Why Texas Instruments Incorporated Shares Will Rally 25%

Does this analyst make a good case? Or is it just more noise from Wall Street?

May 19, 2014 at 12:06PM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Texas Instruments (NASDAQ:TXN) gained about 1% today after RBC Capital upgraded the semiconductor giant from sector perform to outperform.

So what: Along with the upgrade, analyst Doug Freedman raised his price target to $57 (from $49), representing about 27% worth of upside to yesterday's close. So while contrarian traders might be turned off by Texas Instruments' price strength over the past year, Freedman's call could reflect a sense on Wall Street that its growth prospects still aren't fully baked into the valuation.

Now what: According to RBC, Texas Instrument's risk/reward trade-off is rather attractive at this point. "The company has been laser focused on its capital management strategy, and we believe TXN delivers FCFs at the upper-end of its 20-30% of revenues range (RBCe: CY15/29%, CY16/28%)," said Freedman. "We suspect TXN is benefiting more from unit growth and mix shift vs. pricing power, which is driving revenue/GM upside as utilizations remain low (high-70% range)." Of course, when you couple Texas Instruments' hot stock price with its still-intense competitive environment, I'd hold out for a wider margin of safety before betting on that bullishness. 

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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