Company name Cirrus Logic, Inc.
Stock ticker CRUS
Live stock price [stckqut]CRUS[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $41.94
Target stock price (averages with growth) $45.51
Target stock price (averages with no growth) $25.18
Target stock price (manual assumptions) $35.69

The following company description is from Google Finance: http://www.google.com/finance?q=crus

Cirrus Logic, Inc. is a United States-based company, which supplies high-precision analog and digital signal processing components for audio and energy markets. The Companys products include analog-to-digital converters (ADCs), digital-to-analog converters (DACs), codecs that integrate ADCs and DACs into a single integrated circuit (IC), digital interface ICs, Class D digital amplifier controllers and power stages and audio DSPs. Its products are used in consumer applications, including smartphones, tablet personal computers (PCs), audio/video receivers, portable media players, soundbars, complete home theater systems, set-top boxes, gaming devices, sound cards and digital televisions (TVs). The Company offers applications for products within professional markets include digital mixing consoles, multitrack digital recorders and effects processors. Its applications for products within automotive markets include amplifiers, satellite radio systems and multispeaker car audio systems.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock. It is very rare for a company to have this much green in my analysis. It is a good way to end the 2012 year especially since, at this writing, Cirrus is significantly undervalued in my opinion.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

 

I am very happy to announce that my book The Confident Investor is now available for sale in paperback or ebook format. You should be able to buy it wherever books are sold. There is also a 2 chapter preview available in PDF format in case your local bookstore doesn’t have the book on the shelf and you want to browse.


BN-TCI-cvr

Now that the book is published, this site will change slightly. I will still publish reviews of companies on a regular basis for all to read. I will also publish commentaries for all to read. However, I will now publish some information that simply doesn’t make sense unless you have read my book. In those situations, I am actually providing more free content for the people that have purchased my book.  As I explained in the book, content costs money in a book format while my site is basically free no matter how much content I put on it. Therefore, to reduce the page count of the book and keep the cost down, I am moving some valuable content to the site for the enjoyment of only the readers of the book. It is free to register to see this enhanced content if you own the book.

If you decided in January 2006 to invest $10,000 in Apple, you would have increased your profit an ADDITIONAL 10.8% by using the techniques taught in my book. That is an additional $10,100 in 6+ years to be added to your savings account! To achieve this amazing return, you would have invested in Apple using the techniques in my book rather than using a simple “Buy and Hold” strategy.

In the same 6+ year period, you would have INCREASED YOUR EARNINGS by 42% if you would have used the techniques of this book for an investment in Google!

Every hard worker that is saving for retirement or a college fund should read my book, The Confident Investor.

You work hard at your job and try to invest money for retirement. When you look at your investment returns, you don’t see your money growing very quickly. Many people have lost money in the stock market over the past couple years. My book teaches you how to find great companies and profitably invest in those companies.

The combination of technical analysis with data analysis and key financial metrics results in tools to buy stocks at the appropriate time in extremely well-run companies. The result is the Decennary Time Weighted Average (DTWA), Time Weighted Composite Average (TWCA) and the Confident Investor Rating (CIR).
This book is not a Get Rich Quick scheme. There is no fast and easy way to build wealth by doing ANYTHING legal. My book explains a proven system to identify great companies, purchase stock at a discount in those companies, and accelerate wealth-building over time.

 

In my book The Confident Investor I detail a possible trading example using 3 different methodologies.

  1. Traditional “Buy and Hold” strategy
  2. Traditional “Even incremental investment over time”
  3. My GOPM strategy – “Grow on Other People’s Money”

I chose the example around IBM [stckqut]ibm[/stckqut] because it is such a well-known brand even if it may not be the best of companies in which to invest. I felt that it was important to show that my technique works with most fair companies. It works even better on a good company.

I also specifically chose 2007 and 2008 as my example time period. I chose this example since many people still do not invest in stocks due to the plunge that happened in November 2008. This plunge wiped out considerable value in the stock market and persuaded too many people that investing in stocks is foolish. My example shows that if you stick with the “traditional” methods of incremental investing and buy-and-hold then you will be very susceptible to these market corrections. GOPM tends to reduce this exposure and even take advantage of it.

The tag line of this site and of my book is “Learn How to Invest With Confidence in a Turbulent Market” and there were few times in the last 15 years when the market was more turbulent that 2007 and 2008.  So I chose the worst of times to explain how my GOPM method can make it the best of times.

In the first scenario, an investor buys IBM stock and sits on it.  A traditional buy-and-hold technique.  He loses money in the crash and like too many people gives up on the stock market as a method to provide for his retirement.

In the second scenario, an investor invests $2,000 in IBM every 3 months. He ultimately takes a bath in the fall of 2008.

In the third scenario, an investor has read my book and uses GOPM – Grow on Other People’s Money. Obviously, the crash of 2008 affects him but he loses none of his capital and has acquired 39 shares of stock in IBM for only $7.22 per share or about 10% of the value of the stock at the time (after the crash, IBM stock had dropped to about $75).

I used a slight variation of my traditional technique for simplicity. Typically, I suggest that an investor invest the same dollar amount using GOPM techniques but in this case I varied the dollar and bought 100 shares of stock in each transaction. Had I used the same dollar amount, the return would have been slightly higher but the math would have been a bit more complicated to explain in this very first example of the technique.

If you are concerned about a major correction in the stock market wiping out your net worth, you really should read my book. You can read a sample of the book here and it includes Chapter 4 which is the chapter containing this IBM explanation.

If you are a registered reader of my book then you will be able to see the table below that shows the time of each GOPM trade and the profit or loss from that trade. It is FREE to register for anyone that has purchased my book.[s2If current_user_can(s2member_level1)]

  Invest Commission Total Profit Shares Free shares saved Cash
04/02/07 $9,521.00 $10.00 $9,531.00   100.00    
05/16/07 $10,587.00 $10.00 $10,577.00 $1,046.00 9.88 9 $93.17
06/19/07 $10,650.00 $10.00 $10,660.00   100.00    
06/19/07 $952.83 $0.00 $952.83   9.00    
07/30/07 $11,452.00 $10.00 $11,442.00 $782.00 100.00    
07/30/07 $1,030.68 $0.00 $1,030.68 $77.85 7.51 7 $58.21
08/28/07 $11,200.00 $10.00 $11,210.00   100.00    
08/28/07 $1,832.32 $0.00 $1,832.32   16.00    
09/17/07 $11,452.00 $10.00 $11,442.00 $232.00 100.00    
09/17/07 $1,832.32 $0.00 $1,832.32 $0.00 2.03 2 $2.96
12/20/07 $10,886.00 $10.00 $10,896.00   100    
12/20/07 $2,061.36 $0.00 $2,061.36   18    
12/31/08 $10,810.00 $10.00 $10,800.00 -$96.00 100    
12/31/08 $1,945.80 $0.00 $1,945.80 -$115.56     -$211.56
01/20/08 $10,498.00 $10.00 $10,508.00   100    
01/20/08 $1,945.80 $0.00 $1,945.80   18    
02/08/08 $10,327.00 $10.00 $10,317.00 -$191.00 100    
02/08/08 $1,858.86 $0.00 $1,858.86 -$86.94     -$277.94
02/12/08 $10,653.00 $10.00 $10,663.00   100    
02/12/08 $1,858.86 $0.00 $1,858.86   18    
03/17/08 $11,394.00 $10.00 $11,384.00 $721.00 100    
03/17/08 $2,050.92 $0.00 $2,050.92 $192.06 8.01 8 $1.54
04/15/08 $11,717.00 $10.00 $11,727.00   100    
04/15/08 $2,962.44 $0.00 $2,962.44   26    
04/29/08 $12,285.00 $10.00 $12,275.00 $343.00 100    
04/29/08 $3,194.10 $0.00 $3,194.10 $231.66 4.68 4 $83.26
05/13/08 $12,658.00 $10.00 $12,668.00   100    
05/13/08 $3,685.50 $0.00 $3,685.50   30    
05/20/08 $12,518.00 $10.00 $12,508.00 -$160.00 100    
05/20/08 $3,755.40 $0.00 $3,755.40 $69.90     -$90.10
07/15/08 $12,320.00 $10.00 $12,330.00   100    
07/15/08 $3,755.40 $0.00 $3,755.40   30    
08/11/08 $12,660.00 $10.00 $12,650.00 $320.00 $100.00    
08/11/08 $3,798.00 $0.00 $3,798.00 $42.60 2.86 2 $109.40
               
            32 -$231.06
              -$7.22

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One of the first lessons that I teach in my book, The Confident Investor, is that you need to have an Emergency Savings fund to tide you over when bad things happen to you and those you love.

Every investor should put 10% of your earnings into a savings account at the bank immediately, preferably before you even touch your wages. Most employers now offer automatic deposit of your check into as many bank accounts as you wish. Set up your direct deposit so that 10% of your earnings goes into a different account to that in which you normally keep your money. Do not touch that account to pay the bills unless calamity has beset you or your family. This is the cushion to keep you financially secure.

That savings account needs to build up to the equivalent of six months of your after-savings and charity income to help you in case life deals you a tough hand, such as:

  • If you lose your job.
  • If someone in your family is diagnosed with a medical condition.
  • If some catastrophe happens to you or someone you care about.

You will need those 6 months of income to give you a soft landing while you put your life back together.

If you have nothing saved right now, simple math tells you that it will take you 48 months to save up this cushion. The interest does not count here since the interest on a savings account will barely keep up with inflation.

Once you have accomplished that minimum goal, then you can begin to invest.

To calculate how long you need to generate this savings, let’s do a simple example. Assume that your after-tax income is $50,000 per year.  You will want to have 6 months or half that annual number in cash savings. In this example, that is $25,000. If you have no savings today, you will need to be diligent about building up that cash. It won’t be easy but nothing worthwhile is easy. If you save 10% of your after-tax income to that savings account then you will put $5,000 per year into that account.  It will take you 5 years of saving $5,000 per year to accumulate $25,000.

Your should only start investing money in the stock market after you have built up your emergency savings to a 6-month cushion. Once you have that cushion, you will be very comfortable in your life as you know that you can weather any major calamity that befalls you. You will be able to redirect that 10% savings to your investment fund after you have built up your Emergency Savings fund. That 10% will be the money that you will use to invest in the stock market using the tools that you learn in my book, The Confident Investor.

If you already have some money in savings, you will hit the goal of 6 months even faster. If you have purchased my book, The Confident Investor and registered on this site you can download a worksheet that will help you with this calculation. I am sorry but this worksheet is only available for registered readers of my book (it is free to register once you have the book).
[s2If current_user_can(s2member_level1)]

The worksheet is available here.

Note to readers of book.  There is an error in the book that missed editorial review.  It takes 60 months to save for a 6-month Emergency Fund if you have nothing set aside and you are only saving 10% of your income. In the book, I erroneously put 48 months. I apologize for the error. This error will be corrected in the 2nd edition of the book.
[/s2If]

 

Company name Checkpoint Systems, Inc.
Stock ticker CKP
Live stock price [stckqut]CKP[/stckqut]
Confident Investor Rating Poor

The following company description is from Google Finance: http://www.google.com/finance?q=ckp

Checkpoint Systems, Inc. is a global manufacturer and provider of technology-driven end-to-end loss prevention, merchandising and labeling solutions to the retail and apparel industry. The Company engaged in shrink management, merchandise visibility and apparel labeling solutions. The Company’s solutions are built upon diverse shrink management offerings, a portfolio of apparel labeling solutions, radio frequency identification (RFID) applications, high-theft solutions and its Web based Check-Net data management platform. It operates through three segments: Shrink Management Solutions, which includes the operations of the s EAS labels and library business; Apparel Labeling Solutions, which formerly Check-Net, includes tag and label solutions sold to apparel manufacturers and retailers and Retail Merchandising Solutions segment, which includes hand-held label applicators and tags, promotional displays, and queuing systems. In May 16, 2011, it acquired Shore to Shore, Inc.
Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. It is not possible to confidently invest in a company that is not currently profitable. It is unfortunate that their tag line is helping retailers grow profitably when they are not able to be profitable.