Monday Dec 26, 2011
Ask most investors and the will say, yes they are conrarians. That means going against the grain, buying when others sell and vic versa. Yep they mine the data, find the rare gems, and step up to the plate, so to speak.
While we generally don't care for individual stocks we do have three that are worth a look. Our benchmark requirements are
Great balance sheet ( no turnarounds)
Great management
Recognized Brand
Low Price to Book
Barriers to Entry to the Market ( This eliminates most high tech plasy)
See our post Friday Dec 23, 2011 for the comments on Transocean, RIG which meets all these criteria.
Okay what's next?
Contrarian Pick Number Two (RIG was Number One)
Great balance sheet ( no turnarounds) - Cash per Share of 20.44, stock price is 20.50, yes really
Great management - Could be better but recent book by an insider swears they are up to the task see
The Car Guys versus the Bean Counters
Recognized Brand - And how, think Apple Pie, America
Low Price to Book - BV is 94% of share price so it trades for less than book value, heck trades for the cash per share, see one above
Barriers to Entry to the Market - A heavy capital investment required, currently a 26% return on equity
Yep it's Government Motors- GM
There is a tender offer and I will explain it later this week. Like Delta, GM took the BK route and is stronger for it.
GM trades at about half its previous post IPO high of 38.
It has double bottomed at the stock market low of this past October.
The cars are selling well and the pickups and SUVs are back in demand. Surely it is worth the 26 it hit over the last couple of months.
This is as contrary as a play can get.
Steve Wynn has an interesting take on where the USA is now.
This is a great article, and a great topic to explore. Thanks for sharing.
Posted by: Lillian | December 27, 2011 at 09:03 AM