Stock Analysis
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.
Denny’s Serves Up Grand-Slam Returns
By George Leong, B.Comm. for Profit Confidential
We all know that McDonalds Corporation (NYSE/MCD) is the reigning king of the fast food sector and one of the top performers over the past decade, based on my stock analysis.
In fact, my stock analysis suggests that McDonalds’ rivals are trying to emulate what is working at the company rather than compete against the seller of the iconic “Big Mac.”
Burger King Worldwide, Inc. (NYSE/BKW) may be pursuing a similar strategy to McDonalds’ by diversifying its menu offering with new items and value-conscious options, based on my stock analysis.
Yet while Wall Street focuses on McDonalds and its burger-oriented rivals, my stock analysis reveals that a stock that I feel offers better valuation and potential upside is Denny’s Corporation (NASDAQ/DENN). With a market-cap of $552 million, Denny’s is dwarfed by the $102-billion market cap of McDonalds, but that doesn’t mean there isn’t a buying opportunity with Denny’s, based on my stock analysis.
In fact, Denny’s is up 50% over the past 52 weeks and has easily outperformed the S&P 500’s advance of 26.8% and McDonalds’ 11.8% gain, according to my technical analysis.
Chart courtesy of www.StockCharts.com
Denny’s is best known for its “Grand Slam” breakfast offerings. The company has gone through a major structural reorganization in which it sold many of its stores to franchisors, thereby reducing its own operating costs and collecting fees instead. As of March 27, 2013, 1,525 of the company’s 1,689 restaurants were franchised. The end results have been stronger operating numbers and a steady rise in the company’s share price, according to my stock analysis.
About 98 restaurants are situated in Canada, Costa … Read More
Has Microsoft Found Its Savior?
By George Leong, B.Comm. for Profit Confidential
Did you notice that Microsoft Corporation (NASDAQ/MSFT) is a hot commodity once again? After essentially trading in a sideways channel since late 2009 to April 2013, the stock broke out to a new 52-week and multiyear high of $35.10 on Monday, according to my stock analysis.
With the move, Bill Gates has recaptured his title as the world’s richest man, having a net worth of over $75.0 billion. Microsoft is now valued at $292 billion and is catching on fire.
Only a few months ago, I was questioning the potential of Microsoft; I felt that the former Wall Street darling was set for a crash landing unless it could convince the market that better times were ahead. (Read “Another Lost Decade for Microsoft?”)
Fast-forward three months, and my stock analysis now suggests that Microsoft seems to be firing on all cylinders and is once again catching the attention of Wall Street and investors.
The chart of Microsoft below shows the stock (as shown in red candlesticks) moving higher in relation to the S&P 500 (as shown by the green line), based on my technical analysis.
Chart courtesy of www.StockCharts.com
My stock analysis indicates that the rising of the stock has not been triggered by its new “Windows 8” touchscreen or the Windows smartphone in association with Nokia Corporation (NYSE/NOK); but the company is showing great potential in its ever-growing gaming division.
On Tuesday, Microsoft launched its highly anticipated “Xbox One,” which will represent a dramatic change from the “Xbox 360.”
Based on the somewhat glitzy presentation in New York City, the Xbox One looks like it has … Read More
No Time to Relax, More Significant Correction May Be in the Works
By George Leong, B.Comm. for Profit Confidential
The stock market came off its worst week this year; but even given the minor correction, I don’t think we can relax enough to re-enter the market and buy, based on my stock analysis.
I think there could be a more significant market correction down the road that could shave another five percent off the current levels.
Yet even so, the selling over the recent sessions have driven the key stock indices down to levels that are more realistic compared to levels at the end of the first quarter, according to my stock analysis.
Simply put, the previous rate of the advance was not sustainable.
My stock analysis shows that with April coming to an end, we could also be seeing the final leg of the current six-month bull cycle from November to April that has historically resulted in the best gains, according to the Stock Trader’s Almanac.
This doesn’t mean that stocks are not worth a look for the next six months. But if the historical cycles pan out, the best gains may have already been made, so it will come down to stock selection, according to my stock analysis.
Let’s take a look at the investment climate at this juncture.
What’s critical right now is the first-quarter earnings season. So far, with about 104 S&P 500 companies having reported, the results have more or less been in line with the previous quarters, with about 67.3% beating earnings-per-share (EPS) estimates, according to Thomson Financial.
Another 170 S&P 500 companies are reporting this week.
Of the 20% of the S&P 500 companies that have reported, the results … Read More
PCs a Relic for the Smithsonian; Intel Paints a Bleak Picture
By George Leong, B.Comm. for Profit Confidential
Personal computer (PC) sales are on the decline.
It’s clearly not a surprise whatsoever, as we have seen this trend developing for years following the major push of tablets into the marketplace, according to my stock analysis.
We have seen all of the PC makers report declining sales and the need to re-invent and adapt to the rapidly changing environment for mobile devices.
Intel Corporation (NASDAQ/INTC), which used to be an icon on Wall Street and in Silicon Valley, is succumbing to the mobile wave. And it’s only going to become a technological tsunami that could inevitably devastate the PC sector and drive industry changes in order for survival, based on my stock analysis. (Read “PC Sector Struggling; Time for One Last Goodbye?”)
Chart courtesy of www.StockCharts.com
The results released from Intel on Tuesday support my argument.
Let’s take a look (source for all data: “Intel Reports First-Quarter Revenue of $12.6 Billion,” Intel Corporation web site, April 16, 2013):
Revenues from Intel’s once-thriving PC Client Group (PCCG) fell another six percent year-over-year to $8.0 billion in the first quarter, down 6.6% on a sequential basis.
My stock analysis indicates that volume in the notebook segment fell six percent year-over-year in the first quarter, while volume in the PC segment declined seven percent year-over-year.
But what was interesting was the Intel Architecture Group, which comprises the mobile business, including its tablet and smartphone business—areas that I feel will be critical for Intel to expand, based on my stock analysis.
The Intel Architecture Group accounted for a mere 8.5% of total revenues in the first quarter. My stock analysis … Read More
PC Sector Struggling; Time for One Last Goodbye?
By George Leong, B.Comm. for Profit Confidential
At my household, no one uses a personal computer (PC). There is the occasional use of a laptop, but even these mobile devices are becoming cumbersome to handle. In fact, the dominant devices of choice in my household are tablets, phablets (large smartphones with the capabilities of a tablet), and smartphones. These devices are small, light, mobile, and increasingly powerful enough to work on, whether it’s for work or for school.
What is occurring in my household is also happening across America and, in fact, around the world, according to my stock analysis.
Users are increasingly demanding smaller and more powerful devices. My stock analysis indicates this has been the trend, and it’s not going to change anytime soon, despite many efforts by the PC makers.
Dell Inc. (NASDAQ/DELL) was playing around with a hybrid laptop/tablet combo. It was pretty gimmicky, and it was just a failed attempt to override the tablet, based on my stock analysis.
Microsoft Corporation (NASDAQ/MSFT) recently launched PCs and laptops with its touchscreen “Windows 8” platform, but they’ve failed to catch on so far. Having played with these touchscreen computers, I still prefer the feel and portability of the tablet. I think the majority of users are in sync here, based on my stock analysis.
Bob O’Donnell of International Data Corporation (IDC) said, “At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market.” (Source: “PC Shipments Post the Steepest Decline Ever in a Single Quarter, According to IDC,” International Data Corporation web site, … Read More
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