Part of my vision for this blog is to encourage myself to take more risks with the stock market and investing. Unfortunately I didn’t listen to my intuition when I should have during the recent stock market price fluctuation.
I’ve been tracking Amazon (AMZN) trying to decide if it is a stock that I want to invest in; however, I was hesitant because it is such a large cap stock that I didn’t think it had the same potential for immediate returns as some of the smaller sized companies.
However, I remember looking at the price when it was right around $185 (I have it tracking on the blog sidebar) and thinking I should buy some – but then life got in the way and I never made the buy order. Now it may be too late since it closed the highest it’s been all year this past Friday – $240.
If I had bought Amazon at its low of $177 (August 22nd) and sold it this Monday, my return on investment (ROI) would have been 35% (in less than a month).
Now though, Amazon (AMZN) is at its highest price all year and it is more of a gamble (less likely) that it would continue to rise like it has in the past 3 weeks. Typically buying a stock at its 52 week high is not ideal.
So, where does that leave me?
Looking for a stock to buy.
What Stock Should I Buy?
Research in Motion (RIMM) is near its 52 week low price after dropping 19% on Friday. Nineteen percent is a huge drop in one day and the stock could likely bounce back at least a few points on Monday. However, it worries me – what did all those people (see the high volume bar on Friday’s trading graph?) know to make them sell?
RIMM’s 52 week price range is $21 to $70 with Friday’s price at closing $24. If I believed RIMM had good fundamentals and management team, now would be a great time to buy. But RIMM’s success was based upon the Blackberry and no one I know right now is using a Blackberry. Where a
Crackberry Blackberry used to be the phone to have, it doesn’t look like Blackberry has kept up in this new touch screen market.
So while the numbers may make this stock look appealing – when I add my real world observations into the decision – it doesn’t look as rosy.
I’m Buying Target (TGT)
- While the price is not at the 52 week low, it is closer to the low than the high – indicating there is room for the stock price to grow.
- TGT pays a dividend which means if I bought 20 shares, I will receive $6 each quarter ($24/year) regardless of the stock price. That works out to be a 2.3% guaranteed rate of return. (Better than interest from a savings account right now.)
- We are headed into Christmas shopping season and with a down economy, discount stores like Target and Walmart are likely to get more of the consumer dollars. I anticipate this will result in higher stock price in the next 3 months.
- I personally like to shop at Target. I think the quality of their items is slightly better than Walmart, the prices are good, and the home decor items are really cute and affordable. Plus their 75% off clearance can’t be beat!
With those points in mind, I went ahead and set a buy order that will execute tomorrow.
There are quite a few terms in this post that I am curious if they are new to you or old hat.
Would having a definition post with basic meaning of dividend, price per earnings, types of buy or sell orders, small cap versus large cap, etc. be useful to you?