I spent some time this week talking about my ideas with an old friend. It has led me to write to expand my ideas a bit and explain where I see opportunity.
There are two themes at work in this blog. One is my own ideas about long term technical developments and companies poised to exploit them. These are not instant wins, but shares you could buy and put away for the family future. The second are short term (1-3 years) bets placed on companies that I think have been oversold due to some misfortune. I think they will recover.
Supermarkets
I think the key to understanding them is to examine what they do well. They are good at point of sale and at acquisition and distribution of goods. Walmart is the world leader, but Carrefour and Tesco are 2nd and third. Even in a recession these companies make a lot of cash. I think they are good defensive stocks which also pay good dividends. All three have realised that the key is growth and world domination, and local players like Sainsbury in the UK and Safeway in the US will eventually lose out to these global giants. As it happens two of them fall into my category two, but I think they are all good solid buys with years of good returns.
Group One
Aerovironment is a pure play company based on two emerging technology trends. Electric powered vehicles and drones. In both areas this very focussed company has a lock on world supply providing almost all the worlds small drones (which is where I see the future) and a large percentage of high speed electrical charging systems. Drones are about to move out of the military (which is where the market sees Aerovironment), and into the mainstream as police, border agencies, engineers and others start to use them. A helicopter costs $5m and a drone $50,000 and the drone can do everything except carry people. I see TV news people using them, why have a crew in a copter reporting? Electric vehicles are the future, its cheaper and more eco friendly to use oil and gas to create electricity than to power billions of vehicles.
Monitise is at the centre of the smartphone e-money world with software that enables banks to talk to customers phones. Mobile money is gearing up to be the next major wave of change as credit cards disappear. For years people in business have waved a card at a box by the door to gain entry, why is waving a smartphone any different?
Dragonwave is a little known company that has built standard Internet solutions to mobile broadband backhaul. It is a high risk area, not from technical skills, but the recession has put off many companies plans to implement 4g. However with the massive growth of smartphones there is only so long this can be put off before traffic becomes impossible.
Marvell is one of the worlds largest semiconductor companies and has developed leading technologies. Their shares are depressed because the stock market "sees" them as a PC supplier like they did Intel until recently. But while the market seems to be getting Intel its not seen that Marvell is a world leader in key technical areas.
Group Two
Tower Semiconductor in Isreal is one of a new breed of manufacturers that offer contract services to designers. The big player in this world is TSM, but I think that share has its value baked in. TSEM has been undervalued for two reasons, one its tiny and two it had nearly gone bankrupt a few years ago and in getting back on its feet had left itself with some outstanding debts to banks that could dilute its share count. Also its based in Isreal seen as a high risk area.
TESCO saw its shares fall 20% due to its first profit fall in years, and concerns that its large superstores are not the future of retail. I think it will recover.
CARREFOUR suffered from years of poor management and its shares have fallen from around 45 to 15 euros. But its the second largest retailer in the world and the new CEO has a proven record of turning companies around.
Thomas Cook is a very high risk bet. But the shares are down to 15p from over 100p and if they can overcome their short term debt issues the shares will bounce to over 30 at least.
DELL fell from grace as the market began to grasp that PC's were dead. I think the company is trying to reinvent itself as a services company focussed on cloud computing and I think Michael Dell and more importantly the team he acquired from Perot Systems will succeed.
There are two themes at work in this blog. One is my own ideas about long term technical developments and companies poised to exploit them. These are not instant wins, but shares you could buy and put away for the family future. The second are short term (1-3 years) bets placed on companies that I think have been oversold due to some misfortune. I think they will recover.
Supermarkets
I think the key to understanding them is to examine what they do well. They are good at point of sale and at acquisition and distribution of goods. Walmart is the world leader, but Carrefour and Tesco are 2nd and third. Even in a recession these companies make a lot of cash. I think they are good defensive stocks which also pay good dividends. All three have realised that the key is growth and world domination, and local players like Sainsbury in the UK and Safeway in the US will eventually lose out to these global giants. As it happens two of them fall into my category two, but I think they are all good solid buys with years of good returns.
Group One
Aerovironment is a pure play company based on two emerging technology trends. Electric powered vehicles and drones. In both areas this very focussed company has a lock on world supply providing almost all the worlds small drones (which is where I see the future) and a large percentage of high speed electrical charging systems. Drones are about to move out of the military (which is where the market sees Aerovironment), and into the mainstream as police, border agencies, engineers and others start to use them. A helicopter costs $5m and a drone $50,000 and the drone can do everything except carry people. I see TV news people using them, why have a crew in a copter reporting? Electric vehicles are the future, its cheaper and more eco friendly to use oil and gas to create electricity than to power billions of vehicles.
Monitise is at the centre of the smartphone e-money world with software that enables banks to talk to customers phones. Mobile money is gearing up to be the next major wave of change as credit cards disappear. For years people in business have waved a card at a box by the door to gain entry, why is waving a smartphone any different?
Dragonwave is a little known company that has built standard Internet solutions to mobile broadband backhaul. It is a high risk area, not from technical skills, but the recession has put off many companies plans to implement 4g. However with the massive growth of smartphones there is only so long this can be put off before traffic becomes impossible.
Marvell is one of the worlds largest semiconductor companies and has developed leading technologies. Their shares are depressed because the stock market "sees" them as a PC supplier like they did Intel until recently. But while the market seems to be getting Intel its not seen that Marvell is a world leader in key technical areas.
Group Two
Tower Semiconductor in Isreal is one of a new breed of manufacturers that offer contract services to designers. The big player in this world is TSM, but I think that share has its value baked in. TSEM has been undervalued for two reasons, one its tiny and two it had nearly gone bankrupt a few years ago and in getting back on its feet had left itself with some outstanding debts to banks that could dilute its share count. Also its based in Isreal seen as a high risk area.
TESCO saw its shares fall 20% due to its first profit fall in years, and concerns that its large superstores are not the future of retail. I think it will recover.
CARREFOUR suffered from years of poor management and its shares have fallen from around 45 to 15 euros. But its the second largest retailer in the world and the new CEO has a proven record of turning companies around.
Thomas Cook is a very high risk bet. But the shares are down to 15p from over 100p and if they can overcome their short term debt issues the shares will bounce to over 30 at least.
DELL fell from grace as the market began to grasp that PC's were dead. I think the company is trying to reinvent itself as a services company focussed on cloud computing and I think Michael Dell and more importantly the team he acquired from Perot Systems will succeed.
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