Facebook. It is going to start to trade today on the Nasdaq under the symbol FB. It has been the talk of the financial news all week and I have even gotten a few emails about it from people asking if I think they should buy it.

Most of these people remember Google. They remember that back before Google went public there were financial commentators saying that it was overvalued and that they shouldn’t buy it. And of course Google went up and became one of the strongest stocks in the market.

People also I believe are interested in Facebook simply because they like it. They like having a profile and posting pictures and comments and getting attention from their “friends.”

Well I treat Facebook like any other stock and IPO.

I’m not going to buy Facebook when it opens today. For two reasons. One simple reason is that I am getting ready for some huge opportunities and am saving my money for that.

I’ll get to that in a second.

But the second reason is that I believe you SHOULD NEVER buy an IPO on the opening day. It’s great if somehow you bought some Facebook before today and before it goes public. If you did I’m happy for you. But most people haven’t.

The problem is what a stock does after it starts to trade in its first day is simply random. There is no chart history to help you figure out the trend. There is no real earnings history to understand the company with – and BTW – Facebook earnings have been flat the past few months.

If you want to trade a newly trading stock I believe the best thing to do is just wait a few weeks. IPO’s do one of two things. They either open up and crash to nothing over time or else they open up, go wild for a day or two, and then pullback and form a new base. If they are truly the next Google they then break out of that base and start a long march up.

So the prudent thing to do if you want to play Facebook is just wait to see if it bases and then buy if it breaks out.

Look and see how this would have worked with the other social media stock of this year ZNGA:

Now if you just buy right on the open to be frank I think you are nothing but a pure gambler. You are coming to the stock market in my view with no plan at all. And with no plan you might as well just go to Vegas and play the slots.

Also I think it is important to point out to you that the stock market is in a correction that is likely to continue for at least another month or two. If Facebook holds up and bases out during that correction then I may even buy it. But I’ll let the market and Facebook stock prove to me if it’s going to be a good one to buy instead of just buy today and hope. I want the stock to PROVE ITSELF TO ME!!!! Otherwise I don’t care. And I’m not going to buy Facebook just because I like the website, because Facebook the company doesn’t care about me. So why should I just give it money for nothing?

And as for its fundamentals I don’t think anyone can argue that it is a cheap company to buy.

Now personally I see some much bigger opportunities than Facebook to buy into also – real companies that are at super cheap valuations. Of course we have the gold stocks that have been melting down.

But the Greek stock market is currently trading at a P/E of around 6!!! I think it has lower to go. But once it nears default I’m going to start to build a position in Greek stocks. I’m looking at one that is trading around $1.00, has a P/E around 3, pays an 8% dividend, and is probably going to fall down to 50 cents and then end up at $10 in 2013. I’ll put a report together about the Greek stocks I’m looking at soon for Power Investor members and send them a buy alert once I do buy. It probably will be in 4-6 weeks.

I spent about three hours on the phone last night talking to Dave Skarica about the opportunities in Greece and I woke up at 5:00 AM this morning excited about them! I’ll write about it in detail for you over the next few weeks.

As for the stock market. I think we’re due for a bounce. Gold and gold stocks seems to have been leading the market and were up big yesterday so I expect the market will bounce here too for a few days. Maybe even a week!

for more:

Podcast: David Frazier Who Gave a Market Sell Recommendation on April 1st Sees Opportunities in This Market – Mike Swanson (05/16/12)

Stock Market Is Now In A Correction – Mike Swanson (05/16/12)

Podcast: Victor Riesco Talks About the Current Stock Market Action and His New Signals System – Mike Swanson (05/09/12)

Podcast: Investment Author Michael Panzner Gives His Updated Views on the Financial World – Mike Swanson (04/23/12)

Podcast: Reggie Middleton On How AAPL Now Has a Market Cap Bigger than All Other Retails Stocks Combined – Mike Swanson (04/20/12)

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WSW Articles: 

Google Inc. (NASDAQ:GOOG) closed at $605.23 last Friday, marking a 1.4% gain for the week. The stock is currently down 5.8% for the year. After peaking at $651 in mid-April, Google has generally been on a downward trajectory, trading around $592 – $615. The stock has been trending lower after its quarterly numbers showed a decline in advertising rates and other worrisome business trends.
Google is facing an ongoing lawsuit for allegedly infringing Oracle Corp’s copyrights on the Java programming language. The lawsuit, which was filed in August 2010, revolved around patent claims, especially on the fairness of using application programming interfaces (APIs or a set of tools through which developers utilize the Java software language). Last week, the jury ruled that if Google was found to be using Oracle’s Java programming in all fair means, then the company would not be liable for any damage costs. Google’s lawyers have since challenged the key jury finding on Java copyrights and moved for a mistrial. (Oracle countered that rather than retrying the issue, the judge could simply intervene with a decision that would take the place of a mixed verdict – with Google guilty of some infringement, but also reducing Oracle’s ability to recover a large amount in damages.)

Notwithstanding its legal troubles, analysts remain optimistic about the company. Not only do its fundamentals remain strong, the company is also on the lookout for innovative ways to boost growth.

In its 14 May edition, Barron’s wrote that, with reference to the imminent IPO of Facebook, Apple and Google were “proven growth companies with much lower valuations and cash-laden balance sheets”. Last month, in its first-quarter earnings announcement, Google achieved $8.14 billion in revenue, above analysts’ expectations of $8.09 billion. Its revenue was helped by a 39% increase in “paid clicks”, although the “cost-per-click” for these ads fell 12% as compared to a year ago.
According to the New York Post, Google’s YouTube unit is considering the introduction of a premium, subscription-based video service. YouTube intends to add more top-shelf content to its channels, though these would subject to subscription fees. There have also been market speculations that Google is currently in negotiation to buy social-products company Meebo for about $100 million. Meebo allows developers to create and run applications and services on both its web and mobile infrastructure.

for more:

Podcast: David Frazier Who Gave a Market Sell Recommendation on April 1st Sees Opportunities in This Market – Mike Swanson (05/16/12)

Stock Market Is Now In A Correction – Mike Swanson (05/16/12)

Podcast: Victor Riesco Talks About the Current Stock Market Action and His New Signals System – Mike Swanson (05/09/12)

Podcast: Investment Author Michael Panzner Gives His Updated Views on the Financial World – Mike Swanson (04/23/12)

Podcast: Reggie Middleton On How AAPL Now Has a Market Cap Bigger than All Other Retails Stocks Combined – Mike Swanson (04/20/12)

Topics: 

WSW Articles: 

Tech giant Microsoft (NASDAQ:MSFT) closed at $31.16 last Friday, eking out a 0.58% gain for the week. For the past three months, Microsoft has been trading around $30 – $32.85. The stock is currently up 19.8% for the year. Microsoft last posted its quarterly earnings on 19 April, when it reported earnings of $5.1 billion or 60 cents per share, above the consensus estimate of 58 cents. Its revenue reached $17.4 billion, up 6% over the previous year.
Most of Microsoft’s businesses posted excellent sales growth over the previous year: 14% for the server and tools division; 9% for the business sector; 6% for online services; and 4% for Windows sales. Only its gaming business posted a 16% drop to $1.6 billion.
In late April, the company announced that it would pay $300 million for a 17% stake in a new division (Newco) of Barnes & Noble, Inc. that included the “Nook” e-book reader and downloadable material. For Microsoft, the addition of the e-book reader will be an attractive bonus in its “Windows 8” mobile version, due to be launched in summer.

The company is now increasingly sending signals that it intends to become a major player in the lucrative but competitive smartphone sector. With widespread acceptance of its “Kinect” and “Xbox” console, the company is also in a strong position to grab a bigger market share in the mobile and gaming sectors. Given the above, Microsoft, which currently has a market cap of $269 billion, is poised to enhance its competitiveness in these high-growth businesses.

Hence, notwithstanding its lackluster stock performance in recent months, analysts are generally optimistic about Microsoft, especially given its strong financial fundamentals and growth potential. Las week, analysts at Stifel Nicolaus initiated coverage on the company and set a “buy” rating and $38 price target. McAdams Wright Ragen analysts raised their price target from $34 to $36, as well as upgraded their rating to “buy”. Barclays Capital also raised their price target from $33 to $36, while giving the stock an “equal weight” rating. Goldman Sachs also restated their “neutral” rating on Microsoft.

for more:

Podcast: David Frazier Who Gave a Market Sell Recommendation on April 1st Sees Opportunities in This Market – Mike Swanson (05/16/12)

Stock Market Is Now In A Correction – Mike Swanson (05/16/12)

Podcast: Victor Riesco Talks About the Current Stock Market Action and His New Signals System – Mike Swanson (05/09/12)

Podcast: Investment Author Michael Panzner Gives His Updated Views on the Financial World – Mike Swanson (04/23/12)

Podcast: Reggie Middleton On How AAPL Now Has a Market Cap Bigger than All Other Retails Stocks Combined – Mike Swanson (04/20/12)

Topics: 

WSW Articles: