The Priceline Group Inc. ($PCLN) is the well-known leader in online travel services owning "six primary brands: Booking.com, priceline.com, agoda.com, KAYAK , rentalcars.com and OpenTable. " Not only do the operate in over 220 countries and territories, but they also operate in over 42 languages, a key skill in the globalized economy. Now let us examine the financial data driving this travel service group and determine whether they are primed for an investment.
According to Priceline's Investor Relations webpage they handled $55.5 billion in gross bookings in 2015. A few data points that I like about PCLN are as follows...
P/E Ratio: 25.60
This ratio is higher than the average for the S&P 500, but PCLN has been growing rapidly and has outpaced their competition in numerous categories.
Profitability
PCLN tops the industry average in gross profit margins (90.2% vs 77.1%), operating margin (35.3% vs. 20.2%) and profit margin (27.7% vs. 19.4%)
Financial Strength
PCLN has less debt/equity than the industry average and is a better value in terms of Price/Cash flow.
Revenue
PCLN's revenue per share is 179x vs the 20.7x industry average.
Summary
This company is truly the best of breed when it comes online travel booking. They bring in a tremendous amount of revenue without taking on insurmountable debt. This company also knows how to capitalize on this revenue and turn it into profit. I would certainly look into investing in a piece of this company as the U.S. economy continues to improve and consumers will travel more frequently.
Wednesday, May 11, 2016
Tuesday, May 10, 2016
Just a bit of FitBit (FIT)
It has been quite a while since I last posted, but I am back! I will fill in the blank spaces in future posts, but I am excited to announce my most recent investment. I invested in FitBit Inc. ($FIT) after its precipitous 18% drop after reporting earnings. FitBit was an IPO darling just a year ago, but it has fallen from nearly $50 to $14. This story is all about expectations...simply, FitBit is actually much better off now then when they first became a public company. They have not met Wall Street's lofty expectations however, so their stock has been punished. This is a company with competition, but they have serious growth potential and are the dominant name in the wearables market. At a P/E multiple that fell to 18 I could not help but invest.
Tuesday, July 23, 2013
Three Reasons to Invest in Apple Inc. (AAPL)
Although there are many reasons to invest in the great tech company that is Apple, I have narrowed it down to just three reasons.
- Simply looking at the fundamentals, Apple is trading at a major discount to its rival "tech-giant" competitors. Although Apple shares have fallen nearly 30% in the last year, the company is still extremely profitable and trades at just 10 times earnings. This is far less expensive than the technology industry average of 16 times earnings. In this bull market, value is hard to find, but not if you choose to invest in Apple.
- Additionally, Apple is still projected to grow at an average of 21% for each of the next five years, while the technology industry is only projected to grow at an average of 11%. The PEG ratio (PE/Growth) is useful in this situation to display Apple's value. Apple trades at a lower PE ratio and grows at a higher rate than the tech industry, therefore Apple's PEG ratio is .52. The PEG ratio for the tech industry is 1.34, which means that you are paying more for less growth, if you look past Apple.
- Finally, Apple is one of the largest companies in the world, and now has $146 billion in cash! This money is just sitting there waiting to be returned to shareholders in the form of share buy-backs and increased dividend payouts. Apple currently yields 2.91% which is very impressive for a tech company. Consider that Google, Microsoft, IBM, and Oracle all fall short of a dividend that pays this much. Apple has announced plans to buy back shares which is good for two reasons. Apple believes that their shares are undervalued at these prices and will attempt to profit by selling them later. Also, by reducing the number of shares available to the public, the value of each one increases.
Thank you for reading, now carefully consider these facts and your investment objectives before investing
(Facts according to Yahoo!Finance)Monday, July 22, 2013
3 Reasons That I Am Buying UnitedHealth Group Inc. (UNH)
- On a valuation basis, UNH currently trades at 14 times earnings, or a 14 P/E multiple. Additionally, UNH is trading just over 12 times next years earnings, a better value than the S&P 500.
- Not only is UNH undervalued, but it's share price has still been increasing at an average of 40% each year for the last 5 years. This year, it is already up 30 %.
- Finally, with the Affordable Care Act looming over the horizon, more citizens will be able to receive health benefits. Currently there is an estimated 44 million Americans that cannot afford health care. However, UnitedHealth is positioned to acquire a good amount of these citizens' business once the act is put into practice.
Monday, July 15, 2013
3 Reasons to Invest in Dividend-Paying Companies
The value of investing in dividend paying companies is often overlooked in today's market. Investors are seeking growth, but yet they forget that dividend paying companies can be just what they need.
First of all, investors know that a dividend payout is a return to shareholders that is issued quarterly, semi-annually, or annually. This extra cash is a delight to investors, as it is essentially a "thank-you" for being a loyal shareholder. However, this cash can and should be used to purchase more shares of the same company, if you believe in it. In turn, this will lead to more cash in your pocket when future dividends arrive. For information on why you should reinvest your dividends, see my other entry "Why Should I Reinvest My Dividends?"
Secondly, a dividend can help boost your returns when the stock price is appreciating, but also mitigate your losses when the market goes down. For example, if a stock prices rises from $100 to $110 in one year, it increased 10%. However, if you include your 3% payout, you have an adjusted 13% return. If the price decreases 10% in a year, your dividend reduces that loss to 7%.
Finally, and most importantly, a dividend is proof that a company is prosperous financially. These companies have enough capital to continue growing, and make shareholders happy. Also, the companies that are able to consistently raise their dividend payout each year, have been some of the best performing stocks in the last century. There is a select group known as the "Dividend Aristocrats" which are the companies that have raised there dividend payout for 25 consecutive years. I advise you to search for the members of this group, and seriously consider investing in them if you wish to build life-long wealth.
First of all, investors know that a dividend payout is a return to shareholders that is issued quarterly, semi-annually, or annually. This extra cash is a delight to investors, as it is essentially a "thank-you" for being a loyal shareholder. However, this cash can and should be used to purchase more shares of the same company, if you believe in it. In turn, this will lead to more cash in your pocket when future dividends arrive. For information on why you should reinvest your dividends, see my other entry "Why Should I Reinvest My Dividends?"
Secondly, a dividend can help boost your returns when the stock price is appreciating, but also mitigate your losses when the market goes down. For example, if a stock prices rises from $100 to $110 in one year, it increased 10%. However, if you include your 3% payout, you have an adjusted 13% return. If the price decreases 10% in a year, your dividend reduces that loss to 7%.
Finally, and most importantly, a dividend is proof that a company is prosperous financially. These companies have enough capital to continue growing, and make shareholders happy. Also, the companies that are able to consistently raise their dividend payout each year, have been some of the best performing stocks in the last century. There is a select group known as the "Dividend Aristocrats" which are the companies that have raised there dividend payout for 25 consecutive years. I advise you to search for the members of this group, and seriously consider investing in them if you wish to build life-long wealth.
Wednesday, June 19, 2013
Why This Fed Meeting Should Not Scare You
Hello Everyone!
Today at 2:00 the Federal Reserve confirmed that they will continue buying $85 billion in bonds for a few more months, but plan to wind down their purchases to zero by the end of 2014. What does this mean for your money? Two things. First, the bond market may slowly return, as yields rise. However, this could mean that some investors will leave the stock market, causing prices to fall. On the positive side, by having the Fed leave the market, the economy can work towards becoming "normal" again. By normal I mean a market that is not artificially held up. Many investors would argue that every gain since 2009 has been artificial. This will hopefully lead to a more stable market (including bonds) even if we have to deal with short term losses. Be sure to follow me on twitter @andrewciatto
Today at 2:00 the Federal Reserve confirmed that they will continue buying $85 billion in bonds for a few more months, but plan to wind down their purchases to zero by the end of 2014. What does this mean for your money? Two things. First, the bond market may slowly return, as yields rise. However, this could mean that some investors will leave the stock market, causing prices to fall. On the positive side, by having the Fed leave the market, the economy can work towards becoming "normal" again. By normal I mean a market that is not artificially held up. Many investors would argue that every gain since 2009 has been artificial. This will hopefully lead to a more stable market (including bonds) even if we have to deal with short term losses. Be sure to follow me on twitter @andrewciatto
Tuesday, June 18, 2013
7 Helpful Investing Resources
Hello everyone!
Today I will explain how I use some of the "Investing Resources" that I have listed on the left side of the page. The best link that I can steer you towards is Investopedia.com. This website has something for investors of all levels. It provides 1 minute videos explaining countless aspects of investing. There is also an investing term dictionary which provides the dictionary definition and the "Investopedia Definition." Finally, Investopedia has a stock market simulator where you can test investing strategies.
Yahoofinance.com is most useful for it's real-time content, either news, stock prices, or charts. However, once you type in a ticker symbol, on the left hand side, there is a link called "Analyst Opinion." This link tells you how many analysts cover that stock, whether they rank it as a buy or sell (1.0 = buy, 5.0 = sell), and their price targets for the stock.
Googlefinance.com has a useful tool called "Stock Screener." This tool allows the user to input specific criteria that they are looking for in a stock, and Google will match you with the results. It is also one the most well organized tools for tracking your portfolio.
The Motley Fool, fool.com , is a great link for finding how thousands of other investors feel about the same stocks that you do. This can be found in their "CAPS Community"
Of course a compound interest calculator is nice for projecting returns, but it is impossible to predict the future.
Twitter is good for the speed in which you can receive news.
Reddit.com/r/investing is a forum in which you can post questions and read other interesting information. It is like a giant bulletin board.
Today I will explain how I use some of the "Investing Resources" that I have listed on the left side of the page. The best link that I can steer you towards is Investopedia.com. This website has something for investors of all levels. It provides 1 minute videos explaining countless aspects of investing. There is also an investing term dictionary which provides the dictionary definition and the "Investopedia Definition." Finally, Investopedia has a stock market simulator where you can test investing strategies.
Yahoofinance.com is most useful for it's real-time content, either news, stock prices, or charts. However, once you type in a ticker symbol, on the left hand side, there is a link called "Analyst Opinion." This link tells you how many analysts cover that stock, whether they rank it as a buy or sell (1.0 = buy, 5.0 = sell), and their price targets for the stock.
Googlefinance.com has a useful tool called "Stock Screener." This tool allows the user to input specific criteria that they are looking for in a stock, and Google will match you with the results. It is also one the most well organized tools for tracking your portfolio.
The Motley Fool, fool.com , is a great link for finding how thousands of other investors feel about the same stocks that you do. This can be found in their "CAPS Community"
Of course a compound interest calculator is nice for projecting returns, but it is impossible to predict the future.
Twitter is good for the speed in which you can receive news.
Reddit.com/r/investing is a forum in which you can post questions and read other interesting information. It is like a giant bulletin board.
Saturday, June 15, 2013
Why should I reinvest my dividends?
Hello everyone!
Today I will discuss the importance of reinvesting your dividends in the great company that you identified and now own. A dividend is a quarterly or annually distribution of a portion of a company's earnings(Investopedia). Often times, investors are paid a quarterly cash dividend, and don't think about it as much more than that. However, a wise investor would look to set up a Dividend Reinvestment Plan (DRIP). In this "plan," the shareholder requests that his quarterly dividend be paid directly in stock rather than cash. This eliminates an additional transaction in which you have to contact your broker with the same order each time you receive a dividend payout. As you will see in a minute, by increasing your number of shares every three months, you significantly increase your returns. Let's look at two different investors: Steve and Carl. Steve and Carl both make a $10,000 investment in McDonald's(MCD). For our sake let's assume that McDonald's costs $100 per share (actually 98.42). Both investors want to hold their 100 shares for 30 years without selling, or spending any additional money to increase their holding size. However, Steve wants to reinvest his dividends, while Carl wants to use his dividends to go out to a special restaurant every 3 months. Unfortunately Carl does not realize that he is severely restricting the amount that his investment can appreciate. If McDonald's stock price does not increase in the next 30 years, Carl will be left with a $9,390* profit simply from dividends...not bad (nearly a 100% gain). Steve will make far more money than Carl since he wisely reinvested his dividends. Here is how Steve accomplished such a feat...First Steve had 100 shares, but each quarter he had a few more shares since he used his dividends to buy more shares of McDonald's. Then Steve had more shares that paid him a dividend, so he had even more money the next quarter, to buy more shares! This snowballed in an account value worth $25,000! Nearly $6,000 more than Carl's $19,930*. Now imagine they had made these investments when they were teenagers and were actually planning to hold for 60 years! Carl again would be left with his $10,000 initial investment plus $19,860 (dividends). Here is where Steve's wise investment pays off...Steve's account will be worth $63,500! More than double Carl's account value. REMEMBER! Steve accomplished this with McDonald's stock price never increasing over 60 years! Amazing! The reason that Steve was able to do this was because after 60 years he had accumulated 635 shares of McDonald's stock while Carl still had his 100 shares.
Use this link, and see how important dividends are to you!
http://loanlane.com/divcalculator2.php
MAKE SURE YOU SCROLL DOWN AFTER PRESSING "CALCULATE"
*$9,390 = ($3.13 Dividend per Share) x (100 shares) x (30 years)
*$19,930 = $9,930 (from dividends) + (10,000 initial investment)
Today I will discuss the importance of reinvesting your dividends in the great company that you identified and now own. A dividend is a quarterly or annually distribution of a portion of a company's earnings(Investopedia). Often times, investors are paid a quarterly cash dividend, and don't think about it as much more than that. However, a wise investor would look to set up a Dividend Reinvestment Plan (DRIP). In this "plan," the shareholder requests that his quarterly dividend be paid directly in stock rather than cash. This eliminates an additional transaction in which you have to contact your broker with the same order each time you receive a dividend payout. As you will see in a minute, by increasing your number of shares every three months, you significantly increase your returns. Let's look at two different investors: Steve and Carl. Steve and Carl both make a $10,000 investment in McDonald's(MCD). For our sake let's assume that McDonald's costs $100 per share (actually 98.42). Both investors want to hold their 100 shares for 30 years without selling, or spending any additional money to increase their holding size. However, Steve wants to reinvest his dividends, while Carl wants to use his dividends to go out to a special restaurant every 3 months. Unfortunately Carl does not realize that he is severely restricting the amount that his investment can appreciate. If McDonald's stock price does not increase in the next 30 years, Carl will be left with a $9,390* profit simply from dividends...not bad (nearly a 100% gain). Steve will make far more money than Carl since he wisely reinvested his dividends. Here is how Steve accomplished such a feat...First Steve had 100 shares, but each quarter he had a few more shares since he used his dividends to buy more shares of McDonald's. Then Steve had more shares that paid him a dividend, so he had even more money the next quarter, to buy more shares! This snowballed in an account value worth $25,000! Nearly $6,000 more than Carl's $19,930*. Now imagine they had made these investments when they were teenagers and were actually planning to hold for 60 years! Carl again would be left with his $10,000 initial investment plus $19,860 (dividends). Here is where Steve's wise investment pays off...Steve's account will be worth $63,500! More than double Carl's account value. REMEMBER! Steve accomplished this with McDonald's stock price never increasing over 60 years! Amazing! The reason that Steve was able to do this was because after 60 years he had accumulated 635 shares of McDonald's stock while Carl still had his 100 shares.
*Price is kept constant at $100 over 60 years.
*Dividend remains $3.13 per year or $.7825 per quarter
|
Carl
|
Steve
|
Initial Investment
|
$10,000
|
$10,000
|
Number of Shares (Year 1)
|
100
|
100
|
Account Value (30 Years)
|
$19,930
|
~$25,000
|
Account Value (60 Years)
|
$29,860
|
~$63,500
|
Number of Shares (Year 60)
|
100
|
635
|
Use this link, and see how important dividends are to you!
http://loanlane.com/divcalculator2.php
MAKE SURE YOU SCROLL DOWN AFTER PRESSING "CALCULATE"
*$9,390 = ($3.13 Dividend per Share) x (100 shares) x (30 years)
*$19,930 = $9,930 (from dividends) + (10,000 initial investment)
Identify a Great Company!
Hello Everyone!
Although these last few weeks in the market have been rocky, this has been a very bullish year. Now is a great time to discuss how to identify a superior company. In a bull market, finding such a company will maximize your returns. In a more bearish market, finding a great company will be crucial to limiting your risk of losses. Everyone invests differently, and may have different opinions, but here is how I identify a company as a buy target.
Although these last few weeks in the market have been rocky, this has been a very bullish year. Now is a great time to discuss how to identify a superior company. In a bull market, finding such a company will maximize your returns. In a more bearish market, finding a great company will be crucial to limiting your risk of losses. Everyone invests differently, and may have different opinions, but here is how I identify a company as a buy target.
- You can explain how this company makes money
- You could explain why you want to buy the stock
- There is a catalyst that can boost the company's growth
- Consider how strong/weak the company's competitors are
- Well recognized (brand name)
- Does not have to constantly spend money to change their product
- Fair price-earnings valuation
- Reasonable dividend
- Strong leadership
- A strong balance sheet
Although I have outlined these investing principles, not every great company fits this criteria. For example, Google does not pay a dividend, and spends money to revamp what they do. Thanks for reading and keep investing! Be sure to subscribe, so that you can receive these posts directly in your inbox!
Follow me on Twitter @andrewciatto
Thursday, June 13, 2013
First Post!
Hello Readers,
In today's edition of intelligent investing I will be sharing a few of my investment strategies. First of all, I always invest based upon a theme. Let's look at our current economic situation; investors are gaining confidence, and they are selling their "stable" stocks in exchange for more cyclical investments. Your theme for this investing period could be "Recovering Economy." At this time, I too would be looking to pick up some high-growth stocks for my portfolio. One such stock would be Boeing (BA). Although I am not telling you to go purchase some shares of Boeing, it is a perfect example of a cyclical grower. In 2008, when the market collapsed, Boeing was one of the hardest hit companies. Since Boeing makes airplanes, when the consumer was not spending very much money on travel, airlines did not need more, or newer, planes. Thus, Boeing did not have orders to fill. However, Boeing has come roaring back (150%) since the crash, because airlines need newer planes, and more of them! Now I encourage you to maybe look elsewhere for growth since Boeing has run up a lot. But stay investing with a theme! One theme that I have personally considered, but am not necessarily recommending, is investing in companies that belong to the "financials" sector. I like this theme for two reasons. 1. Most specifically, banks have refocused on their core business since the market collapse. Many have sold off "less relevant" parts of their businesses. Also, although the S&P500 and the Dow Jones Industrial Average have set all-time highs, these financial companies are not even close to their 2008 highs. That means their is plenty of growth left in the tank. Thanks for reading and continue investing!
Follow me on Twitter @andrewciatto
In today's edition of intelligent investing I will be sharing a few of my investment strategies. First of all, I always invest based upon a theme. Let's look at our current economic situation; investors are gaining confidence, and they are selling their "stable" stocks in exchange for more cyclical investments. Your theme for this investing period could be "Recovering Economy." At this time, I too would be looking to pick up some high-growth stocks for my portfolio. One such stock would be Boeing (BA). Although I am not telling you to go purchase some shares of Boeing, it is a perfect example of a cyclical grower. In 2008, when the market collapsed, Boeing was one of the hardest hit companies. Since Boeing makes airplanes, when the consumer was not spending very much money on travel, airlines did not need more, or newer, planes. Thus, Boeing did not have orders to fill. However, Boeing has come roaring back (150%) since the crash, because airlines need newer planes, and more of them! Now I encourage you to maybe look elsewhere for growth since Boeing has run up a lot. But stay investing with a theme! One theme that I have personally considered, but am not necessarily recommending, is investing in companies that belong to the "financials" sector. I like this theme for two reasons. 1. Most specifically, banks have refocused on their core business since the market collapse. Many have sold off "less relevant" parts of their businesses. Also, although the S&P500 and the Dow Jones Industrial Average have set all-time highs, these financial companies are not even close to their 2008 highs. That means their is plenty of growth left in the tank. Thanks for reading and continue investing!
Follow me on Twitter @andrewciatto
Wednesday, June 5, 2013
Welcome!
Hello potential readers of this blog!
Starting June 14th, I will be updating this blog regularly, with the intent of growing wealth together! I will constantly be sharing my views of the stock market, but under no circumstances am I a stock broker, so I can not be held responsible for any investments that you make that go down, nor take credit for those that you act on, and go up. However, I also know that the best investment, is one in knowledge. Therefore I wish to make you financially literate, so that you have the skills and tools to build your own wealth. To all of those who have read this, thank you, and I am excited to begin!
Follow me on Twitter @andrewciatto
Starting June 14th, I will be updating this blog regularly, with the intent of growing wealth together! I will constantly be sharing my views of the stock market, but under no circumstances am I a stock broker, so I can not be held responsible for any investments that you make that go down, nor take credit for those that you act on, and go up. However, I also know that the best investment, is one in knowledge. Therefore I wish to make you financially literate, so that you have the skills and tools to build your own wealth. To all of those who have read this, thank you, and I am excited to begin!
Follow me on Twitter @andrewciatto
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