Valmont shines. Guess who makes all those wonderful lighting fixtures you see along highways? And the huge irrigation pipe thingsees for agriculture? It’s a ciompany called Valmont Industries. They’re doing very well. Profits are up Dividend is up Guidance is up. So are the shares.
P/E is 18. And dividend yield is 0.72%. It could go a little higher. The business is doing well.
Renting is booming. So are rental apartment sale prices. Be wary. Son Michael eyes a five unit apartment building just down the road from where he lives in Portland, Oregon. They want $950,000. Seems reasonable for the nice neighborhood. He does his math and disocvers an implied negative return of minus 1.93%. He’s bewildered. How can they sell an “investment property” on which the buyer is guaranteed to lose money from day one? Easy. That’s the price. And someone will buy it, figuring the property’s value will go up at 8% plus a year. Michael and I are not factoring in any likely capital appreciation, since we don’t think there will be any for years.
Meantime, here’s the spreadsheet Michael ran on the property. Note: He’s using actual numbers. And he’s not figuring any numbers for potential vacancies. Amazing. He says if you want to see the impact of things, put different numbers in the yellow highlighted boxes at the top. For Michael’s spreadsheet, click here.
I don’t make this stuff up.
Horrible economic statistics. Spain (the ninth largest economy in the world) now has a higher percentage of people unemployed than the United States did at the worst of the Great Depression.
Unemployment among workers under 25 in Spain is more than 50%. In Ireland it’s about a third. Here it’s 16.5%.
Sixty-five of France’s economy is government — owned, run and employed by the government. That’s the highest in the world. Meantime, France is about to elect a socialist, who likes big government, early retirement and a low working week.
Austerity is a dumb economic policy. Until they allow countries to escape the Euro and go back to their own currencies, things will get worse.
Cockroach stock predictably produces baby cockroaches.Chesapeake Energy is the classic cockroach stock, as the weekend press literally bulged with curioser and curioser stories on CEO Aubrey McClendon.
+ From the New York Times. Trouble with the Top Man. Click here.
+ “Chesapeake Walks Like an Egyptian” from the Wall Street Journal. Click here.
+ “Aubrey McClendon: The Politically Incorrect CEO” from the Wall Street Journal weekend interview. Click here.
+ “Chesapeake Finally Ends Absurd Conflict In Which CEO Invests Personally In Company Wells” from Business Insider. Click here.
+ Cramer is also talking about Chesapeake’s necessity to sell of assets to meet loans due. Cramer talks about a “Fire sale of premium assets.”
From today’s Wall Street Journal, “The Arab Spring did wonders for global oil prices but nothing for U.S. natural gas. Regardless of the momentous events across the Middle East, gas prices fell 32% in 2011 as producers like Chesapeake Energy pumped out more than the market could take. Weak prices for its major product aren’t the only thing weighing on Chesapeake’s share price these days though.
I’m short CHK.
How to save on airline fares, from SmartMoney:
+ Time booking: Studies show that the cheapest time to book airfare is on a Tuesday afternoon, when the maximum number of sale seats is available. … Travelers can expect to find the best fares about three months out from departure for domestic flights and five months out for international flights. Prices go up dramatically 14 days out.
+ Consider an airline card. If your local airport is down to just one or two carriers, it might be time to reconsider applying for an airline-branded credit card. “The airline cards are finding that they need to compete with bank offerings, and that helps consumers,” says Jay Sorensen, president of IdeaWorks Company, a research firm that studies the frequent flier space. New-cardholder bonuses have risen to an average 60,000 miles, and airlines are loading them up with ongoing perks like free checked bags and priority boarding. But most still carry a fee after the first year, which means they aren’t ideal for infrequent travelers and those who occasionally carry a balance.
+ Set fare alerts. More airlines and travel sites offer best-price guarantees that give consumers cash back if a fare price drops after they book. Sign up for general sale and route-specific alerts at sites like Airfarewatchdog and Bing Travel.
+ Follow the fare sales. Although fares are rising, competition on many routes hasn’t ebbed. Airfare comparison sites including FareCompare.com, Google and Kayak.com are using “getaway maps” to point travelers to destinations that have the best fares from a home airport. Users can narrow the field by budget, amenities (golf versus beaches) and flight duration. Such tools can also be useful in picking alternate airports for a planned trip, he says.
+ Be flexible. “Flexibility was important, and it’s doubly so now,” Traveling on a Tuesday, Wednesday or Saturday usually results in a cheaper fare than on other days of the week. Plenty of travel sites offer a flexible-date engine to find the cheapest combination of travel dates. Check a few — some don’t include low-cost carriers like Southwest and JetBlue. Opting for a flight with one or more stops can also shave hundreds from a fare without adding more than an hour or two to your flight time, he says.
+ Buy a package Hotel-airfare combos are often cheaper than buying each component separately, experts say. Travelocity and Expedia both claim the deals offer discounts of up to $525. It’s not a perfect solution, however — not every flight and hotel option qualifies for a discount.
+ Watch the fees. Department of Transportation regulations require airlines to include taxes and fees in advertised fares, but be sure to factor in expensive extras like checked bags and seat selection, too. “The airlines have not fully exhausted their ability to charge for extra services,” warns Dean Headley, an associate professor of marketing at Wichita State University. Earlier this month, Allegiant added a fee of $10 to $30 for carry-on bags. Spirit introduced a similar fee in 2010, and carry-on bags are one revenue source more airlines could soon tap, he says.
My personal favorite deal is the twofer, which American Express Platinum offers on some international long distance flights. Susan and I are going on an Aer Lingus businsss class twofer to a wedding in Ireland in June. The price is reasonable. And American Express guarantees it won’t rain. And if you believe that, I have a great apartment building in Portland, Oregon which is only slightly overpriced.
31 “amazing” iGadgets. Interesting to flip through. From Laptop Magazine. Click here.
The best jokes from Saturday night’s 98th Annual White House Correspondents’ Dinner:
+ “I’d like everyone to look under their seats. Under each you’ll find a copy of Keith Olbermann’s resume.” – Jimmy Kimmel.
+ “What’s black and white and read all over? Nothing anymore.” – Kimmel.
+ “It’s nice to be here in the nice, vast Hilton ballroom. Or as Mitt Romney would call it, a fixer-upper.” – Obama.
+ “Remember when the country rallied around you (Obama) in hope for a better tomorrow? That was a good one.” – Kimmel
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Harry Newton who understands “old age.” It’s what you feel like when you didn’t play tennis for five days. You feel like crap. Bicycling and running help, but nothing works the upper part of your body as well as tennis does. Sadly, it worked it so well that my shoulder’s rotator cuff hurts and needs a rest. For how long? It better not be long. I’m climbing the wall.
The best TV you can buy is the new Samsung UN60ES8000 60-Inch 1080p 240 Hz 3D Slim LED HDTV (Silver). The 60 inch is $3,200 at Amazon. Not cheap. But truly wonderful. Click here.
Just wondering when the airlines will start to charge for the air we breathe while in flight.
Harry: I agree with Crisvin comments about some minor adjustments, and would ad that the property mgmt fee is to low. Here in CA it ranges 5-10% depending on type of property. The apt. mkts are very hot all over the country right now. He may wish to consider SFR as an alternative. Lots of families have been displaced and looking for homes to rent as opposed to Apts. or Condos.
We look at approximately 50 homes before we find one that meets our criteria. The more you look the more you will develope a feel for what price and rental ranges will work. An initial method we used is not to pay more that XX times the annual rental. In San F, CA it is as high as 18 here in San Diego its around 10. Multiple is much smaller in midwest and south.
Harry, interview in WSJ with Chesapeake CEO was actually quite positive.
Harry, tell son to include in his numbers, closing costs, some sort of vacancy allowance, and a figure to take care of anything now wrong with the house.
Vincent
Harry,
You properly knock the European governments spend-spend-spend policies, but then say austerity doesn't work. I assume you mean – well, what do you mean? Government austerity along with much less government does work (except for the NYTimes!), allowing entrepreneurs and bigger and big companies to do their capitalistic thing, grow and expand adding jobs and expanding the real economy. agree?
in point of fact, all the european countries are practicing austerity. they're required to by the maastricht treaty that requires individual nation deficits to be no more than 3% gdp. since france's economy is so heavily dependent on government spending, any contraction in government spending hits the french economy particularly hard.
if austerity worked, then europe's economy should be going like gangbusters since practically every european country has reduced government spending.
which country, in the midst of a recession, has reduced spending and seen economic growth?