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Back in my younger days, when I started out as a green business writer, I had the opportunity to work with a business editor who had won two Pulitzer prizes for journalism. His name: Joseph Livingston.
One day, I was asked to take the whole day and go up to Bethlehem Steel’s plant in upstate Pennsylvania, tour the firm’s steel mill and meet some of the executives. I didn’t have to do a story. It was great to see the big furnaces blazing hot and then the steel rolling down the assembly line.
When I got back, I asked Joe: “Why did you want me to spend a whole day out there at Bethlehem?” His reply: “To help you get your nose out of the numbers and see what a real business is all about.”
It is true that, in stock investing, one can generally crunch numbers and study charts and other data and come up with winners. I do it all the time. But, it is also a good idea to get out there and see firsthand what the competitive battle is all about.
You can sometimes put the two together: (1) numbers analysis and (2) firsthand evidence to come up with a good long-term investment that could bring in a bundle with patience. In the great stock market classic, Reminiscences of a Stock Operator, a key word of advice is that the big money is made in the sitting.
A big winner this year with a great new product is Apple Computer Co. (AAPL) and its iPods (music players). Since the start of the bull market in early 2003, the stock has soared from 5 to 51, adjusted for splits. There have been others. Genentech Inc. (DNA), with its cancer drug Herceptin for breast cancer and Avastin for colorectal cancer, has done great too.
A good way for eSignal subscribers to get a line on these big winners is to use both the “technical approach” and the “eyeball approach” as I like to call it. What you want to do is have both lined up in a bullish way. But, either one could be the first to lead you to a potentially winning stock.
Often times, you may discover “a new investment theme.”
Back in the early 1970s, when there was an oil crunch, Japanese auto firms began penetrating the U.S. auto market with small, high-miles-per-gallon cars. They grabbed a good chunk of the market. A similar theme seems to be emerging all over again as the price of crude is running at $60 gallons a barrel and gas at the pump is hovering around $3.
This time, the Japanese are moving strongly toward hybrid cars with both gasoline and electric engines. Toyota Motor Corporation (TM) is in the forefront with its Prius and Highlander Hybrid . It will soon be coming out with a Camry hybrid. They get in the range of 50 miles to a gallon.
A look at Toyota’s stock tells a significant story. Since the start of the bull market in early 2003, TM has surged from 40 to 92, a gain of 130%. Honda (HMC) is up too, and it also has hybrid cars. However, both General Motors (GM) and Ford (F) stocks are down, and they are lagging in the hybrid market.
A good way for an eSignal subscriber to do a little detective work is to check out the autos at one of the annual auto shows coming up, go to a dealer showroom or even check the big auto firms’ websites.
In any event, it is obvious Toyota is doing something right and that bodes well for the stock. For the fiscal year ending March 30, 2005, Toyota’s net should surge 111% to $6.75 a share from $3.20 a year ago.
In the telecom arena, cell phones are still hot, and one gadget catching the interest of the young crowd -- so I am told -- is T-Mobile’s Sidekick. It is a micro-computer cell phone setup that does everything from linking one to the Internet to taking pictures. It sells for approximately $250.
T-Mobile is a unit of Deutsche Telekom (DT). The stock has climbed from 10 in 2003 to approximately 19. Earnings this year should rise 34% to $1.84 a share from $1.27 a year ago. One can easily go to one of the company’s mall-based stores to check out the latest products. While you are at it, take note of the number of customers and who they are.
NICE Systems Ltd. is a stock in a nice spot business-wise. It is a beneficiary of the war on terror. The Israeli-based firm (with annual sales of $250 million) makes closed circuit television security systems. NICE is benefiting from the worldwide need for more security in subways, airports and places of business. That winning theme could continue for some time.
NICE’s stock has run from 10 in 2003 to 42. Technically, it is now resting in a two-month flat base within a long-term up trend. This year, NICE’s earnings should soar 41% and next year 31%. So, the outlook remains bright.
As we move toward the Christmas season, investors should be on the alert for any new products that could have a significant impact on a company, and, most importantly, on an industry.
One good way to do that is too keep an eye on stocks making new highs. That can be done by using eSignal’s Power Scan service, an affordable add-on to the eSignal subscription. It will tell you the new highs each day. Then, you can check those stocks for news to see if those companies are coming out with any new products. You just might discover a potential big winner.
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