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Saturday, October 25, 2008
Wednesday, May 07, 2008
So the current leader of the financial bloggers stock picking contest is Smarty with 100% allocation to Nvidia Corp. (NVDA). In the first two (2) day of this competition, the stock was up more than 9% from the close of April 2008. With that kind of action, I decided to write a financial analysis review of the company.
To start the first post, I would like to provide an overview to NVDA using some of the tools I have shared in my posts:
Company Overview, taken from latest 10-k filings:
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or the GPU. Our products are designed to generate realistic, interactive graphics on consumer and professional computing devices. We serve the entertainment and consumer market with our GeForce products, the professional design and visualization market with our Quadro products, and the high-performance computing market with our Tesla products. We have four major product-line operating segments: the GPU Business, the professional solutions business, or PSB, the media and communications processor, or MCP, business, and the consumer products business, or CPB. We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities are in Santa Clara, California.
Despite rising+ 9% in the first few days of May for the competition, NVDA is down-40% from the start of the year. When looking at the 5-year performance, any long-term shareholder would be happy with a total return of 436%, annualizing at 32%. Another positive stock performance metric for NVDA is achieving this growth when the S&P 500 returned an annualized rate of 3.5%, creating a 9.3x over the broad market index.
5-year Income Statement Trends:
Looking at this chart, it doesn’t get any better than this…All of the metrics are increasing with a 5-year compounded annual growth rate of 22.4% on sales and 80.9% on net income.
Aside from the sales and net income metrics, NVDA isn’t as exciting on the rest of the metrics for my value scorecard. By looking at the growth metrics above, this stock falls into the growth category. The price to book seems rich at 5.9x but with no debt and a FCF yield of 7.4%, not that bad…. I will compare these metrics to the competitor set to provide a benchmark.
Post 2: Detailed Income Statement Review
Post 3: Detailed Balance Sheet Review
Post 4: Cash Flow Statement Review
Post 5: Ratios and Competitor analysis
Post 6: Insiders & Major Holders review
Post 7: Valuation: A Discounted Cash Flow Approach
If you would like me to add any additional sections, please feel free to email me or comment below.
Author Disclosure: At the time of this posting, the author does not own/short any NVDA stock.
Sources: Company website, Edgar database, Yahoo Finance, Morningstar.com
Saturday, May 03, 2008
"One person's trash is another person's treasure"
As spring and the warmer weather approaches the Northeast region of the United States, it brings a great opportunity to find great deals in the local yard sales. I am not sure about you, but every weekend I come across homemade signs advertising the next yard sale in the neighborhood. When I see these signs, I see $$$
I always try to take the time and see what is being offered in each local yard sale. Not only are these venues to practice my negotiation skills but the sales also serve as profit potential visits. Just recently I came across a yard sale towards the end of the afternoon ~3pm....As I approached this multi-family event, I can instantly read their expressions that they were tired of sitting around trying to sell their "garbage". I was able to grab a few items that I deemed valuable for a unbeatable price....."Free"
That is right, FREE....The families involved were at a desperation point in their yard sale experience by trying to just get rid of their stuff. Within 3 hours of obtaining these free goods, I had them posted on EBAY. My auctions have just ended with a profit of $45 for about 2 total hours of work...I will deposit this into my savings account.
If you are interested in finding great deals at yard sales, here are my major tips:
1. Before you visit a yard sale, know your market....I would strongly suggest that you capture data on a few focus areas (i.e. sporting goods, books, clothing, etc)...Visit EBAY and see what items have a great track records of selling and for approximately how much.
2. Time your entry appropriately....If you are looking to capture the few quality items that sometimes appear at yard sales, plan to go early. If you are looking to try and pick up items at a deep discount, wait until the later afternoon to visit.
3. Go in with a negotiation strategy....Don't get caught up in the moment of trying to strike a deal. Know your limits (a.k.a. "walk away price") for items and stick to it. There is nothing more frustrating that buying some items from a yard sale and taking a loss on the transaction.
4. Shipping costs are not a profit oppty....Some ebay sellers try and capture additional profit by increasing the shipping costs needed to send the item. I am not a fan of this at all and would recommend that you try and estimate as close as possible for these expenses. Savvy buyers look into these costs and if they seem unusually high for the item you are selling, it deters them from bidding.
5. Track your progress and document any lessons learned....This step is critical if you want to try and make these visits as profitable as possible in the future. Learn from your mistakes and adjust your strategy as you enter each transaction.
If you have any other tips for successful yard sale transactions, please feel free to comment.