Procter & Gamble also has the upside prospect of its management getting round to releasing the latent potential of some of its powerful brands. I’m not the biggest fan of the company, and note that it hasn’t been doing that well in China compared to its rivals, although it seems to be stabilizing market share in the U.S. No matter the market wants this sort of stock, so don’t be surprised if it goes up in line with the market.
What’s with the caution?
Actually, investors should research more ‘caution’ than ‘buy’ stocks, because this helps avoid overtrading and creates a more rigorous approach to investing. I’m proud to be a coward.
Delving into the list, we come to Bed Bath & Beyond Inc. (NASDAQ:BBBY). The company would release results on the April 10, and investors will get a further update on its plans to restructure and turn around disappointing same-store sales growth. Unfortunately, there are tangible signs that online competitors are eroding market share.
However, the market has decided to give the company the benefit of the doubt. Indeed, the rest of the housing related sector is doing well and the market has been bullish overall. In such circumstances, you can expect stocks like Bed Bath & Beyond Inc. (NASDAQ:BBBY) to do well, but much of the gains could disappear if the next earnings aren’t good.
The next two highlighted stocks are both telcos. Finisar Corporation (NASDAQ:FNSR) recently reported its familiar story of strong datacom spending but weak telecom revenue. Many observers believe that this could be a better year for telco spending, but it certainly didn’t show up in Finisar’s numbers.
In addition, some analysts think there is a potential longer-term issue with Cisco Systems, Inc. (NASDAQ:CSCO) (currently a key customer) silicon photonics-based solutions that will rival Finisar’s existing products. Finisar claims it is ‘agnostic’ over using the technology itself in future, but that will be small recompense for losing market share to others using it first.
Ciena Corporation (NASDAQ:CIEN) reported a good quarter. Shareholders were immediately rewarded with a sharp rise, only to see it start falling afterwards. This is inevitably going to be the situation with a stock like Ciena.
The company has good exposure to some of the genuine growth areas of telco spending like network convergence, Voice over LTE, and 100G networking. These are areas that the major carriers are spending money in this year. Indeed, analysts have some pretty spectacular growth rate forecast for the next few years. However, the stock trades 37 times earnings for October 2013. It’s the sort of stock that will be volatile and move around based on sentiment over telco spending prospects.
The bottom line
One conclusion from this quarter’s performance is always to remember to not be selective over how you view your risk aversion. It would be easy for me to pick out one or two winners from the ‘caution’ list and then beat myself up over not buying them, but the same approach led me to avoid the losers too. And as the numbers outline, the stocks I didn’t buy were under performers overall.
The article What I Bought and Sold Last Quarter originally appeared on Fool.com and is written by Lee Samaha.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
