The Dividend Pirate

Exhibiting at the Communic’Asia trade show this week in Singapore, Garmin finally started to show up a fully functional Nuvifone and it looks pretty cool.

And to see some more features, look at this cheesy ad.

Popularity: 10% [?]

“The way to make money is to buy when blood is running in the streets.”
John D. Rockefeller

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Warren Buffett

Below I am giving a few stocks that I am considering to buy. I am doing research on these stocks and will post in details about them as my research comes along. All the stocks that I am considering are for the long term and not for momentum investing. So here go the stocks,

1. UNH (United Health)

   Current Price: 33.87

   I think this stock is undervalued right now. Its at a 52-week low and has shown good EPS growth. I think it might be a good stock for value investing. I apologize in advance for the lack of details but a detailed post on UNH is coming really soon. So hold on to your seats till then.

2. NOK (Nokia)

   Current Price: 26.78

   Great company. It owns Navteq. Going big on mobile phones with GPS. Kind of hedging against Garmin if gps on cell phones is the future. Pays a dividend of 3%. Its at a 52-week low. Low institutional ownership. Zero debt. I think the price will go lower making this stock very attractive at around 22 dollars. At 22 dollars I know I will buy atleast some. Great EPS growth. Good profit margin. A lot of good things happening for this stock except for the negative price momentum. I think there are concerns around the competition with Apple and RIMM but Nokia phones are extremely popular in India. Excellent Return on Investment and Return on equity. Terrific fundamentals overall.

Phil Town is the author of one of my favorite books on Investing. I had the privilege of meeting him on one occasion and found him very knowledgeable. Having read his book I highly recommend it to anyone who is planning to start investing in stocks. He explains in very simple words some difficult concepts.

His approach to investing is simple and effective at the same time. In a nutshell his approach is as follows,

1. Find a company that you really like and have a good knowledge about. If you love eating at Chipotle, research its stock. If you are an ardent Apple fan, research Apple’s stock. Dont try to invest in a company that you dont have much idea about.

2. Ok so you really like this company. The next thing to find out is if the company is fundamentally strong. For this he recommends looking at key financial ratios which are mainly,

• Minimum average annual growth for EPS
• Free cash flow
• Sales
• Book value

For each of these ratios he explains in detail what kind of growth should you look for. I really enjoyed reading this part of the book since I always used to get confused on what financial ratios should I focus on from the hundreds that are available.

3. If the stock matches the above criteria, the next thing to find out is if the management of the company is good or not. Obviously you want to buy companies that are well managed. One of the easy ways is to look at the insider ownership. You want the company management to own a large stake.

“The market can stay irrational longer than you can stay solvent. “

- Ben Finkelstein

The above quote best sums up the market’s irrationality presently. How else can you term the markets reaction to Garmin’s fourth quarter stock earnings? Here is how Garmin’s last quarter went,

Garmin Ltd. sold $1.21 billion worth of navigation gear during the fourth quarter, up 99 percent from a year ago. It was the first time the Olathe manufacturer’s sales topped $1 billion in a single quarter.

Navigation equipment for cars and trucks continues to be a hot ticket for the Olathe company, as sales of portable devices grew by 124 percent, to $999 million. Sales of its other products — aviation, marine and personal fitness — grew by double digits.

The company’s earnings per share of $1.39 shattered Wall Street expectations. Analysts had projected earnings of $1.12.

“The strong holiday season demand we experienced clearly demonstrated that our products are well-positioned to take advantage of the growing interest in portable navigation devices,” Min Kao, Garmin’s chief executive, said in a statement.

Garmin reported a $307.2 million profit for the three months, up from $180.3 million a year ago. Sales for the year totaled $3.18 billion — up more 79 percent from 2006.

The company said its gross and operating margins — closely watched by investors and Wall Street analysts — were better than expected. The company reported a gross margin of 46 percent for the quarter, about four percent below 2006. The company’s operating margin was 29 percent, about 2 percent below the same
quarter in 2006.

The company forecast 2008 earnings “to exceed” $4.40 a share on revenue of $4.5 billion. Analysts’ mean estimates were for earnings of $4.40 a share on revenue of $4.26 billion.