The Honeycomb tablet…

Motorola (MOT) $8.88

MOT had a nice story in Barron’s the other day. The shares jumped in advance of the story, so you might wait until there is a bit of selling/pullback to buy. LOTM does believe MOT will be a positive stock performer in 2011– how much is difficult to say. From the $7.80 to $8.80 area, it appears that MOT is an attractive value buy. Whether MOT becomes a growth stock again depends on how its new products sell – especially with Google/Android. There is plenty of room for positive surprise. The article suggests MOT is 20% undervalued. That is not enough to get our attention in and of itself. The market however has a way of surprising on both the upside and the down side. We are leaning in favor of MOT surprising on the upside. The break-up of the company (happening Jan 4th) combined with new and what appears to be an exciting new product launch of Honeycomb on the popular Android platform from Google would be the catalyst. Look for a 5% pull back from $8.88 as a buy-in price.

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What was the fastest growing consumer electronics product in 2011?

If you guess iPad – Android – the iPhone 4GS – you are close but not correct… Bloomberg News says these were among the top four products in 2010 but the #1, fastest selling product – only available in the fourth quarter – roaring out of nowhere is the Kinect from Mircosoft.

Jefferies & Co Analyst:

“Kinect appears to be the fastest-selling device ever,” the company (Jeffreies) wrote in a note to investors. “It is selling at 2.5x the rate of the iPad since debut. … Kinect sales are likely to slow post the holiday season. Still, the technology has applicability beyond gaming, and we see Kinect as an important psychological win for Microsoft as it seeks to regain relevance in consumer tech.”

Earlier this week, Caris & Co. analyst Sandeep Aggarwal issued a note saying he expected Kinect would give Microsoft a $1.2 billion boost in its first year. Add in software purchases and that estimate hits $2 billion in gross revenue.

A theme of LOTM is to look for Growth stocks trading like Value companies with visibility for these companies returning to growth stock status.

Microsoft (MSFT) $27.91 and Motorola (MOT) $8.88 both appear to fit this description.
These companies are not in our 2011 UNDER $10 idea Portfolio, however, we like the stories very much. A number of strategies might apply, from buying the stock, to cash secured put selling, to covered call writing.

Interesting comments by Warren Buffett on gold in the article below. I suspect he’s not saying gold can go up, but rather should gold go sideways for ten years, equities are dynamic, growing or paying dividends while gold is fully valued and more a trading vehicle… I went back, did some reading of comments and editorials from the 2001 period, and found that Buffett bought a significant amount of silver in 1998 – $500 million worth. It seems Buffett does not like gold because it’s a storehouse of value and therefore it’s not consumed – it never shrinks. Much of what has been mined through time is still around. Silver, on the other hand, is consumed in products, especially technology products, so there is no stored silver the way gold is stored. Therefore, by Buffett’s thinking, silver has a scarcity value that gold does not have. An interesting perspective.
Tom – LOTM

Warren Buffett: Forget gold, buy stocks
By Ben Stein, contributor October 19, 2010: 2:24 PM ET

FORTUNE — The first thing I notice on my most recent visit with Warren E. Buffett, who recently turned 80, is how incredible he looks. He would look terrific for 50; for 80, he looks like Charles Atlas. He’s modest about it, as he is about everything. “It all works great,” he says. “The eyes, the hearing — everything works great … which it will until it all falls apart.”

The second thing you notice is that he is so smart it curls your hair.

My first question, as I sit there on the couch in his office, is: “What about gold? Is this a classic bubble or what?”

“Look,” he says, with his usual confident laugh. “You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”

Okay, so gold is not a screaming buy to Buffett. What should a typical upper-middle-class person in the U.S. buy to prepare for retirement?

“Equities,” Buffett answers without a moment’s hesitation.