Recent Share Price Increase
ISRG shares rose over 15% last Friday because of better than expected earnings expectations. Is the share price too high to buy? Conventional wisdom would say yes, however, I believe that ISRG is still a great buy.
Intuitive Surgical's Business
As you might have guessed, ISRG is in the medical surgery business. ISRG has patented a robot called the da Vinci Robot that performs different types of surgeries. The da Vinci Robot enables surgeries to be performed with maximum efficiency. You could imagine that people are willing to pay big money to get this machine to perform their surgeries.
Key Financial Data
Intuitive Surgical is a fast growing and very profitable business with year to year revenue growth of over 20%, a profit margin of over 27%, and Return on Equity of over 20%.
For more on ISRG and the da Vinci Robot, please view the video below (if you are receiving this via email you can click on this link)
Michael R Caligiuri owns shares of Intuitive Surgical
Wednesday, January 26, 2011
Thursday, January 13, 2011
Trailing Stop Loss Order on ECOtality, Inc. (ECTY)
ECOtality has Great Potential Return on Investment
Two words: Electric Cars. The world is already starting to make the transformation from gasoline powered cars to electric cars. It is only a matter of time before we go completely electric. Like cars that require gasoline, electric cars also need to be re-charged. ECOtality is a leader in the "re-charge" industry and has many advantages including a partnership with Nissan and a proven product. Nissan is a leading electric car producer, and there are already ECOtality charge stations in places like California and Asia.
For an up-close look at the ECOtality charge stations, check out the video below.
What is a Trailing Stop-Loss Order?
Think low risk and high reward. If I set a stop loss at 15%, this means that the maximum that I can lose on my investment is 15%. However, the maximum that I could earn on my investment is limitless. For example if I invested $100 into company X with a stop loss order of 15%, the maximum I could lose is $15. If the share price increases to $200 per share, I would make $100 profit.
Now that we know what a stop-loss order is, let's examine a "trailing" stop-loss order. From the example above, my investment into company X would only sell if the share price dropped to $85 per share (15% drop). With a trailing stop-loss order this would not be the case. A trailing stop-loss order adjusts with an increase in share price. For example, if the share price of company X increases to $200 per share, the new stop-loss price would be $170. I feel that a trailing stop-loss order is more advantageous because it allows investors to ensure profit if the share price of a company they invest in initially surges.
I want to thank my good friend J Ludlow for bring this intriguing business to my attention. He is in Environmental Studies at the University of Michigan and provides valuable insight.
Michael R Caligiuri owns shares of ECTY with a 15% trailing stop-loss order
Two words: Electric Cars. The world is already starting to make the transformation from gasoline powered cars to electric cars. It is only a matter of time before we go completely electric. Like cars that require gasoline, electric cars also need to be re-charged. ECOtality is a leader in the "re-charge" industry and has many advantages including a partnership with Nissan and a proven product. Nissan is a leading electric car producer, and there are already ECOtality charge stations in places like California and Asia.
For an up-close look at the ECOtality charge stations, check out the video below.
What is a Trailing Stop-Loss Order?
Think low risk and high reward. If I set a stop loss at 15%, this means that the maximum that I can lose on my investment is 15%. However, the maximum that I could earn on my investment is limitless. For example if I invested $100 into company X with a stop loss order of 15%, the maximum I could lose is $15. If the share price increases to $200 per share, I would make $100 profit.
Now that we know what a stop-loss order is, let's examine a "trailing" stop-loss order. From the example above, my investment into company X would only sell if the share price dropped to $85 per share (15% drop). With a trailing stop-loss order this would not be the case. A trailing stop-loss order adjusts with an increase in share price. For example, if the share price of company X increases to $200 per share, the new stop-loss price would be $170. I feel that a trailing stop-loss order is more advantageous because it allows investors to ensure profit if the share price of a company they invest in initially surges.
I want to thank my good friend J Ludlow for bring this intriguing business to my attention. He is in Environmental Studies at the University of Michigan and provides valuable insight.
Michael R Caligiuri owns shares of ECTY with a 15% trailing stop-loss order
Sunday, January 9, 2011
Buy Dean Foods Co. (DF)
Why Buy Now?
A hedge fund manager named David Tepper just purchased over 7% of the entire Dean Foods Company. David Tepper is a World renowned stock investor who absolutely crushes market averages year in and year out. If you don't believe me, click this link. Do you remember that expression, "If you can't beat them, join them"? This is one of those "join them" stock investments. We're buying along with David Tepper.
Over the past 52 weeks, Dean Foods shares have decreased over 45% in value compared to a positive market return of over 10%. Shares of Dean Foods have already started to rise again which I think is a sign that the fall has "bottomed out."
What is Dean Foods
Dean Foods is a company that sells a variety of dairy and soy products. According to Yahoo Finance, "It sells its products through internal sales force and independent brokers to the retailers, distributors, foodservice outlets, educational institutions, governmental entities, grocery stores, club stores, natural foods stores, mass merchandisers, convenience stores, and drug stores."
Financial Data
If you want to check out all the key financial data, you can click this link. My brief analysis is below:
I consider an investment in Dean Foods to be a value investment. In this case, we are investing in a pretty good company at a very good price. Dean Foods is definitely not a powerhouse company with extremely high profit margins or high growth rates, however, it does have decent profit margins and decent growth rates. Another thing to consider is that Dean Foods has a high amount of debt relative to its cash position. I do not think this is very worrisome because the amount of debt has decreased for the past three years. In other words, the debt is going away and not piling up.
A hedge fund manager named David Tepper just purchased over 7% of the entire Dean Foods Company. David Tepper is a World renowned stock investor who absolutely crushes market averages year in and year out. If you don't believe me, click this link. Do you remember that expression, "If you can't beat them, join them"? This is one of those "join them" stock investments. We're buying along with David Tepper.
Over the past 52 weeks, Dean Foods shares have decreased over 45% in value compared to a positive market return of over 10%. Shares of Dean Foods have already started to rise again which I think is a sign that the fall has "bottomed out."
What is Dean Foods
Dean Foods is a company that sells a variety of dairy and soy products. According to Yahoo Finance, "It sells its products through internal sales force and independent brokers to the retailers, distributors, foodservice outlets, educational institutions, governmental entities, grocery stores, club stores, natural foods stores, mass merchandisers, convenience stores, and drug stores."
Financial Data
If you want to check out all the key financial data, you can click this link. My brief analysis is below:
I consider an investment in Dean Foods to be a value investment. In this case, we are investing in a pretty good company at a very good price. Dean Foods is definitely not a powerhouse company with extremely high profit margins or high growth rates, however, it does have decent profit margins and decent growth rates. Another thing to consider is that Dean Foods has a high amount of debt relative to its cash position. I do not think this is very worrisome because the amount of debt has decreased for the past three years. In other words, the debt is going away and not piling up.
Friday, January 7, 2011
The TJX Companies, Inc. (TJX)
TJX is a great company, but I believe that the share price is overvalued.
Why is it a great company?
Great companies must have great products or services. TJX stores including TJ MAXX and Marshalls have always been the "go-to" stores for my family. We have always been able to purchase quality products at discount prices at these stores. In essence, TJX's brand is providing customers with great value for their money.
In addition to having products that customers love to buy, TJX is also very profitable. Relative to its main competitors (Kohls, Macy's, and Target), TJX has the highest operating margin. The operating margin is a great way to measure the profitability of companies within the same industry. Perhaps what is most appealing to me is the high ROE and ROA for TJX. ROA and ROE are over 17% and 46%, respectively.
Why is the share price overvalued?
I feel that earnings expectations are a unreasonably high at this point in time. It is possible that the share price could drop on the day of the next earnings report (February 23rd). If the price drops drastically on Febrary 23rd, it could be a good time to buy. Until then, do not buy.
Why is it a great company?
Great companies must have great products or services. TJX stores including TJ MAXX and Marshalls have always been the "go-to" stores for my family. We have always been able to purchase quality products at discount prices at these stores. In essence, TJX's brand is providing customers with great value for their money.
In addition to having products that customers love to buy, TJX is also very profitable. Relative to its main competitors (Kohls, Macy's, and Target), TJX has the highest operating margin. The operating margin is a great way to measure the profitability of companies within the same industry. Perhaps what is most appealing to me is the high ROE and ROA for TJX. ROA and ROE are over 17% and 46%, respectively.
Why is the share price overvalued?
I feel that earnings expectations are a unreasonably high at this point in time. It is possible that the share price could drop on the day of the next earnings report (February 23rd). If the price drops drastically on Febrary 23rd, it could be a good time to buy. Until then, do not buy.
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