Article by Investment U
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In focus this week: getting juiced takes on a whole new meaning, AT&T and Verizon’s war for mobile data, and the SITFA.
There’s a Bull Market… in Juice!
According to Barron’s, what do Bill Clinton, a million hedge fund managers and a lot of housewives have in common?
Juice! Spinach slurpees, kale cocktails, super fruit smoothies!
A Barron’s article said the liquid lunch is taking on a whole new feel in our well-heeled suburbs and trendy cities. Martinis are out, brackish-looking goo is in!
A 17-ounce bottle of cucumber, celery, parsley, kale, dandelion, Swiss chard, lemon and ginger juice will set you back $13.
It’s a $5-billion industry and growing like crazy!
Big players are jumping into it in a big way. Campbell Soup, Coke, Pepsi and Whole Foods are buying small juicers, and a Whole Foods spokesman said this segment is growing faster in traditional stores than in others.
Sales have grown 58% since 2004. Starbucks (Nasdaq: SBUX) is in on the game with Evolution Fresh that has an 11-foot wall with spigots that dispenses all kinds of juices.
A SBUX spokesman said they will do for juices what they did for coffee. Wow!
Matthew DiFrisco, an analyst who follows SBUX, said this could hit 1.3 billion in sales just at SBUX!
McDonald’s and Dunkin Donuts have been pushing a part of this segment with fruit smoothies, and some of the names to watch for: Juice Press, Organic Avenue and Earth Bar. In fact, Earth Bar is opening stores in Malaysia and Singapore.
Scott Van Winkle said in the Barron’s article that every player in the food business is either looking at juicing or moving on it.
Kale cocktail, no thanks!
AT&T and Verizon Fighting for Your Data Dollars
AT&T (NYSE: T), according to Barron’s, is the pick over Verizon (NYSE: VZ) as the dividend play in the data and wireless area. The demand for wireless may not be good for our wallets, it’s getting pricey out there, but it’s great for AT&T.
AT&T has $4 billion in stable cash flow, and it could expand even further as our demand for data usage and their customer loyalty grows.
With a 5% yield, and a lower price-to-earnings basis than VZ, it still has a comparable long-term growth estimate.
AT&T pays three times the 10-year Treasury yield with good upside potential, and, according to Dan Genter of the RNC Genter Dividend Income Fund, the dividend will continue to grow.
AT&T will be spending $9 billion in a stock buyback, that’s about a 5% of the float, Verizon isn’t, and analysts expect earnings to grow at 5% quarter over quarter.
The company’s subscriber base is also less fickle than it used to be. Most of their base is family and business with less churning than in the past.
Analysts see the industry coming down to two players, AT&T and Verizon, many of the small players have been bought up or forced out, and right now the edge is with AT&T.
Look for earnings to grow and increasing margins as demand for data increases, and everyone is looking for constantly increasing demand…
The stock is not likely to explode upward, but we do have a very nice defensive dividend play in AT&T.
Finally, the SITFA
This week the slap-in-the-face award goes to the folks at Squawk Box on CNBC.
In an economy where we have 15% real unemployment, a GDP that looks like it headed for the toilet, the EU crumbling, China slowing and almost no good news for the consumer in the energy and food sectors, CNBC ran a segment this past week about how cheap it is to own your own island.
I’m not kidding!
Yes, when folks are being put out of their homes, the over-50 crowd is being forced out of the job market, the market seems to have nowhere to go but down, the producers run a segment about how affordable your own island can be? Come on!
But wait, says CNBC. Islands have dropped in value anywhere from 20% to 80%. Oh, boy!
You can buy an entire chain of islands in Greece for less than 5 million euros. Why have one when you can have a chain?
Why have prices gotten so low? One island owner was quoted as saying that his kids have so many soccer matches they can’t find the time to use it.
Well, a little reality anyway.
Article by Investment U
