Quick picks

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Quick picks

Post  Fred on Wed Aug 25, 2010 10:55 am

I don't have a lot of time to do research right now but I have 2 quick picks that I recommend.

QEC - Questere Energy - It is around its lows right now, it frequently runs up to above $3 from here and my reason for getting in is because the next shale gas well will be tested within the next few months. If you know anything about the gas researves in shale you will be interested. (the first test drove it to $5.40 which is where I sold it last time).

My second pick is TX - Ternium - Best steel company for its price and has the fastest recovery and growth prospects due to is South American exposure, additional payments pending from Chaves and the new mill they are building in Mexico.

Fred
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Re: Quick picks

Post  Max on Tue Aug 31, 2010 1:06 am

I'm not sold on Ternium, but I am buying some QEC and we will see where it goes (my last analysis showed low risk). Most of your other picks are doing well.

I'm buying Manulife since I think it is undervalued (well below book value of approx $13.50). Of course there are risks related to actuarial valuation of liabilities increasing as interest rates stay low or decline (a possibility not to be ruled out no matter how crazy it may seem), and also a risk of overall stock market performance, but these risks can work in favour of the stock in a market recovery or if interest rates rise. Considering the above, I think my investment in MFC is uncharacteristically optimistic. Started buying at $13.40, it got as low as $11.30 and it is now around $12, so I highly recommend buying in slowly and averaging down (my average cost is now $12.50). Should get to $14 within a year without much difficulty (16% gain from $12), and there is 4% dividend yield while you wait with a low payout ratio relative to conservative forecast based on historical earnings (low risk of dividend cut). Other risks are government mandated capital ratio may require MFC to sell assets or stock to raise cash (dilution), risk of loss not represented on balance sheet (bad loans), unusually high insurance payouts. Not a home run, but a solid low-moderate risk value play.

Max
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Re: Quick picks

Post  Max on Sat Sep 04, 2010 10:18 am

MFC up pretty good. My average cost was $12, and I just sold at $13.35 for a 6.4% gain in less than 1 month. Not too impressive vs most of your investments, but still a 78% annualized return, and with a lot less risk.

The bump in price came on the issuance of bond financing of $10B, which means dilution is likely off the table.

Max
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