The short term investing stock picks blog

I wanted to announce to the blog audience the creation of Instant ETF.  Instant ETF was an idea I had while trying to find some ETFs for my portfolio a while back.  What I found was that while there are many tools out there, few offered a simple approach to browsing ETFs.  At times, I could get lucky with using Google Finance’s autocomplete, but since most ETFs official name starts with its manager (like iShares), it was hard.  I’ve found ETF Connect’s search function somewhat useful as well, but also limiting if I didn’t know exactly what I was looking for, or say if I was an average investor what the heck a closed-end fund was.

Instant ETF offers the ability to simply browse by name, expense ratio, sector, bond type, location, market cap, and investment style (bullish/bearish).  Its a simple system — you can’t currently filter by multiple attributes or search traditionally — these may be added in the future.  The system currently contains around 1,000 ETF/ETNs, which I do not believe is a fully exhaustive list, but pretty darn close.  I know there are probably a few of those closed-end funds that I do not have in there.

In any event, check it out and enjoy!

In August, I wrote an article about the 3 Stanleys in the stock market: Stanley Works (NYSE: SWK), Stanley Furniture (NASDAQ: STLY), and Stanley, Inc (NYSE: SXE).  At that time, I said, hey there is no question here the other two are garbage and Stanley, Inc was the way to go.  Since that time SXE is up 44% and in December hit the mid-high $30s.  If anyone cares, in the same period SWK is down 12.4% and  STLY is down 21.0%.

Back in August, I noted that the main risk facing Stanley, Inc was the potential for it to lose its largest contract, its Passport contract, with the State Department.  Well, good news for the company is that  on 3/17 it was announced that SXE would keep its passport services contract with the government and it would now be worth $570 million over 5 years.  This is obviously significant for a company with a $660 million market cap.  I like this news to hey buoy the stock in troubled market times and look for it to hit a target of $33, or around 12% upside in the next 3 months.

The company has shown an impressive track record of earning contracts over the past year or so.  Analysts currently peg its long term growth rate at 28.3%, not too bad for a company with a trailing P/E of 30 (PEG ratio=1.0).  With continued success on the contract front, Stanley can look for an upside to $40, which it likely would have reached under ‘normal’ market circumstances back in December or early January.

Disclosure: I hold no position in Stanley, Inc.

This morning McDonald’s (NYSE: MCD) reported same store sales that were up 12%, driven by international markets, but also by a strong 8% increase in the US.  Much had been written about the potential for premium coffee to help boost McDonald’s earnings and drive above average growth for the next few fiscal years.  These expectations, in part, helped send its Northeast coffee distributor, Green Mountain (Newman’s Own) to 52 week highs, peaking around $40-$42.50.  Given this, you may expect Green Mountain Coffee Roasters (NASDAQ: GMCR) to be riding MCD’s coattails with today’s trading — it’s not.  As I write it is down nearly 4%.  This marks the 16th down day in the last 19 for a loss of around 36%.  Sure small caps are down during this same period, but not even close to as much as GMCR, thank god for that. 

So what’s the worry with GMCR?  It’s our old friendo: commodity price inflation.  With guidance given last week, management reaffirmed guidance for the second quarter (phew), but noted that it would be increasing prices 8-12% effective May 5 (oh shit).  They also noted that earnings remain highly susceptible to continued commodity price inflation.  Remember they not only have to worry about coffee prices, but also the milk and sugar to go with it.  It’s hard to justify such a premium (still over 45 P/E) with such heady times coming and I think investors are responding to this.  From a technical standpoint, you may see some Relative Strength bounces soon, but I expect this one to piddle around and maybe even test the $20 support from around April 2007.

I really like this brand and love this coffee, so I am pulling for GMCR, but even with MCD in the Northeast, this may be a bumpy quarter or two for the roasters from Vermont.