Nothing Like a Storm

Wow, I had a big day today. I think I owe some thanks (albeit likely short-lived) to Tropical Storm Dolly. All my refiners (HOC, FTO and WNR) were up sharply. I suspect the reason was Dolly and that my refiners are not gulf coast exposed. Of course when Dolly fizzles, my stocks will likely give back the gains.

I did buy my third tranche of stocks today. Every month I am buying 5 stocks from the top 50 list over 100m, with an emphasis on the larger cap stocks (typically I allow myself one flier) as I have been whip-sawed enough. I am allowing stocks to be bought in multiple tranches.

May Tranche: TRA, RHI, ACN, AEO and MHP
June Tranche: KG, FTO, VALU, HURC and LRCX
July Tranche: FTO, NVDA, COH, QXM and NOK

Nokia is not on the lists, but I suspect that is because they are a ADR and I don't think they get listed. But my calcs had NOK as a stellar large cap stock AND Jim Jubak just put it on his buy list. Here is my calculation of the Earning Yield and ROC for Nokia:

NOK
+ Operating Income After Depreciation 9,002.85
- Minority Interest - Income Account (717.09)
= Income for Calculation 9,719.94
Market Cap Yahoo 103,450,000
Share Price 27.32
+ Market Cap Calc 103,450.00
+ Preferred Capital -
+ Debt in Current Liabilities 1,749.61
+ Long-Term Debt 273.43
Cash and Short-Term Investments 16,383.46
- Excess Cash 16,383.46
= Enterprise Value 89,089.58


+ Property Plant and Equipment - Net 2,865.45
+ Receivables 16,500.42
+ Inventories 4,414.34
+ Other Current Assests 5,901.59
+ Working Cash -
- Accounts Payable 8,833.42
- Current Liabilities - Other 16,906.61
= Invested Capital 3,941.77
Earnings Yield 11%
ROIC 247%

GSK is another ADR that I think would make the cut. Perhaps I'll buy them next month.

Here was my rationale of the buys:
FTO - still too cheap for a best of breed independent refiner. I think when oil prices inevitably fall back to their normal long-term trend line, FTO quickly rises 50% from $20 to $30.
NVDA - got crushed when they lowered earnings recently. Still a quality company and they have some good products in the pipeline.
COH - I have been watching them for many a month. At $27.59 for a best of breed company with impeccable balance sheet was too good to resist. James Stewart of SmartMoney has been hinting they are a great buy at these prices.
NOK - recommended a week ago by Jubak. He says that they have positioned themselves (along with Apple) to capture the "near-computer" market, which he thinks will be the fastest growing segment.
QXM - ok, they are my flier. But they have a negative enterprise value AND are making money. Sooner or later these type of companies have to have lots and lots of cash on hand recognized by the market.

I'll mention another Jubak stock I bought on Friday at a fire sale price of $8.10. FSUMF, an Australian stock named Fortescue. I had noticed them perhaps 5 months ago because Ian Cummings was buying them hand over fist. But the price went up so fast (and I am a bit hesitant buying pink sheet stocks), I didn't get in. Jubak also recommended them in the 1st quarter and has a price target of $17.

They are in the iron ore business. What makes them neat is they are just ramping up (sent out first shipments recently) AND they are extremely close to China geographically. That closeness gives them a tremendous cost advantage over many over iron ore companies as shipping costs are so high. And of course iron ore prices are up over 50% this year. They did jump a $0.81 today, so the opportunity may be closing.