It's Halloween time, Fools and Ghouls, and what better way to celebrate than with stock ideas? Today we launched our annual Halloween special with 10 stocks to watch under a full moon. Our Tricks are stocks we think are better off avoided right now. Our Treats are companies we think will perform well over the long haul. And we've even got a scary story for you too, "Attack of the Killer Fees." Enjoy!
In today's Motley Fool Take:
- Is Apple Photogenic?
- Discussion Board of the Day: Cheap Air Fares
- Game On for SINA
- Quote of Note
- P&G Plows Along
- Checking Out RedEnvelope
- More on Fool.com Today
Is Apple Photogenic?
With competitors avidly trying to nibble at the iPod's market share, Apple
With this move, Steve Jobs has made good on his vow not to bring video to iPod, as Microsoft
Meanwhile, the iPod U2 Special Edition might make me roll my eyes and groan, only I'm thinking it looks pretty darn cool because it's black and has a red Click Wheel. Hmm. Other selling points of this 20GB iPod include "autographs" from the band as well as a digital boxed set of U2 songs, including rare and previously unreleased tracks. Sure, it makes sense coupled with the recent U2-centric TV ads, but it seems that it might only appeal to diehard U2 fans.
(Furthermore, by channeling my previous life as a rebel, I can imagine that some of today's hipsters who might be attracted to a black iPod would likely shun the idea of the connection to a particular band. Can you say "sellout"?)
I'm not sure I'm completely sold on the idea that the iPod Photo will be as much a smash success as the regular iPod. Although it might be a great tool for parties if you're showing off tens of thousands of digital photos of your lovely children or your last vacation, I have a hard time imagining that photos are as catchy on this platform as music.
One feature I do like is that the gadget can show album art as you listen. That's a pretty nifty feature, especially for those of us who are music aesthetes, but I have a hard time imagining it would command a premium price. (Then again, to be fair, I didn't think that digital cameras in cell phones would take off like they have.)
It's clear that Apple knows it needs to innovate to keep the iPod mania going, especially with the holiday gift-giving season approaching. For my part, though, I do question whether even iPod fanatics will be willing to pay those prices for photographic functionality. However, it remains to be seen -- Apple has surprised us before.
Alyce Lomax does not own shares of any of the companies mentioned.
Discussion Board of the Day: Cheap Air Fares
It's not just JetBlue putting up a good product at a low price these days. What do you think of the other bargain carriers? Where do you find the best rates? All this and more -- in the Cheap Air Fares discussion board. Only on Fool.com.
Game On for SINA
Motley Fool Stock Advisor
The best part is, this market is far from maturing. Shanghai-based iResearch estimates wireless value-added services to follow this year's 65% growth with growth rates of 41% and 35% in 2005 and 2006. These growth rates more than offset declines in short message service (SMS) revenue. Even with the temporary suspension of SINA's interactive voice response (IVR) service, revenues from new mobile value-added services grew from $5.1 million to $7 million as SMS revenue decreased by $1.7 million. (China Mobile resumed the IVR service on October 15.)
Mobile services may be SINA's sweet spot, but the company is looking beyond that. In the quarter, SINA launched the online gaming portal iGame, which has 3.6 million users to date despite debuting in July. To get an idea of the staggering demographics involved, note that this figure is greater than the number of XM Satellite Radio
SINA also managed to land prime property from Korean company NCSoft. Lineage 2 is the hottest massively multiplayer online game in the world right now, and Chinese gamers have latched onto the beta to the tune of 2 million subscribers and over 100,000 concurrent users. The official launch scheduled for November 11 should provide a new steady stream of revenue.
So why pick SINA over more focused companies like online game operator extraordinaire Shanda
Fool contributor Tim Goh does not own any stake in the companies mentioned.
Quote of Note
"I told the doctor I broke my leg in two places. He told me to quit going to those places." -- Henny Youngman
P&G Plows Along
There wasn't so much to be disappointed about when it came to Procter & Gamble's
Procter & Gamble's fiscal first-quarter net income increased 14% to $2 billion, or $0.73 per share, which, while not as exciting as last time around, still met estimates. The divestiture of the company's juice business contributed $0.02 per share to earnings. Total sales increased to $13.74 billion. The company reported particular success in the beauty care and fabric and home care businesses, which saw sales increasing in the double digits. Free cash flow increased 21% to $1.51 billion (not only did the company include its statement of cash flows but also it did the math for you).
Increasing commodities costs seem to be one avenue where investors are spooked. Not to mention, the specter of price wars looms on the horizon. ("Spooked" and "specter" -- hmm, I think I've read a few too many of today's fun Stock Tricks and Treats!) Many of P&G's rivals are anteing up their promotional activities to try to get toeholds on the markets.
Procter & Gamble has a myriad of important products for your whole family, such as Tide, Swiffer, Crest, Pampers, Nyquil, Herbal Essences, and Prilosec, to name only a few (and even some for the four-legged family members, such as Iams and Eukanuba). Therefore, the company competes with a slew of consumer products companies, such as Kimberly-Clark
In its conference call, P&G management said it won't be pushing its guidance upward. CFO Clayton Daley Jr. reassured listeners that while this doesn't mean they expect to miss estimates, "in light of higher commodity prices and higher price and promotion spending by several competitors, we simply believe it is only prudent to make sure we have the financial capability to address whatever issues confront us in the balance of the fiscal year."
Meanwhile, a large balance of the question-and-answer section of the conference call dealt with margin growth at P&G. And of course, it bodes well for investors to keep an eye on margin improvement.
Procter & Gamble remains a classic consumer products stock with every sign that it has what it takes to keep its crown. In recent trading, though, the company's shares wilted by about 3% as investors got jittery. However, as has been said here before, P&G is no gamble -- though there may be plenty of good reasons to believe there might be tough times ahead for consumer products companies, P&G is arguably one of the strongest in the fold.
Alyce Lomax does not own shares of any of the companies mentioned.
Checking Out RedEnvelope
Last night, RedEnvelope reported revenues of $10.6 million and a net loss of $0.44 per share, beating the analyst estimate of a $0.46 loss. Top-line revenue growth for the second quarter of fiscal 2005 came in at a healthy 27%, and the margins held steady at 48.5% while the customer file reached the 2 million mark.
When Tom Gardner recommended RedEnvelope in Motley Fool Hidden Gems, this recent IPO was debt-free, sitting on a nice stash of cash, bounding into profitability, and looking like it had a fair shot at establishing itself as a niche online gifts outfit. Though RedEnvelope is down -- to the tune of 20% since the original recommendation -- it's not out quite yet. The balance sheet remains solid, and a strong showing during the upcoming holiday season could put the company on the path to profitability sooner than forecast.
Whether that's likely to happen is a different question.
On one hand, execution problems are often a sign of a deficient management and can cascade into other problems; case in point, a nasty proxy fight this past summer that revealed a vocal minority of doubters and cost shareholders $.02 per share in proxy solicitation.
On the other hand, the company's problem last Christmas was execution -- not a lack of orders -- and as far as problems go, that one is solvable. Management has built up inventory in anticipation of the holiday rush, focused on training its customer service teams and implemented new systems to improve shipping and handling.
The key metric will be whether RedEnvelope can capture the upscale, personalized gifts niche it seeks by distinguishing itself from Sharper Image
Still, to that end there's only one litmus test -- holiday season. The company's performance in the upcoming quarter will be the true determinant of whether investors are in for another year of stormy seas of red.
Fool contributor Marko Djuranovic does not own shares in any companies mentioned in this article.
More on Fool.com Today
Rex Moore offers 4 Small-Cap Stock Ideas, as well as a look at the complete Foolish 8 list.... In Embrace the Unloved, Tom Gardner finds bargains among the scorned with Moneyball author Michael Lewis.... Jeff Greenberg steps down, and Marsh pledges to reform. Apparently that's enough penance for a decade of misdeeds, Bill Mann says in When in Doubt, Decapitate.
In other news:
For a list of all our stories from today, see our Today's Headlines page.