Archive for January, 2004

Stock idea – MCG Capital Corporation (MCGC)

Friday, January 30th, 2004

So here’s a company with a P/E of 30 and a forward P/E of 11 (approximately 30 and 11 with shares at 20.09). The PEG ratio is 0.8. Throw in an 8.4% dividend yield and here’s a stock that I don’t own yet but am very interested in.

Here’s the Yahoo! finance quote

Buy Silver?

Wednesday, January 28th, 2004

I’ve been reading a lot about metal lately and there are good arguments to buy gold, silver, and copper. Here’s an article on silver that concludes :

So, if you want some fairly liquid alternatives to cash, in case you don’t know what other silver stocks to buy at the time, here they are:
1. Buy silver. You can hold silver in an IRA.
2. Buy CEF. Central Fund of Canada, ticker symbol CEF. It’s gold/silver bullion fund. It has 50 oz. of silver for every 1 oz. of gold. The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute. Unfortunately, given the current ratio, about 60% or more of the value is in gold.
3. Buy a fairly large cap silver stock, with fairly large volume, that is still fairly cheap on the list. SSRI is probably the best candidate, the next might be PAAS.

I haven’t decided what I’m going to do yet.

Stock idea

Friday, January 23rd, 2004

Polymedica or PLMD is a stock I like. It’s P/E is a reasonable 14.89 at its current price of 26.10, but its price/growth is a very nice 0.66. It’s also nice to know that the company has cash to spare: the dividend of 60 cents/year is 2.29% at the current stock price. You can start your own research with Yahoo!: http://finance.yahoo.com/q?s=PLMD&d=t

Stocks and diversification

Tuesday, January 20th, 2004

When I got into the stock market the bubble was about to burst. Of course I didn’t know that, so I bought equities like Tyco, Sun Microsystems, etc. Needless to say, the bubble burst hurt.

Recently I’ve been reading a lot about how diversification can reduce risk. Risk is only reduced when your investments don’t follow each other. For example, it didn’t really matter if I invested in the S+P 500 or Tyco and Sun Microsystems and a handful of other stocks. Their performance is not all that different, especially over long periods of time.

What you can do is buy some domestic stock: I have FDP (as I mentioned on Jan. 15), as well as Pfizer, Fleet, Tyco (leftover from the bubble) and a handful of others.

You can buy some REITs: a real estate one that I like is HCN, but I recently sold as the stock kept going up and the dividend was down to 8% or something. I put the money that had been in HCN into a mortage REIT, IMH (I wrote about it Jan. 13). Its dividend is better.

Precious metals: I have IAG and WHT.

International stock: I have EFA and hope to scrape together some money to invest in Korea’s KOSPI index.

Bonds: I have none, but they’re supposed be safe and steady.

The idea is that US equities, precious metal stocks, REITs, foreign stocks, and bonds do NOT track each other. They don’t behave the same way. If one goes down the others may not.

Stock idea

Thursday, January 15th, 2004

A stock I like is Fresh Del Monte produce Inc. or FDP. Why not take a look. At least for now, with the stock at 23.88, their P/E is 5.71 and the dividend is 3.39%.

Unless the company is headed for a big SEC investigation or something, this is one of the best deals I can find in today’s stock market.

REITs: time to get out?

Tuesday, January 13th, 2004

One of my best performing stocks is Impac Mortgage Holdings, IMH. This REIT recently upped its dividend to 2.20/share (.55/quarter) which is a yield of about 11% at its current 19.00 stock price. Its P/E is a reasonable 8.5. For more information: Yahoo Finance’s quote. Just remember that REITs dividends ARE taxable, even under the new plan. I got in at around 14.00, and I don’t know if now is the best time to buy. You’ll have to decide that.

I’m reducing my holdings because this stock makes up too high a percentage of my portfolio. In addition, if interest rates begin to rise quickly Impac shares may go down.

Exposure to foreign stocks through ETFs

Monday, January 12th, 2004

In an article I recently read, http://www.usafairtrade.com/icplan.htm, Warren Buffet mentions that he’s investing in foreign currency due to the weakening US dollar. The general consensus seems to be that the dollar will be weakening for a while (maybe a year though possibly longer according to Buffet).

I live in Korea, so my Korean salary is becoming more valuable in terms of US dollars but my US stocks are becoming less valuable in terms of Korean won. I plan to keep my investments in the US and in dollars, but I would also like to make money. A declining dollar may mean declining US stock prices.

The question then becomes how to invest in foreign stocks. For me the answer is to invest in exchange traded funds or ETFs. The ticker symbol IOO tracks the S+P global 100. This includes big US companies but also big foreign companies: the top ten holdings are AMER INTL GROUP AIG, BP Plc, CITIGROUP C, EXXON MOBIL XOM, GENERAL ELEC CO GE, Hsbc Hldgs, INTEL CORP INTC, MICROSOFT CP MSFT, PFIZER INC PFE, WAL-MART STORES WMT.

Then there’s EFA. the summary:

The fund uses a representative sampling strategy in order to try to track the MSCI EAFE Index. The fund invests in stocks from Europe, Australia, and the Far East with concentrations similar to those of its index.

Finally, there’s EPP

The iShares MSCI Pacific ex-Japan Index Fund seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the Australia, Hong Kong, New Zealand, and Singapore markets, as measured by the MSCI Pacific Free ex-Japan Index.