Steve's Value Picks

McDonalds Comes Out Of The Closet

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It might be a good time to sell your McDonald's stock. The American Family Association contacted McDonalds and asked them to remain neutral in the culture wars, but McDonald's reaffirmed their attention to continue support of the homosexual agenda including gay marriage. It seems one of their VPs is a homosexual and serves on the board of a influential homosexual organization. This officer approved contribution of $20,000 to this gay organization. So a resturaunt chain that we have always thought of as "family friendly" has proven an enemy of the traditional family. The Christian right has proclaimed a boycott of McDonalds. A website has been created www.boycottmcdonalds.com to facilitate the effort. I would expect as the boycott gains steam that McDonald's revenues can only go one way, down. They will probably lose a portion of their customer base that they may never recover since the Christian right is about 25% of the population. This coupled with the poor state of the economy can only lead to tears for McDonalds. I look for this stock to take a nosedive.

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McDonalds Comes Out Of The Closet

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It might be a good time to sell your McDonald's stock. The American Family Association contacted McDonalds and asked them to remain neutral in the culture wars, but McDonald's reaffirmed their intention to continue support of the homosexual agenda including gay marriage. It seems one of their VPs is a homosexual and serves on the board of a influential homosexual organization. This officer approved contribution of $20,000 to this gay organization. So a resturaunt chain that we have always thought of as "family friendly" has proven an enemy of the traditional family. The Christian right has proclaimed a boycott of McDonalds. A website has been created www.boycottmcdonalds.com to facilitate the effort. I would expect as the boycott gains steam that McDonald's revenues can only go one way, down. They will probably lose a portion of their customer base that they may never recover since the Christian right is about 25% of the population. This coupled with the poor state of the economy can only lead to tears for McDonalds. I look for this stock to take a nosedive.

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McDonalds Comes Out Of The Closet

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It might be a good time to sell your McDonald's stock. The American Family Association contacted McDonalds and asked them to remain neutral in the culture wars, but McDonald's reaffirmed their intention to continue support of the homosexual agenda including gay marriage. It seems one of their VPs is a homosexual and serves on the board of a influential homosexual organization. This officer approved contribution of $20,000 to this gay organization. So a resturaunt chain that we have always thought of as "family friendly" has proven an enemy of the traditional family. The Christian right has proclaimed a boycott of McDonalds. A website has been created www.boycottmcdonalds.com to facilitate the effort. I would expect as the boycott gains steam that McDonald's revenues can only go one way, down. They will probably lose a portion of their customer base that they may never recover since the Christian right is about 25% of the population. This coupled with the poor state of the economy can only lead to tears for McDonalds. I look for this stock to take a nosedive.

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The Carnage On Wallstreet Continues

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Well July is upon us and we have celebrated Independence Day. I do not think we will have much more to celebrate in the coming months. The stock market has reached "official" bear territory and a new earnings season begins tomorrow. Oil is hitting new records each week. The credit leverage of the banks continues to unwind. Prices are rising all around us to compensate for the increases in fuel prices. Property continues to go down in value. The builders are on the ropes. The airline industry is in trouble. The banking industry is in trouble. The automobile industry is in trouble with talks of a possbile General Motors bankruptcy (something that I have not heard in my lifetime). The corn crop is seriously damaged by the mid-west floods and food prices are spiralling upward. The unemployment rate is increasing.

One would be hard pressed to find any good economic news today. So what are we to do other than to wring our hands. The safest place to be at the present seems to be in cash. The next choice would be value stocks of companies with little or no debt. In the near future companies are going to go belly up simply because they cannot find financing for their debt. The problem is that the banks either won't have the money or they won't want to lend it if they do.

So, companies that have little or no debt who pay a dividend and whose price is already beat down by the last few weeks of market attrition are the best bets. Add into that companies who cannot be held ransomed by increasing oil prices. I have most of my money that I have in the market parked in utility stocks. With depressed prices some of them are paying almost 7% return on the dividend. So as long as it looks likely that they can continue to pay the dividend, this might be a good place to park your money until the carnage on Wallstreet is over.

Cash is really the only safe option. The good news, you can look for better interest rates in the coming months due to greater competition for the decreasing amount of money in the lending pool. Interest rates will go up regardless of what the Fed does.

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Chickening Out On SAFM

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I have had quite a run on Sanderson Farms over the past few months. I sold my positions in this stock today realizing a 49%+ return (my best). Sanderson Farms at this price no longer meets my criteria as a value stock and I believe it is time to take my profit. The CFO sold his common stock which might be a sign that it is a good time to sell.

This is still a good company and I will look at it again if/when price levels ebb to lower levels and it begins to look more like a value stock again.

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Imperial Sugar Has Taken It's Lumps

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Back in February I sold my favorite stock, Imperial Sugar, because of the explosion at their Georgia refining plant. I expected a short-time hit due to the business problems that the explosion would create for them. Imperial Sugar has taken their hit. Due to the explosion they showed a 2nd quarter loss and as I feared were not able to meet all of their supply committments. The stock has suffered a $5.00+ loss in per share price since that time.

I believe it is time to re-enter the market for this stock. All of the things that I love about Imperial Sugar are still true. They have no debt. Their book value is now higher than the current share price. The price could continue south a bit more, but I do not expect that to happen. I believe that their next quarter figures will show that they are adjusting to the situation and that they will do a better job of meeting their supply committments as a result.

This is a solid proven company which has produced consistent cash flow and returned value to their investors over the years.

They took a left hook on the chin with the explosion and subsequent damage to their business, but like a good fighter they will begin to recover from the blow and get back into the fight. Sugar prices are stable though not really setting any price records. I have added a small monitoring position to my personal portfolio.

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