I follow quite a lot of companies -- some more closely than others -- so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Intel (Nasdaq: INTC )
It's not really a secret that the semiconductor sector is cyclical. Intel, the primary semiconductor producer to which all other chip makers are compared against, has held up better than many of its counterparts despite announcing three weeks ago that its profits would miss Wall Street's forecasts due to fallout from last year's flooding in Thailand. While I'm not silly enough to bet against Intel over the long term, I'm also smart enough to realize that cyclical companies often make terrible long-term buy-and-hold stocks.
Advanced Micro Devices (NYSE: AMD ) , Intel's primary competitor, is slated to grow sales by only 3% in 2012, and even it has seen earnings estimates reduced of late. Earnings warnings in the semiconductor sector are rarely one-time events, and as such I wouldn't be surprised if Intel disappointed again in the first half of 2012. With that said, I'm considering purchasing Intel puts if the stock were to rally much from current levels.
MasterCard (NYSE: MA )
I'm really trying hard not to fall in love with a stock, but it's difficult with a company like MasterCard. Not to continually ride the bandwagon, but CEO Ajay Banga has done a terrific job of leading MasterCard, and he is most deserving of the No. 1 ranking as my Top CEO of 2011.
MasterCard has found ways to grow its operations worldwide without so much as a blip while many of its competitors in the financial sector have flopped under pressure. Operating margin, revenue, and earnings are all at record highs, and the stock is trading at what I would deem a very reasonable 17 times forward earnings. Perhaps asking for another 67% return in 2012 would be a bit unrealistic, but I see no reason that the stock couldn't tack on to its gains from last year. I'll be looking to possibly buy into this amazing growth story on any dip.
Annaly, which invests predominantly in mortgage-backed securities backed by the U.S. government, is set for another great year following the Federal Reserve's announcement last year that it was planning to keep lending rates at current rock-bottom levels through mid-2013. Annaly makes its profits on the difference between the rate at which it borrows funds and the interest rate at which it lends. With rates seemingly fixed for the next year and change, Annaly's shareholders will probably clean up with a double-digit dividend yield yet again. While nothing in the stock market is guaranteed, income-seekers could probably do a whole lot worse than Annaly in 2012.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider taking my cue by adding these three companies to your free and personalized watchlist to keep up on the latest news with each company.
- Add Intel to My Watchlist.
- Add MasterCard to My Watchlist.
- Add Annaly Capital Management to My Watchlist.