January 3, 2005
See 2004 here
|Toyota||TM||$ 68.75||$ 81.87||19.1%|
|Wipro||WIT||$ 15.40||$ 24.65||60.1%||split 3:1|
|Intel||INTC||$ 31.85||$ 23.39||-26.6%|
|Microsoft||MSFT||$ 24.48||$ 26.72||9.2%|
|Inuit||INTU||$ 52.86||$ 44.01||-16.7%|
|Adobe||ADBE||$ 39.08||$ 62.74||60.5%|
|Sina.com||SINA||$ 33.75||$ 32.06||-5.0%|
|Yahoo||YHOO||$ 22.51||$ 37.68||67.4%||split 2:1|
|$ 288.68||$ 333.12||15.4%|
|S&P500||^GSPC||$ 1,111.92||$ 1,211.92||9.0%|
|NASDAQ||^IXIC||$ 2,003.37||$ 2,175.44||8.6%|
|GOOG||$ 100.00||$ 192.79||92.8%||IPO|
|Shopping.com||SHOP||$ 22.95||$ 28.25||23.1%||IPO|
|Salesforce.com||CRM||$ 15.00||$ 16.94||12.9%||IPO|
|Ebay||EBAY||$ 64.61||$ 116.34||80.1%|
|Amazon||AMZN||$ 52.62||$ 44.29||-15.8%|
|Ask Jeeves||ASKJ||$ 18.12||$ 26.75||47.6%|
|Walmart||WMT||$ 52.55||$ 52.82||0.5%|
|Boswell Farming||BWEL.PK||$ 305.00||$ 600.00||96.7%|
|Overstock||OSTK||$ 19.87||$ 69.00||247.3%|
|Starbucks||SBUX||$ 33.16||$ 62.36||88.1%|
|Sun||SUNW||$ 4.47||$ 5.39||20.6%|
|Apple||AAPL||$ 21.37||$ 64.40||201.4%|
|$ 512.77||$ 909.20||77.3%|
We all thought he’d be the front runner and maybe next president. Too bad he was eviscerated by the press and thrown out for showing too much emotion. Yet we can forgive Presidents for having an affair(s).
But the Howard Dean Scream is pretty funny...
Hat’s off to Brian Fitzgerald for picking the Patriots and the Red Sox for 2004.
Again, great prediction from Brian Fitzgerald “2004 will be a bad year for natural disasters due to an imbalanced climate.”
Spot-on prediction from Dave Lundell: “By the end of the year, the $10 movie is the rule, in all major cities and large suburbs. Viewers will watch an average of 3 commercials before the previews start.” Well, maybe not the commercials, but it is ten bucks.
Predictions for 2005
Ask Jeeves -
ASKJ. Yeah yeah, another
gimmicky search engine. However, it’s a lot more human friendly than google or
yahoo, if you ask me. Ask Jeeves is to search engines what Apple is to the
desktop; a lot more intuitive. Though Ask Jeeves hasn’t really evolved their
natural language interface (choosing instead to focus on sponsored links via
google), there is a valuable asset there with the interface. Yahoo would be a
natural fit as a company to acquire them; the new tagline: “search made
Stock prediction: 50% gain if there are rumors of a favorable buyout. If not, they will loose at least 25% of their value as analyst worry too much about their reliance on google’s ad words for their revenue stream.
GOOG. Google is on fire. Buy
the stock? Despite it’s founders whimsy which creates uncertainty in the stock’s
performance, this stock HAS to and WILL take off, even more than it has in 2004.
It will go up at least 50% this year. Short term, it will eat away at Yahoo
share. Long term, it will be the only place people will go to research ANYTHING.
Their announcement, to start scanning out of print books from the world’s
leading libraries, is GENIUS. As they curry favor with the world’s most sacred
libraries, they will be given unprecedented access to do more. While expensive,
in the long term, Google will be the only place where students will go to get
information for their term papers, and if Yahoo doesn’t react, the only place
people will search.
Stock prediction: up at least 50% by year end.
EBAY. Perhaps the luckiest
company in the world. They created the marketplace. But will they continue to
grow at such a rapid rate? No way will ebay match the growth of last year. They
are too focused on their treasured individual seller marketplace and too leery
of creating a real marketplace for NEW products. Plus, consistent/reliable
revenue increases are what drive the company (to avoid instability in the stock
price). This means innovation is less important than measured growth. BORING.
This being said, there must be hundreds of really bright employees feeding ideas
that will become Ebay spin offs from either it’s internal R&D dept or from their
Stock prediction: up 20% by year end.
YHOO. Being rightfully accused
of being too conservative and “me too”. I am worried that the company is too big
and diversified without enough focus on where to be #1 or innovation. That said, Yahoo
is full of a lot of smart people and there will be some changes in the next 3
quarters. And, unlike Ebay, because so diversified, can afford to innovate
without threatening stock performance. What Yahoo should do is leverage their
“fun/trust” and “ease of use” by cobranding other services, as they did with
SBC. Imagine Yahoo Loans (partner with Intuit or Lending Tree), Yahoo Insurance
(Geico), Yahoo Movie Tickets (Fandango), Yahoo Movie Rental (Netflix or Block
Buster), maybe even Yahoo Shopping using Yahoo Wallet, one way to buy from
Stock prediction, huge correction in Q2, down to the high 20’s, but will be up 30% by year end.
AMZN. What a cool company. In
addition to doing a simply outstanding job of merchandising products online, and
carrying essentially everything, Amzn’s continued investment and deployment of
web services make them a durable and viable long term entity, and the place to
buy anything new. For instance, how did they strike the coup to handle most of
the red cross’s transactions for the Tsunami? Why didn’t Yahoo do the same as
soon as Amazon did with its’ yahoo store platform? On the downside, not sure
where they are going with their expensive A9 initiative (web product search),
and their stock has suffered in 2004 (down nearly 16%). Also their user
interface is getting complicated, meaning they are just adding functionality but
not sure why. I think they need to simplify, regardless, Amazon is the one place
to buy anything (that’s new). Maybe they should spend less money on R&D and more
on marketing. Perhaps a good stock buy entering 2005.
Stock prediction: up 25% by year end.
WMT. Their online business is
growning rapidly and now are in third place behind eBay and Amazon. The online
business makes Walmart’s killer pricing more accessible to people who wouldn’t
necessarily shop there. Expect online business to continue to climb, focusing on
higher end products while also entering the Costco space based on volume. As
stated earlier, expect their Market Cap to exceed GE by 2009.
Stock prediction: has a lot of inertia. Be pleased with a 10% increase by year end.
Sears and KMART -
S. The best thing
about these companies is Land’s End and Craftsmen tools. The rest is garbage;
Martha Stewart can’t reinvent herself enough to save her kmart brand. But Land’s
End and Craftsmen are like LL Bean and Jiffy Lube—are these the same buyers? The
common ground is Kenmore appliances. In my opinion Sears is the stronger brand
(yet Kmart bought them…) They need to do some serious reinvention to compete
with Walmart and Target.
Stock prediction: stock eekes out modest gains; in an ironic twist, Sears will lease out it’s property to new Walmart and Target stores and make most of their net new revenues on the real estate they own. Up 5%.
Texas Instruments -
TXN. These guys are the
main chip supplier for a lot of Consumer Electronics, esp cell phones and DLP
televisions. Stock didn't do so well last year, but sales growth this year may
make it attractive. View the last
analyst presentation here.
Stock prediction: up 25%.
TECHNOLOGY In a word, the PC is now stabilized. Sophisticated home electronics are where the growth is. One thing I am really pleased with-the computer I bought last year, with a 2.8 pentium is STILL FAST. And I don’t need to upgrade it! What a relief. However, though computers are a $1000 upgrade, we’re switching our upgrade-aholicism to Televisions which will cost $3-5,000!
What matters this year:
HDTV. This is bizarre to me; the government is
regulating the switch to digitial TV by the end of 2006. While utilities may
need government backing to “make it happen”, it also seems like a
government-sponsored event to stimulate world economies. Think about it-there is
already a growing concern that your existing TV is “outdated” and “won’t be
compatible”. This means: buy a new TV (from mostly international companies), pay
more (now) for HDTV programming (from US cable/satellite companies), allow us to
track usage (Cable CARD). Then, when the switch happens, pay more to have your
“old” TV backward compatible and, likely, pay more for premium HDTV channels.
Money is going to be spent on televisions as never before. Further, just think
of the waste this will create; what will people do with old tube and projection
screen tvs that are not HDTV compatible? To that end, as of 1/1/05, California
adopted recycling fees for old TVs which are payable when you buy your new set.
The ensuing frenzy-what to buy-has helped to revolutionize the TV industry with LCD and DLP alternatives to Plasma. But do we really need that much sophistication from the boob tube? Do we need to see and hear contestants eating meal worms on Survivor in that much detail? There will be a backlash from older generations who will simply get new antennas to once again receive 5 main channels.
The “HDTV switch” is the next most impactful event of the technology age after the announcement of Windows ’95 and the introduction of the Ford Model T. (In my opinion, the launch of Windows ’95 was perhaps the most far reaching, simultaneous, and important technological innovation of the modern era. No other event required so much planning/budgeting from companies and individuals than the launch of Windows ’95; everyone had to budget for more expensive computers and software applications to be Win ’95 compatible).
On demand radio/Satellite Radio. I
am amazed that Sirius and XM still exist and that the format seems to be
growing. It’s phenomenal how it’s installed on so many new cars these days,
complete with the goofy antennae. Sirius’ exclusive contract with Howard Stern
is the biggest reason it’s a contender at all. This is a case in point for
content being king.
The killer app for customizable radio programming is still to come; Tivo for the radio. It will be a device that allows the user to program from books on tape (www.audible.com), NPR, satellite and local stations, combined with stored MP3 files. You’ll be able to fast forward, rewind, and pause stories so you can listen to Terry Gross on the way to work. The device is essentially a giant hard drive with ability to upload/download via satellite to a web server, and of course, will have a web-based interface for primary functionality and ability to stream through the household.
Apple has a huge opportunity to be the market maker with the IPOD, leading the way in “add on” features either through their own investment of through licensing. “Ipod compatibility” and ease of use make it the natural contender for this device. Imagine Apple further leveraging the Ipod name, as Dolby did. Unfortunately, Apple’s stock price is already too high, but they are going to be one of the main companies to watch in 2005.
Speaking of radio, it is amazing to me that there isn’t CNN for the radio; news and financial info (esp in the morning), available round the clock.
Digital Cameras. Digital Cameras are complicated.
Hat’s off to Kodak for making it a lot more simple. The quality and ease of use
of their new products is very impressive. Expect them to take big share this
year. Their stock will do well, especially as they get deeper into the home
imaging (printing) business. Watch out HP. Long shot prediction: Kodak buys
Xerox to jump start their printer business.
Stock prediction: Kodak up 30% this year.
PDAs. Will go the way of the dinosaur. PDAs will
need to integrate cell phone and email capability a la RIM and Treo 600/650. The
rest are dead. PalmOne needs to let go of the PDA and focus on the integrated
solution. RIM products are still too hard to buy for the non business user. One
of these companies, one will buy Danger, makers of the HipTop.
Stocks: PalmOne (PLMO), despite their cash cow with the Treo 650, will struggle all year trying to rebrand themselves (dumb) and continue to push their PDAs. They may pull it out by year end. If they have a massive correction but still continue to innovate with the PDA/phone combos, they might be a good buy.
Cell Phones. Cell phone purchases will grow with
the PDA convergence. But innovation otherwise will tail off; bells and whistles
(text messaging, camera, ringtones, are all “tired”). Only thing left to
innovate is faster download speeds to cell phones and improved UI for email use.
The real story will be the consolidation of cell providers and the subsequent
increase in price and decrease in quality service. Unexcusable! One bright spot:
Sprint and Nextel. Together they’ll combine excellent availability (Sprint) with
walkie-talkie featues (Nextel) that enable them to enter more markets together.
Stock pick: Sprint (FON). Up 25%.
Cable TV. Good lord it’s getting expensive. We’re paying 80$/month for cable. That’s outrageous; for comparison we’ve got 2 cell phones with unlimited minutes for the same rate. A few years ago, cell would have been at least twice that. With consolidation, HDTV coming up, and because Satellite is, frankly, complicated and not that much cheaper, cable prices will continue to escalate. AT&T was dumb to sell COX to Comcast.
2005 Stock Picks
|Picks for 2005||12/31/2003||12/31/2004||
|GOOG||$ 100.00||$ 192.79||92.8%||$ 289.19||50%||Low||inevitable they will continue to rise|
|Sprint||FON||$ 16.00||$ 24.85||55.3%||$ 31.06||25%||Low||solid bet|
|Kodak||EK||$ 25.22||$ 32.25||27.9%||$ 41.93||30%||Low||solid bet|
|Sears||S||$ 44.54||$ 51.03||14.6%||$ 53.58||5%||Low||branding/merchandising will be a challenge|
|Walmart||WMT||$ 52.55||$ 52.82||0.5%||$ 58.10||10%||Low||solid bet|
|Texas Instruments||TXN||$ 29.27||$ 24.62||-15.9%||$ 30.78||25%||Low||could be a great time to buy|
|Starbucks||SBUX||$ 33.16||$ 62.36||88.1%||$ 68.60||10%||Med||too much gain last year|
|Ebay||EBAY||$ 64.61||$ 116.34||80.1%||$ 139.61||20%||Med||too much gain last year|
|Yahoo||YHOO||$ 22.51||$ 37.68||67.4%||$ 48.98||30%||Med||big correction, then growth|
|Ford||FORD||$ 15.57||$ 14.64||-6.0%||$ 18.30||25%||Med||auto industry is dangerous but might be a good bet|
|Amazon||AMZN||$ 52.62||$ 44.29||-15.8%||$ 55.36||25%||Med||is stock undervalued now?|
|AAPL||AAPL||$ 21.37||$ 64.40||201.4%||$ 74.06||15%||High||too much gain last year wait for stock to come down|
|PalmOne||PLMO||$ 11.75||$ 31.55||168.5%||$ 23.66||-25%||High||risky, depends on cell/pda integrated products|
|Research in Motion||RIMM||$ 33.42||$ 82.42||146.6%||$ 70.06||-15%||High||too much gain last year|
|Ask Jeeves||ASKJ||$ 18.12||$ 26.75||47.6%||$ 40.13||50%||High||risky, depends on acquisition|
|$ 371.26||$ 538.76||45.1%|