Informed readers knew that investing in Facebook Inc. (NASDAQ: FB) stock was a bad idea from the first trading day. Its shares haven’t closed above the $38 IPO price since then.
Such an overvaluation made it the 23rd biggest stock in America at the time.
And that, of course, means it had much more distance to fall.
But this logic wasn’t enough to keep a mass hysteria of people from practically going all in on the stock.
According to Bloomberg,
“Facebook, worth $51.2 billion, has lost about $40 billion in market value since the IPO, making it the worst performer among all large IPOs on record.”
You can’t help but marvel at spectacular failures.
And today is the first of five days, in the coming nine months, when Pre-IPO stock holders get the green light to dump almost 2 billion shares.
Each time this sell-off happens, it will significantly increase the supply in the market:
- August 16: 271 million shares
- October 15: 249 million shares
- November 14: 1.32 billion shares
- December 14: 49 million shares
- May 13, 2013: 47 million shares
And just today’s 271 million shares that were “unlocked” have the potential to boost the number available to trade by 60 percent.
Yikes.
But if you’ve been taking our advice, you don’t have any Facebook shares to sell in the first place.
So breathe a sigh of relief.
In fact, breathe another one. Because Jim Nelson is about to give you healthy alternative to far flung investments in overhyped companies like Facebook.
He’s going to show you an investment opportunity that’s performing in the opposite way.
So you can earn safe, steady gains in a reliable stock… as well as make yourself a stream of income through healthy dividends.
I’ll let Jim get to it…
Sincerely,
Josh Grasmick
Editor, Agora Financial
How To Win Big Profits When Others Fail
By Jim Nelson
August 16, 2012
If you’ve been a subscriber for a while, my current favorite investment shouldn’t be a surprise. I’ve been calling this my favorite dividend stock for a long time.
Despite politics, European finances, record low interest rates and all the other worries we hear about on the news, one huge underlying movement is still driving this investment.
Nearly a billion people are on the verge of getting their first computer.
And the technology at the heart of all of these new sales is what makes Intel Corp (NYSE:INTC) my favorite no-brainer dividend stock.
Take a look at this table. I originally showed readers this table in June 2011. Nothing has changed.
It shows the average number of weeks of income it would take to buy a PC across the world. The lower the number, the easier it is for people to purchase a PC.
Many studies have shown that once a family can buy a PC with between a month to two months of income, they do. Clearly, that happened in the 1990s in the developed world. Here 20 years later, it’s finally happening in the developing world.
China and Latin America are hitting the target range right now. India will be next. Those countries make up half of the world’s populations. You can’t tell me Intel, the company whose technology powers more PCs than any other company, won’t make a buck selling to half the world’s population.
Sure, companies like Apple will take its cut too. But the demographics are incredible. Apple can take half, and Intel should still see regular double-digit growth rates year-in and year-out.
Intel is also making huge strides in smartphones and tablet computers. It has already proven it can add these markets at a profit. And margins continue to grow every year.
On top of its personal products markets, the company is also a giant in storage and networks with its vast catalog of commercial products. It has a major role in cloud computing and wireless infrastructures.
But what really makes Intel my favorite income play is its actual income.
It brought in $55 billion over the last 12 months. Up from $44 billion in 2010 and $35 billion the year before. It doesn’t need to wait for billions of Chinese or Indians to start buying its products. It is already growing like no other blue chip I know of.
With all that cash flow, it is able to keep virtually no debt and plenty of cash on hand for acquisitions and research and development.
More importantly, its massive cash flows allow it to pay a substantial dividend.
After paying 63 cents per share in 2010, it paid 78 cents last year and just hiked its annual rate to 90 cents going forward. That’s a 3.4% yield at today’s prices. Our cost yield is even better at 4.2%
I have been able to boost those yields even higher by recommending to my Total Income Alert readers to sell calls on this play. Going forward, I’ll continue to do so.
So it doesn’t matter if you are the type of investor that likes to just sit on a stock without keeping a close eye on it, or want a little more actionable advice, Intel is a definite buy. And you can follow my Total Income Alert to keep up on which calls to sell to do even better.
When I first recommended readers buy Intel, it was trading at just over $21 per share. Today, it is still a steal at $26.50. I recommend you get in if you haven’t yet. And if you have, buy more.
Best,
Jim Nelson
How To Win Big Profits When Others Fail was originally featured in the Penny Sleuth.
