3 Stocks to Get on Your Watchlist

An automotive giant, a fast-growing internet security company, and a potentially overvalued national retailer are this week's must-watch stocks.

Jan 1, 2014 at 12:31PM

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 with my favorite sectors and see 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, and I don't guarantee I'll take action on the companies being discussed. But I promise 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.

Ford (NYSE:F)
Despite a banner year for Ford, 2013 ended with the auto giant stalling in the fast lane.

Ford shares stumbled into the end of the year by recently announcing that it anticipated reporting a profit of $7 billion to $8 billion for the year after a forecasted profit of $8.5 billion in fiscal 2013. That move left shareholders a bit bewildered, given that its European operations have improved and its China sales have taken off. So what's a shareholder to do, you wonder? I'd suggest get ready to buy more Ford!

The primary reason Ford's earnings will take a hit in 2014 is that it'll be introducing more than a dozen new models in its North American markets. The added expenses of advertising these models and increasing public awareness is bound to boost its costs temporarily and eat into profits. But look at how successful Ford has been at introducing new models recent years. It did the exact same thing in China, and its unit sales are up more than 40% this year alone as it closes in on 5% total market share in the fastest growing auto market in the world. For a little earnings pain in 2014, Ford has the potential to drive 10% growth in sales through 2017.

Ford also has a unique opportunity to gain an even stronger foothold in China. Last week, General Motors (NYSE:GM) announced that it will recall 1.5 million vehicles manufactured between 2006 and 2012 for a faulty fuel-pump bracket that could call into question its reliability. Couple this bad news for General Motors with Chinese citizens' shaky relationship with Japan, and that leaves U.S. automaker Ford, with its improved fuel economy and sleek designs, as the primary beneficiary.

If Ford falls much further, I am thinking about opening a position in my personal portfolio.

AVG Technologies (NYSE:AVG)
Speaking of companies with near-necessity products that are ending the year on a sour note, how about Internet and mobile security software provider AVG Technologies!

Shares of AVG were clobbered in early November, after the company delivered third-quarter results that simply didn't live up to shareholders' lofty expectations. For the year, AVG guided toward a midpoint of $400 million in sales and adjusted EPS of $2.01 to $2.06. By comparison, Wall Street had expected AVG to report EPS of $2.07 for the full year.

Yet dig a bit deeper, and you'll discover that things aren't nearly as bad as they seem.

For instance, AVG ended the third quarter with 172 million active users, including 57 million mobile users. Mobile is an important source of growth for AVG and it alone could put AVG on a potentially larger Internet security company's radar.

In addition, you have to understand that Internet and virus security is no longer an optional piece of software. Because of sophisticated viruses and hackers, these firewalls are a practical necessity. Although AVG lacks the OEM agreements that some of its peers, like Intel's McAfee, possess, AVG does offer much of its software in a "freemium" platform. Consumers love free services, and AVG's exposure from its open source platform has thus far been priceless.

With the company valued at less than nine times this year's EPS and peddling a highly demanded product, it could very well be a strong turnaround candidate in 2014.

Burlington Stores (NYSE:BURL)
For those of you looking for an intriguing short-sale idea to start the new year off right, how about taking a closer gander at discount retailer Burlington Stores which only recently went public.

Burlington obviously has a lot going for it in that it carries discounted retail and accessories which is normally the perfect recipe to drive traffic into its stores. With a steady dose of new stores opening and 5% comparable-sales growth through the first three-quarters of the year, Burlington has used that momentum to spring its stock to a new 52-week high. As for me, though, I see a potentially worrisome flaw that investors may want to take note of.

This flaw is that Burlington isn't immune to the weakness permeating throughout the retail sector. Wal-Mart (NYSE:WMT), which has a similar setup to Burlington in that it delivers below department-store priced apparel and accessories, has missed Wall Street's same-store sales expectations in each quarter this year as higher payroll taxes, delayed tax refunds, and the prospect of higher health-care costs via Obamacare kept shoppers from purchasing discretionary items. A similar fate looks to be descending upon Burlington. While comparable-store sales are up 5% year to date, comparable-sales in the fourth quarter were expected to be up only 2% to 3%. As this figure falls, Burlington's share price has no business heading higher.

In the current environment, a midpoint of 2.5% same-store sales growth would be considered good, but with its stock valued at nearly 24 times forward earnings, that seems awfully pricey. If shares head higher from here on out, it could be a wise idea to start hedging those bets with puts or short shares.

Foolish roundup
Is my bullishness or bearishness misplaced? Share your thoughts in the comment 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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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Ford and Intel. It also recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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