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Stock Market Analysis Video
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The Shocking Truth About the New Bull Market
With unemployment rising, real estate prices spiraling south and oil prices surging, it’s clear the market’s volatility is about to increase exponentially--especially headed into earnings season.
For these reasons, the next market move we see headed our way in the next 30 days could be the biggest shocker of 2011. My free report reveals what you must do now to protect yourself and profit.
One of the big news stories this week was about Zipcar’s (ZIP) initial public offering. The company, founded 10 years ago, has headquarters right near my house and I pass it frequently.
If you don’t know, Zipcar is a car-sharing service that’s popular in cities (like mine, Boston) and among college students--basically with people who are unlikely to own cars. Members can rent cars, located in convenient spots, at an hourly or daily rate and they pay an annual membership fee. This allows a lot of flexibility because the cars are parked all around cities/college campuses and eliminate the central car rental location that has been the previous industry standard. The hourly rental rate also allows non-car-owning people to rent the vehicles for short trips, like to go to Home Depot or IKEA, even the grocery store!
(I have many friends who have used the service with great success. They report on the easy-to-use system and frequent locations of the vehicles around the city.)
The company’s model has even attracted the attention of rental car industry leaders like Hertz and Enterprise, which have expanded their businesses to include their own car-sharing services.
Zipcar had hoped to sell 8.3 million shares for $14-$16 each, but ended up selling nearly 10 million shares at $18 each for a total of $174.3 million raised. Not bad for a company that has seen mounting losses since its inception that totaled $65 million as of the end of 2010. And Zipcar has warned investors that nothing is likely to change in 2011, as it expects a loss this year as well.
Most of Zipcar’s losses are due to the fact that as a rental car company, it incurs many upfront costs (mostly purchasing and repairing cars). The company also acquired British car-sharing service company Streetcar to give it a presence in 14 major cities and over 200 college campuses in the U.S., Canada and the United Kingdom. Despite the losses, Zipcar’s revenue has risen recently, up 42% to $186 million in 2010 after climbing 24% in 2009.
Zipcar’s story is a good one; I’ve been attracted to it for years and have long anticipated its IPO. But at Cabot, we generally do not advise buying stocks that have just had their debut. We like to see stocks get a little trading history behind them before jumping on board and with Zipcar’s numbers still lacking, we’ll need to see some improvement in that area as well. This is definitely one to watch and possibly revisit once it gets a little more mature.
I usually bring my lunch to work for both health and cost reasons--eating out every day definitely doesn’t help the waistline or the wallet. But when I do venture out of the office for a bite, one of my favorite stops is Panera, the growing bakery/fast casual restaurant.
I’ve always enjoyed Panera’s more wholesome offerings and lately, I’ve seen calorie counts popping up on their menus, which helps diners make even better choices. I’ve used it several times recently to decide which soup to have (black bean versus tomato) or salad (Greek versus fuji apple chicken). So I was very excited last Saturday morning when I saw that a Panera is opening right near my house!
And not only is Panera Bread (PNRA) a tasty place to have lunch (or breakfast, dinner or a snack), it also appeared in Cabot Top Ten Trader in late March, with Editor Mike Cintolo writing:
“It’s been a while since Panera and its nearly 1,500 bakery locations in the U.S. and Ontario, Canada, showed up in Cabot Top Ten Trader. Panera is a player in the quick casual restaurant segment, and is built around fresh-baked breads, with soups, sandwiches, salads and coffee filling out the menu. High-quality food and moderate prices enabled the company to keep both revenue and earnings growing right through the Great Recession, and results have heated up a little recently, with a 17% revenue bump in Q4 to go with a 21% jump in earnings. The real impetus for growth is expansion, as the company has locations in only 40 states and one province, which means there’s plenty of room for growth. Panera’s management has managed the company’s expansion with ease, and investors are anticipating good results to come.
“PNRA has been in a long-term uptrend since late 2007, but there has been plenty of turbulence along the way. The stock put in a four-month correction from mid-April through mid-August 2010, and dropped from 107 to 95 during a December-January pullback. But the great Q4 earnings report on February 11 gapped the stock up from 100 to 116 in one day. Since then, PNRA has been holding on to all of those gains and even making a little more progress as it waits for its 25-day moving average to catch up. The 25-day average is now over 118, and PNRA looks ready to rise again. Look for any weakness as an entry point.”
You could buy PNRA here and hope for the best or you could discover Mike’s latest recommendation on this and other top stocks in Cabot Top Ten Trader.
In this week’s Stock Market Analysis Video, Cabot China & Emerging Markets Report Editor Paul Goodwin says it’s been an interesting week in the market. The major indexes corrected sharply last month, but have bounced back nicely and found support. We think the long-term trend is up, but we’re cautious short-term, especially with earnings season underway. Stocks discussed: Rail America (RA), OpenTable (OPEN), Informatica (INFA), Youku.com (YOKU) and Sify Technologies (SIFY). Click here to watch.
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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
Cabot Wealth Advisory 4/11/11 - Apple, a Long-Term Perspective
On Monday, Timothy Lutts discussed the always-powerful motivator of fear and how unlike our predecessors, we have mounting evidence that most predicted disasters will never come to pass. Tim also discussed one of his favorite stocks right now and why Apple’s best days might be behind it. Featured stocks: OpenTable (OPEN) and Apple (AAPL).
Cabot Wealth Advisory 4/12/11 - Why I Expect More Stocks Will Pay Dividends Next Year
On Tuesday, Chloe Lutts discussed why the aging Baby Boomer generation means that more stocks are likely to pay dividends in the future. She also recommended five Dividend Aristocrats. Featured stocks: The Chubb Corporation (CB), Exxon Mobil (XOM), Abbott Laboratories (ABT), Johnson & Johnson (JNJ) and The McGraw-Hill Companies (MHP).
Cabot Wealth Advisory 4/14/11 - Focus on the Process, Not the Result
On Thursday, Mike Cintolo discussed how a recent visit to the driving range helped him to remember the importance of focusing on the process, not just the results (in both golf and investing). Mike also discussed the current market environment and a company that’s been dubbed “the Latin America e-Bay.” Featured stock: MercadoLibre (MELI).
Until next time,
Editor of Cabot Wealth Advisory