Stock talk for the main street investor.
Aug 16 2010

Is Now The Time To Sell?

It’s been an interesting last couple of weeks on the market. Earnings have been great, GDP numbers not so great and unemployment still struggling. I’ve been bullish for a long time and that’s still my long term view as we get past this “breather” in out recovery. But now may be time to take some gains off the table.

The reason I say that is the contrarian way I like to invest. Everything just seems too stable right now for me to be a buyer so I may be a seller. And my favorite thing to sell at times like this are options. You can collect money for the option, if you get called fine, if not you get free cash on a stock you like long term.

Right now I’m looking at selling Las Vegas Sands call options at $28. You get over $2 in premium, meaning if you’re called you sell the stock for over $30. I consider that a good price for that stock.

I would like to do that same thing with Sunpower but the stock is down so far I’m not happy with the price I would get if I sold. So I’ll hold out.

Bottom line is this. If you look at a stock you own and don’t think you would buy it today at the same price, you might want to consider selling.

Disclosure: The Mayor is long LVS and SPWRA.

Aug 10 2010

Solar Steps Up

I still think solar, photovoltaic in particular, is way undervalued right now. Sunpower (SPWRA) and JA Solar (JASO) both announced solid earnings today continuing performance at a time when sales are supposed to be reaching a peak.

Investors are expecting a slowdown for solar in 2011 but so far I’m not seeing it happening. And companies don’t seem overly concerned about lower demand in 2011. Costs are consistently going down, demand is picking up, it’s all good. In fact, Sunpower thinks it will lower cost per watt to $1.48 in Q4 next year. That’s 29% lower than Q4 2009. On a levelized basis, which considers land and connection costs that’s close to the cost of First Solar (FSLR), the cost leader.

Residential sales are also holding up well even without big government subsidies. The bottom line is this… Until all this doom and gloom shows it’s head I’m going to stay long solar. I’ve taken positions in FSLR and SPWRA. If interested you should also check out JASO and SOLF.

Disclosure: The Mayor is long SPWRA and FSLR.

Aug 9 2010

Still Long IMAX

IMAX is still my biggest bet right now. The market doesn’t seem to be terribly excited about it but I think long term growth will be phenomenal considering the expansion they will have internationally.

I once thought IMAX would fade into the night when the 3D craze died down but I’ve been pleasantly surprised at the share IMAX has kept in theaters. A normal opening weekend announcement from IMAX states that 8% of box office came from IMAX’s 2% of all theaters. One would assume that 8% number would eventually fall to something between 4-6% as moviegoers trade down from the new bigger theaters. But it just hasn’t happened.

Subsequently everyone is trying to get their hands on an IMAX theater and backlog is way up. In fact it will take years for IMAX to build all the theaters they have under contract. Meanwhile revenues will grow 20-30% a year and most of that money is cash in the bank.

Like I said, I’m long and believe strongly in the value IMAX has. Their operating leverage is very positive and I think this could be a $30 stock within a couple of years.

Disclosure: The Mayor is long IMAX.