RIM @ $47.36 CND

After the announcement that RIM was going to meet and exceed earnings, the price rose from the $45.52 low to a high the next day of $53.32. This reinforces my belief that the stock is trading about where it should be (I guessed a high of $56 dollars... perhaps a bit optimistic... But *close*. off by about 5%). At $53.32 I would have rated the stock a hold although it clearly should have been a sell rating. However, I believe that the hold rating would be justified in the time frame of 6 to 12 months versus a sell rating to make a quick buck after only a few days.

It's seems like they are doing well... Even hiring people away from Motorola (and having some grief about it... Something I can personally sympathize with).

Rating: Buy @ 47

GM @ $3.66 (up 12.62%)

Ok... I rated GM sell, but they got a boost when GMAC got bank status and could participate in the government bailout package. There is some controversy as GMAC is 49% owned by GM, but as a financing company who is in a position to assist in the recovery of the credit markets, some analysts are hailing this as a correct decision to improve the market.

I still maintain that the company is a long term dog. A restructuring plan by executives by March? Too little, too late. The fundamentals of this company have passed a tipping point and is poised to be delisted. These measures of government assistance are only serving to reduce the pain while this giant slowly makes its way out.

Rating: Sell

Canadian Politics - Investing in Infrastructure

Individual party politics aside, in the current economic client, a good question to ask ourselves (as the Canadian government experiences it's own unique brand of turmoil) is what should the government's role be in helping us boost the economy and prepare us for what is ahead.

I agree that the best course is to invest in infrastructure to create at least a temporary boost in aggregate demand while positioning us to be more competitive in the future. However, with circumstances being what they are, a key consideration is the effect of running a deficit during these trying times.

Real Estate

If you can hold off, don't buy real estate (this is particularly targeted to people I know in their early to late twenties who are thinking of buying their first house). Why?

• Although the US real estate crisis hasn't hit us as hard (and probably won't) we still have yet to feel some of the effects
• There is an aging population which has a disproportionally high amount of equity built into their homes who will be liquidating their houses within the next few years (downgrading / down sizing, releasing equity, retiring etc) but no one will want to buy them (old article, but the fundamentals remain the same).
  
• Over capacity in real estate can't just be "scaled back". There are currently more houses than the market can absorb and you can't just halt development projects and watch construction companies close shop. The market reaction will be a much faster reaction than the development reaction (i.e. Housing starts seems to be dropping across the board)
  

Wait... 1 to 2 years for the market to bottom and get a good mortgage rate and price for housing. Check out the reports published by the CMHC for more info on the outlook of the Canadian Housing market.

Oil Companies

Petro-Canada (Hold - Sell) @ 25.28 USD
http://finance.google.com/finance?q=TSE%3APCA
Encana (Hold - Sell) @ 52.01 USD
http://finance.google.com/finance?q=TSE%3AECA

Oil prices have been plummeting ($25 oil?). Both have reported issues and scaling back their operations in Alberta. Petro-Canada has been beat up and nothing much has changed to rate an improvement in their companies fundamentals (in fact they seem to be deteriorating). However, the stock is getting beat up *REALLY* bad. Not sure if there is a bottom here, but Petro-Canada might find itself in serious trouble soon (it's P/E is less than 3) if things don't improve.

Oil prices being where they are (and where people thing they are going) Encana also doesn't look like it will be recovering anytime soon. (P/E is 5.47)

- Granted analyzing oil and related companies is MUCH more complicated than presented there, I think these broad strokes are enough to warrent a Sell rating.

GM - Sell @ 3.00 USD

http://finance.google.com/finance?client=ob&q=NYSE:GM

These guys are goners. It's only a matter of time. Although they have the right idea now (developing new technologies), it's too little too late (even with the Government loan / warrants). I was discussing with someone who was watching the stock who said that that surest sign that the company was on it's way out was when it started offering 0% financing a few years ago. Now there are reports of dealers giving stock away or closing shop. Even if the economy was stronger, I don't think there is enough momentum to save GM (even with gas prices at an incredible low and dropping). It doesn't matter that gas is cheap so much as people are worried about their job security and incomes.

Also a great deal of GM's business is in the financial arm of GMAC (which is holding Ditech, a mortgage refinancing company) which is taking a heavy beating also. It isn't a good sign when your company is on a banned list for shortselling.

I think almost everyone knows that this company is on its way out and no one would be foolish enough as to dismiss the deep ramifications of that (Windsor becoming like Detroit), however, the question shouldn't be "How can we save GM?" but rather "How are we going to move on after it's gone?"

Rating: Sell

Kodak - Buy @ 6.11 USD

http://finance.google.com/finance?client=ob&q=NYSE:EK

Kodak has been taking a beating ever since they announced they were getting out of the "traditional photography" business in 2003. However, they said they would invest in developing new technologies and get more into digital photography. Well today, 5 to 6 years later, I think they are starting to get it right. Although their stock has been taking a beating for the better part of several years, I think it's finally time for Kodak to make a come back and it's mostly due to their new line of printers.

Now everyone knows that HP is *THE* established printer maker. I'll talk more about HP in another post maybe, but I think the point I need to make here (and that Kodak makes) is that their printer ink cartridges are *exorbitantly* expensive. I think it's too late in the game for Kodak to catch up on Digital Photography and their camera's aren't particularly any better than anything else out there. However, if they can leverage their credibility towards printing and create good *inexpensive* printers that don't suck (think Lexmark and Cannon who couldn't GIVE their printers away), they may have a legitimate grounds to eat into HP's territory in that market and may even change the dynamics of the current market (the "razor blade" model described here hasn't changed much in 10 years).

Having said that, I would say that Kodak has bottomed (or is close to it) and if they stick to their guns regarding pursuing good inexpensive printer technology, they might be able to offer something new and very useful to consumers.

I'd rate Kodak a buy. I would think that at this stage... It warrants a P/E of somewhere between 8 to 10 (EK @ $7.20 to $9 USD) and it's currently trading at 6.76. However, it will probably take a few quarters of reporting positive growth and lag to get there (so think a time frame of 6 to 9 months)

The only problem is that there are a lot of other "lines of business" that dilute the overall effect of the growth I'd expect in the line of printers (the stock has a beta of 1.76) so if their other business start to falter (which I think they will), the management would be smart if they divest the non-performing businesses which will never recover.

If this works out... This maybe known as Kodak's big comeback... Stuff to write business books and management consulting cases about.

Apple - Hold @ 86.38 USD

http://finance.google.com/finance?client=ob&q=NASDAQ:AAPL

If I had to comment on Apple, I would say this:

• The stock took a small beating like other stocks at the end of September (128ish to 105ish)
• But this company is a very established tech company and trades as such
• iPhone sales will be strong but not overwhelmingly surprising
• Stock is priced about where it should be (I'd think that in the current economic climate a P/E of 14 to 17 is appropriate for Apple and it's trading at 16ish)
• I'd rate this stock a "Hold"
  

DAMN IT!

So close... Yet so far.

I guessed on Dec 12, that RIM stock would hit a minimum of $45 and had a buy order at that amount. Well on *Dec 15th* the stock bottomed at $45.52. Then RIM reported a positive financial quarterly report (like I anticipated) on the 18th.

Ok... So some of my "analysis" was guess work... But to guess the bottom to within 52c (or just over 1% of the stock price) is pretty damn good. Unless something weird happens, I think the stock will start to have a more "normal" growth pattern (translation: it's still a good investment if you don't really have other plans for your money). However, instead of making 25% over the next six month's you'll probably still only make about 10% over the same holding period.

Nonetheless... Even though I didn't make the killing I had hoped to, I am happy about the result.

RIM.TO

I think that investors have gotten a little crazy with RIM stock. It plummeted on Sept 22nd from a 52 week high of $150.30 to a current close today of $48.49 CND.

Ok... I think that the stock was *way* overvalued before. However, I think investors have gotten a little crazy offloading the stock (the P/E ratio has dropped to 12.67 - Source: Yahoo Finance @ Friday Dec 12). I think that the Financial Crisis (and RIM's "negative" news) has made people a little emotional when it comes to stock. I think that given the circumstances, the stock *might* drop as low as $38.34 if people continue to panic, but I'd like to think that smart investors will start coming in and preventing it from falling too far below it's intrinsic value.

The fundamentals of this company are still good. Although they've downgraded their earnings for the next quarter based on general economic weakness in the US, I think that it's still a strong growth company (deserving a P/E of around 15 or more). Plus, given that their EPS is technically still growing (just at a slower rate), I don't think the panic is entirely justified.

Check out the Roger's commercials. It almost seems like 75% of all the phones are BlackBerry's (Bold, Flip, Storm). Having said that... It seems like RIM will do better than most companies in the same space (which doesn't say much as most companies will probably suffer).

Based on all that... If I had to put a stake in the ground... I would buy the stock if it fell to $45 CND and sell it if it went up to $56 within the next six to twelve months - two to four quarters (it might slowly start growing again after that... But if you are looking to make a *relatively* quick buck with *relatively* low risk - the stock seems to have bottomed for now... or approaching it). That's an almost 25% holding period gain. In short... I'd rate this stock a "Hold" for now. If investors get any more panicky (if the stock drops another few percent) I'd rate it "Buy".

Keep in mind... Even though I think the stock *SHOULD* be worth $56... The market (being emotional and even irrational during this stressful crisis) *may* not agree until later. Either way, I think this stock is undervalued and poised to make a recovery... *Eventually*.