advertisement
Sorry for the delay in posting my first Strategy Lab entry, but I have been on the road. Now that I'm back it's time to get in the game, though I will start the process slowly for two reasons:
- First, with the Dow Jones Industrial Average ($INDU) trading at record highs, there aren't as many dogs to look at these days -- especially not those that fit the criteria of being ready to run.
- Second, I'm a little uncomfortable with the market at current levels and don't want to jump in with both feet at current prices. That could be a giant tactical error if the market up and runs away from me in August, but I would rather accept that risk than the risk of getting slammed for being over-aggressive at the wrong time.
My first two buys will be familiar to those folks who monitored the Strategy Lab site during the last round. I will start by buying 150 shares of casino company Las Vegas Sands (LVS, news, msgs) at the open Friday. The stock took a beating earlier this year amid concerns that it overspent on its new Macau property, just as travel to the area was being restricted by the government. Personally, I think that's a bunch of nonsense. Each time a casino operator spends a ton of money on a new property, the bears claim it's too much. However, they were wrong with the Venetian, the Bellagio and the Wynn, and they will be wrong again in August when Las Vegas Sands unveils its Venetian Macau casino. The company is also expanding elsewhere in Asia and will continue to benefit from strong visitation and high occupancy rates in its core Vegas locations. As concerns wane over the Macau property, look for Las Vegas Sands to zip past the $100 mark on its way to new 52-week highs.
Test your investing skills in the Strategy Lab Open
Secondly, I will add 1,000 shares of JetBlue Airways (JBLU, news, msgs) at the open Friday. The company took it on the chin this past winter when it did a miserable job of handling adverse weather conditions in the New York area resulting in long delays, numerous cancellations and irate customers. Management has taken steps to rectify those problems, however, and while the company still has to overcome its public relations snafu, the airline represents a compelling value at current prices.
Barring another major blunder, JetBlue should experience high double-digit earnings growth for the next few years. It has one of the youngest fleets in the air today, which also helps with fuel efficiency -- a key in today's climate of high jet fuel prices. Finally, investors shouldn't rule out a takeover of this regional discount carrier. All in all, I'm expecting a 12-month run at $16-plus.
My final purchase for the day is Motorola (MOT, news, msgs). Failure to stack the pipeline with products to follow up on the Razr's incredible success, combined with management's mistake of slashing prices in an effort to build share, has resulted in declining sales, eroding margins and major earnings misses. A dog if there ever was one. Nevertheless, I was very encouraged by the stock's reaction to its latest earnings warning and now think that the bad news is largely priced in. As old inventory gets flushed through the system, new products get introduced and management focuses on maintaining price stability, and the stock should experience a turnaround within the next six to 12 months.
Don't be surprised by either a change at the top (Chairman and Chief Executive Edward J. Zander booted) or by a takeover attempt. Motorola is also still sitting on a bunch of cash. The company reported earnings Thursday. I will buy 600 shares at the open.
That's all for now. I'll be back in touch early next week.
Rate this Article
High
