In that Christmas classic It's a Wonderful Life, George Bailey gets a taste of what the world would be like if he had never been born. In the business world, retailers are probably wishing they could get a taste of a world where Amazon.com (Nasdaq: AMZN ) never existed. While the vast majority of the retailing world was struggling this year -- with that Mr. Potter-like Wal-Mart (NYSE: WMT ) as another notable exception -- Amazon had the cheek to announce that it had its best holiday season ever.
So what happens to the stock of a company that has reported such buoyant news? Over the past year, it's actually down more than the S&P index. Not only is Amazon a retailer -- a sector toward which that investors are pretty cold right now -- but it has also sported a premium valuation for a while. Both are probably major factors in the two-star rating the stock has earned from Motley Fool CAPS.
CAPS member FieryGuy7, however, hasn't had to worry about the stock's recent decline. FieryGuy is the Amazon score leader, thanks to making a 2006 outperform call on the stock, and then closing the call late last year, when shares were still selling for more than $90. For that great call, FieryGuy has pocketed a cool 215 points.
Though FieryGuy hasn't quite crossed into CAPS All-Star territory (a player with a rating of 80 or greater) this stock picker has outperformed more than 75% of the rest of the CAPS community. Amazon hasn't been the only great call on FieryGuy's scorecard. Here's a look at a few of this member's other prescient picks:
|
Company
|
Date Picked
|
Call
|
Points
|
CAPS Rating
|
|
Apple (Nasdaq: AAPL )
|
8/25/06
|
Outperform
|
182
|
****
|
|
Dolby Laboratories
|
8/25/06
|
Outperform
|
84
|
*****
|
|
Netflix
|
1/18/08
|
Outperform
|
70
|
***
|
Data from CAPS.
So what is this investor looking at these days? Here are a few recent calls on CAPS:
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Company
|
Date Picked
|
Call
|
CAPS Rating
|
|
Wells Fargo (NYSE: WFC )
|
7/1/08
|
Outperform
|
***
|
|
Take-Two Interactive
|
2/26/08
|
Outperform
|
***
|
|
Berkshire Hathaway (NYSE: BRK-B )
|
2/4/08
|
Outperform
|
*****
|
Data from CAPS.
Not all of these picks may pan out, but they could still be a good place to start some further research. I decided to take a closer at Berkshire Hathaway.
Berkshire? But why?
Most of the time, the suggestion to pick up some Berkshire stock would be met with the response, "Why not?" After all, the company owns some great brands, including GEICO, Benjamin Moore, NetJets, and Fruit of the Loom. It's also pounded out some spectacular results over the past couple of decades. And, of course, the company is headed by the incomparable Warren Buffett.
So why would a potential investment in Berkshire be met with a "why"? Well, people just aren't all that excited about stocks right now -- Berkshire or not. At the same time, there are valid concerns that Berkshire's underlying businesses -- many of them retail -- may take a hit during the recession. And if that's not enough, some folks out there are wondering whether Buffett has lost his touch -- after all, he did make major investments in Goldman Sachs (NYSE: GS ) and GE (NYSE: GE ) with what now appears to have been less-than-perfect timing.
On CAPS, there are some Berkshire detractors, including CAPS All-Star Lance912, who thinks the secret is out on the stock and that future returns will thus become less attractive: "In sports betting, when a team gets 'hot' or suddenly becomes 'popular,' what used to be a good team to bet on now becomes a bad one since everyone else is betting on it. The bookies price into the line that everyone now loves the team, and the line gets affected signficiantly."
The majority position on CAPS, however, is staunchly positive -- darn near 99% of the CAPS members who have weighed in on Berkshire's "B" shares have rated it an outperformer. One of the most recent Berkshire bulls to comment was WakeJKirk, who said: "This will be one of the biggest gainers once the market starts to gain some ground. I know we are looking possibly longer than a year but if you have the funds that can sit in the market for 1-3 years, I can't think of a less risky, more rewarding investment than BRK."
But here's the important question: What's your take on Berkshire? Will it continue to be dragged down with the rest of the market, or will it turn around and soar? Get in the action by clicking over to CAPS. It's absolutely free and already has more than 125,000 stock pickers chipping in to find the best stocks out there.
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