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Saturday, July 30, 2005

Reader's Stock Picks

Primer on my investment outlook

> OK... Then what do you think of - NCOG and RYG
>
> One is a debt collection company. Its trading just a
> little lower than book
> value. Given that IRS will start outsourcing their
> $300B or so in
> uncollected debt that might become a decent source
> of revenue. Also given
> the huge amount of adjustable loans ... any collapse
> will help them. You
> obviously know the debt situation here better.
> Competitors ECPG and AACC
> seem to have much higher valuations.
>
> RYG is a Canadian company and is also trading below
> its book value. Has been
> for a while now and the stock hasnt done much in
> last 2 years. Last 4-5
> years seems like Canadian Real Estate market and
> especially existing home
> sales has picked up.
>


Well. The approach is right, but just the first step. Worldcom traded wayyy below book value before its bankruptcy. You also need to check the debt figures, find out the leverage. Also, many items can be on the account books at cost value, and only updated periodically.
You also need to check on the dividend history. At this point in time, with generationally low interest rates, I only bother with stocks that offer income. It is easy to hold onto a stock when it offers 6% dividend yield, when it goes down in price...

1 Comments:

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8:25 PM  

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