Goodbye 2010….

Test test, this is only a test…

Okay, trying to blog from my iPad, so if this works then I’m buying a MacBook. Lol.

….okay it works! Here we go….

Two thousand and ten was a year to remember. What will I personally remember it as? A lot of things. It was a year where I watched the entire market tread softly on the wall of worry, an epic wall of worry. It was a year where I witnessed ironic rallies, like clothing retail or movie rentals companies. It was a year of short squeezes, much like the good old days of 2007 (seems so long ago) as companies like Priceline, or Netflix, and Green Mountain Coffee kept moving up earnings after earnings. It was a year where the champs stayed the champs, as the Lakers repeated. It was a year to cheer for the underdog, as the Giants proved you don’t need a high payroll to win it all. It was a year of heroes- Drew Brees for a battered state, Manny Pacman” for a nation. It was a year of political compromise- not sure where Obama is going on these taxes. It was a year of betrayal- Lebron takes his talents to south beach, Cleveland wears Quitness. It was a year of haters- so what if Palin’s daughter can’t dance. It was a year that demonstrated that an upgrade doesn’t necessarily make things better – YouTube. It was a year of technological breakthrough- the iPad. It was a year of social networking, dumb students, and unproductive office workers- Facebook. It was a year of heartbreaks- I’ve broken a few, but had mine break by the same women twice. It was a year to reflect on many years- as I watched my father fight death. It was a year of happiness, hope- ibankcoin.

Have an awesome 2011!

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(that’s a fortune cookie, sadly)

China is probably the most known-unknown country you know of. Yes, we all know how amazing China is, but in reality, we don’t because we’ve never been there, and the country does a good job at keeping it a private, no trespassing you arrogant American crybabies whose minimum wage is a day’s wage for them. After all, they do have the Great FireWall. My sister moved to China and so I bought her a iPod so we could FaceTime, because she said they read your emails and screen your phone, especially if they know you’re from America. Lol. Sounds like some James Bond movie. Anyway, whether that’s true or not, the level of mystery that surrounds China makes it an exhilarating place to invest. I mean, when we buy into China, there’s huge risk because they don’t follow GAAP according to our standards, or the media can be bias, and the Government, boy do they sure have a grip on the major companies.  So whenever I hear something business related about China, I’m always thinking, “I wonder what really happened,” then I proceed to buy up stocks. This kind of goes against my philosophy to investing (that is, buying what you know or what you consume), but for the next few years, China will be a great spot for speculative money. So if you got a few dollars to throw in the wind, here’s 3 Chinese stocks that have great potential to throw more money back at yah. You’ll notice a pattern with these growth stocks… any negative news item will shoot them down, but if you’re patient, the market will forgive them and they will perform. The wise thing to do, is to buy when everyone sells on the bad news, and slowly buy more as the panic subsides.

Dang!

I’ll start with the highest risk highest reward play.  Dangdang.com (DANG) is the Amazon.com of China. Well, at least that’s what they model themselves out of. This e-commerce giant, like Amazon, started off selling books and music, and like Amazon, they are branching out into offering more products. Go ahead and check out their website at dangdang.com , seriously, that is their website dangit. There are a few other e-commerce websites in China that are coming up, which is a good sign for this special industry. What I like to see is one big leader, and a bunch of smaller companies coming out trying to catch a ride on the leader’s momentum. One of the more significant other online retailer that has just emerged is M.18.com, which is a retail company in Shanghai that has all kinds of accounting problems, which tells you pretty much the whole story behind the stocks huge decline recently. Nevertheless, Mecox Lane operates M18.com, which is a popular online department store in China, that kind of reminds me of the Gap. If you really believe in China catching up to the U.S. in the way we spend money on fashion (and that would be a good belief too btw), then you may want to consider buying up MCOX for the long run, however, I must state here that I’m pretty sure you can get it cheaper than its current price. MCOX trades at around $7, but the volume is flat, so think about making your first buy closer to $6. So for now, I like DangDang better, for two reasons, 1) it’s more popular, and 2) it’s fun to say. I mean, can you imagine telling your grandmother who asked for investing advice, “Just buy DANG, dang it!” The potential for Dang to grow in revenues can be (and my stats professor would slap me for this) correlated to the population of China, so there is much much much room for sales, revs, and high fives. Currently, according to site trail, dangdang.com gets about 3.2 million page views a day. I have a hard time quantifying that into dollars, but for a better perspective Amazon.com get 83 million page views a day. So, if you’re like me, then you see the glass a quarter full for dangdang.com, and the glass one quarter empty for Amazon.com. In other words, Amazon.com is capped, old, done, carded. Dangdang is fresh, energetic, underaged, party animal. So which do you want to be?

 Is Their An American Town In China?

… and do Americans throw hamburgers at weddings? Yeah, we’ve all heard the corny jokes, but it serves as an example of how customs and habits are shared across borders and nationalities. Asia has a lot to offer for other cultures to copy, but what does the U.S. have to offer to Asia? I can answer that… food chains. No one does food chains better than America, which is kind of like one of those things you’re proud of at first but then you’re like, wait a minute that kind of sucks. I mean, yay we’re number 1 in food chains, but that probably explains why we’re overweight and die young. Or kind of like how Oakland telling San Francisco we’re more ghetto than you. Or San Fran telling Paris, no we’re more gay. So anyway, what was I talking about? Oh yeah China and food chains. The “evil west” influence finally found its way over the Great Wall, and sure enough, it came through man’s tummy. Shanghai, has relatively recently cashed in on this concept. And now you’re starting to see a variety of food chains open up in China. There’s one food chain in China I want you to zoom in on, and it’s not KFC (which is doing great there), rather, Country Style Cooking (CCSC). I’m really excited about this one because their growth is outstanding, with revenues in the triple digits (114% yoy). McDonalds and KFC are the biggest chains in China, but Country Style Cooking is the home town underdog, which I’m sure, the Chinese are going to cheer for down the years. You probably won’t get another investing opportunity unique like this, and that’s another reason I’m a big fan. I expect the “CSC” logo to compete quite nicely with the golden arches. Here’s a great article from the Chinese communities perspective on CSC versus the American chains.

China’s YouTube

The third and final stock that I expect to do great in 2011, and that I’m flat out guessing based on concepts rather than numbers, is a Chinese company that doesn’t trade publicly just yet. It’s TuDou.com (TUDO ?). I just want you to keep them in mind, because when they do go public, you want to get in asap. It’s funny because I’ve been using Tudou.com to stream my pirated movies for over a year now. The site is no YouTube, but still, TuDou.com gets 18 million visits a day. A DAY. So, either this company figures out how to make money directly from its users and its stocks gains value, or you like TuDou.com as a potential as a buy-out candidate. And of course, with China gaining more and more internet users, expect their #1 video site to gain immense popularity. Remember, YouTube is blocked by the Great Firewall, so let’s see if this favoritism gives Tudou a boost. Anyway, keep this on your radars. I’ll be sure to send a tweet or something when things heat up. They filed their F6 (http://secwatch.com/tudou-holdings-ltd/f6/registration-statement-for-ame/2010/11/9/7425034) with the SEC November 9, so I already expect big things in the news soon.

My fortune cookie from Panda Express wants you to diversify your portfolio with a little bit of China.  As always, do your own DD, and keep an eye on community news because these stocks move fast on the news. For example, I can imagine Bird Flu sinking CSCC a few percentage points, or more accounting scandals with MCOX sending it below $5 a share. So you probably would want to, for example, sell on the news and buy on the panic. Anyway, with all this Chinese stuff, I’m suddenly craving a giant American cheeseburger.

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(Doing a lot of research on stocks for 2011.  I’ve got 5 of them I’ll release over the rest of the month.  Enjoy!)

 

ATVI is one heck of a company.  They are the definition of greatness in the world of video gaming, in fact, they are the definition of greatness for any company.  They have everything that every company strives to achieve:  massive revenue, global presence, large cash position, acquisitions of talented companies, talented staff, great products.  The only thing they lack, is a stock price history that doesn’t reflect their industry performance. For me, buying ATVI under $15 is a great deal.  Here’s why…

ATVI is like the Apple of the gaming industry, they make a few products, but make sure it’s the best.   Meanwhile, if ATVI is like AAPL, Electronic Arts, ERTS, would naturally be the Microsoft of the gaming industry.  What makes ATVI like Apple is that they invest heavily on a few products.  They pour millions into one game, make it a “best seller”, and hope to bank on it.  ATVI, or more commonly known in the gaming industry as Blizzard, is probably the most hated software company there is.  And that’s a big reason why I like them.  It’s the whole, the better you are the more haters you have concept.  There are a few ongoing projects that ATVI is in that makes it look good going into the next few years.

1)       Global market influence, strong presence in Asian market.  Probably one of the best I’ve seen for a U.S. company

2)      Acquisitions to make company stronger; Halo maker, Bungie ditched Microsoft three years ago and partnered with ATVI in April 2010.  Do you know how big Halo is? (http://www.shacknews.com/onearticle.x/63547)

3)      Starcraft 2 return on investment

Many investors of ATVI have been eagerly waiting for the release of StarCraft 2.  And investors have been waiting a long time… It took about 10 years to develop and cost $10 million to make.  Ten mil?!  That’s crazy.  It seemed like the wait was worth it:  SC2 came out in the Spring of 2010, and sold over 1 million copies in its opening day.  That’s insane stuff too.  But the market didn’t seem to care.  The stock has been capped.  Sheesh.  This can get real frustrating for an ATVI investor.  Just why isn’t ATVI doing well?  It’s mostly due to a slump in the overall gaming industry, and stingy forecasting by analyst.  The gaming industry was a firecracker two years ago, and has cooled off significantly.  Just look at ERTS yearly. 

That’s why, for now, I think ATVI’s stock price is cheap… analyst are capping it, but really, they have the best selling game, StarCraft 2, and will release more top selling games in the near future (they are very careful in timing their releases.  For example, they did not want to release other real-time-strategy games and first-person shooter games this year since SC2 was their trump card).   If you’re not a gamer, just look at how impressive this one game is from a marketer’s perspective… SC2 was released in North America, Europe, South Korea, Australia, New Zealand, Russia, Brazil, Chile, Argentina, Singapore, Indonesia, Malaysia, Thailand, the Philippines, and Taiwan, as well as the regions of Hong Kong and Macau. In total, the game was launched in 11 different languages across five different continents. It took 24 hours to become one of the best-selling PC game ever.   Another reason investors are nervous about investing in a software company is the scare of piracy, especially since Blizzard’s biggest customer base is in Asia, the Mecca of software piracy.  However, Blizzard addressed this quite nicely, by requiring an account setup.  It’s hard to explain, but basically, anyone can download their gaming software from their website, however, you have to pay for a unique account key.  So, if you’re familiar with the game, in order for you to play, you have to log on using a unique username and password.   This eliminates the use of simultaneous account usage.  And like Apple, Blizzard has constant patch updates making it harder for hackers, and thus making it less cost effective to hack an account than just buying a user key.  Anyway, I’m just impressed in how they handle the piracy issue, since there are millions of people playing on their servers, I’m sure as an investor, you would want each of those users paying you. 

      The more and more the world becomes connected by the internet, the more ATVI will profit.  Really, when you think of it, with the millions of other people out there OUTSIDE of the U.S., ATVI’s potential is unlimited, and that’s what makes them a far superior company than ERTS and other gaming companies. 

                Okay, so the case for ATVI being an awesome company for the future is made on its penetration of Asian markets (lol).  But let’s get to the one-trick pony play:  StarCraft 2010 total sales.  If you made it this far down my post, then you’re cool.  Anyway, here’s the real play I’m considering on ATVI.  Analyst pretty much screwed ATVI by lowering their 4^th quarter numbers, probably because the StarCraft 2 initial sales were already so huge.  But I strongly disagree with analyst.  I think SC2 sales will top 14 million by 2010, making ATVI Q4 a record breaking quarter for ATVI in sales, profit, and revenues, and making SC2 the best selling PC game ever.  It’s a risk here, but I like my cards.  SC2 presence in Asia is so strong, and I think investors are really missing out in just how much this is going to affect ATVI’s bottom lines.  So I’m kind of liking this lowered guidance; it gives me a chance to get ATVI cheap.  I know it’s been frustrating for ATVI investors, but I think their patience will pay off.  Get in ATVI soon if you think they will beat estimates on their next report.  You have about 2 months to create your position, so don’t be dumb and buy everything in one day.  Buy it in blocks.  Right now, the gaming industry is in a slump, and the overall market is trading too high for me to get aggressive long anything.  Nevertheless, I think ATVI is a great play for 2011.

ATVI sells to the post populated countries in the galaxy:

… huge revenue potential.  Oh yeah, and I forgot to mention about the expansion packs which release in 2011.  More sales  🙂 

Anyway, be smart, and continue to watch the price-to-volume performance of ATVI.  And as always, make sure you keep an eye on their revenues since that’s all analyst care about in this company.  It’s a very sales-sensitive type of stock.  Invest a few minerals in it, kick back and let the masses play and pay.

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The Green Mountain (GMCR) got hit hard today, but I’m looking forward to getting long next week, especially if we get another high volume selloff.  I like to use these sell-on-the-news items to buy these leader stocks.  All GMCR did was cut the bottom line of their estimates and people dump it.  Pathetic.  Anyway, GMCR will comeback when they surprise.  Meanwhile, here’s a quote from the analyst, believe it if you want, but I don’t think it has peaked:

“Astrachan maintains a Sell rating on Green Mountain Coffee Roasters because he “continues to believe the rate of household brewer penetration has peaked and continued declining attachment rates could worsen resulting in lower peak earnings than are anticipated by GMCR shares.”

Meanwhile, I was looking for a way to invest in another coffee company that I’ve consuming a lot lately, the Coffee Bean Teal and Leaf, aka, CBTL.  However, there is no “CBTL” ticker, I checked.  The only thing I found on their website was a strange looking senior management team.  Anyway, I did find another way to hitch a ride on this fast growing LLC.  I’m going for their IT business enterprise software partner, Lawson Software Inc (LWSN).  With CBTL catching up with StarBucks on the international scale, they need a good ERP company to help them integrate into foreign markets. This partnership has been on for about 5 years now, and with the overall market firming up, I’m expecting LWSN to make a move.  Besides, I need a good software company in my portfolio so I’ll start here.

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“Hey I’m going to Blockbuster video tonight.”  Lol.  You never hear that anymore, thanks to the innovative ways to rent dvds.  Today, there are two dvd-rental companies that are dominating the market-  Coinstar and Netflix.  Netflix gets all the news headlines, but Coinstar is quietly eating away market share from everyone.  It’s funny how Coinstar started off with their strange coin counting machines, but now have their RedBox rentals accounting for almost all of their revenue.  So which do we invest in?  Well, I liked CSTR back in early March after the company surprised and guided higher on almost every pertinent category- revs, sales, rental market share.  It was just a great growth stock.  I also have been a fan of NFLX over the years because they know how to partner with other giants, like Nintendo, Sony, and Apple.  What about heading into 2011?

I think between CSTR and NFLX, CSTR has much more potential as a stock and as a company.  Meanwhile, examining both companies illustrates what exactly you need to look for when investing in growth stocks.  From a marketing point of view, NFLX is much closer to leveling out on its productivity, while CSTR is still in its growth stage.  So you like NFLX for its stability, but you like CSTR for its potential because you know it can get better.  One way you can measure a company by its level of growth is by measuring their competitors.  Remember, the more awesome/successful/brilliant you are, the more haters/copycats you have.  Let’s call it the high school girl complex.  The stock market is full of stocks that act like teenage girls.  NFLX already went through those stages as many other brick-mortar companies started offer the same services.  Only recently have I seen newer wannabe companies copy the RedBox system.  Sure, RedBox didn’t start it, but they were the best at monopolizing, er, nationalizing it.  Now I’m starting to see DVD kiosk rentals in the weirdest places, like 7-11 (I guess that would work), I guess because CSTR took all the best places. 

Speaking of haters, you know a company is doing real well when other companies turn into whiners and seek litigation to slow them down, as is the case with CoinStar.  The economic impact that RedBox has on the entertainment industry is quite interesting, as it was unexpected.  What is happening is that these RedBox machines that offer rentals for $1 is dramatically eating away from DVD sales.  Fox, Universal, and Warner Brothers got real pissed so now they have this arrangement where RedBox has to wait about 1 month after a DVD/Blu-Ray is released before offering it as a rental.  🙂

…  and that’s another big reason why RedBox is better than Netflix.  With NetFlix it takes a while to get a new release DVD so you’re stuck watching Heroes Season 1-4 on its streaming site.  Meanwhile, RedBox is so much faster.

Anyway, I like both companies for their innovation and dominance in the industry.  When you think about it, NFLX and CSTR are just fancy distribution companies.  But you like that… you like to see during rough economic times, new companies emerge offering cheaper alternatives.  And when you spot these companies, you buy them early and often.

The Final Verdict
So, honestly I have to say an investor, I like CSTR better than NFLX right here.  And as a consumer, I’m much more satisfied with RedBox, in fact, I ditched my NFLX account.  So, I guess if I were back in highschool, I’m dumping NFLX and taking CSTR to the prom.

CSTR is about to breakout, so monitor it everyday.  Meanwhile, if you’re really crazy and aggressive, you can do a pair trade by shorting NFLX while staying long CSTR.  Both have high p/e ratios, but NFLX is a bit high at 72 p/e, and NFLX earnings are leveling out while CSTR seems to be steadily growing.

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It’s every drivers nightmare… flashing blue lights in your rear view mirror. 

Can you believe, I got pulled over for skipping a track on my iPod?! 

“Excuse me son, is there a reason why you were using a portable electronic device while driving?”

“Sorry officer, I was just using my iPod.”

“Why is your phone in your lap.  Ipods are the same as phones.  Use your common sense.”

” …..”

Wow, I honestly didn’t know you couldn’t use your iPod in the car, well, at least touch it.  So pissed.  I wasn’t even really using it;  I just pressed the skip button at the stop light!  Turns out to be one expensive skip button.  Lol.  About half the price of a new iPod touch.  So anyway, I’m just warning yah.  If you have those no-cell phone laws in your state, it also applies to your iPod.  Bleh.

Whatevers, I’ve got two stocks i’m excited about.  I have all my notes on the side, but for now I’ll give you the charts.  They are two gaming companies that are having huge revenues due to release of multi-year projects.  We all heard of Take Two Interactive  (TTWO), with their RockStar game line, like Grand Theft Auto.  However, I’m really liking Activision (ATVI) right now.  They are cashing out big time in the Asia markets.  More on this later.  For now, here’s the charts.  Both stocks have the potential to breakout soon.  ATVI already in the process. 

Don’t forget to tune in on the Heat versus Cavs game!  We should see a lot of shirt burning…

$20 he doesn’t do the powder thing.

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