I’ve been going crazy latly spending what little resources that I have on buying the common stock of great companies the I believe have serious long term potential. I must admit that I’ve also made a short term trade or two…it’s hard not to take advantage of this type of volatility!
Well, the background is that in about October of 2002 the US stock market took what I believed to be a “short term beating.” This beating left solid companies, with strong balance sheets, at prices that would suggest they were no doubt going out of business. BUT I WAS BULLISH ON THE US ECONOMY, blah, blah, blah…bottom line, by 2006 the $10,000 of stocks that I’d picked up in 2002 had grown to just a hair shy of $40,000. And non of them went bankrupt…(though VTSS almost has, I bought at $1.00, it went to over $10.00, I was stupid and didn’t sell, now it is at $.40…you can’t win them all!)
On to what I’ve bought over the last couple of weeks:
Aloca (AA) Strong, well managed Dow Component. This stock historically goes up and down alot based on the price of certain commodities. I feel like I bought low, and that world demand for Aloca’s products is certainly going to increase over the next decade.
American Eagle (AEO) Clothing retailer that targets men and women ages 15-25. I feel like this demographic cares about being trendy, so in ups or downs, they will spend less on clothes, but they will still spend. This company is profitable, expects a forward P/E of about 8 for 2009. Is sitting on over $300 Million of cash and has only $75 Million of LT Debt.
APPLE (APPL) What can I say, every gadget that I own or want to own is made by Apple. This company is sitting on more cash than Microsoft, is growing like a weed, has NO DEBT, and I was able to buy near a multi-year low.
CANON (CAJ) I’ve been successful investing over the years by asking my wife (who cares nothing of stocks and investing) “Honey, where are you spending our money right now?” This strategy has led me to many great long-term investments…she got us into Carters baby clothes at $25 a share, and we rode it to $75. She has had similar success with DIS, LF, BEBE, and more over the last 5 years. ANYWAYS, she likes the digital camera space, and Canon is the 500 lb gorilla of the industry. It doesn’t hurt that they are growing profits, sitting on $7 Billion of cash, and have almost no debt.
Chicago Bridge and Iron (CBI) Don’t let the name fool you, This company was founded in 1889 and is based in The Hague, the Netherlands. At $8 a share recently, this company was selling for less than 5 times 2009 expected earnings per share. I figured if the global economy does go into a longer term recession, governments might try to kick start things by passing massive infrastructure spending projects. I figure that CBI and GE would be huge beneficiaries of that spending.
Anyways, I could probably bore you all day with this crap, but it really gets me going. I bought about seven other companies too. Small positions, but I’m excited about where I think their valuations will be in 5-10 years.