Jubak’s Picks – Sells

Company	Symbol	Date Sold	Sell Price	Price Now	Today's Change	Gain/Loss Since Sale
McDonald's	MCD	08/12/2010	$72.74
Update : If you’re worried that the U.S. and global economies are going to slow in the second half of 2010, then McDonald’s (MCD) on its second quarter performance is the stock... more    Read Jim's Original Sell
Impala Platinum	IMPUY.PK	06/17/2010	$26.15
I’m going to use the current bounce, World-Cup-rally, summer rally, whatever to sell my position in Impala Platinum (IMPUY.PK). The South African stock looks like it’s in a steady downtrend... more
Microsoft	MSFT	06/10/2010	$24.93
Update April 23, 2010: The earnings news out of Microsoft (MSFT) yesterday, April 22, after the stock market close in New York, was good but good isn’t getting investors very excited these days. Unless... more    Read Jim's Original Sell
Rayonier	RYN	05/28/2010	$44.93
Update March 17, 2010: On January 26 Rayonier (RYN) told income investors what they needed to hear: Even though 2009 had been a very tough year for timber and real estate sales the company,... more    Read Jim's Original Sell
Marvell Technology Group	MRVL	05/26/2010	$19.01
Update March 5, 2010: After the market closed yesterday (March 4) Marvell Technology Group (MRVL) reported fourth quarter fiscal 2010 earnings of 40 cents a share (excluding items). That was 3 cents a share... more    Read Jim's Original Sell

Update McDonald’s (MCD)

If you’re worried that the U.S. and global economies are going to slow in the second half of 2010, then McDonald’s (MCD) on its second quarter performance is the stock for you. (Of course if you think the upswing of the last week isn’t just a bounce, McDonald’s isn’t the stock for you. See my post Two weeks of summer rally or three days of bounce? ) The company reported earnings on July 23 for the quarter of $1.13, a penny better than the Wall Street consensus, and revenue of $5.95 billion, slightly above projections for $5.91 billion. Comparable store sales climbed 3.7% in the United States, 5.2% in Europe, and 4.6% in the Asia/Pacific, Middle East and Africa business unit. And that’s without any big macro trends in its favor. Unemployment remains high in the United States, cutting into the spending of the company’s customers. European economies are growing slowy and the euro/dollar exchange rate worked against the company in the quarter. Japan remains, in the company’s words, challenging—as it has been for the 20 years of economic stagnation. The company is managing to grow revenue and earnings by introducing new menu items—coffee drinks, frappes, and fruit smoothies—adding more value menu items, and what the restaurant industry calls reimaging in Europe. What may be most impressive about the company’s performance, however, is that it has managed to increase operating margins even as it introduced new menu items and expanded its value menu. Operating margin in the quarter grew by 1.3 percentage points to 31%. In its conference call the company said that exchange rates would hurt third quarter earnings by about three cents a share (four cents a share for the full year). The company has benefitted from lower commodity costs in the first half of 2010, but McDonald’s expects that commodities will decline at a slower pace in the second half of the year. McDonald’s has opened 48 restaurants in China so far in 2010 and is on track, the company said to open 150-175 for the full 2010 year. As of July 27, I’m upping my target price to $76 a share by September from my recent target of $74 by July 2010. The stock paid a dividend of 3.2% as of July 27. Full disclosure: I don’t own shares of any company mentioned in this post.

Sell Impala Platinum (IMPUY.PK)

June 17th, 2010

I’m going to use the current bounce, World-Cup-rally, summer rally, whatever to sell my position in Impala Platinum (IMPUY.PK). The South African stock looks like it’s in a steady downtrend despite its 13.8% gain off the June 4 low.

Platinum was bid up heavily by traders who bought it as a speculative precious metals play on market volatility, but the problem with platinum, unlike, say, gold, is that it’s both a precious metal and an industrial metal. With the European economy slumping and the U.S. economy showing signs of slower growth, the industrial demand for platinum hasn’t lived up to hopes and traders have been unwinding positions since April. (The company paid a half-yearly dividend on March 15.)

 I’m selling now with a 3.7% loss since I added the stock to Jubak’s Picks on January 25, 2010. I don’t think the current rally has much upside and I’m looking to raise cash for buys on market weakness later in 2010 and for a recovery in emerging markets stocks that could start as early as August. If you own this stock in a long-term portfolio like The Jubak Picks 50, you don’t need to sell.) This moves my cash position in Jubak’s Picks to more than 40%.

Full disclosure: I will sell my personal position in Impala Platinum three days after this is posted.

Update Microsoft (MSFT)

April 23, 2010

The earnings news out of Microsoft (MSFT) yesterday, April 22, after the stock market close in New York, was good but good isn’t getting investors very excited these days. Unless a company delivers great earnings and ups guidance as well, shares have been selling off on just good news this quarter. That’s the way this market is expressing its nervousness about the Greek debt crisis, monetary tightening in China, and the uncertainties of Wall Street reform during this earnings season. And so Microsoft shares dipped on its earnings report in the market’s after-hours session and were up just a nickel on the open in New York even though the company is growing just the way that investors in the stock, a Jubak’s Pick in July 2009, had hoped. Revenue for the company’s third quarter of fiscal 2010 (Microsoft’s fiscal year begins on July 1) grew to $19 billon as sales of Windows 7, Microsoft’s new operating system, produced a 29% increase in revenue for the Windows business unit. Most of that growth came from consumers with unit sales of Windows to corporate customers flat from the year-earlier quarter. That wasn’t unexpected. Microsoft has repeatedly said that it doesn’t expect corporate sales to kick in until the second half of 2010 and early 2011. So that piece of the Windows 7 good news story is still in the pipeline.  The company’s other units posted just so-so results. Revenues in the Server unit grew by just 2%. In the Business software unit revenue actually fell by 3% as corporate customers put off some purchases of Microsoft’s Office software ahead of the release of Office 2010. At the bottom line, where revenue turns into earnings, the story was about lower operating expenses. Nothing captures Microsoft’s transition from a growth rabbit to a growth tortoise—slow and steady, remember, wins the race—better than investors’ newly discovered concern with expenses at Microsoft. So while earnings of 45 cents a share, which exceeded Wall Street estimates by 3 cents a share, still count, many analysts led their reaction to the company’s quarter by noting that Microsoft had said that operating expenses for the company’s full fiscal year would come in $100 million to $200 million lower than previously projected by the company. That should help keep gross margins near the 81% announced for the third quarter. (Wall Street had estimated gross margins of 78.9%.) All in all, I think the Microsoft story remains on track—no surprises in this quarter to either the upside or downside. I’m going to tweak my target price just a little to reflect the company’s higher margins but that’s it. As of April 23, I’m raising my target price to $37 a share by October from the previous $36. Full disclosure: I own shares of Microsoft in my personal portfolio.

Update Rayonier (RYN)

March 17, 2010

On January 26 Rayonier (RYN) told income investors what they needed to hear: Even though 2009 had been a very tough year for timber and real estate sales the company, organized as a real estate investment trust (REIT) so it must pass most of its profits on to shareholders, had generated cash available for distribution of $230 million for the year. That was an increase from cash available for distribution of $213 million in 2008. And more than enough to cover the company’s $2 a share annual dividend. Oh, yes, earnings. The Rayonier reported earnings in share of 42 cents for the fourth quarter (excluding gains from the alternative fuel mix tax credit). That was in line with Wall Street estimates. Revenues at $309.8 for the quarter were down 15% from the fourth quarter of 2008 but met Wall Street projections of $309.1 million. The company’s three divisions certainly can’t be said to firing on all cylinders. (So, it’s a three-cylinder car.) Timber sales fell in the fourth quarter to $34 million, down $19 million from 2008, as the company postponed the sales of high value timber until prices recovered. Sales of real estate plunged even further to $11 million. That was $37 million below sales in the fourth quarter of 2008. Here too the company postponed sales of its better land. Only performance fibers, specialty wood-fiber products used in things like cigarette filters, showed growth in the quarter. Sales of $41 million were up $16 million from the fourth quarter of 2008. Analysts project 2010 as a much better year for Rayonier. Standard & Poor’s projects that sales, which fell 7% in 2009, will increase by 5% to 7% in 2010. The Wall Street consensus calls for earnings per share to grow by 18.8% in 2010. In one non-sales or earnings related bit of news, Standard & Poor’s confirmed its BBB debt rating for Rayonier but revised its outlook to positive from stable. As of March 17, the stock paid a dividend of 4.42%. Combining that yield and the stock’s earnings prospects for 2010 I get a new target price of $50 a share by December 2010 for Rayonier in my Jubak’s Picks portfolio. That’s up from my prior target of $46 by June. The company’s next earnings report is due on April 29. (The stock is also a member of my Dividend Income Portfolio.) Full disclosure: I own shares of Rayonier in my personal portfolio.

Update Marvell Technology Group (MRVL)

March 5, 2010

After the market closed yesterday (March 4) Marvell Technology Group (MRVL) reported fourth quarter fiscal 2010 earnings of 40 cents a share (excluding items). That was 3 cents a share above the official Wall Street consensus. Revenue climbed 64% from the fourth quarter of fiscal 2009 to $843 million, just a tad above analyst consensus. Strength came in storage (sales up 5%) and networking (sales up 10%). The best news in the current quarter, however, came on gross margins, which climbed 2.2 percentage points to hit 60%. That’s an all-time high for the chip company and is significantly above the 58.6% gross margin expected by Wall Street. Normally the first quarter of the company’s fiscal year—the quarter that ends in April—shows a 7% to 10% seasonal decline in sales. In that context Marvell Technology Group’s guidance to Wall Street for a flat to 2% decline in that quarter counts as a sign of major continuing strength for the company. So too does the company’s increase in gross margin targets going forward to 58% to 60%. That indicates that Marvell believes the new margins are sustainable and the savings from its cost reduction program aren’t based on one-time gimmicks. The conference call wasn't completely sunshine and buttercups, however.  The one worry that management did express was over supply constraints in hard disk drive components and capacity constraints at chip foundries. (On the other hand that sounds like good news for Jubak’s Picks Taiwan Semiconductor Manufacturing (TSMC).) The stock sold off slightly after hours on even this good news. Not surprising since Wall Street had conducted one of its maddening exercises in hyping results just before they’re announced in the days before Marvell reported. The consensus earnings estimate may have still been officially 37 cents a share, but in the days before the report I saw analyst notes calling for 39 cents or 40 cents. That made the surprise much less of a surprise. As of March 5, 2010, I’m raising my target price on Marvell Technology Group to $27 by December from the previous $26 by December target. Full disclosure:  I own shares of Marvell Technology Group in my personal portfolio.