Kellogg Company (K)

Cereal-maker Kellogg has created a wide array of popular breakfast foods over the years. Despite their powerful brand, they are still remain behind General Mills and Kraft Foods.

Using a discounted cash flow model with a WACC of 10.4%, I find that the company is currently fairly priced by the market. On a last note: while I believe that its cost cutting measures and favorable margins are attractive, I find that the company is not doing enough to advertise and increase market share.

Google (GOOG): A Potential Modern Tech Empire

While analysts and students in business classes online have otherwise been keeping an eye on Google+, I do not believe that the market has come anywhere close to fully appreciating its value. Having recently acquired Motorola Mobility and Zagat, I see Google strengthening its position as a technology titan when it integrates its features into its social networking.

For clarification: By nature, I view myself more as an aspiring entrepreneur than a stock market investor. Accordingly, my valuation for Google has a special emphasis on "business strategy and direction" than what the typical Wall Street analyst might have. To be frank, valuing synergies in a potential business competition is more of an art than a science and can be susceptible to arbitrariness. At the same time, I do not think it would be fair to value Google without considering the upside it has for its upcoming business combination. With leading positions in the smartphone and search engine, I believe that there is tremendous amount of potential for value creation when Google+ becomes available to the general public.

To inquire about my valuation and forecasts on Google, email me at david.z.gould@gmail.com.

Bullish on Philip Morris International (PM)

Here is a stock that is uniquely positioned to attract the international market. PMI was spun off from the Altria Group in March 2008 to avoid the negative effects of domestic litigation. The decision has thus far proved successful, as the stock has appreciated by more than 38% while the S&P has been down more than 12% over the same time period. Emerging markets exposure, cost savings, dividend increases, and continued share repurchases will complement increases in market share.

Unlocking Value at The New York Times (NYT)

A while back activist investor and legendary hedge fund Harbinger Capital agitated for change at The New York Times. The campaign ultimately failed and Harbinger lost much of its AUM.

I have been conducting some research in NYT and believe that it is undervalued based on its long-term growth in online media. While I am doubtful that an activist will get involved in the stock again, I think that it would end up being a successful campaign if one were ever launched. A few key decisions could go a long way to unlocking shareholder value: cutting costs, spinning off assets, and moving to online media.

McDonald's (MCD): A Growth Stock with Emerging Markets Exposure

With the US economy stagnating, I have been researching multinationals who could sustainably grow abroad like they have domestically. McDonald's meets the mold.

The company offers a 2.83% dividend yield and is not overvalued given its size. It has low volatility, which makes it a safe investment in what could potentially be a double dip. I expect sales to increase roughly by 12.7% in 2011 and 5% more the following year.

What are your thoughts on this growth stock? Email me your thoughts at david.z.gould@gmail.com. It would be interesting to post others thoughts in a subsequent piece.

The Walt Disney Company (DIS): A Powerful Brand with Tremendous International Appeal

Sifting through Disney's SEC filings and analyst reports, I have come to the conclusion that Wall Street has not even begun to appreciate the amount of untapped potential Mickey Mouse has abroad. While management has taken steps in the right direction--via Disneyland Paris, Hong Kong Disneyland Resort, Tokyo Disney, etc.--it is just hard to not "wish upon a star" for more.

If this is a company that you are interested in, please send me an email.

Breakup at McGraw-Hill

Yesterday, McGraw-Hill gave notice that it plans on breaking up into two separate companies. One will be an education business, another will be a markets business. I have done some financial modeling on what these separate companies would look like in order to find out whether shareholder value was created through the activists. I believe that this was the right move for the 123-year old company and that splitting into four companies, re: Jana's requests, is not entirely necessary.

For any interests, do not hesitate to send me an email.

Union Pacific (UNP)

Union Pacific is the leading railroad company in the United States spanning 32K miles. Built up through consolidation, this relic of the Gilded Age is still dominating the market. I am bullish on top-line growth: 16% y-o-y in 2011 and 13% in  2012, according to my model. I also expect the rate of operating expense growth to decline from 11% in 2011 to 9.4% in 2012.

I believe that Union Pacific has a stellar executive management focused on value creation. As the economy picks up, I also expect that railroads will experience tremendous gains--especially those that are prepared to acquire competition.

To inquire about research or ideas, email me at david.z.gould@gmail.com.

Mattel, Inc.

Over the past few days, I have been studying Mattel, maker of Barbie toys. This iconic mid-cap company could be the scene of an activist play in the coming year based on its low price, healthy free cash flow, operating performance, and several other factors. MAT offers high dividend yields above 3.5% and favorable asymmetric risk. From what I have gathered thus far, MAT is a great company at a cheap price. I have estimated revenues to rise around 7% from 2010 to 2011 and around 4% from 2011 to 2012. My research findings may change in the coming time.

If you are interested in receiving a report on Mattel, contact me.

SEC Allows Shareholder Proposals for Proxy Access

While Rule 14a-11, a contentious Dodd-Frank reform granting limited proxy access, was defeated by litigation, its sister--Rule 14a-8--is very much alive. Rule 14a-8 effectively gives shareholders the right to submit a proposal for proxy access to be voted on at company annual meetings. Says SEC Chairman Schapiro,

"Last year, when the Commission adopted Rule 14a-11, it also adopted amendments to Rule 14a-8, the shareholder proposal rule. Under those amendments, eligible shareholders are permitted to require companies to include shareholder proposals regarding proxy access procedures in company proxy materials. Through this procedure, shareholders and companies have the opportunity to establish proxy access standards on a company-by-company basis -- rather than a specified standard like that contained in Rule 14a-11.

Although the amendments to Rule 14a-8 were not challenged in the litigation, the Commission voluntarily stayed the effective date of those amendments at the time it stayed the effective date of Rule 14a-11. The Commission's stay order provides that the stay of the effective date of the amendments to Rule 14a-8 and related rules will expire without further Commission action when the court's decision is finalized, which is expected to be September 13. Accordingly, absent further Commission action, Rule 14a-8 will go into effect and a notice of the effective date of the amendments will be published."

By giving shareholders the right to vote on proxy access instead of a one-size-fits-all model, this increases "choice" while allowing for efficient reforms in corporate governance.

For reference, The Harvard Law School on Corporate Governance wrote a piece on this.