Stock Analysis 2013
Stock analysis is the application of a method or set of criteria to evaluate a company’s stock. This analysis can fall into several areas; more broadly this encompasses fundamental analysis, technical analysis, and quantitative analysis. Fundamental analysis covers the research of a company’s financial statements, its management, the marketplace, the firm’s competitors, and forecasts for the future of the business. Technical analysis is the study of a stock’s chart. Someone using technical analysis wouldn’t look at the income statement, but would spend their time looking at the chart and indicators, such as volume, moving averages, and past market moves to forecast future stock moves. Quantitative analysis is when a computer is programmed to look for patterns using mathematics. Some examples of quantitative analysis can be found in statistical arbitrage or algorithmic trading.
A year ago, I was able to take a close look at a cool-looking electric-powered sports car. I even got to sit in it. I noticed that it was not made by a manufacturer that I had recognized—it was built by Tesla Motors, Inc. (NASDAQ/TSLA), but I really didn’t give it a second thought.
Well I wish I had now, as Tesla is seeing its shares supercharge on the price chart, up 70% in the first few weeks of May and 167% so far in 2013, based on my stock analysis. Tesla is up a sizzling 198% over the past 52 weeks compared to the S&P 500’s 23% increase.
My stock analysis suggests that the maker of the sharp-looking electric sports car has really shocked the stock market with its superlative price appreciation. Who would have known?
Chart courtesy of www.StockCharts.com
I thought Tesla was interesting and gimmicky in some ways, but never in my wildest imagination did I expect the stock to surge as much as it has.
According to my stock analysis, you can thank the short-sellers for running to the exits and unloading their positions in a classic short squeeze. At the end of April, there were 27.5 million shares of Tesla shorted. The share price was $53.99. Fast-forward 10 sessions, and the price has surged to over $90.00.
Now you can’t blame short-covering for all of the increase in the share price. Tesla did deliver some awesome numbers that tore apart Wall Street’s estimates, according to my stock analysis.
In the first quarter, Tesla sold 4,900 vehicles. That’s it. By comparison, General Motors Company (NYSE/GM) sold … Read More
The shares of Apple Inc. (NASDAQ/AAPL) have been on a steady climb since plummeting to $385.10 on April 19; but my sense is that the buying has largely been driven by retail investors and not from where it counts with the institutional money, based on my stock analysis.
Insiders and the institutional money are not as supportive of Apple, according to my stock analysis. Over the last six months, insiders have sold Apple in 10 transactions totaling 127,896 shares, while there was only one insider buy of 1,780 shares, according to information by Thomson Financial.
Institutional buying, which I believe is the key to stocks due to their knowledge on the companies, is also refraining from buying Apple, even at the much lower price. My stock analysis indicates that institutions have unloaded 27.8 million shares of Apple with institutional investors’ ownership declining 4.5% on a quarter-to-quarter basis, according to Thomson Financial. Some of the biggest sellers include Capital World Investors (-56.3% in Apple stock), Wellington Management (-48.9%), HSBC Holdings (-62.6%), and BlackRock Advisors LLC (-48.2%). My stock analysis notes that this selling suggests a lack of confidence in the company, even with Apple shares plummeting down more than 40% since the company’s high point.
Based on the lack of buying by the insiders and institutions, I would still be wary of buying Apple at this point. In my view, Apple is more of a trading opportunity than a buy-and-hold.
The reality is that following where the professional money is flowing gives us another tool to evaluate the stock market and get a sense of what is happening.
The concept of … Read More
Apparently, someone forgot to tell the market that Microsoft Corporation (NASDAQ/MSFT) was a dead investment and not worth buying.
Following a lackluster launch of its “Surface” tablet and “Windows 8” operating system, Microsoft quietly moved to a new 52-week high of $32.84 last Thursday.
In its fiscal third quarter, Microsoft reported revenues of $20.49 billion, now on target for fiscal 2013 revenues of $79.16 billion, based on the Thomson Financial estimates.
My stock analysis indicates that the current uptick in the stock price is being triggered by optimism toward the company’s focus on touch-screen computing and mobile devices, along with greater demand for Microsoft’s “Xbox” gaming platform.
Revenues in the company’s entertainment and devices division surged 56% year-over-year to $2.53 billion. The company is set to launch its next-generation Xbox, with its “Xbox LIVE” currently having over 46 million subscribers worldwide, according to Microsoft.
The upward move in the share price and its sustainability will be dependent on whether this former darling of Wall Street can recapture some of its former glory, based on my stock analysis.
One thing is for sure: my stock analysis suggests that Microsoft is no longer the intriguing, can’t-miss stock that it used to be.
Microsoft is not Google Inc. (NASDAQ/GOOG).
My stock analysis suggests that for Microsoft to steadily move higher, the company will need to generate higher revenue growth than the current 7.4% and 7.9% that is estimated for fiscal 2013 and fiscal 2014, according to Thomson Financial.
Microsoft trades at a lower valuation than Google, but this is due to Google’s much higher estimated revenue growth rate of 43.0% and 15.1% for … Read More
Bearish traders tend to short stocks and/or the equities market. While stocks subject to short selling are viewed as negative, I often take the contrarian view, and look at these shorted stocks as a possible buying opportunity due to the short-covering possibility.
Let me explain. With short selling, a trader disliking a particular stock would short the stock by borrowing the stock from his or her broker and selling it in the market at the prevailing price. The short-seller hopes the stock falls in price. For the short-selling strategy to pan out, the short stock must drop in price so that the short-seller can buy it back at a lower price and replace the borrowed position to the registered holder. The short-seller would profit.
In my view, looking at heavy short-selling stocks is a strategy to buy a stock that could have more potential than what the short-seller thinks. By taking this contrarian short-selling approach, you can often discover stocks that may be set for a short-covering rally in which you can profit.
For instance, online leader Google Inc. (NASDAQ/GOOG) is trading at over $800.00; however, investors continue to like the stock, as there are minimal short-selling positions on the stock at 1.6% of the float, or 1.4 million shares, as of February 15, 2013. (Source: Thomson Financial, last accessed March 14, 2013.) But note that a month earlier, there were 3.28 million short shares on Google, so the stock attracted some short-selling covering that helped to drive the stock higher, based on my stock analysis.
I normally would not look at a stock like Google as a short-selling buying … Read More
Google Inc. (NASDAQ/GOOG) is up seven-fold from its initial price and could be well on its way to being the first $1,000 stock. Another heavy-hitter is priceline.com Incorporated (NASDAQ/PCLN), at over $700.00 a share and sizzling on the charts. At a new 52-week high, eBay Inc. (NASDAQ/EBAY) continues to dominate the Internet retail space. The commonality between all three of these companies is that they are all leaders in their respective Internet space, based on my stock analysis. There are pundits suggesting the best years for the Internet stocks are now behind us. I don’t believe that.
In just less than four months, Groupon, Inc. (NASDAQ/GRPN) has more than doubled in value from its 52-week low of $2.60 on November 12, 2012. The company’s business model of providing daily deals on goods and services is interesting, but it is not immune to the rising competition from rivals, since the barriers to entry into this space are relatively low, based on my stock analysis. Unfortunately, my stock analysis suggests that while Groupon was an early entrant in its business, numerous companies are surfacing and pushing Groupon to defend itself by trying to offer an advantage for the user. As shown in the chart below, Groupon broke out at $5.50 resistance, but recently, it sold off with a downside gap after disappointing results; yet the chart shows a possible rally, according to my technical analysis.
Chart courtesy of www.StockCharts.com
My stock analysis indicates that not only does Groupon face competition from the likes of Yelp, Inc. (NYSE/YELP), Google, and Amazon.com, Inc. (NASDAQ/AMZN), but it now faces competition from eBay, which launched a … Read More