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February 27th, 2011 at 1:34 pm
Phil / others – Two stocks that I would like your opinion on. I’ll present a quick thesis with each for comment.
GS – OK, this stock has been flat for almost a year now, if not more. The earnings are stable and strong. As the trading environment gets better, and as M&A picks up I would expect them to outperform. With a good M&A environment, they good earn $19/share this/next year. Thats $190 at 10x, and about 1.4x book. Also, these guys own tons of their own stock….as they get out of the buffet deal, and with their cash, I would expect a buy-back at some point as a catalyst for the stock. What do you think about picking them up in the low 160s? Also the IV on the options is really low, so you can pick up ITM Leaps for not such bad prices.
GOOG – Huge cash position. Great earnings. Not overvalued by any metric. If they have $100/share in cash, and do $40/share EPS next year, 700 per share price would be 15x. Android is growing quickly. IV is also down recently for whatever reason. A long term call spread? I feel that if the market has a good year, we should see GOOG back at 700+ again.
Thanks!