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Giacomo Maggiore

Colca-Cola, a love affair

We can’t speak about the cola giant without first speaking about Berkshire Hathaway Inc. Warren Buffett built Berkshire over four decades of acquisitions and stock picks, bringing the value of his personal stake in the company to about $50 billion. Buffett assembled an enterprise with businesses ranging from car insurance and underwear to ice cream and corporate jet leasing. Berkshire is the largest shareholder in The Coca-Cola Company (NYSE:KO), and that’s why I love the stock.Coca-Cola has a 12 month trailing earnings per share (EPS) of $3.49 US with a dividend of $0.44. Ideal for the value investor, because right now with all the political turmoil in Libya and the disaster in Japan, the market is overreacting to good or bad news, regardless. As a result, the stock price movements do not correspond with the company’s long-term fundamentals. In other words, now is the time for value investors to profit by buying stock because most prices are deflated, including for Coke.KO has a return on assets (ROA) of 19.42% with a staggering return on common equity of 42.32%. In essence, they generated 42.32% of shareholders equity into solid returns for 2010. This measures Coca-Cola’s profitability by revealing how much profit it creates with the money shareholders have invested. Moreover, the company has significant growth potential: sales growth year-to-date (YTD) 13.32% with a growth in assets of 49.82%, primarily due to expansion efforts in the US, where Coca-Cola gained more ground from Pepsi.In the decade-old cola war between Coca-Cola and Pepsi; Diet Coke finally overtook Pepsi Coke as the No. 2 soda in the US behind regular Coke. PepsiCo. Inc. (NYSE:PEP) saw their sales volumes in 2010 fall sharply by 4.8% for Pepsi cola and 5.2% for diet Pepsi, according to industry data published by Beverage Digest. The Wall Street Journal says Pepsi’s current market share… Read More

The Wall Street secret — Goldman Sachs

Wall Street is the safest place in the world—chaos or no chaos, money is always made. Being a highly interested finance student, I’ll share some of the secrets with you. Here’s one: Goldman Sachs.Goldman Sachs [NYSE:GS] reported Q2 11 diluted EPS of $1.92, with almost all the disappointment coming mainly from FICC (Fixed Income, Commodity, & Currencies), Goldman’s trading unit. With a negative surprise, most analysts’ consensus is that things are not looking too great for the Wall Street giant. I beg to differ.Weak performance in commodities was driven by asset price fluctuations as well as defaults in Greece, the “steroid” financing in the U.S., and the slow degradation of Italy’s financial position. Markets all across the board have been in the red since June. All together, it seems that most of these issues were specific to Q2 and with the recent adjustments in earnings expectations, there should be no impairment for Goldman Sachs in Q3.Analysts cut 2011E EPS numbers by roughly 15 percent from $12.80 to $10.20 and 2012E EPS by 9 percent from $17.10 to $14.70 in order to factor in the weak Q2 11. From my personal analysis, the target price has been lowered to $170 from $185 in order to reflect the EPS cuts.Goldman Sachs’ bottom-line is also extremely sensitive to the strength of the economy and the total capital markets. Earnings have been highly volatile from Q1 to Q2, going from $4.62 to $1.92. Such fluctuation depends upon a variety of factors including asset values, trading activity, and demand from retail and institutional investors to purchase securities.Moreover, Goldman Sachs also “faces significant litigation risks and the Manhattan U.S. Attorney’s office has opened up a preliminary criminal investigation into Goldman Sachs’ CDO dealings related to the recently settled SEC civil suit” (Keefe, Bruyette and Woods (KBW) Financial Services).Trailing… Read More

The Wall Street secret ? Goldman Sachs

Wall Street is the safest place in the world—chaos or no chaos, money is always made. Being a highly interested finance student, I’ll share some of the secrets with you. Here’s one: Goldman Sachs.Goldman Sachs [NYSE:GS] reported Q2 11 diluted EPS of $1.92, with almost all the disappointment coming mainly from FICC (Fixed Income, Commodity, & Currencies), Goldman’s trading unit. With a negative surprise, most analysts’ consensus is that things are not looking too great for the Wall Street giant. I beg to differ.Weak performance in commodities was driven by asset price fluctuations as well as defaults in Greece, the “steroid” financing in the U.S., and the slow degradation of Italy’s financial position. Markets all across the board have been in the red since June. All together, it seems that most of these issues were specific to Q2 and with the recent adjustments in earnings expectations, there should be no impairment for Goldman Sachs in Q3.Analysts cut 2011E EPS numbers by roughly 15 percent from $12.80 to $10.20 and 2012E EPS by 9 percent from $17.10 to $14.70 in order to factor in the weak Q2 11. From my personal analysis, the target price has been lowered to $170 from $185 in order to reflect the EPS cuts.Goldman Sachs’ bottom-line is also extremely sensitive to the strength of the economy and the total capital markets. Earnings have been highly volatile from Q1 to Q2, going from $4.62 to $1.92. Such fluctuation depends upon a variety of factors including asset values, trading activity, and demand from retail and institutional investors to purchase securities.Moreover, Goldman Sachs also “faces significant litigation risks and the Manhattan U.S. Attorney’s office has opened up a preliminary criminal investigation into Goldman Sachs’ CDO dealings related to the recently settled SEC civil suit” (Keefe, Bruyette and Woods (KBW) Financial Services).Trailing… Read More

Short RIM’s Stock

Just the other night I was dinning with a few colleagues and we began to discuss the current situation at Canada’s largest technology company: Research in Motion. RIM is currently trading at multi-year lows, even lower than during the market’s bottom of March 2009, so could it be a buy? Through much debate and after speaking with a junior analyst at the John Molson Investment Society who covers the technology sector, I’m afraid to say that the Canadian smartphone giant is doomed. RIM recently made a downward revision to its guidance for the fiscal year 2011, as lower than expected device shipment volumes are expected to exert pressure on the company’s revenue and earnings. Management now expects revenue to come in lower than its earlier forecast of $5.6 billion, and has also made a downward revision to its EPS guidance range for Q1 to $1.30 from $1.55.So what’s going on at RIM? Could it possibly be a management problem? Has the company become stagnant? Recently, RIM launched its tablet, PlayBook, and has indicated that the initial shipments were in line with their original expectations. However, it still remains to be seen how PlayBook will overcome the stiff competition from other tablets. On the other hand, the globalization of RIM’s business once acted as a strong volume growth driver and the company had a successful strategy of attracting new smartphone customers to the BlackBerry solution. Note RIM “once had,” now all that seems certain when talking about RIM is the huge sell off on the street.Moreover, RIM not only faces competition from Apple but also regional players in the emerging markets who are offering Blackberry look-alike handsets and smartphones at much lower prices. Going forward, the growth of Android phones, growing acceptance of iPhone in the corporate world, and the introduction… Read More