Investor Roundup for End of May 2012

Of course, investing is a serious matter, because it’s your hard-earned money that is on the line, and there is a certain level of risk involved when investing in the stock market.

In my previous post, Blogging the Stock Market: One Hour to Closing Bell, I touched upon the Facebook IPO debacle, and whether or not FB is a worthy investment.

Basically, I don’t recommend that anyone invest in Facebook at this point in time, and the experts will tell you that you should wait at least 6 months until things get settled with Facebook being a publicly owned/traded company.

Facebook’s First Week

FB

Why You Should Wait Before Investing in Facebook

  • 1. Facebook’s stock is so new it has no public records of being a profitable company. Looking at my trading software, Last quarter EPS (earnings per share) was $0.00, and current EPS is $0.00.
  • 2. Logic will tell you that it’s best to watch the stock for awhile and see how it performs. In the case of Facebook, the stock has plummeted in its first week.
  • 3. NASDAQ botched the opening of Facebook’s stock. Shares bought on Friday weren’t confirmed until days later.
  • 4. It was questioned whether some private investors were informed that the stock would do poorly on its first day of trading.
  • 5. Underwriters at Morgan Stanley quite possibly had priced the stock too high. And based on FB’s current stock performance, it should’ve been valued at $20 or less per share.
  • 6. Also, there is no dividend payments on Facebook shares. Just something I personally am always aware of when buying stocks. Are there quarterly dividends?

Bottom Line

Wait a while before investing in Facebook stocks. Let the stock complete its downward turn, and do the technical analysis. Investing in anything blindly and without studying the company’s fundamentals, financials, and earnings is a gamble which could result in a large loss of your hard-earned dollars.

Whole Foods Market (WFM)

A quick look at the 1 year chart for Whole Foods Market (WFM) will tell you that its stock has been looking good in 2012 and is once again close to it’s 52-week high of $91.50 near the end of May 2012.

Stock Charts

Of course, some remain skeptical about Whole Foods, and suggest you sell your Whole Foods stocks and buy McDonald’s instead.

I have done the opposite, having invested in Whole Foods and purchasing even more shares, while dumping all my McDonald’s shares close to its 52-week high, selling them at the right time when the stock experienced a downturn. But, I’m biased and prefer to invest in a company that offers the healthiest foods rather than a company that offers the fastest!

Here’s another, more positve look at Whole Foods Market.

A Quick Look at Starbucks Corporation

Starbucks has created that “Third Place” between Home and Work that many find quite vital in their lives. And it continues to prove that it’s still a big part of our lives.

Stock Charts

On 4/26/2012, SBUX reported 2 quarter 2012 earnings of $0.40 per share. This result was in-line with the consensus of the 28 analysts following the company and beat last year’s 2 quarter results by 17.65%.
The next tentative earnings announcement is expected on 07/26/2012.

SBUX’s PE ratio is among the highest of any stock in the Food Processing industry and signals that investors have high hopes for this company’s future business prospects. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.—Scottrade

Starbucks’ Power Over Us Is Bigger Than Coffee: It’s Personal.

Third places are different from first or second ones because we go to them in our in-between time – their voluntariness is what makes them so special and unique.

Starbucks has succeeded so well at filling this role that it’s become a global third place.

Last Quarter EPS was $.40. This quarter is $.46.

Disclosure: The author has invested long in WFM and SBUX, and has no immediate plans to invest in FB.

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Carlos Rull

Carlos Rull is a musician living in the San Diego area. His interests include Yoga, Eastern Philosophy, Zen Buddhism, and Gardening. He plays drums, piano, and composes New Age & Ambient music, and his albums are available on iTunes and Amazon.com.

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