U.S. economy – plain and simple.
When consumers are willing and able to crack open their wallets it creates a snowball effect that positively impacts everything in its path. But we’re hardly done with economic reports – this week will be rife with numbers including whoppers like GDP and non-farm payrolls data. Of course Europe will continue to impact markets but with a lull in news expected from our friends across the pond, U.S. figures should play a more prominent role this week and next.
What will all this mean for the investment opportunities discussed last week? Good news – at least for investors willing and able to take a buy and hold strategy.
Intel and Ford
Their histories and industries are distinctly different but Ford (NYSE: F) and Intel (NASDAQ: INTC) share a lot of commonalities right now. Both are leaders in their respective businesses and offer ridiculously good investment values. As discussed last week Ford – for those who haven’t yet pulled the trigger – is incredibly cheap in large part because of the recent European and China woes. Investors have been hesitant as concerns over non-domestic sales for the automaker have lagged. Too bad for them, great news for value seekers.
Intel is in much the same position as Ford – a great value opportunity - but for a slightly different reason. Dell reported numbers last week that were just downright depressing – Hewlett-Packard’s weren’t much better - and Intel paid the price. Apparently there are those that remain under the mistaken impression Intel is reliant on the PC market to drive earnings – not so. The stock is cheap as can be, has fantastic growth prospects this year and next, and shareholders enjoy a 3.25% dividend – what’s not to love?
Facebook – Really?
No need to belabor the Facebook (NASDAQ: FB) fiasco – you’ve heard it all by now and may have even paid for it if you were unfortunate enough to partake in the IPO. As depressing as the returns have been so far was the manner in which the big day unfolded. Beyond NASDAQ’s trading miscues and the behind-the-scenes “I’ll scratch your back if you scratch mine” craziness was an even bigger issue – Facebook’s unmitigated greed. As the road show rolled on, Facebook management seemed to get caught up in their own rhetoric and the continued increase in initial pricing bit them – and shareholders – right where it hurts.
Last week is certainly one CEO Larry Page and the team are glad to see in the rear view mirror. What should have been a week of celebration – a positive resolution to the Oracle lawsuit claiming intellectual property rights infringement and the closing of the Motorola Mobility deal – ended with a thud. The upside for investors is a sound investment opportunity just got better. But last week’s article focused on another step – in addition to the recently announced 2-for-1 stock split of non-voting shares – Google (NASDAQ: GOOG) can and should consider to generate shareholder value.
Much like Apple prior to them succumbing to pressure from shareholders and critics, Google is sitting on a ton of cash and it’s time to spread the wealth. With nearly $50 billion in reserve, why not pay a dividend? Cash flow certainly isn’t a concern as evidenced by the past 5 quarters. Since the end of Q1 2011 Google’s ready cash has increased an average of $3.4 billion each quarter. The time has come Larry - fork it out.
timbrugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford, Facebook, Google, and Intel. Motley Fool newsletter services recommend Ford, Google, and Intel. 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.