Official Let's Make Some Money Off Stocks Thread
07-02-2008, 08:22 PM
#231
Little more complex than looking at the key statistics
Balance Sheet
http://finance.yahoo.com/q/bs?s=GM
Net loss of $41,043,000,000 is the key number. That number is expected to grow on the negative side in the coming quarters; meaning a widening spread of owing more than they own. Analysts believe this number will increase several billion before year end.
Income Statement
http://finance.yahoo.com/q/is?s=GM&annual
Their massive revenue number is almost completely consumed by cost of goods sold. Their profit margin is a staggeringly small 6.7%. They actually LOST money with such a high revenue number because of selling and general administrative expenses (marketing and general operations). The key for them to continue operating is decreasing cost of goods sold. I am going to take an educated guess and say most of the cost comes from salaries and benefits.
This basic analysis shows their cash and revenue are worthless. With the current economic situation you can expect SG&A to increase.
I am not kidding when I say this company should not be operating. The numbers only get worse with more advanced analysis.
Balance Sheet
http://finance.yahoo.com/q/bs?s=GM
Net loss of $41,043,000,000 is the key number. That number is expected to grow on the negative side in the coming quarters; meaning a widening spread of owing more than they own. Analysts believe this number will increase several billion before year end.
Income Statement
http://finance.yahoo.com/q/is?s=GM&annual
Their massive revenue number is almost completely consumed by cost of goods sold. Their profit margin is a staggeringly small 6.7%. They actually LOST money with such a high revenue number because of selling and general administrative expenses (marketing and general operations). The key for them to continue operating is decreasing cost of goods sold. I am going to take an educated guess and say most of the cost comes from salaries and benefits.
This basic analysis shows their cash and revenue are worthless. With the current economic situation you can expect SG&A to increase.
I am not kidding when I say this company should not be operating. The numbers only get worse with more advanced analysis.
07-02-2008, 09:23 PM
#232
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Thread Starter
You looking at the same numbers I am?
That's a one time charge.
Look, I'm not saying it's doing well. I'm saying it's worth a lot more than $5B. Once they close plants, lay off workers and restructure it will be an entirely different picture. They are still the largest car maker in the world and they have plenty of liquid capital and cash flow.
That's a one time charge.
Look, I'm not saying it's doing well. I'm saying it's worth a lot more than $5B. Once they close plants, lay off workers and restructure it will be an entirely different picture. They are still the largest car maker in the world and they have plenty of liquid capital and cash flow.
07-02-2008, 09:49 PM
#234
Originally Posted by cthree,Jul 2 2008, 10:23 PM
You looking at the same numbers I am?
That's a one time charge.
Look, I'm not saying it's doing well. I'm saying it's worth a lot more than $5B. Once they close plants, lay off workers and restructure it will be an entirely different picture. They are still the largest car maker in the world and they have plenty of liquid capital and cash flow.
That's a one time charge.
Look, I'm not saying it's doing well. I'm saying it's worth a lot more than $5B. Once they close plants, lay off workers and restructure it will be an entirely different picture. They are still the largest car maker in the world and they have plenty of liquid capital and cash flow.
I agree it is undervalued at $5.65B but that doesn't mean it can't go lower. A restructure is going to help their business but won't completely turn them around. Once again, you are betting a couple years out. I think by that time either market conditions change or they get a government bailout package. At some point they will have to cut their debt.
07-02-2008, 10:11 PM
#235
We can discuss the numbers all we want but the analysts are on the side of the company being in trouble.
"We are maintaining our financial strength rating for GM at
Low. The company garners a Z-score of just 0.52, down from 0.75
at the end of 2007. The declining score (it was 1.05 in 3Q07)
suggests that the company remains 'at risk' of filing for bankruptcy
within two years. GM's Z-score is lower than 88% of the
companies rated by this method. Moody's has lowered its credit
outlook to negative. At the close of the first quarter, the company had a net cash
shortfall of $16.2 billion, a significant deterioration from shortfalls
of $12.1 billion at the end of 2007, $12.3 billion at the end of
2006, and $13.8 billion at the end of 2005."
"We are maintaining our financial strength rating for GM at
Low. The company garners a Z-score of just 0.52, down from 0.75
at the end of 2007. The declining score (it was 1.05 in 3Q07)
suggests that the company remains 'at risk' of filing for bankruptcy
within two years. GM's Z-score is lower than 88% of the
companies rated by this method. Moody's has lowered its credit
outlook to negative. At the close of the first quarter, the company had a net cash
shortfall of $16.2 billion, a significant deterioration from shortfalls
of $12.1 billion at the end of 2007, $12.3 billion at the end of
2006, and $13.8 billion at the end of 2005."
07-02-2008, 11:48 PM
#236
Registered User
commodities being destroyed tomorrow by the more than likely rise in rates?
everyone was pushing the whole global economic slowdown story back in last august, then early 2008 again, and then march again.
The only real change is rates have gone up and oil is near 150.
I'm plenty worried for the long term right now.
everyone was pushing the whole global economic slowdown story back in last august, then early 2008 again, and then march again.
The only real change is rates have gone up and oil is near 150.
I'm plenty worried for the long term right now.
07-03-2008, 04:56 AM
#237
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IF things start to crater again today, what are opinions here about selling most everything, going to all cash and waiting to see what happens down the road? Or is it better to sit and watch the values fall (I would hate to repeat watching my portfolio fall 25% like it did early this year -- I had finally gotten back to being a bit positive!) based on holding for a (very?) long term view? I'll admit to being very confused right now.
07-03-2008, 06:39 AM
#238
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Interesting article about refiners/gasoline in OPIS this morning:
July has started with carnage in some of the key U.S. refined
products markets, in so far as gasoline returns are concerned. A number
of gasoline grades coming out of Texas, Louisiana or Delaware River
refineries, for example, are priced at less than the value of sweet
crude. That can't continue, and there are concerns that refiners will
have to throttle back some units unless cracks bounce back to at least
marginally profitable levels.
Gas continues to trade at a hefty 17.5cts gal or so discount to the
NYMEX at the Gulf Coast and all of the downstream sources suggest that
demand is flat, or perhaps much more disappointing than DOE or
MasterCard data would imply.
July has started with carnage in some of the key U.S. refined
products markets, in so far as gasoline returns are concerned. A number
of gasoline grades coming out of Texas, Louisiana or Delaware River
refineries, for example, are priced at less than the value of sweet
crude. That can't continue, and there are concerns that refiners will
have to throttle back some units unless cracks bounce back to at least
marginally profitable levels.
Gas continues to trade at a hefty 17.5cts gal or so discount to the
NYMEX at the Gulf Coast and all of the downstream sources suggest that
demand is flat, or perhaps much more disappointing than DOE or
MasterCard data would imply.
07-03-2008, 07:14 AM
#239
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Thread Starter
Selling at the market low is not a good strategy for making money long term. Unless you think you should short the market (selling) then why would you think it's a good idea to go to cash?
You need to position yourself either long or short. Being out of the market gets you nothing. At these prices (DOW and S&P below 200 day MA) it's time to get long not short. The market is feeling around for a bottom and if you watch the news you see lots of people reaching out for some kind of drama like the market value dropping to all time lows. It makes for a good story and good fiction.
I'm not saying it's at the bottom just that it's closer to the bottom than the top. That means going long on super discounted issues and there are some. Where you don't want to be are in stocks which are only slightly off their highs (AAPL for example). I want to be in the dirtiest, filthiest, nastiest stocks. Autos, Financials, yucky stuff.
We're looking long term retirement account stuff here, not 3-6 month trades.
I bought some GM, I like Ford, I like Wells Fargo I like Citigroup and I'm picking away at those. I'm holding my tech stocks like AAPL because it's still sweet long term but there are better deals on the table.
What you want to sell is energy, oil and oil services. Take your profits and go bargain hunting. This downturn isn't going to last more than another year or two before things start to boom again. If you are looking out 5 years then that is what you should be looking for. Which stocks have been beaten within an inch of their lives based on the next 2 years but will rebound bigtime in 5.
Don't make long term decisions based on short term factors. Remember the most basic investing rules:
1) Buy dips
2) Sell rallies
3) Take profits
Oil and energy is a rally. Sell and take profits. There are lots of good, solid companies which aren't going away which are cheap and then some. Buy those.
You need to position yourself either long or short. Being out of the market gets you nothing. At these prices (DOW and S&P below 200 day MA) it's time to get long not short. The market is feeling around for a bottom and if you watch the news you see lots of people reaching out for some kind of drama like the market value dropping to all time lows. It makes for a good story and good fiction.
I'm not saying it's at the bottom just that it's closer to the bottom than the top. That means going long on super discounted issues and there are some. Where you don't want to be are in stocks which are only slightly off their highs (AAPL for example). I want to be in the dirtiest, filthiest, nastiest stocks. Autos, Financials, yucky stuff.
We're looking long term retirement account stuff here, not 3-6 month trades.
I bought some GM, I like Ford, I like Wells Fargo I like Citigroup and I'm picking away at those. I'm holding my tech stocks like AAPL because it's still sweet long term but there are better deals on the table.
What you want to sell is energy, oil and oil services. Take your profits and go bargain hunting. This downturn isn't going to last more than another year or two before things start to boom again. If you are looking out 5 years then that is what you should be looking for. Which stocks have been beaten within an inch of their lives based on the next 2 years but will rebound bigtime in 5.
Don't make long term decisions based on short term factors. Remember the most basic investing rules:
1) Buy dips
2) Sell rallies
3) Take profits
Oil and energy is a rally. Sell and take profits. There are lots of good, solid companies which aren't going away which are cheap and then some. Buy those.
07-03-2008, 07:59 AM
#240
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cthree, of course you're right and cash doesn't make any money. My thought was simply that I didn't (don't) want to sit by and watch another 25% fall as I did early in the year. Also, if things are going to fall more, it would seem prudent to sell now and buy back cheaper (not that I can time the market obviously -- just listening to a lot of noise out there about much lower equity prices in the future).