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.
Las Vegas Sands
Believe it or not, the big talk of the casino sector isn't how Macau revenue is the saving grace of the industry but how we are inching ever closer to the legalization of online gambling. As reported by the Fool's Travis Hoium earlier in the week, both Bally Technologies and International Game Technology
Ironically, as Travis pointed out, it's Las Vegas Sands' Sheldon Adelson who stands steadfast against online gaming's approval. Online gaming would put Las Vegas Sands considerably behind the curve. However, if approval remains a long way off, Las Vegas Sands' large investments in Macau could pay off more quickly than its peers. Macau is growing considerably faster than Las Vegas, and Las Vegas Sands recently opened its fourth casino in the territory. This is a stock that appears set for a large move -- the question is in which direction?
Just as quickly as buyout chatter pumped up Brocade's stock, a few months on and still without a deal, Brocade's share price is beginning to sink once again.
If you recall, one of the biggest deterrents I saw to a deal was Brocade's increasing valuation due to speculation of an imminent deal. At the time, Brocade's stock price had nearly doubled from its lows and was approaching $6. Blackstone Group
What really matters now is whether Brocade can keep and extend its supply partnerships with IBM, Dell, and Hewlett-Packard. Notably, weakness from Dell and HP hasn't translated into fantastic results for Brocade, but all things considered, Brocade looks like it could be a cheap pick-up at just eight times forward earnings. Keep an eye on Brocade as I suspect it will find a suitor before the year is out.
Let the nail-biting begin for Taseko Mines shareholders. Copper recently moved to multimonth lows, which has investors on edge as to what's really behind the move lower.
In Taseko's most recent quarter, the miner of copper and molybdenum reported that a delay in copper shipments as well as an unrealized loss on derivatives were the biggest drags on an otherwise decent quarter. As for me, I see the biggest worry for Taseko being China. China is the world's largest consumer of copper and its huge investments in infrastructure also require large amounts of molybdenum, a steel-strengthening alloy. Even with 7.5% GDP growth (which would be considered robust in most industrialized nations), China's demand for these materials could be waning which, in turn, could put downside pressure on copper and moly prices.
On the other side of the coin, at just 5.3 times forward earnings, much of the risk of a China slowdown has been built into the stock and the recent move lower could be a brutal overreaction. I personally own Thompson Creek Metals, a copper, gold, and molybdenum resources company, for many of the same reasons and feel Taseko is also at a very attractive valuation.
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 and keep up on the latest news with each company:
- Add Las Vegas Sands to My Watchlist.
- Add Brocade Communications to My Watchlist.
- Add Taseko Mines to My Watchlist.
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Fool contributor Sean Williams owns shares of Thompson Creek Metals, but has no material interest in any other companies mentioned in this article. He's a total nerd when it comes to making lists. 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 IBM. Motley Fool newsletter services have recommended creating a synthetic long position in IBM. 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 that believes transparency comes first.