Ah, Christmas. Here is Santa's wish list of stocks:
Apple Computer (AAPL): I know what I'm going to be thinking about when I cut into that scrumptious apple pie this holiday season: the ongoing success Apple Computer has had in its product line. Many people thought Apple was dying with the huge market share owned by PCs, but that all changed with the inception of one monumental product: the iPod. This little gizmo saved Apple's revenues and jacked the stock up -- way up. I love what Steve Jobs has done to Apple Computer. The company now pursues intelligent design to differentiate its product, and its iMacs and Power Mac G5's run on Mac OS X, different from all the rest. The company had a two-for-one stock split on February 18, 2005, and it's stock has been climbing steadily ever since. Apart from the financials, my entire biomed research lab uses the Mac, and after using it for a while, I think my next computer will be one too. I love the chic design and reliability of Apple. I love almost everything about the Mac actually; with the sole exception of how their windows take up much space and leave you less to work with on the screen. I should also mention that Steve Jobs, the CEO of Apple, is also the CEO of Pixar Animation Studios (PIXR). Pixar has produced Toy Story, Finding Nemo, and The Incredibles -- three of my favorite movies of all time! Yet another reason to love Apple, Inc!
Google, Inc (GOOG): This is another story similar to AAPL, and it's even more dramatic. I remember the days when GOOG was at $250 a share, and people were saying it was overvalued. Then it climbed to $300, then $320, and soon after their second IPO, $400. It's currently at $420 a share. It's obscene. I watched in blank horror as it's stock kept climbing and I knew I didn't own a single share! I wanted it, but I already owned one tech stock, and according to my diversification standards (which I follow religiously), I couldn't own one more. (Plus, I admit, it's multiple was too high and it was just too rich for my blood... with the pennies I invest with, I would have only owned one share!). Oh, the humanity!
Yahoo Inc. (YHOO): Yet another tech success story, when will the pain end!??? Fine, I don't own YHOO. I've been riding on Intel (INTC) all this time, and I still believe it's a good play. Under most considerations, I'd prefer Google over Yahoo (this blog is written with Google technology after all...), but Yahoo is still unmatched in several areas. Take Yahoo Finance, or Yahoo GeoCities for instance. Yahoo Finance alone makes Yahoo all worth it. It offers a humongous number of user-friendly finance tools I couldn't dream of, and the internet (Yahoo and all its competitors combined) has really changed the way I live and interact with the world. Take the stock market for instance. How else would a simple street urchin like me be able to research stocks and trade securities like a broker? This is a bit of an extension, but I attribute some of this power to Yahoo, for making the web friendly for all of us, and this stock definitely gets my approval rating of the year.
Amgen (AMGN): Where would $60 in June have gotten me today if I had invested in AMGN? $22 richer per share if you ask me. Amgen is a great biotech company to invest in. They have a stable pipeline, and they're relatively young, with room left for growth. The biotech mine is still largely untapped. Amgen's products are based on sound science and it's interesting how they've managed to study and "mimic" the biology of cells to produce innovative new products like Epogen for treating age-old diseases (as opposed to researching small drug molecules for targeting certain cell receptors). I'm not going to get into this too much right now, but I certainly wish I owned this stock.
McDonald's (MCD): This is more of a stock for last year, but I'm listing it because I wanted to buy it when I first saw it in 2004, and I was completely right about it when I checked the numbers a year later (if I had invested in it the time that I wanted to, I would have made about $7 a share). McDonald's is like a tried-and-true friend to me. The company gets a bad rap because they target a lower-income market, they don't charge much for their products (hence the term, VALUE meal), and they duplicate stores (as you would expect any restaurant chain to). I don't give in to the plain snobbery that some have towards McDonald's though. I think it's mostly because McDonald's makes cheap products for what tends-to-be poor consumers -- but heck, I grew up in Jersey City, I was raised to like fast food, and I'm not going to lie about their food tasting better than some of the stuff that comes out of high-end restaurants. (Many of them are great, don't get me wrong, but there tends to be a great deal of variability within restaurants). In a country where people count calories and cholesterol levels, it's obvious that McDonald's would be an easy target for the public, but if you eat there, you're making a concession to be eating primarily fried foods high in calories. You don't see fast food diners getting as bad a rap. It's your responsibility to watch your weight, not theirs. Furthermore, I think there's a great deal of exaggeration about the hazard of eating McDonaldland's foods. Yes, they have preservatives. Yes, they salt their foods -- but it's not like they're serving you rat poison in a burger. I think there's a great deal of exaggeration involved when people start talking about poisons, preservatives, free radicals, and carcinogens in McDonald's foods. There would be a huge liability risk for McDonald's if it was true, and if it was, I think the settlement package would more than make up for any grievances. People are so blind to the good that McDonald's does. When have they considered the Ronald McDonald House Charities the company sponsors, or how the restaurant offers healthy alternatives like milk and orange juice to its soda, not to mention the $1 side salad? I think the average McDonald's customer is satisfied with his or her order -- all of my friends from Jersey City certainly were. It wasn't until I moved to the suburbs that I started hearing bad raps about McDonald's, and all this while the company was making money and the stock was doing well. I also know something that many people tend to forget as they get older: kids love McDonald's. They love the burgers, the fries, and those colorful happy meal boxes. McDonald's also has great management and they know how to negotiate. Do you remember when McDonald's teamed up with Ty Beanie Babies or Neopets? What about Hasbro and Parker Brother's Monopoly? A look at their sheets will tell you that McDonald's has over $4.5 billion in operating cash flow, with about $1.5 billion in free cash flow. Management knows what it's doing and it's doing it right. MCD is a great stock to own. It's proved itself time and time again, they have a great international presence, the company will probably still be standing when I die, and they offer good dividends. With it's long history, MCD is no longer a value play, but it's still a damn good growth stock to own.
Citigroup (C): Have you seen all the Citibank and Citicard advertisements lately? There are a million of them! I see them all over NJ and PA when I'm on my way to New York City. It's part of Charles Prince's (CEO) aggressive advertisement campaign. Citigroup offers competitive rates and valuable service, and their CitiRewards credit card offers one of the best deals to consumers. Citigroup has also won Glendale Federal Bank vs. the United States, and recently acquired the First American Bank in Texas (FAB), to offer more than just a strong presence in the East Coast. To add to this, Citigroup has a diversified asset management base, has been growing steadily in revenues, is trying to command a stronger international presence, and is buying back common shares: a good sign! I'm hoping to use it to add some stability to my somewhat volatile-at-the-moment portfolio. It's just too bad I didn't get it earlier when I was already thinking about it at $44 a share.
I think these five stocks should give anyone an idea of what kind of companies I like and why I like them. I did also want to talk about Amazon (AMZN), Dell (DELL), eBay Inc. (EBAY), Dow Chemical (DOW), Deere and Co. (DE), 3M Co. (MMM), Johnson & Johnson (JNJ), Microsoft (MSFT), Conoco Philips (COP), and JP Morgan and Chase (JPM). Alas, I'm tired. That will have to wait for another day.
I did, however, come up with a list of business leaders I now officially admire.
My new business role models include:
Larry Page and Sergey Brin, Cofounders of GOOGLE
Steve Jobs, CEO of Apple Computer and Pixar Studios
David Filo and Jerry Yang, Cofounders of Yahoo!
(by the way, did anyone know that YAHOO was originally an acronym for "Yet Another Hierarchical Officious Oracle"?)
Bill Gates, you know… Chairman and Founder of Microsoft
Warren Buffett, Chairman of Berkshire Hathaway, "revered investor," and second richest man in America, after Bill Gates
Pierre Omidyar, Founder and Chairman of eBay
Jeffrey P. Bezos, Founder and Chairman of Amazon
This basically makes my reading list for the month.
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