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I follow quite a lot of companies, 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, I'd be lost when the time came to choose which stock I'm buying or shorting next.
Today is "Watchlist Wednesday," so I'm discussing 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.
Facebook (Nasdaq: FB )
If you don't have Facebook on your watchlist by now, crawl out from the cave you've been hiding in and click the little "plus" sign next to the ticker symbol to add it to your Watchlist. Even if it's not a stock you really care to trade, what Facebook does sets the precedence for a lot of social media, communications, and tech companies.
Last week, Facebook reported its second-quarter results (its first as a publicly traded company), and for the most part, it failed to impress. I wasn't too shocked, as my Foolish partners in crime, Travis Hoium and Alex Planes, agreed with me in our roundtable that Facebook shares are overvalued. Revenue did rise 32%, but considering the rate at which growth is decelerating, it's concerning. Perhaps the biggest concern was the increase in advertising revenue to 84% of total revenue. This was confirmed when Zynga (Nasdaq: ZNGA ) also nosedived after broadly missing its second-quarter sales and profit forecast, which it blamed squarely on Facebook's new algorithms that it said made finding its games difficult for users. Let's not forget that it was a high dependence on ads that killed many dot-coms 10 years ago and that leaves Facebook exposed to macroeconomic headwinds more than its shareholders would like it to be.
The Facebook idea is great, but it has a long way to go before it can turn what it's written down on paper into actual results. It does, however, merit a spot on my and your Watchlist simply because of its broad-reaching appeal.
Starbucks (Nasdaq: SBUX )
Just because I'm writing this article while on vacation and sitting in a Starbucks doesn't mean I'm addicted to Starbucks -- but I might as well be.
Starbucks joined Facebook last week in issuing quarterly results that didn't perk up investor optimism. The premium-coffee producer slightly lowered its fourth-quarter earnings outlook and reported a third-quarter profit that fell shy of Wall Street and its own expectations. The company blamed weak customer traffic in June as the primary culprit.
Even so, there were plenty of positives to take from the report and reasons to believe that Starbucks is once again getting cheap. The China and Asia-Pacific region, which is the new growth engine for Starbucks, saw sales growth of 31%, with double-digit same-store sales growth in China. In the Americas, net revenue rose 9% as same-store sales jumped 7% and operating margins expanded 90 basis points. But where growth really cranked up was in the company's direct channel marketing segment. Sales in this segment rose a blistering 45% over last year, as it sold more packaged coffee and as it continues to take advantage of its K-Cup partnership with Green Mountain Coffee Roasters (Nasdaq: GMCR ) . The introduction of the Verismo, Starbucks' own single-serve coffee system, in the fall should also vastly boost this segment.
It may be time to drink up some Starbucks in the near future.
ATP Oil & Gas (Nasdaq: ATPG )
It's moment-of-truth time for ATP Oil & Gas. The company has spent its resources at a breakneck pace over the past couple of years to drill and develop wells in the Gulf of Mexico, the North Sea, and now in the Shimshon well off the coast of Israel, which development partner Isramco Negev said could possess 2.3 trillion cubic feet of natural gas.
Unfortunately for ATP shareholders, meeting production goals hasn't been in the cards. The company has $1.5 billion worth of debt at 11.875% due in May 2015, and some analysts have warned that the company could run out of cash, between operating losses and interest payments, by next quarter. Last week, ATP's debt traded at record-low levels, and a consortium of bondholders has gotten together to seek an advisor in what amounts to a last-ditch effort aimed at restructuring ATP's whopping debt load.
It appears to be just a matter of weeks or months before this story completely plays itself out, but as you can tell from my CAPS portfolio, I stand decidedly negative on ATP's prospects going forward.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using these links to add these companies to your free personalized Watchlist to keep up on the latest news with each company:
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