Tuesday, May 5, 2015

Recent Sell: WIN & CSAL. Recent Buy: SBUX



Recent Sell: WIN & CSAL

I suffer from social anxiety. In other words, I hate situations that put me in awkward positions I can’t control or predict. I hate going to restaurants because I can never tell if I’m just supposed to sit down or wait for somebody to walk me to my seat. I hate waiting in line because there is always a stalker breathing heavily down my neck. I like to live as anxiety free and stress free as I can. The last thing I need is a stock giving me nightmares. I prefer the old buy and forget about it method. Maybe check once every 2 weeks to put in a trade or once a month to adjust my FLIP plan. When a stock gives me anxiety, it has to go.

On April 4, 2015 I sold my entire holdings in WIN and CSAL. 
 
        Sell of 15 shares of WIN at $11.35:   $170.25
       Sell of 18 shares of SCAL at $30.35:  $546.30
       Sell of a partial share of WIN:             $6.00
       Sell of a partial share of CSAL:            $6.01
       Total WIN Dividend received:             $91.00
       Total:                                                           $819.56
       Cost of buying 91 shares of WIN:       ($894.53)
          Total Loss:                                                 ($74.97)

Rationale for selling WIN and SCAL

    1)     Dividend cut. I was receiving $91.00 a year prior to the spinoffs and reverse split. Post spin off it went down to $53.70. A dividend cut of $37.30.

    2)     WIN CEO, the guy that proposed the spinoff and promised to guide the company post-split, stepped down. WIN is currently leaderless.

    3)     Unpredictable future. I read the transcript of WIN’s first quarter result. Instead of talking about profit and revenue, it was exclusively about how WIN was trying to stop the money hemorrhaging.

    4)     CSAL only tenant is WIN. They must be cooking the books to somehow make CSAL and WIN new payments feasible since their last payment came from borrowing debt.
I bought WIN during the beginning of my investing career based on a “hunch.” Now I learned the hard way that you should never listen to hunches. Do your research and learn about the company before making stupid moves. Will the WIN-CSAL spinoff be successful? Maybe but I won’t be part of it. Many people talk about a sleep well at night fund. WIN-CSAL were my nightmares.

Recent Buy: SBUX

Shifting gears, I bought 15 shares of SBUX at $49.50 for $749.05. Why? Because I’m crazy. 

Financials:

    1)     SBUX is currently trading at 30.00 P/E TTM.
    2)     SBUX forward PE is 27.00
    3)     It currently yields 1.3%.
    4)     M*, S&P, and yahoo all give SBUX a 12 month target of $54.00.
    5)     SBUX is not cheap and currently trading at a premium both to the S&P and historic values.

So why on earth did I buy a stock that causes value investors so much grief? I believe SBUX will become one of those sleep well at night stock in the not far off future. 

    1)     SBUX has a 26% dividend growth rate over the past three years.  26%! That’s 26x my pay increase last year.

    2)     Average payout ratio over the past three years has been 44%. Lots of room to grow.

    3)     Growth in Asian countries. This year Japan will experience the cult of Starbucks.

    4)     African and South American countries have yet to discover the cult of Starbucks. 

    5)     Starbucks is moving to new products like Teavana and alcoholic beverages (in Canada). I wouldn’t mind having some warm spiced wine.

    6)     Oh did I mention OPRAH partnered up with Teavana? I think she’s popular or something.  

With this I now own 20 shares of SBUX between my loyal3 and Scottrade accounts. My forward 12 month dividend increased by $9.60. More importantly, I can sleep at night without thinking that my company is going to declare bankruptcy tomorrow.  SBUX is probably more growth than dividend but there is nothing wrong with pumping up your portfolio. If SBUX drops, I’m going back in!

Forward 12 months dividend current stands at  $ 1,699.28-$1,723.28

*I would also like to note that this is the first time I had sold a stock before a crash and bought a stock during a crash. Normally I would buy a stock and have the market crash 300 points the next day. I must be getting good at this stock thing.

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