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Tickers in this Article: F, BA, GOOG, NOVL, AAPL, NFLX, BBI
It pays as an investor or an advisor to screen stocks, and to keep certain issues on your radar screen. The idea being, that when the time is right, you'll be ready to pull the trigger. To that end, as part two of my running three part series, I will review some of the companies I'm looking at, as well as what I perceive to be their prospects going forward.

Ford (F): I first talked about Ford's merits in a June 26th article entitled "More Fallen Angels." In that piece I outlined the macroeconomic concerns I had, namely rising interest rates and decreased consumer spending, as well as the company-specific issues Ford must address in order to regain shareholder confidence.

Since that time, Ford's chief executive, Bill Ford (Henry's great grandson) stepped down from his post. The position was summarily filled by a gentleman by the name of Alan Mulally, the former chief exec of Boeing's (BA) commercial airplanes division. The move was seen in a positive light among Wall Street analysts. The general perception on the street is that Mulally will offer a fresh perspective on the issues facing Ford.

At Boeing, Mulally was credited with revitalizing the company's commercial aircraft business, and helping it compete with Airbus. I can't help but think that Mulally has come into the position a motivated man, and that we will probably see more cost cutting measures enacted in the months ahead.

But is this enough for me to say that now is the time to pull the trigger and buy the stock?

Not at all. My gut tells me that one should pay attention heading into the November/December time frame as I suspect that there will be a bunch of tax-loss selling and that the shares will move lower. If this happens, and the company continues to make progress in its cost cutting efforts, and looks to remain solvent, I might consider jumping in.

Another potential catalyst prior to year end: Mulally announces a partnership with another major automaker that will drive revenue and margins. But absent either one of those two events transpiring, the risk, at least in my mind, continues to outweigh the potential rewards.

Google (GOOG): In spite of the well-known search engine's roughly 30% rise in its share price this year, and the fact that the company trades at a lofty 11 times cash, 8.7 times book value, and a whopping 30 times expected 2007 estimates, the stock remains a favorite among both retail and institutional investors.

Now to be clear, I like the company. And I think its chief executive, Eric Schmidt, is a genius who has a grasp on technology that most Wall Street analysts can't even comprehend (Something I experienced personally, having spoken with him in the past when he headed up Novell (NOVL)). But with that in mind, I just can't help but think that this stock is a bubble that will eventually burst.

Just take a look at the insider selling. Over the past six months alone, execs have unloaded more then 7.2 million shares (mostly option-related). And although I can't blame these folks for taking some money off the table, I would suggest that their selling may simply be a harbinger of things to come. I mean why wouldn't these folks exercise their options but continue to hold the stock if they really thought there was some upside? Or at least hold them until after year's end so as to delay any tax owed! In my mind, their actions speak volumes.

Currently, Wall Street is betting that the company will grow its earnings per share by more then 30% in the coming year. But is this likely? There have already been reports that its share of the international internet search market is declining. And while Schmidt's recent acceptance to Apple's (AAPL) board of directors is a good thing, and may be an indicator that we will see some collaboration between the two companies, I think that analysts are making more out of it than it probably is worth.

In short, I don't think that Google is worth the risk. While I like its business model, I just can't figure out a proper way to value them, and I definitely don't like the fact that I think the shares are trading on emotion. In short, I would argue that the stock has more downside then upside from current levels.

(NFLX): Make no mistake about it, Netflix is the most formidable challenge to Blockbuster's (BBI) survival out there! These guys have an awesome business model. By nixing the bricks and mortar store format, and heavily advertising its services, I think it has Blockbuster on the ropes big time.

For evidence, just look at what Blockbuster is doing. It recently came out with its own online rental business. It is also offering coupons like no tomorrow in an effort to win back market share. But I think it is just too late. Netflix appears to be in the catbird seat and I just don't see how anyone is going to knock them out of it for the foreseeable future.

Wall Street figures the company will earn 53 cents a share in 2006 and 82 cents a share in 2007. That implies a growth rate of about 55%. If these earnings come to fruition, which I think they will, I think the shares, at $21, are a bargain. Incidentally, because I am more of a value player, I also like the fact that the company trades at just above 4 times cash, and has essentially no long-term debt.

So where do I think the stock can go from here? Assuming the company hits its earnings targets, I can't help but think that the shares are worth $27 to $30 a share over the next year.

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