What a KO!?!?!? Go long on KO-The Coke Cola Company

My selection this quarter is KO- The Coke Cola Company. I recommend we buy KO as a long term investment. The movement on it has been between $35-$40 over the past. I do not think we should simply buy KO because it is the largest stock in Warren Buffett's portfolio or Bill and Melinda Gates Foundation is the second largest share holder. Lets look at the numbers- Coca-Cola’s revenue was about flat in the third quarter of 2012 compared to the same period in the previous year. Higher revenue in North America was partially offset by weaker performance in Europe and a slight decline in the Pacific geography. Margins were up slightly, but not by much and so net income showed a slight increase as well. Overall in the first nine months of the year earnings per share came in at $1.56 as opposed to $1.49 a year earlier. With these recent results and a market cap of $166 billion, The Coca-Cola Company trades at 19 times trailing earnings. It’s certainly the case that the company still has its moat and its brand name, but even with those advantages it doesn’t stand out as a cheap stock at that pricing. Analyst expectations are for slight growth in 2013, and these figures imply a P/E of 17. Coca-Cola is also notable as a common example of a defensive, consumer staple stock, and its beta is a fairly low 0.4. Pepsi is often considered the closest peer in terms of brand, but much of its product line includes snacks and other foods. Its earnings multiples are very similar to Coca-Cola’s: 19 times trailing earnings, 16 times consensus for 2013. However, Pepsi actually experienced declines in revenue and earnings in its most recent quarterly report compared to the same period in the previous year. Here is a great article to review. Many great charts and includes Apple too. http://beta.fool.com/ruperthargreav/2013/01/09/would-warren-buffett-buy-apple/19395/ Donald Yacktman and Warren both own KO. Here is another great article. http://www.forbes.com/sites/gurufocus/2013/01/03/the-top-stocks-warren-buffett-and-donald-yacktman-both-own/ Many of the renown investors have invested in some of the same stocks and KO is one of them. We have an opportunity to invest in a company they have found value in and has continued to reward it's investors. We should buy KO and hold as a long term position.

Pepsi Challange

My pick this quarter is Pepsi Co (PEP).  As you know, Pepsi is global giant in the beverage industry; what you may not know is that they are also a major player in the snack food industry (Frito-Lay) and oatmeal (Quaker) - unlike Coke that is strictly beverages.  This is where I think Pepsi has a big advantage over Coke.   Frito-Lay controls nearly two thirds of the U.S. snack market and dominates Latin America with a 60% market share in Brazil (developing market).  It leads in the United Kingdom (46% market share) and within continental Europe it has a decent 31% market share. I like the potential for expansion snack food in these developing markets like Latin America, where people aren't as health conscious as we are.  For the health nuts here in the USA, Quaker will be putting out healthy snack options.  On the beverage side, I think there is potential for growth in the energy drink business, which has become a huge segment in the beverage market overall and people expect it keep growing.  Pepsi has 22 billion-dollar brand products and it has doubled in ten years. Of these 22 billion-dollar brands most are either number one or number two in their respective category.  They also pay a nice a dividend (2.7%) and have solid financials.  I like PEP as a long term play.  The stock is trading at its 52 week high, so there is potential for a pull back, however I think over the long term this stock will continue to grow. 

Duke Energy

Presenting Duke Energy (DUK)- America's largest electric power holding company with over 7m electric customers and 500k natural gas clients. They're a Fortune 250 company with over $100b in corporate assets. Duke Energy is thriving- up 13% in the last six months. As a utility, they rely on a constant flow of capital from paying consumers and target expanding networks and acquisitions to increase their reach and their 27,000 employee workforce. Based in North Carolina, their biggest presence is in their home state, Florida and the Midwest. DUK trades about $72/s and their last three quarterly dividends paid over 1% of share value.

that's GOLD, Jerry!

My pick this quarter is for us to add a new position in gold (GLD).

With the tension in North Korea mounting there will be some natural panic that arises and I think money will flow into precious metals like gold while there is a period of uncertainty.

There are a few ETF's to trade that we can talk in more detail about on the call. 

SPDR Gold Trust

Proshares Ultra Gold

Or another play on it is getting into the VIX which measures volatility in the stock market. 

I'll discuss more live but the links are above to do some research in the meantime.

Any of the plays above would require us taking action early next week.

Hey boys. My pick for this quarter is Lowes again. I like it a month ago and still like it now. At the time of the meeting I know a few of you liked it as well. Still trading right around the same price $38-$39 per share. They have started paying a dividend since last month as well! They have great financials and they profit as the housing market rises...

AIM higher

My pick is AIMCO - (NYSE-AIV)

AIMCO stands for Apartment Investment and Management Co.  The company is involved primarily in the ownership and management of rental properties nationwide.  The US rental market is red hot, and I anticipate it staying red hot for another couple years through 2014 at least.  I believe an investment in AIMCO will allow us an opportunity to capitalize.

This is an extremely competitive space.. so why choose AIMCO?  My choice is based on valuation.  I believe that AIMCO is undervalued with respect to its peers.  This year saw one of the largest apartment REIT buyouts in history, with Equity Residential and AvalonBay buying Archstone from Lehman Brothers.  I believe that that opens the door to more potential buyouts as other sharks look for undervalued assets.  A company looking to expand it's portfolio could make a bid on a company like AIMCO and add 100,000 units to its holdings while it's share price is low.

Currently AIMCO trades at $29.16.

My favorite RAX

My selection for this quarter is one we all know, Rack Space Hosting, inc. We jumped on board when they were at $25 a couple of years ago and rang the cash register along the way. The cloud has really helped accelerate their grow and that has pushed the current price to about $73 per share. The cloud revenue has grown about 25% in Q4.! Forbes recently named RAX in the Top 100 companies to work for, again. Rack Space Hosting has also been in the rumors of a buyout from Dell and another technology company. This stock will be worth over $100 in the next couple of years as the cloud technology pushes forward. I suggested it would triple when we bought it back in 2010(see previous posts). We can ride this stock over the century mark if we buy and hang on to it. I am bullish on RAX long term and highly recommend we ride the wave over the century mark. If companies are trying to buy them and employees are very happy, it is an investment we need to strongly recommend. We have experienced the potential of the RAX. Lets RAX it again! http://news.investors.com/technology/021113-643898-rackspace-reports-q4-earnings-cloud-growth-expected.htm?ven=rss&utm_source=dlvr.it&utm_medium=twitter

LOWES

My pick this quarter is Lowes (LOW). $39.03 per share. I started looking at Lowes because my company is the HVAC contractor in 3 of there stores. There outside project division is a big part of there business. HVAC, siding, roofing, windows, doors.. If you look at there charts you may think we missed the boat, but I don't think so. They have been trending up for about a year and a half. They have consistently increased revenues since the 1990's. And with the housing market turning around and future outlook good, I see Lowes taking advantage and continuing to increase numbers.  This article have some great pros and cons of Lowes so you know it's not biased. http://www.insidermonkey.com/blog/lowes-companies-inc-low-never-stop-improving-never-stop-investing-57778/

Who doesn't love drugs?

My pick is Abbott Labs, a major player in the drug space with Merck, Glaxo, Pfizer, J&J, etc. We've had success in the health sector (HNT, BSX) and this country spends more on insurance and med products than any other in the world. The numbers make sense- 9 PE and a $34/s price tag. The stock has been on a steady include for the past three years and pays a heavy $2/yr dividend. There are more filled prescriptions today than there has ever been and that number will continue to grow. We've consistently done well in the health sector and until Obamacare is straightened out, we'd be crazy to abandon this investment category.

Time to make the Donuts..

My pick for this qtr is Dunks.. DNKN.  I was looking at some food industry stocks - its been a while since we dabbled in that sector.  Domi-hogs has come a long way since then. I chose dunks because i think they have plenty of room for growth, especially onto the west coast.  Right now they plan on opening 1000 stores in Cali.  They've been advertising like crazy and they keep expanding their menu.   They are trading around $36 a share, close to 52 week high and their PE ratio isn't that great compared to its competitors like Starbucks and Krispy Cream.  But i have confidence.  I'm long on DD.