Stocks on your watchlist Oct 2017

Question

I know most are more interested in the get rich quick aspect of the pennies,(I dabble in them too so Im not knocking anybody)but lets have some discussion on some stocks that have potential that arent pennies.

I like OMER for a long term hold..its taken a beating last 10 days(actually down nearly 50% from the high 4 months ago) with the entire biotech sector but this company has a drug that could be a game changer for the company and our pockets.

Thoughts and analysis welcome (Wall plz chime in as well)!!

Post your pick lets help each other make some $$

bucknuts · Answer

I know most are more interested in the get rich quick aspect of the pennies,(I dabble in them too so Im not knocking anybody)but lets have some discussion on some stocks that have potential that arent pennies.

I like OMER for a long term hold..its taken a beating last 10 days(actually down nearly 50% from the high 4 months ago) with the entire biotech sector but this company has a drug that could be a game changer for the company and our pockets.

Thoughts and analysis welcome (Wall plz chime in as well)!!

Post your pick lets help each other make some $$

bucknuts · Answer

Id like some discussion/advice/tips on renting or flipping property as well if we have some people here on covers that have exp with that sorta thing.I won an auction for my first rental property this past week.

A bit of work is needed before I have tenants but I got a decent deal in a rural area and will have instant equity as soon as I sign the papers.Ive been attending "on site" auctions and following along on some online auctions(bidding too but they often got out of my price range) for months.

I watched this property for the entire auction and didnt bid until there was only a few hrs left,I set my max bid and it came in nearly 10k under.I was nervous and nearly made a huge mistake by taking the "buy it now" price.I set my price just under that figure and waited to be out bid but it never happened.Ive come close to winning several auctions but have had somebody swoop in last min every single time until now.I was leading bidder on a property and it was 25k below the buy now price and somebody took it for that with only 3 mins to go.Had they just kept bidding with me they wouldve saved at least 10k,I wasnt willing to do buy it now because the last appraisal of property was within a few grand of that price.

Im a subcontractor in construction industry and Im wanting to acquire several more properties.I plan on doing most of the work to these myself or folks I know in that line of work.

Ive heard the horror stories of the renters from hell,any positive experiences out there?!

wallstreetcappers · Answer

Hey congrats on the auction!I dont know if buying real estate into this market is wise but I am sure your area probably hasnt appreciated as much as some markets and the price you got made sense from a ROI basis. So given that you spent X ammt on the property and you know you will spend X ammt on the rehab and likely get a loan on the property after it is fixed up, what do you think your CAP rate is going to be given all expenses and rental rates/vacancy rates in your area?I have a hard time risking for the average CAP rates here...since rates are so depressed people are risking on rental real estate to get a CAP rate of like 7-8-9 percent and to me that is NUTS!Who wants to risk all that there is with regard to rentals for a measly 8-10% rate of return given the leverage you are risking? I&#x27;d rather wait for more opp on capital return in RE or in the stock market and not take that high risk than force a rate of return not factoring in the real risk of rental real estate.Of course I am not saying YOU in this case, you have a skill set that gives you an advantage and you have equity already built in so the risk in general is lower than most.

bucknuts · Answer

Im able to pay cash for the property and the house is actually brick with a roof thats only 12 yrs old.Nothing needed outside,from what I can see.It looks like I will get away with just flooring,paint and maybe some cabinets(dont have keys yet).There was still an eviction notice on door from May,so Im hoping since somebody was in there no plumbing or electrical work?

Im thinking about 5-7k(thats generous,if no hvac work or plumbing,electrical prob more like 2-3k) and its ready to rent and Im still up considering what I paid and what last appraisal was.I still have cash for repairs and have a revolving line of credit with my bank if needed so not gonna refi for cash anything ATM.

Looking to rent for $700-$800 a month..prop taxes are less than $1500 a yr... havent checked into comps in the area but Im pretty sure bottom would be $700.

Think Im in good shape going forward here and once I got some people in here I will prob refi for less than its worth to get my cash back out and start looking for the next one.

gambleholic63 · Answer

XLF is a long term play. The next decade will be an environment of rising rates where the banks will prosper.

wallstreetcappers · Answer

Funny I do not see it that way...Banks have been living off leveraging cheap FED funds rate cash through the repo deal they have and buying bonds using that leverage...if rates go up that benefit shrinks plus they have to pay higher interest on balances.People are not over hoarding on credit cards and they already are maxing out rates...so if they try to raise car loan rates or mortgage rates demand will drop, also not good for them.I dont see banks as benefitting from a higher rate environment with how they do business. In the past yes but the last decade with fed funds near zero they have been leveraging to buy a safe sure government note/bond and that has been giving them a free 10% or so return with zero risk. If rates go up, those bonds that banks own drop in value...a huge negative for them.

gambleholic63 · Answer

You make excellent points. However, in a rising rate environment, the banks will make more money on their other investment products. Further, with so many baby boomers going into retirement, it is a virtual guarantee that a huge chunk of that money will find it&#x27;s way into CD&#x27;s. CD deposits at banks nationwide are at an all time low right now because they don&#x27;t pay squat.

gambleholic63 · Answer

I make the above statement assuming rates eventually return to pre 2008 levels, not the 16% rates of the 80&#x27;s. If that happens, our younger generations are screwed and older generations will have to deal with rampant inflation (which will destroy their dollars future worth).

wallstreetcappers · Answer

CD&#x27;s are less popular because they are not yielding anything worth the risk that comes with them.So many CD&#x27;s have heavy early penalties and why in a rising environment would someone lock in for 1-2-5-10 yrs on a CD when in that environment going short term makes more sense and you can do that without all the CD hassle and banks are not the only way to buy CD&#x27;s now, people can buy them direct or even in a brokerage acct.

gambleholic63 · Answer

Well, we can agree to disagree on this point. For as long as I have been alive, banks have done well in a rising rates environment. Perhaps this will be the one time where the reverse holds true. We will have to wait and see I suppose. Meanwhile, I have 1000 shares of the XLF with a nice profit already and 1600 shares of BOA at an average cost of $8. I will continue to ride the wave and stick to my theory. If it doesn&#x27;t continue to work, at least you told me so.

wallstreetcappers · Answer

Yeah what held true in the past wont be true in the future because of the unprecedented rate environment and what it has led banks to do which is unlike any past situation.

What I dont get is if you look at the balance sheets for most large banks like BOFA you see their gills full of treasury holdings, how can that be an intelligent business decision buying treasuries on the highs like this when banks KNOW rates will if anything creep up and that will continue to cause losses on those legacy holdings. With the high leverage they are using, those losses multiply and can be quite serious....

Also banks are not making big profits off this muted vol environment....volume is way down in the markets and volatility is also extremely low which is bad for commish and arb trading.

I hope you do well on the trade, I HATE BofA they are slimeballs who got away with a very likely BK in 2008 with little to no damage, it sickens me and I hope they go under when the market gets smacked around next time.

gambleholic63 · Answer

I get it...you don&#x27;t like BOA. Most of their soiled reputation was due to their acquisition of Countrywide prior to the financial crisis. It was Countrywide that was the center of the scandal and all of the slimy stuff going on there did not surface until after the BOA acquisition.  Regardless, I started buying BOA after the crash at $3 per share. I figured the government would never nationalize the banks, and my gamble paid off. At $27, I am making big money on this holding.....and the XLF which was the pick I made in this thread. So maybe you like the VGK better? European stocks have done NOTHING for 20 years and are poised for a rebound. I bought in at $56 back in July and expect to easily double my money by 2024. Yeah, not that exciting for all of the penny traders because it&#x27;s not going to go up 1000% overnight, but slow and steady wins the race in investing.

wallstreetcappers · Answer

No I would not want to own European banks because they are much more tied in with their governments meaning they are not really operating like the banks here are...also there are MANY that are holding on to garbage assets being propped up by central banks, even worse than our banks are.

Europe staved off the real pain by stepping in much more than the US did, I would say Europe is more like Japan than the US and their banks can play dead for another decade..

European real estate has some serious pockets of extended prices, some are quite bad...like the UK.

If the market breaks the banks will lead the carnage, but I think you probably already know that.

gambleholic63 · Answer

VGK is not a European bank portfolio. It&#x27;s a diversified portfolio of all European stocks...akin to the USA S&amp;P SPY. You might want to look things up before you speak.

wallstreetcappers · Answer

Haha...We were talking banks, you gave a symbol when the discussion was of banks. It goes to show you how much I follow ETF stock symbols right?How about instead of the sarcasm you try to specify a bit more than you did in post 12...discussion was banks and you mention BAC and XLF, both are banks or bank ETF then you mention European stocks, so thanks for the great detail but I stick with my original comment about their banks and stocks in general.

gambleholic63 · Answer

Fair enough. I like that you speak intelligently and are not touting penny stocks like everyone else here.

To speak honestly, while I do like the XLF and the VGK (both are 2017 buys for me), it's very difficult to recommend winners right now (everything is flying high). Both are 20 year dogs and I feel like a trend reversal is likely. Sometimes you have to buy the ugly and depressed stocks and sectors to make money. I believe the Dogs of the Dow theory has consistently beaten the market over the past decade.

bucknuts · Answer

Watching LC get pounded..company makes money,no debt..Ive watched this stock for a while now and missed many swing opportunities,time to buy this one again?Opinions fellas

bucknuts · Answer

Cant resist Im in LC at $4.37...looking to gain 20-30%

wallstreetcappers · Answer

They are a mess...Slashed guidance and are going to for sure see reduced revenues with them being tighter in their credit rules.

bucknuts · Answer

We will see how it goes moving forward..they make money,no debt,management seems to think these moves will attract new lenders and borrowers.Think Ill be out of this with nice profit before xmas

bucknuts · Answer

Am I seeing things wrong here..just their cash has a pps at nearly $2 right??Add in the value of loans I cant see this dipping under $4..

bucknuts · Answer

Not sayn it isnt possible for a slide here,just lookin in terms of value.

bucknuts · Answer

Take a look at OMER..more good news for them today.If they get 721 approved this stock could go ballistic next year..easy multi bagger if it does.I know bios are all or nothing and Im not a doctor but everything I read about their pipeline of drugs seem promising.Thoughts and opinions please!

wallstreetcappers · Answer

Well if their earnings decline then the valuation will be muted until they come out and clear the air about the future.They are still selling at 3 times trailing sales, their margins are negative and their cash burn will continue.

bucknuts · Answer

Look OMER over for me Wall and let me know what you think.They have a drug now thats been selling and gaining steam qtr over qtr..this thing is popping today!

Stocks on your watchlist Oct 2017

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