What I Watch in My Stocks, Part 2

Note: This is a continuation of my post from yesterday. Feel free to go read the two introductory paragraphs there if you want to know the purpose of these posts!

Up first today are the four companies in my “War on Cash” basket, which is an idea that I I admit I’m stealing this idea from Jason Moser of The Motley Fool, who calls the “War on Cash” one of the more interesting developments in investing.

Mastercard Incorporated (NYSE: MA) [Earnings – May 2 Before Market Open (BMO] – For Mastercard, the word is CASH. Chances are, we are going to get further removed from using cash in our lives, so companies like Mastercard will benefit because it is their infrastructure that a cashless society will run. Mastercard is the second largest of the four companies, with $186.7B in market cap, $12.5B in revenue and $4.7B in income. This is the longest held of the four “War on Cash” companies that I own, and I plan on holding them for a while.

PayPal Holdings, Inc. (Nasdaq: PYPL) [Earnings – April 25 AMC] – PayPal joins Mastercard with the word CASH. A recent addition to the portfolio, I was simply rounding out the thesis behind the “War on Cash” basket mentioned above. PayPal was spun off from eBay a few years ago, and they have been successful in their own right since being granted its independence. It’s the third largest of the “War on Cash” companies, checking in with a market cap of $95.4B, annual revenue of $13.1B, and income of $1.98B. Continue reading

What I Watch in My Stocks, Part 1

Now that I’ve covered how I personally invest, and even disclosed the holdings in the portfolio I manage, I thought I would breakdown why I chose the particular investments that I hold mentioned in my disclosure statement. All but Berkshire Hathaway (NYSE: BRK-A; NYSE: BRK-B) will be releasing quarterly earnings over the next two weeks. While the earnings releases probably won’t be the only trigger to sell any of these holdings, they are the first thing that I would examine if I think the company is no longer meeting my personal expectations.

For each of the 11 individual stocks* that I have purchased, I will provide a one word “driver” that I look at nearly anytime I see results from the company. There is obviously more than this one thing for each company, but as I was making a quick list, I realized that these were the things that jumped out for both reasons I will keep holding and why I would decide to sell. I am also going to include the earnings date, as applicable, for each company, and I intend to write a quick earnings review for each company after those earnings are released. Continue reading

When to Buy – And When to Sell

The decision to invest in individual stocks can be driven by multiple factors. Maybe you feel secure enough in your other retirement investing and want to dip your toe in the water of individual stock ownership. Maybe you’ve heard about the great market returns of the shares of companies that you use and love every day, and have decided to earn some return on your investment into the products. Whatever your reason, you might find it hard to finally push that “Buy” button and own your first shares of individual stock. This post will aim to help you with that decision, and also try to illustrate when it’s time to walk away from an investment as well.

I personally believe that any investment should be an active decision; that is, not only should you be able to justify purchasing shares of a company, but you should also have a goal for the investment. Though I am generally a long-term, buy-and-hold investor, there have been times in the past where I’ve dabbled with buying something in the short-term based on looming news that might boost my short-term gains. For example, I purchased shares in Blockbuster and American Airlines’ former parent AMR Corp. shortly before both trouble companies declared bankruptcy, risking only a few hundred dollars in the process. Continue reading

What to Look For in Quarterly Earnings

Today, I want to talk about what are some indicators of positive performance from a quarterly (or annual) earnings release from a company. Because results are dependent on industry, i.e. you would look for different things when evaluating a bank versus a retailer, I will try to keep this as top level and universal as possible. Through some later writing, especially as I dive into some earnings takes that I used to do back in the day for the banks that I covered, I’ll further explore some of the industry-specific things that companies talk about in earnings releases.

One way to know what is important for an individual stock’s performance – at least in the eyes of the company – is to look at what is highlighted in its earnings releases. It can help you to understand what kind of impact the actual results are going to have on the performance of the stock. This is the information that analysts will use when examining the company and what will dictate their ratings and predictions for the company. It’s really up to an individual investor whether they want to take the analysts’ views as gospel regarding the future potential of a company. Personally, I don’t pay much attention to individual analyst results, though the number of analysts that follow a company can indicate the “importance” of the company to the market. Continue reading