Feb 23, 2012|
Jeff talks about the future of Amazon’s stock , the purchase of Pringles by Kellogg’s, and the forecast of the stock market.
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Okay. Stocks are trading lower based on excessively high oil prices -- how bad is it. Dow down 47 points to 12891. NASDAQ down nine points S&P is down five. And gold is up seven dollars to 1778. -- oil. It's actually down 31 cents to 10597. Lowest price gas here in Massachusetts start gas granite -- Dorchester at 339. All right highest. United gas on NASA in Lexington at four dollars and nine cents all right. All right well you've got a text question text -- asking you please Barry explain the assumed rate of return. Sure we had Steve Grossman on earlier we're talking about Massachusetts state state pension plans if you were call he acknowledged that the state pension fund. Is currently underfunded by about nineteen billion dollars June and he anticipates that number going up into the twenties. During the next couple of years. And that is assuming that they make eight point 25%. On their money they made -- -- last year the pension was is flat that returns last year. And they are assuming that they're gonna make eight point 25% on their money I've talked to Steve about this in the past I think that's an irresponsibly high number to assume as a rate of return. On pension fund. And and hopefully they reduce that in the near term right now we're joined by Jeffries he is the editor of investor place dot com Jeff welcome to the show are you don't. Good pay. Let's talk about Kellogg stock they're buying Pringles after somebody else who was at Procter & Gamble backed out of the deal. Well out proctor got elected Salomon -- -- -- that accounting scandal going -- and obviously they don't have as much money as they thought they once did it they try to can't close the deal anymore. Thought it had that they're really fortuitous circumstance being able to come -- And get a -- hold a bigger settlement should pains snack food market which has obviously much higher margins and kind of the front of store grocery on the they typically I would that are in a quark like -- one not out I think they're really good acquisition could about a that the stock a lot of long term. 53 dollar stock today what do you think you might be worth the new year to. What are needed to out of Europe you consumer staple blue chip bottoming out of the desperate that growth in the activated that kind of at the staples is executed back a little bit. But I think instability that we apply that -- did -- and about 3.3 percent. Two I mean -- department attention I agree 8% and it just ridiculous but you know 3% dividend catalog I think that's pretty modest I think the -- probably people sixty. And the next year to do again you're not gonna see breakneck growth out of the companies -- not stylist cereal companies do that I think it's pretty popular that people. There right now if you follow Warren Buffett you're not doing too badly you can invest like Warren Buffett you're probably gonna make money over the long -- He recently took a big position in Liberty Media. Is it too late today to pile on something like that. Well again more about it a lot -- -- I think a lot of people can kind of relate TDs stated. He -- you want by -- all the for the long term I think in in many years not months. I think Liberty Media that good a good -- to the study and a -- -- really could explode the next decade or so obviously the company that -- are actually is really. Kind of like a junior did it's the media conglomerate they don't take in the -- and stake in Barnes & Noble believe it or not. If they can live nation got to be entertainment ticketing company and the reason that I think both actually. Not just the -- but I'll put it kind of prodigy called you can -- over Berkshire. Theoretically on the property in the forever whether there and decent guy like Liberty Media I think is because -- released the first century media company like Disney at ABC at the end stars as -- big streaming entity and I think -- you know it's hard to tell how this is gonna play out but if anyone had the chance of making it work. Becoming a big player it's Liberty Media I don't really like kind of a long term. Growth of streaming cables just not going to be around I don't think ten years from now so if you wanna play that trying to develop it more risky it is small stock but you know I think it over the next decade could really pay -- for. -- Jeff many people many investors have turned bearish on Amazon I still like it I like the company you can grow their revenue by 33%. But I don't understand the valuation of Amazon why do you like Amazon when everybody else seems to be heading for the exit door. Are -- particularly out to be directed -- on Amazon. There's you know the company. I agree to revenue growth is really proud of what disturbs me about Amazon it's its profits could not get paid a big plows. So much money are indeed and -- pay dividends they're asking themselves. And they kind of really overstretched I believe on the Kindle they basically -- that small law. And earn extra care to point kind of liked it if he shares dropped below 140 in 2011. -- point while they're going to be back to 145 that's presuming that they can elected as a business that they expect from it. I think that the huge rip it and despite the flop it and can't share what -- -- from like 24182. Until Wikipedia forward PE Obama Saturday so. I'm actually not well at all on Amazon on a little worried that all the moment. Stating the revenue growth is great. But the margins are razor stand on the flat screen TV to excel hotline editor. Big -- -- Wal-Mart in cracker -- out that it dumped in the little lob in the global Wal-Mart and I've electronics. I don't think there's a lot of but a renewed growth there ourselves. The that the valuation worries me I think the big banking big on the Kindle they can prove me wrong I mean get beaten Virginia is much smarter than I am but you know -- I'm a little bit more on the conservative side so I I I'm a little leery of chasing and it's not our. At what price would you buy used to 177. Dollars as we speak at what price would you find Amazon attractive. Bobby again and although the electric speed Nicki you like 3035 bucks -- -- I think that's completely unrealistic but you have to get closer down -- And on the 81 point 5130 range I definitely think that that the worst strike but again that's a huge huge drop off from here because he had a 52 week low rent it on it that much lower -- -- right now it's about 160 happily it's so you'll hear about the plow through that there'd have to be some bad news for the -- it needed market contractions get that level but. I don't know I mean I'd. Typically doesn't pay dividends and amateur business like Amazon it's not like you know I appreciate the fact that they want -- bank big on the table and applying all the money into it but. You know at some point shareholders got to get there and clearly that spending growth this year -- I'll tell. You'd think -- dollar cap on and that it wanted to come not back yet evident. You know I I I don't really like and I think and the time to go after other David David Anderson here it's huge flop venture partner for me to walk again on -- open. All right Jeff as always we appreciate your time and we appreciate your stock picks thank you very much. Opera on the Jefferies investor place dot com.