US Stocks

steveadl

steveadl

Carried on from this thread

Intrinsic Value:
thanks for the info Steve.
Amazon is too expensive for me, but it is fast growing and has a sustainable business model. I think its definately a top quality company that deserves a status as a long term buy and hold stock (but at what entry price???)

Well that's the thing. I really really hope it drops in the future and lowers my entry price. Whilst it probably will, I'm not going to wait on it, just continue to drip in small amounts of cash.

Stocks that i currently own are: GE, Oracle, Microsoft, YUM.
Exited cisco and HP, both on losses.
Current US portfolio is roughly break even, the biggest problem i find is when share prices are attractive, AU$ is low. (for example from memory i bought some of the GE at around $11-$12, but when the AU$ was much lower, so effectively its still at break even point).

Yes, that's something I'm aware of so am happy to be plowing a fair bit of cash in at the current rate of almost parity. Though last nights transfer was my worst exchange rate so far at 0.9748. My strategy may change and the funds I'm putting in may decrease substantially if we head back down to 70c again, but I don't think that will be a problem for a while yet. Hopefully we'll do the reverse and head closer to $1.10 and I'm happy to put more in.

Like you i am searching for 'long term buy and hold' stocks in the US, rather than investment trading positions via intrinsic value arbitrage. I think the US market is far more efficient than Australia in short term pricing of its stock. Therefore a retail investor's competitive advantage can only come through being patient.

From what I've observed so far I think you've hit the nail on the head.

In regards to margin loans the biggest problem is the interest rate differential. Equity valuations are sensitive to interest rates. Using australian sourced margin loans, we are paying AU$ margin rates, yet buying US stocks that are priced reflecting US$ interest rates.

Actually I was surprised at how little information there was available for me when I spoke to CommSec International desk about the US margin loan on offer. I've sent off the application and so will see more details once it appears in my Pershing account I guess. If it's not attractive I just won't use it. There was no information available for her to email/mail me and really the only information she gave me was that stocks must be over $5 per share and the LVR is 50% on all stocks. Yet to find out what currency and % rates the loan will be in.
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Hey if you are serious about US stocks, maybe set up a new thread in the coffee lounge, this way the information doesnt get lost in the system.

Done! ;)
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Edmond Dantes:
I've got an account in Zecco that allowed me to own us stocks even if I wasn't a US citizen. You just have to fill out couple forms and send it back.

Oh the stocks are no problem, all in my name, I just can't use the direct stock purchases offered by the individual co's themselves through registers like Computershare. No big deal, just means cost me more on brokerage. :rolleyes:

YUM is one of Warrent Buffet's favorites :). I'd bought ORCL @ 9 long ago and had to sell it :-(

That's interesting to hear, maybe I'm better at this than I thought! :D

Own also BIDZ (sucker), RIMM, V (love this one), AAPL (love it too), BAIDU etc..

Yes have noticed MC and V as well, but haven't done any research on them yet. AAPL I've been very tempted, but I haven't brough myself to buying them yet. I keep coming back to the fact that they need constant innovation of their products to keep the massive sales coming (and they've done a brilliant job so far!), what if they slump? What if someone else comes out with something better etc? So whilst I definitely haven't ruled them out and will continue to look at them, for the moment I decided on AMZN as my theory is, no matter what gadget or product is popular, in any category - people will be buying it from AMZN.

now looking at KO for its competitive advantage and relatively low P/E. have to do more research before making the move.

Yes, been thinking seriously about KO. What bothers me is despite their growth, they don't seem to have gone anywhere the last 10yrs or so. I also worry that despite the increased volumes, they need this just to keep their momentum going, and blockbuster growth may be harder. Would be interested in hearing your views on it in your research so far.

PEP I find interesting too, but whilst their revenue is increasing, profit isn't. I do like that they are the biggest snackfood co as well as the beverages business.

What I love about US stocks is the wealth of information you can get. I just can't get my head around with AUS stocks, apart from the normal BHP, woolies, etc.

I've noticed that too! I have the companies I'm interested in set up on Google Reader and I literally get hundreds of links a day (a lot repeated) to go through. So much more discussion, views, research and articles on them. It's also the much larger markets these co's operate in, ie. truely worldwide co's where as in Aust we have only a few eg. BHP, CSL, COH, NWS, BXB and a few others.
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Intrigued:
Have you done any work on the tax side of this, re div's and CG's. I realise your not worried about the CG side considering your term outlook.

But Div earn't offshore what is the effect to your tax here.

Sorry we are looking the same idea, and about to check out this side of it.
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Absolutely none so far, so please post here whatever you find out! For the first year at least the dividends I'm receiving will be insignificant due to the $'s I'm investing and also the fact that half the co's I'm looking at don't pay any dividends. I'm waiting for the first batch of ownership/tax forms etc to reach me over here and will be eagerly looking into it then.

My accountant can handle the tax side of it when the time comes.

Loving this conversation though, glad to know there's fellow SS'ers looking interested in US stocks as well.
 
Here's some more I keep on my watch list, however for one reason or another I'm not comfortable buying yet:

- LTD. Hubba hubba! ;) At this stage I'm looking at making this my next purchase, but will continue to evaluate over the coming days. Still has huge potential for growth in US (comparable store sales up 10%) and has very little overseas presence, so a lot of opportunity there as well. Was very impressed by the VS store when I visited a couple times last year - both for the obvious reason :))) but also the amount of shoppers, selection, product quality, service etc.
- CCSC. Looks good, but I can't justify the extra risk when I'm presented with a solid performer like YUM in the same market.
- EZPW. The mob taking over CCV(ASX) by stealth. The personal finance industry looks extermely lucrative. However I hold CCV with a much better dividend so don't feel the need to buy this one at this stage.
- FRPT. Nice little defence vehicle manufacturer. Looked into them years ago before they started winning major contracts. Look good, but even with a lot of successful contracts, I can't help but think they would need continuous high demand to go places which may be a tougher ask. With the amount of larger defence plays on offer in US (GD, LMT, NOC, RTN etc), it's an industry I'll look into down the track.
- HGSI. About to receive FDA approval for a big drug and a big pipeline ahead, but a lot of that is built into the price already, so not necessarily any rush.

Anyone else got anything I should be looking at? ;)
 
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http://www.ici.org/

Not sure about the total US market,but somebody must be buying maybe all the funds managers,but we are just about into Dec,Jan,and i'm more interested in the All Ordinares,and over the past 32 years it has only fallen 7 times in Dec,and from experience January is the start and gives you some idea as to the way will pan out fot the rest of the "FIN" year,

The only US company that i'm still holding is "BKC", i bought into that m fast food chain when it floated several years ago,all the rest are gone long ago..imho..willair..
 
steveadl said:
Here's some more I keep on my watch list, however for one reason or another I'm not comfortable buying yet:

- LTD. Hubba hubba! ;) At this stage I'm looking at making this my next purchase, but will continue to evaluate over the coming days. Still has huge potential for growth in US (comparable store sales up 10%) and has very little overseas presence, so a lot of opportunity there as well. Was very impressed by the VS store when I visited a couple times last year - both for the obvious reason :))) but also the amount of shoppers, selection, product quality, service etc.
- CCSC. Looks good, but I can't justify the extra risk when I'm presented with a solid performer like YUM in the same market.
- EZPW. The mob taking over CCV(ASX) by stealth. The personal finance industry looks extermely lucrative. However I hold CCV with a much better dividend so don't feel the need to buy this one at this stage.
- FRPT. Nice little defence vehicle manufacturer. Looked into them years ago before they started winning major contracts. Look good, but even with a lot of successful contracts, I can't help but think they would need continuous high demand to go places which may be a tougher ask. With the amount of larger defence plays on offer in US (GD, LMT, NOC, RTN etc), it's an industry I'll look into down the track.
- HGSI. About to receive FDA approval for a big drug and a big pipeline ahead, but a lot of that is built into the price already, so not necessarily any rush.

Anyone else got anything I should be looking at? ;)
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had a quick look at these companies.
Personally i think they are 'active investment' based companies, rather than long term buy and hold.
Some of them are potentially 'Peter Lynch' type companies, but you need to do your homework, and then keep that homework up.

I dont have the time to do this, especially with the added headache of currency translation effecting my buy/sell decisions at any point in time.

Hence i am focusing on 'durable' businesses with high earnings consistency.
 
I'm thinking more companies like (but with no reference to share price)
Mc Donalds, Yum, V, American Express, Coke, Nestle (european), Amazon as you highlighted.

I had a look at their funeral companies but was surprised with their inconsistent earnings history and low ROE.

Companies i am paying close attention to are Pepsi/altria group/McGraw Hill
 
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Steve i've never dabbled in US stocks.

Can you go into abit further about your investing choice in amazon.

On a PE of 70.

Based on Actual EPS of 2.04 (2010 figure obtained from Yahoo)
Predicted EPS growth of 27.53% P.A (next 5yrs)

After 5yrs PE will still be @ 24.85

Predicted EPS growth is still 12.69% above the industrys projected P.A growth over 5yrs.

Ebay has a PE of 15.


Just seems very over priced or future growth well factored in
 
Intrinsic_Value said:
I'm thinking more companies like (but with no reference to share price)
Mc Donalds, Yum, V, American Express, Coke, Nestle (european), Amazon as you highlighted.

I had a look at their funeral companies but was surprised with their inconsistent earnings history and low ROE.

Companies i am paying close attention to are Pepsi/altria group/McGraw Hill
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Good point about some of the companies I mentioned above being more 'active' investments. I think that's one of the main reasons for my hesitation with them, as they may not be 20yr holds and I'm not really interested in trading US stocks at this point in time. LTD however would be the exception in the above bunch.

This week I'm going to have to do some serious thinking about KO or PEP. Or oI could just buy both I guess. They're both expanding in China in a big way over the next 5yrs. Recent press release from PEP says they're building another 20+ factories in the country over the next couple years.
 
RH, I'll clarify with AMZN that I'm not saying it's necessarily a good buy at the moment. In fact that current PE as we've mentioned is very high. But I plan on establishing a position in them for the long term and will also no doubt be adding to my holdings during periods when they're shares have slumped as well. What I do see with them is a much larger co. 20yrs from now and that's my main game at the moment.

Also bare in mind that the market believes they are one of the front runners to become a leader in cloud which is the wave if the future. So for this reason people may also be willing to pay more for them than if they only had their store operations. Look at CRM which is a pure cloud play - PE of 263! :eek:
 
I have nfi what cloud is, but i remember reading CBA are the ones pushing that system in the banking sector. They are on a PE of 12x at the moment.

Edit: just watched a youtube clip about cloud computing
 
steveadl said:
Also bare in mind that the market believes they are one of the front runners to become a leader in cloud which is the wave if the future. So for this reason people may also be willing to pay more for them than if they only had their store operations. Look at CRM which is a pure cloud play - PE of 263! :eek:
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Hmm... Happened to me with CROX and BIDZ. Got burnt with them, very high p/e, joined the wave tOo late and you just need one result missing analyst expectations for the masses to realise the stock is too high and impossible to keep posting above expectations numbers. Even though I believe in the cloud thing and everything, I'll give this one a pass.
 
Thanks for the Gurufocus link IV, very handy to see the 10yr figures and the 5 & 10yr averages.

Also like all the other info. available at a glance. For example WMT. You can see their revenue and profit increasing each year, whilst at the same time see the amount of shares outstanding consistently falling.
 
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IV, nice heads up on Nestle. After looking into them I like what I see and have started a position.

Also looking into a couple more Europeans, actually French co's - L'Oreal and LVMH.
 
I admire how keen you blokes are, investing in stocks overseas. Great stuff.



I keep giving platinum funds a plug here, as they deserve it. My platinum funds are up 15% from the November 2007 top. Incredible effort I reckon. They obviously must have been short at the top, and had cash to invest at the bottom.

I hold International, International brands, Japan and Asia funds. That's how I will get international exposure. Leave it to the experts.


See ya's.
 
That's a very good strategy too TC, I like it.

Personally I just love finding and researching stocks. Always have. The overseas market is a whole different ball game - every stock I've bought so far and am looking at to date are literally 'world leaders' in their respective fields. Hard to find that in many Aussie stocks.

I've been continually taking profits and lightening my Aussie portfolio over last few months in favour of overseas markets. Going to be annoyed if $A keeps sliding though, up 1c overnight so that's more like it! :)
 
steveadl said:
That's a very good strategy too TC, I like it.

Personally I just love finding and researching stocks. Always have. The overseas market is a whole different ball game - every stock I've bought so far and am looking at to date are literally 'world leaders' in their respective fields. Hard to find that in many Aussie stocks.

I've been continually taking profits and lightening my Aussie portfolio over last few months in favour of overseas markets. Going to be annoyed if $A keeps sliding though, up 1c overnight so that's more like it! :)
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Steve
You might find this site interesting it would probably help if you read there book to see how they score them.

http://www.bigsafedividends.com/

Regards
 
Thanks for that Intirgued, will have to make a note. Dividends however is not my main game with the US strategy. Great dividends on offer here in Aus. if you're going down that route.

IV, US Margin acc. all set up - the rates aren't too bad though I thought they may have been a bit lower. 6.12% base rate, then depending on how much you borrow the additional rate varies from 2.75% - 1%pa on top of that. You paying similar? Still cheaper than I'm getting on the Aus. margin account. :D
 
Edmond Dantes said:
Thanks for the link Intrigued, I recently read motivated money book and found it quite interesting. Will be concentrating in income producing shares here in AUS.
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Its a pretty good read (motivated money), I enjoyed the last letter from his old mate at the end it really somes it up and the comment "You need to be ready when".
Another book you should read is "The power curve" its basically about compounding with dividends and options, which is easier is the US due to contract size being bigger in AUS, but its a good read.
http://www.thepowercurve.com/

And AUS site http://www.investing101.com.au/club.htm here is some great reading here.

Also Steve (US site) checkout http://www.magicformulainvesting.com/welcome.html.

Regards
 
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