Etrade and Yahoo, two companies that I own and find to be extremely attractive investments for the next 3 months, are both trading higher today. As I've stated several times, I believe (based on my own personal research and that of other money managers I work with and respect), that both companies will be bought out at some point later this year or the first of next. The reason for my belief is based on the fact that both companies are extremely undervalued, based on their current business models and their prospects for growth. Yahoo, while not the powerhouse search engine it once was, still has solid revenue growth from its advertising businesses. Also of great importance is the footprint they have in the Asian search engine market. Not only do they own Yahoo Japan, they are also 40% owners in Alibaba (which is the biggest search engine in China) and in the Asian equivilent of Paypal (which is one way users on the internet can purchase things). Etrade is attractive because while a small online brokerage firm, the company has over 178 billion in assets and trading revenues have picked up over the past year. The company is generating 100 million in free cash flow each quarter and owning the stock is also a way to play the continued growth in the economy as investors look to move money out of bonds and into U.S. stocks (reallocation). Both Etrade and Yahoo are up approximately 2% today.
Other than these two companies, I've been looking to add to the consumer products company Clorox, not only because their businesses are doing well, but also because the company is currently paying a 3.7% dividend yield. I've also been looking to add to my KKR Financial holding as well as buying back the Sallie Mae stock I sold for a profit earlier this year (the stock has dropped back down in price from $15 to $12 and is attractively valued).
I have yet to reallocate my mutual fund holdings out of bonds and into U.S. stocks as I'm waiting to see some more progress made on the European financial crisis. I still believe Europe will be in a recession next year, but I see U.S. stocks as a good investment to have for 2012.
Btw, is anyone as excited about Christmas as I am???
