Five Star Stocks Poised to Pop: Precision Drilling

Market-trouncing returns could be written in these 5 stars.

Based on the combined intelligence of more than 150,000 investors participating in Motley Fool CAPS, the Fool’s free investing community, the Canadian contract driller Precision Drilling Trust (NYSE: PDS) garnered a coveted five-star ranking.

With that in mind, let us take a closer look at Precision Drilling’s business and see what CAPS investors are saying about the stock right now

On CAPS, 97.5 percent of the 1,697 members who have rated Precision believe the stock will outperform the S&P five hundred going forward. These include ross812 and DarthMaul09.

Just last month, ross812 singled out the stock as a rather sly selection: “If oil stays at $80+ per barrel exploration and there is an increase for drilling of new wells. Precision Drilling is in an advantageous position. I think [Precision] was punished much more than Transocean [(NYSE: RIG)] and will have a superior value catch up.”

In a more recent pitch, DarthMaul09 also sees Precision as a profitable way to play politics:

Sometime in the not too distant future, someone in the US government will come up with the brilliant idea that expanding domestic oil and gas production will not only save us a huge amount of capital that we are currently sending to the middle east, but also bring in real jobs that will last for more than a few weeks. This probably will not happen until after the 2010 election since the Congress will be focusing their full efforts on job preservation (their own).

What do you think about Precision, or for that matter, what do you think of any other stocks? If you desire to retire rich, you need to create the best portfolio you can. Owning exceptional stocks is a surefire way to ensure your financial future, and on Motley Fool CAPS, thousands of investors are on the lookout every day to find them. CAPS is 100% free, so get started!

VIA MSNBC

Keyword: Stock Investing

Stocks Worth Purchasing Again

They were good stocks before but they’re even better when they’re cheap.

It’s always enchanting to read stories about average, everyday people who make fortunes by regularly investing small amounts of money over long periods of time in time-tested companies like Caterpillar (NYSE: CAT), Home Depot (NYSE: HD), and McDonald’s.

If you worked in any of these companies and/or regularly “trickled” money into them over the years, this is quite practical — Caterpillar, Home Depot, and McDonald’s have respectively returned 13.6%, 16.1%, and 12.4% annually over the past 20 years.

But you can also get market-beating profits by buying into great companies at more advantageous times — whenever the stock goes on sale. Instead of regularly investing small, fixed amounts, investors can use the simple method of purchasing a stock in portions to handle risk and boost returns. And the current market would definitely count as one of those advantageous times to purchase cheap stocks.

1st, find a solid business

Of course, not every stock will produce such impressive gains, but big returns on investments always come on the backs of profoundly strong businesses. And if you are confident that you have bought shares in a great company, why wouldn’t you consider purchasing again, especially if the stock price is significantly below its intrinsic value? Especially in pessimistic markets (like today’s), profoundly strong businesses can be purchased for good prices — or even downright, outrageously cheap prices.

For a lot of large, stable companies, buying more shares when the outlook is bad has shown to be especially rewarding. For example, buying more British American Tobacco back when investors’ negative attitude over tobacco lawsuits was at its peak would have earned your returns considerably — the stock has returned more than 1,300 percent from its low in 2000.

In a newer example, stock in the wireless technology giant Qualcomm (Nasdaq: QCOM) traded flat for almost two years as major legal conflicts with Nokia (NYSE: NOK) weighed on shares despite the continued, fundamental growth at the firm. Once the conflict was settled in mid-2008, Qualcomm’s stock increased more than 25% in a few days as the pessimism vanished.

For younger, riskier companies, a strategy of owning shares in portions is a smart play. It limits your initial disbursements and reduces your exposure to significant drops, should the company fail or broader economic conditions change.

For instance, look at Mobile Mini. You have likely seen the company’s portable storage units around construction sites and parks — the firm turns shipping containers into storage lockers, and then rents them for use in commercial and residential markets. From 1997 to the start of 2002, Mobile Mini’s stock rose nearly tenfold as the company invest on rising demand for storage units. Then, in a sudden six-month period, the stock dropped roughly 70% of its value.

When demand for portable units decreased with the slowing economy, margins began to get smaller, and investors pulled out of Mobile Mini stock. But the fundamental business operations remained functional. Investors who took advantage of this and poured money into Mobile Mini stock when the outlook was bad are now realizing more than a 180% gain on that added investment. The larger economic conditions had only a temporary effect on Mobile Mini’s solid business model.

Purchase again

Other strong companies, such as j2 Global (Nasdaq: JCOM), Adobe Systems (Nasdaq: ADBE), and Intuitive Surgical (Nasdaq: ISRG), have experienced huge drops in share value at some point, only to come soaring back. Investors who concentrated on the underlying businesses, rather than the stock values, were more likely to turn the circumstance into an opportunity.

The final warning with this method is to make sure that you are not throwing good money at a truly falling company — hence the significance of understanding the underlying business. In their Motley Fool Stock Advisor service, David and Tom Gardner cover all of their investments and rerecommend companies with a promise when the price is right.

VIA MSNBC

Keyword: Stock Investing

Your crash course in market investing

Jean Chatzky’s five tips to help you overcome your anxiety of the stock market

As an individual who travels the country on the speech circuit, I hear a lot of excuses for why people don’t have firm control over their finances. One of the most common excuse is a fear of investing.

I can surely understand why. The stock market just appears way too big for most of us to wrap our heads around — it is certainly not as easy as paying your bills on time or balancing your checkbook, and because there are no certainty — even people who claim to know which stocks will go up and which stocks will go down are often wrong — it can be pretty scary.

That is why, at some point or another, the market has intrigued most of us. I certanly was, as well as Karen Blumenthal, who admits that even after 2 decades as a Wall Street Journal reporter, she still did not quite get it. So she allows herself through a crash course of sorts. She made a decision that for a full year she was going to follow one of the country’s hottest stocks — and then write a book about her experience.

Her pick? Starbucks. Her book? “Grande Expectations.” Why made her decide on America’s favorite coffee shop as a model? To begin with, the innumerous number chain of stores is hard to avoid, especially in a big city. But Blumenthal says she really decided on the company because of the profit it generated for early investors — those who bought the stock when it went public in 1992 have undergone a gain of about 6,500% on their initial investment.

Of course, she admits, not everyone has that kind of luck. But her experience in the trenches did produce a few lessons that all investors should take to heart when they are ready to dip a toe in the market.

Consider your options

That does not mean you have to walk through almost every share on the market. Toan Tran, editor of the Morningstar Growth Investor, advise, “Stick inside your circle of competence.” One of the most important key is to know the company you’re investing in, and that will be a whole lot easier if you choose a business that already makes at least a bit of sense to you. Think retail versus biotech. Then, answer a few questions:

Is the company and its products or services likely to be in demand for a long time? How does the company liken to its competitors? Does the stock’s value accurately reflect what its worth?

Research

Study the annual report, which will give you the previous year’s earnings summary as well as an overview of the goals they have set for the future.

It will outline how and where they intend to expand (Blumenthal says China is Starbucks top priority), and any new products they plan to launch in the near future. Besides that, another good way to get an inner look at the inner workings of the company is by listening in to investor conference calls that are often re-broadcast over the net. This will give you access to the same set of information the big-timers get.

At the same time, don’t believe everything. You cannot rely solely on information straight from the horse’s mouth. It would almost be like letting your kid fill out his own report card. To get a weighted view, check out other sources as well. Besides Morningstar, Toan suggests surfing Yahoo! Finance and the company’s Securities and Exchange Commission filings on www.sec.gov.

VIA MSNBC

Keyword: Stock Investing

I saw some good stock investing blog posts on tip.com.

http://stockinvesting-montyloree.com/entrance-page

If you’re new to this type of investing need some stock investing training, these might be good articles to read.

I am constantly scouring the internet for people who are interested in learning about penny stock trading, and regular trading.
There are usually some pretty good discussions for indivuals who are just at the starting point.. There are many penny stock trading strategies to be discussed.
In this discussion they’re talking about Ben Grahams style of investing.

From member name: dfall over at HotStockMarket discussion forum:

Introduction to Ben Graham-ite Investing

The investing style of Ben Graham’s is usually focused on a company’s net recent assets, or recent assets – total liabilities. If the overall market cap is less than net recent assets, you may have a potential bargain because it alerts me that the company’s ongoing trade activity is selling for nothing. I sometimes look at net current assets as a company’s minimum selling value because it nets out all debt obligations and other liabilities and leaves you with the recent assets left over. As an example, let’s look at Callaway Golf.

Looking at Callaway Golf’s Quarter3 2009 balance sheet, Callaway Golf has $518 million in current assets and $one hundred sixty nine million in overall liabilities, giving you a net current asset value of $518-$169 = $349 million. At the current price of $8.00, Callaway Golf has a market value of 520 million dollars, a bit higher than its net current asset value. At this point, Graham would not be an investor unless some other factor significantly outweighed the high market value. However, back in July, ELY had a share price of $4.80, providing a market valuation of $three hundred ten million which is less than $three hundred forty nine million. Thus, this would indicate a share in which further research is required for an investment but from just isolating this data, the share price seems to a bargain level price situation.

I love discussions where people are just starting to discover the benefits of stock investing, and finding the joys in learning about the numbers!!

You can find this discussion about stock investors for newbies here:
http://www.hotstockmarket.com/forums/showthread.php?t=75906

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