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.
Yes, I'm going to be bashing the golden arches again, so now would be the time to turn away if you're a McDonald's bull.
I'm aware that outperformance comes with a price, but the price is simply more than I'm willing to pay. I simply don't see how McDonald's is going to be able to keep up its torrid growth in Europe, which comprises roughly 40% of its total revenue, with nearly every country in the European Union putting the clamps down on spending. That trickle-down effect and the subsequent possibility of the euro devaluing could put a serious hamper on McDonald's earnings -- at least in Europe. There's simply too much risk built in at its current valuation to merit going long on the stock here. My eyes are on those January 2013 puts, which appear to be a cheap way to play my bearish call on McDonald's in 2012.
Since reporting third-quarter results in November, Silver Wheaton shares have moved lower, with analysts generally focusing on the company's miss of Wall Street's consensus EPS figure. For those analysts, I have only one recommendation: Go to your local optometrist as soon as possible, because you must be blind!
Silver Wheaton's report in November was phenomenal! Revenue doubled while operating cash flow more than doubled. With the company's dividend now being tied to the quarterly operating cash flow, Silver Wheaton also tripled its quarterly dividend to $0.09. The secret to the company's success lies in its long-term contracts, which have its silver costs fixed at a ridiculously low $4.12 per ounce. With silver closing north of $30 per ounce yesterday, you can see just what sort of huge margins the company is working with. Why bother with perpetual silver disappointments like Coeur d'Alene Mines
I don't see this as a great year to be a retailer in the first place, so I feel that companies that are already struggling could get creamed by Wall Street when their fourth-quarter results are released in 2012. From what I've seen over its last few reports, Sears doesn't have a chance in hell of turning things around anytime soon.
Debt levels have ballooned to $4.55 billion, while myriad problems, including falling gross margins and weakening sales trends, have continued a trend of falling revenue that began in 2007. Sears' large cash inflows have turned into cash outflows, and some are questioning whether the company will even survive in its current state. Although I'm not ready to write Sears' obituary just yet, I'm with the skeptics and thinking of shorting this already heavily shorted stock.
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.