Up and down the East Coast today, there's enough cold, grey rain to go around. At times like these, we can't help but dream of retiring to a sunny, warm island somewhere, pina colada in one hand, trashy book or iPod in the other. But then the nagging thoughts begin, especially, "Will we have enough money to fulfill that wish someday?"
Robert Brokamp, our resident retirement genius, has the answers to help us get there. If you haven't already, check out his article from yesterday, "What Retirement Will Cost." And if you'd like to take an additional step toward shoring up your future of leisure, why not sign up for a free trial to The Motley Fool's Rule Your Retirement newsletter? There's no obligation, and heck, your 401(k) will thank you for it.
In today's Motley Fool Take:
- Is MCI Junk?
- Discussion Board of the Day: Buying or Selling a Home
- Altria's Pricey Smokes
- Quote of Note
- Peter Lynch the Grocer
- Sirius' Sobering Slide
- More on Fool.com Today
Is MCI Junk?
For a company that just ascended from bankruptcy, MCI
MCI's indentures have what is called a "reset" feature on them. If both S&P and Moody's
As Philip Durell noted when he selected MCI in the Inside Value newsletter, this company isn't exactly the high-flier it used to be. The telecommunications business, particularly the legacy long distance voice segment that MCI dominated along with AT&T
MCI's shares barely budged on the news, while its bonds lurched higher. At the moment, MCI's senior notes due in 2014 trade at 106.5, which is a premium to face value. This leads to the other part of Philip's thesis on MCI: The company is priced as if a second collapse of the equity is probable. Given that MCI's plan is to limit its capital expenditures and pay out as much of its cash flows as possible to shareholders, all while dressing itself up for potential acquisition, I think that the bond pricing gives a much better picture of the staying power of the company. And when it comes right down to it, anyone who has been watching telecom for a while should not be surprised that there is still plenty of question about whether all of the capital dedicated to it will generate an economic return.
Bill Mann owns none of the companies mentioned in this article.
Discussion Board of the Day: Buying or Selling a Home
Are you thinking of moving? Visit our Buying or Selling a Home discussion board to get some great insights and tips from fellow Fools.
Altria's Pricey Smokes
Though there are plenty of reasons investors might worry that tobacco's days are numbered, the folks over at Altria Group
Is this really good news for the entire industry, as is being so widely reported today? If so, it's worth only a half a point at big producers such as Reynolds American
That's not to say investors shouldn't look at tobacco stocks, which have been pretty decent performers lately, not surprising given the solid results they've been posting. Perhaps it also reflects easing fears about litigation overhead -- something there's less of at UST, which butters its bread with smokeless products. Despite Altria's recent price recovery, there could be more upside ahead. Measured by P/E and enterprise value-to-free cash flow ratio, it's still cheaper than the peers mentioned here, and it's got superior margins to all except UST.
For related Foolishness:
- Is Altria's potential value already unlocked?
- Are tobacco's days numbered?
- Safer smokes? You must be kidding.
Seth Jayson has positions in no firm mentioned.
Quote of Note
"True friends stab you in the front." -- Oscar Wilde
Peter Lynch the Grocer
I gotta admit I did a double take. The press release read: "Winn-Dixie Appoints Peter Lynch President and CEO."
No, it's not that Peter Lynch.
Supermarket chain Winn-Dixie
Peter Lynch comes to Winn-Dixie from competitor Albertson's
Earlier this year, Winn-Dixie announced a turnaround plan that included strengthening the brand, cost cutting, market analysis, and store remodeling. But when Lazaran said, "This company needs to change," he probably didn't have his own job in mind. Yet with the chain trading below book value of $5.40 per share, declining revenues of $2.3 billion, and a cash-flow-negative status, the board of directors undoubtedly felt the fish was rotting from the head down. The larger-than-expected $153 million loss in first quarter results, coupled with the decision for the company to be dropped from the S&P 500 stock index, only hastened his departure.
While at Albertson's, Lynch presided over an asset rationalization initiative as well as a $500 million reduction program that led to an 18% increase in net income, a 15% increase in sales, and earnings per share that would have been in line with analyst expectations had it not been for the devastating hurricanes that swept through the Southeast this past summer.
He'll have his work cut out for him at Winn-Dixie. The grocer has been losing market share to the likes of Wal-Mart
Whether Peter Lynch the grocer can turn in results similar to those of Peter Lynch the mutual fund superstar remains to be seen.
Fool contributor Rich Duprey is easily distracted by bright shiny objects. He owns shares of Wal-Mart, but does not own any of the other stocks mentioned in this article.
Sirius' Sobering Slide
While digital radio satellites may know their way around the laws of gravity, it seemed as though shares of Sirius Satellite Radio
Back in October I wrote about how the company mattered again. It had just signed up Howard Stern to a multiyear, multichannel contract, and despite having a whopping 1.3 billion shares outstanding -- and counting -- it was a worthy candidate for our Rule Breakers newsletter at $3.70 a share.
Yet my optimism for continued near-term gains was put to the test when the stock soared, lapping past the market cap of its larger rival XM Satellite Radio
When the stock lapped the $6.66 mark two weeks ago I warned, tongue-in-cheek, that it was suffering from satanic possession. While I was a firm believer in the company's long-term prospects, it was wrong to ignore both its pricey valuation and the critical concerns posed by some fellow Fools.
Yet the stock defiantly marched higher. Topping out at $9.43 before gravity got the better of the shares, the stock fell sharply on Wednesday after a pair of analyst downgrades. Yesterday the stock closed at $7.17, pricing the enterprise at a beefy $9 billion.
Is satellite radio going to revolutionize the radio industry? Absolutely. Can you pay too much for front row seats for said revolution? Absolutely.
One has to be realistic. I get plenty of anecdotal affirmations in email form. Yesterday someone wrote me that a satellite radio installer at Best Buy
Channel checks rock. Anyone who remembers our early days of Fooldom can recall the spot on optimism for Iomega
Yes, just yesterday my wife was on strict orders that all I want for Christmas is Sirius. But then there's my brother-in-law, who bought an XM system over the weekend and then got two more for his teen-aged kids in order to take advantage of XM's discounts on additional subscriptions.
As the early adopter columnist in our new Rule Breakers research newsletter, I couldn't be more excited to see early shareholders being rewarded lately in both Sirius and XM. This is going to be an exciting place to be as free radio bites its fingernails to the bone. But just as someone wouldn't overpay for a satellite radio receiver, it's important to pay realistic near-term prices for the satellite radio stocks as well. If your only due diligence is reading a post on a free discussion board that reads "SIRI see $10 by Monday" then you might want to take in some market basics first.
It's okay to get excited about tomorrow -- as long as you understand the lessons and gravity of today.
Longtime Fool contributor Rick Munarriz thinks that XM and Sirius will defy the cynics and the skeptics over the coming years. He only hopes that they learn to treat their income statements and balance sheets a little better. He does not own shares in any of the companies mentioned in this story and is a member of the Rule Breakers analytical team.
More on Fool.com Today
Hidden Gems purist Paul Elliott takes a look inside small-cap investing in Smart Money, Killer Stocks....Fool contributor Tim Beyers finds that when it comes to stocks, it might pay to be Scrooge in Three Stocks for the Scrooge in You.... In Types of Investors: Which Are You?, Selena Maranjian helps you become a better investor by learning a little about yourself.... Analyst Philip Durell shares insights into the mind of contrarian asset manager David Dreman in Contrary to Popular Opinion.
In other news:
For a list of all our stories from today, see our Today's Headlines page.