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In today's Motley Fool Take:
- Bulking Up at Costco
- Shameless Plug: Get a Broker
- Seagate's Sadistically Sad Story
- Discussion Board of the Day: GlaxoSmithKline
- Vanity and Vulgarity at Enron
- Quote of Note
- More on Fool.com Today
Bulking Up at Costco
By Alyce Lomax (TMF Lomax)
In May, Costco's same-store sales grew 16%, with overall sales increasing 19% to $3.80 billion. The uptick in sales was associated to customers' robust demand for electronics and food.
Several months ago, rival Wal-Mart
At the same time, it's hard to ignore the complaints of people who are noticing the high cost of food at their local grocery stores -- with receipts likely bolstered even further by rising dairy costs. Again, that makes Costco a tempting destination.
While one could argue that Costco, a long-time Motley Fool Stock Advisor pick, deals with a discount universe, it appeals across all demographics. Not only do its bulk goods appeal to penny-pinchers, but it's also nice to be able to remove kitchen cleaner, paper towels, garbage bags, or various such items from one's shopping list for months (sometimes years!) at a time.
It's hard to ignore the summer factor. Anyone who's ever been to a Costco -- or its rivals BJ's Wholesale Club
Costco's popularity in May is no surprise, considering just last week W.D. Crotty explored the company's latest quarter, as well as many of the things to like about Costco as an investment. Though it's trading near its 52-week high and sporting a forward P/E of 22, considering its strong management, popularity with consumers, and projected growth, it seems worthwhile to keep an eye on this one.
Alyce Lomax does not own shares of any of the companies mentioned. She's about due a trip to Costco to aid and abet in spring-cleaning.
Shameless Plug: Get a Broker
If you want to buy stocks, you're going to need a broker. And who wouldn't want to own stocks? There is no place over the past 100 years where your long-term savings would have fared better than the stock market -- not in bonds, not in real estate, not in gold, and certainly not in Beanie Babies. Our Broker Center makes it super-easy to pick the right broker for you, so check it out!
Seagate's Sadistically Sad Story
By Tim Beyers
The collective wisdom of the stock market is so often sadistic, giddily bidding up the stocks of companies in trouble when they cut jobs or sell poorly performing business units. Of course there's logic to such buying sprees: Painful moves such as these should boost profits long-term, which in turn should benefit investors.
Yesterday at the closing bell, the whips and chains came out at disk-drive maker Seagate Technology
The workforce reductions and other cuts will lower operating expenses by roughly $150 million, including a $50 million charge to earnings during the fourth quarter, which ends July 2. Seagate had been expected to report a profit of $0.01 per share, but now that's anything but assured.
Call me boring, but I get no pleasure from Seagate's pain, primarily because the company should be nabbing profits. Think about it. PC and server sales are spiking, with many of Seagate's largest clients reaping the rewards, including Motley Fool Stock Advisor pick Dell
Despite the macroeconomic trends, Seagate and close competitors Maxtor
And yet, masochistically, investors continue to throw money into its stock. Frankly, it's difficult to watch. Some things really should be done in private.
Fool contributor Tim Beyers, being an old-school tech guy, hates piling on Seagate. But he also hates to see investors' returns needlessly flogged. Tim owns no shares in the companies mentioned, and you can view his Fool profile here.
Discussion Board of the Day: GlaxoSmithKline
The hits just seem to keep on coming for the drug industry. The latest body blow came yesterday as New York Attorney General Eliot Spitzer filed suit against GlaxoSmithKline
Vanity and Vulgarity at Enron
By Seth Jayson
Pride has always been the fatal flaw. Just look at literature. From Homer to Hamlet and even Harry Potter, hubris is the vice that brings down the mighty.
These days, our most visible dramas tend to play out in legal action, and some pretty compelling language has come to light in the Snohomish County, Wash., Public Utilities District's (PUD) efforts to obtain compensation from Enron (OTC BB: ENRNQ.PK) for alleged market manipulation.
Recent transcripts of conversations between Enron's West Coast energy traders offer vivid proof that the firm's sophisticated, self-obsessed thieves didn't just hold a dim view of its unwitting stockholders. Public entities, like the state of California, were considered easy prey. Timothy Belden, one of two traders from the Portland office who have pled guilty and cut a deal with prosecutors, says on one tape that the firm's trading practices "just (expletive) California... to the tune of a million bucks or two a day."
As you might expect, these guys harbored no affection for the rest of us, either. You and I -- derisively referred to as "Grandma Millie" by the traders -- are looked at as ignorant rubes, ripe for the rip-off.
In one tape, after enduring a bit of ribbing about "how much money you guys stole from those poor grandmothers in California," a trader says, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot..." The first speaker responds, "Yeah, now she wants her (expletive) money back for all the power you've... jammed right up her (expletive) for (expletive) 250 dollars a megawatt-hour."
Other tapes document traders' nefarious plans such as sending power away from areas that needed it, manufacturing grid congestion that Enron would later be paid to alleviate. They also capture the hope that then-candidate George W. Bush might someday appoint Ken Lay as U.S. energy secretary.
"How great would that be for all the players in the market?" one asked.
Pretty great, I'll bet. And given the unbelievable arrogance displayed by this gaggle of crooks -- they knew these conversations were being taped, for crying out loud -- we should be mighty glad it didn't come to pass. But most of all, we should hope that this kind of criminal conceit is punished as mightily in our courtrooms as it is in fiction.
Quote of Note
"Business is a good game -- lots of competition and a minimum of rules. You keep score with money." -- Atari founder Nolan Bushnell
More on Fool.com Today
Nathan Slaughter discusses Schwab's move to rethink its role as a low-cost brokerage.... Selena Maranjian explains how investment clubs can be more efficient -- and profitable than going solo.... Tom Taulli considers how Google will spend some of its newfound wealth post-IPO in Google's Billion-Dollar Shopping List.... Jeff Hwang says that Ameristar is claiming another hot property while diversifying away from Missouri.
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