The Proficient Investor

I’m reiterating my buy on Quiksilver (ZQK).  Several other analysts have already downgraded from buy to neutral and some to hold.  I am saying buy buy buy.  Let me break it down.

Quiksilver is in the consumer cyclicals: Apparrel market.  They make clothing for snowboarding, skiing, skating etc.  Right now we are nearing the end of the winter season, with the Winter X-Games wrapping things up and getting ready for spring.  We also are beginning daylight saving time earlier this year by a month.  That means more light, which means teens have more time to play in the evening.  If you didn’t know already, teens drive sales in companies like Quiksilver.

They may not be best of breed but their growth speaks otherwise.  Here is a company selling at 19 times earnings but with 28% growth.  At that rate, the fair value for this stock is an astronomical $57.

Is it likely to get there in a year, doubtful.  However, it  can and likely will get to $20 which is respectable.  I think it has more potential than that though given their recent partnership with Rossignol.  This is also a lasting brand.  Quiksilver became very popular during the early 1980s when surfing and skateboarding had a resurgence among teens.  Since then it has established itself as a premium brand.

Blockbuster’s(BBI) latest scheme to entice Netflix(NFLX) users to change to their service is laughable. President’s Day is a holiday for most people including the Postal Service. Since Netflix uses the Postal Service for delivering DVDs by mail, they are unable to deliver on this day. Blockbuster decided that should Netflix users want to bring in the tear off flaps from the mailed DVD envelope, they would receive an on the spot free rental.

From Feb. 15 through Feb. 21, including two days when post offices are closed, current Netflix members can bring the tear-off address flaps of their Netflix rental envelopes to any of the more than 5,000 participating U.S. BLOCKBUSTER stores. In exchange for every flap they present, they will receive an on-the-spot free movie rental.

Although this seems like a good idea, to participate renters must have a blockbuster account. If you don’t have an account you can register for one for free and the address on the Netflix flap must match the account address.

As further proof Blockbuster is missing the point here.

“With this Presidents’ Day offer, we’re celebrating freedom of choice for American movie lovers, who no longer have to wait for the mail to get DVDs,” said Nick Shepherd, president, Blockbuster North America. “Tens of thousands of customers are joining BLOCKBUSTER Total Access every day because no one else provides the convenience of online rentals backed by in-store services which enables consumers to access the movies they want 365 days a year.”

I don’t know about the rest of the Netflix users, but I’m never chomping at the bit to get my DVDs. The whole point of Netflix for me is that I have a list of movies queued up and I just get them as they come. I actually like being surprised by what’s coming in the mail. Maybe I’m not like most people and don’t need instant gratification when it comes to movies, DVDs and the like.

As for the stock prices of these two rental giants, Netflix is at $23.57 in intraday trading, is at 33 times earnings and has 34% growth. Given those numbers, I have Netflix at a $47.00 target price.

Blockbuster on the other hand, is at $6.72 in intraday trading, but with a 2 cent loss projected this fiscal year, and a modest 18 cent gain next fiscal year all you have here is momentum on promises by the company. The stock is up $3 since November 2006.

My take here is I think Netflix is best of breed. Blockbuster is an old story and I don’t think they have what it takes to take down Netflix. Keep in mind that in 2002 Blockbuster had the opportunity to buy Netflix for $50,000,000. An amount they felt was too expensive at the time. Netflix is now a $1.6 billion dollar company. Oops.

It appears Apple inc. and Cisco have come to an agreement to share the ‘iPhone’ name.  Both companies have products called iPhone and have agreed it is in their best interest to share the name instead of battling out a possibly lengthy legal dispute in court.

Read more from Yahoo! News.

In an interview with Zacks.com, senior analyst Matthew Thurmond talks about Arch Coal (ACI) and Peabody (BTU).

He says “Arch dropped its guidance from 140 million tons to just over 130 million, and Consol is refusing to increase production unless the market clearly demands it.”

You can see this in the stagnation of the price over the past couple weeks, but today Arch is moving.  I think there are several reasons why.  First, they have an unprecedented 74% growth based on 2008 numbers and trading at only 17 times earnings.  Second, I think all the recent press has finally fizzled out and now the real investors can get in here.

With such a low multiple compared to it’s growth, ACI is a perfect buyout target, especially here with the growing momentum.  Compared to the coal industry overall, they are doing extremely well.

Read the full interview at http://at.zacks.com/?id=2647

By Frank Barnako
Feb 6, 2007 15:30:00 (ET)

You won’t find blogs for sale on eBay, but there is a marketplace for Web blogs. Hundreds are being sold monthly through a little-known two-year-old auction service based in Vancouver, Canada.

Matt Mickiewicz, co-founder of SitePoint Pty. Ltd. said his recent offering of BlogCatalog.com drew a winning bid of $40,000 in less than 24 hours. “There were seven backup offers and two higher than that, trying to break the deal,” he said in an interview. Other sales have included the Blog Watch Network, Biziki and College-Startup.com.

Each month, about 400 blogs are offered for sale through SitePoint Marketplace at a flat fee of $20 per listing. “Most sell in a couple of weeks,” Mickiewicz said. Custom designed software handles the sale process providing for private messages and forums for questions and answers.

“The sellers are entrepreneurs, sometimes flipping Web sites for profit like real estate,” Mickiewicz said. In some cases, buyers will “renovate” a site by using search optimization strategies to build traffic and include advertising links to increase revenue, and then offer the site for sale. “Blogs are easy to start, but what is hard is growing them to a decent size with traffic and revenue, and getting pages indexed by Google, Yahoo and MSN.”

The price for blogs is increasing. A year ago, a blog might sell for 10-20 times monthly sales. A blog in a hot category — like directories, mobile telephones, celebrity gossip or video sharing — will sell for more than a 100 times that. Vshare.com, which Mickiewicz called sort of a YouTube-clone was started a year ago and sold within seven months for $30,000.

Buying an existing blog is easy, but probably not for everyone. Web domains may need to be moved, files and archives transferred, and tweaks made to the site’s layout and content. “You do need a little bit of tech savvy, but that’s where some of our books can help people out. We publish a line of books on web development and web design,” Mickiewicz said.

He handles advertising sales and business development for SitePoint from Vancouver, Canada. His employees work in Australia, prompting Mickiewicz to say, “Thank goodness for Skype.”

Even industrial psychiatrists are trying to capitalize on the Super Bowl commercials. Dr. Joanne Pransky issued a press release, touting herself as the world’s first robotic psychiatrist.

“That poor little robot was having a nightmare in the General Motors ad,” she said. “He will definitely need counseling now.”

“Robots should not have to live in fear that they will be discarded when something goes wrong. There are many reasons a robot can ‘drop a bolt’, for example, none of these may be the robot’s fault,” she added.

Pransky looks like the real thing. “She has been pondering, researching, and speaking on issues concerning the human/robot relationship since 1986,” according to her Web site, www.robot.md.

Walmart.com’s new video download service doesn’t work for the millions of people who use the Firefox browser. Valleywag.com is one of them. With Internet Explorer, it’s good to go.

Wal-Mart bailed from the online rental business. Gave its accounts to Netflix. Why will downloads work? Maybe because Walmart.com is the second-most trafficked retail Web site.

Isn’t Netflix going to jump into the game, too? Why did it let Wal-Mart (WMT, Trade ) get there first?

Expect Apple’s iTunes store to start making deals with the movie studios now that Wal-Mart has six signed up. Apple’s movie selection is limited to two majors. The top 10 selling movies at iTunes include three titles from Disney and seven from Paramount.

A deal for Lionsgate Entertainment (LGF, Trade ) films to be on iTunes — rumored since last summer — still hasn’t happened, has it.

Hackers will figure out a way to remove the downloads’ digital rights management protection. DRM for Windows audio’s been neutralized for some time.

Disclaimer: I own shares of Disney (DIS, Trade ), Apple (AAPL, Trade ), Netflix (NFLX, Trade ), and Viacom (VIA, Trade ).

Disclaimer: I own shares of Time Warner.