Growth Stock Radar: Decline in Airlines Sector, SAVE | JBLU

Airlines had a sharp decline today. I have been looking at a few names in the sector: Spirit Airlines (SAVE), JetBlue Airways (JBLU) and Southwest Airlines (LUV). Today teaches us again why we shouldn't be chasing a good stock while it is going up. It is down days like today that keep happening once in a while and present a good discount to buy our favorite companies. Since JBLU announced a decent quarter the stock ran up and I couldn't pull the trigger. Once it was already up, I didn't. With today's decline it is back to pre-earnings level. This is an example of how the market behaves irrationally sometimes, presenting opportunities for us. 

Consider Spirit Airlines (SAVE) for a moment. This has been a terrific company and stock. The chart below shows how it has been growing its revenues and earnings consistently year over year. This is the reason why the expectations became too high from the stock and it fell sharply on even a slight concern in the recent conference call. Today it fell another 6.68%. In December 2014, this stock was trading with a PE of 23x. That was still a PEG of under 1, as analysts are expecting a 22% growth rate over the next 3-5 years. Now the stock trades at a PE of 17.8x. Mr. Market is again presenting us with a great opportunity to own a growth stock at a reasonable price (GARP). I might pull the trigger over the next few days. It is on my radar.

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5 Best Free Online Resources for Researching Stocks

There are a bunch of online paid services that give you access to historical financial data, charts and stock analysis. I have often found that buying those services is probably not the best use of our money, which should rather be put in the market. Especially for the little guys like me who only invest less than $2k at once. In this post, I’m going to discuss the best free options for researching stocks.

1. Google Finance: This is the best service for quickly looking at charts, earnings calendar and even a bit of historical financial data. I think the Related Companies section is awesome for figuring out the competitor firms in the space. But the best feature has to be Portfolio/Watchlist. Here you can add your transaction details and really keep track of the whole portfolio. This even supports multiple geographies and google takes care of the conversion for you to give a unified look if you want. Additionally, I use it to maintain multiple sector-wise/strategy-wise watchlists that I can glance quickly at the end of the day to get and idea of where the marker moved. Google Finance is easily the tool that I use the most.
2. Guru Focus: There is a paid version, however the free version does a decent job for most of my needs. Once, I want to dig deep into the financials of a company I switch over to Guru Focus. It has a 10Y summary of financial statements that I find the most useful. I would often look into the Dividend section for my Value buys as well. Along with the yield and dividend growth, it also tells me about the buy-back rate which is great. Guru Focus has overall the most comprehensive list of financial ratios available for free. Peter Lynch chart is also free!
3. Trading View: This is probably the least famous options in this list. This is mainly used for advanced charting. I use it less for generating buying/selling signals (like the traders do), but rather look at overbough/oversold levels for the stocks and basic support/resistance analysis. I used to be a hardcore technical analyst, but I have since learned to use the power of combining technical analysis for buying fundamentally solid companies.
4. Seeking Alpha: It is foolish to buy stocks on somebody else’s recommendations. That said, reading a lot about stocks that are in your radar never hurts. There are multiple viewpoints being discussed. If you have a viewpoint, you might get some validation or a reason to challenge yourself on your conviction. It is important to keep the thinking process going and developing and I find SeekingAlpha to be an excellent platform for that, at least better than following news articles.
5. FinViz: FinViz has the best free stock screener out there. Period.

There. You have it. 5 best online (free) resources to research on stocks. There are some strong contenders who couldn’t make it to the list, but worthy of a mention.

Yahoo Finance | MSN Finance | Reuters

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Best Investment options for 401k

Putting money in a 401k has many benefits, tax benefits and employer contribution being a few of them. Often the employer 401k plans are limited in investment options. A few employers do allow you to buy individual stocks. However, often you are left with a pre-selected set of 30-35 Mutual funds to choose from. Dividing money equally month them can be the easiest (and worst) option. Often there are overlaps across funds, and such a strategy can lead to abnormal allocation. You could end up with a portfolio, too heavy on a few sectors or stocks. Further, typical mutual funds have an expense ratio in excess of 1%, and some even up to 2.5%. That means, they take this cut out of your money every year, irrespective of whether you gain or loose money that year. This puts a lot of burden on your retirement portfolio in the long run.

John C. Bogle was the pioneer of Index Funds. Index funds have a low expense ratio, typically under 0.20%. Nowadays employer 401k plans have an a few index funds as an option. The best and simplest thing to do is to put your retirement money into these index fund options.

Why not buy stocks on 401k account?

There are two main reasons: 

• Let’s say you are making contributions to your 401k account, twice each month. The typical maximum you will be contributing (including your employer contribution) would be $1000. This means if you buy stocks and pay commissions of $8 (let’s say), you will be paying 0.80% on commission alone for each such stock purchases. This is a bad choice to spend your retirement money.
• Investing in stocks is risky. 80% of the Fund managers, who spend hours and hours on researching stocks still can’t beat the stock market. You, as an individual investor, have odds against you when it comes to investing in the stock market. When you buy index funds, you already beat 80% of the people in the market!

I’m not discouraging you researching and investing in individual stocks. What I’m saying is that the best way to invest is to first maximize your contributions to retirement accounts, invest them in low-cost index funds on a regular basis . Then you are free to research and invest in individual stocks in your investment account. This strategy ensures that you are going to at least have a portfolio invested in the broader market and for a longer term, giving you market performance. While the money in your retirement account funds are still subject to market risk, you are investing them for the long term and in a diversified portfolio. You can use your investment portfolio for seeking alpha, if you are very interested in playing the market. 

If you have a 401k account with Fidelity, you can choose to invest in their Spartan Funds.

Spartan® 500 Index Fund - Institutional Class (FXSIX)

Spartan® Extended Market Index Fund - Fidelity Advantage Class (FSEVX)

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Growth Stock Buy: Twitter (NYSE: TWTR)

I recently wrote about how Twitter is one of the growth stocks in my radar right now. Last week I executed the trade on Twitter, buying 42 shares @ $38/share on 05/13/2015. The dip in the stock price presented a sweet opportunity for this strong brand with growing users. There are clearly challenges that the company is facing. Those challenges are, however, addressable. To figure out how Twitter can monetize their millions of user is something that can take time. I am happy to wait and I'm happy to initiate a position when the rest of the market is getting bearish.

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Growth Stock Radar: Twitter (NYSE: TWTR)

Twitter announced its 1Q15 results on 28th April, after market close. At least it was supposed to be after market close. What actually happened was a result leak on Twitter (!) while the market was still open. Revenue came in at USD 436M vs guidance of USD440-450M. This led to a market wide panic with stock ending 18% lower on the day. The same panic continued the next day as stock fell another 9%. This presents a classic opportunity to buy into the stock. Results were only marginally lower than guided. In fact, there was an EPS beat. Agreed that Twitter needs to figure out how to monetize its users. I believe it will happen over time. With 300M monthly active users (MAU), and a strong brand recognition and unique social offering, twitter isn't going anywhere any time soon.

In fact, if the stock plummets further from its current market cap of just under USD 26B, it would become a takeover candidate. We still have a lot of big tech firms trying to get some success with Social and Twitter might be a perfect solution for them. Apple, Microsoft, Amazon and even Google: any of them could benefit from acquiring Twitter. Facebook acquired WhatsApp for USD 19B. I believe Twitter is a much stronger brand and offers a unique value proposition for its users. While WhatsApp already had a lot of competition from WeChat and Line messenger apps, along with old-school messenger apps, Twitter remains a clear leader in micro-blogging space. I would argue that even buying Twitter at USD 30B would be a good deal for the big techs.

I believe it is time to buy into this market panic. There was no reason for 25+% drop on a slight revenue miss, while it was still a 70+% YoY revenue growth in 1Q15. This is a wonderful opportunity to buy into this growth name and I plan to initiate a position in Twitter (NYSE:TWTR) over the next few days.

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Structure of TheZenFund.com

To give a structure to this blog, I'm going to post in one of the following categories. This will give my readers an indication of what to expect from a post.

1. Growth Stock Radar: I'll be introducing or discussing a growth stock from my watchlist and what makes it a candidate for my portfolio.
2. Growth Stock Buy: Once I have transacted on a growth stock from my watchlist, I'll write a small post related to my entered position.
3. Value Stock Radar: I'll be introducing or discussing a value stock from my watchlist and what makes it a candidate for my portfolio.
4. Value Stock Buy: Once I have transacted on a value stock from my watchlist, I'll write a small post related to my entered position.
5. Growth Stock Sell: when I sell a growth stock holding.
6. Value Stock Sell: when I sell a value stock holding.
7. Monthly Investment Summary: I'll summarize the new positions entered or positions exited, a summary of my portfolio and report the dividends received.
8. Monthly Income/Expenses: I'll go through my list of budgeted and actual expenses each month.

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