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.
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.