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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 489  
Subject: Re: Insider Trading and Upgrades (RCL) Date: 8/29/2011 1:06 PM
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Ray,

Now for the better news, RCL was upgraded today by analysts and the CEO also decided to buy roughly 66,000 shares. See link:
http://www.gurufocus.com/news/143723/royal-caribbean-cruises...


I'm glad to know that Mr. Fain and I are on the smae page with regard to this company. I increased my position from 3,000 shares to 4,000 shares last week, at about the same price point, to rebalance my portfolio.

As opposed to analyst upgrades and downgrades, I do like seeing insider buying activity so I know that the executives are also bullish on the company. As you can see, there has been a LOT of insider buying recently. Despite the fact that the stock continued to fall, insider buying continued all the way down. I feel more comfortable supporting this stock knowing that the head honchos over there have confidence that the stock and company will do better in the future. It also doesn't hurt that the stock is just about at it's 52 week low which doesn't seem logical.

This is a stock that invariably sees overreaction to economic bad news, yet the company's ships continue to sail very full even through the worst of times -- perhaps because those who might have gone to resorts opt for a cruise instead, the cruise being less expensive.

This stock clearly has a lot of upside potential, but be cautious. There's nothing to stop it from going back to its 2009 bottom -- which was about $5.70 per share IIRC -- if another panic sets in. The goal is to buy enough so you can sell half of your position after it doubles, thus recouping your original investment, and still have a reasonable position. OTOH, you need to some "dry powder" (cash on hand) so you can "back up the truck" if it goes down before it goes up.

I will be the first to admit that my fundamental analysis is very basic at this point (I started investing in May...still learning day by day). I remain confident in this company but if someone could provide a little bit of advanced financial analysis on this company, I'd really appreciate it.

One of the most useful books that I have found on how to invest in stocks is Beating the Street by Peter Lynch, who was the "top dog" of Fidelity's Magellan Fund in the late 1970's and early 1980's. In the book, he describes exactly how he put the Magellan Fund at the top of the mutual fund charts. All of the techniques are quite easy to use even as a layman.

One of the most useful ways to evaluate a company is from a consumer's viewpoint, and Peter Lynch describes doing this in his book. In the case of Royal Caribbean Cruises Ltd. (NYSE: RCL), means taking a cruise (yeah, investment research is a tough job, but somebody has to do it!) so you can see its product and service first-hand. Whenever a company goes into a tailspin, it shows up in its products and services long before it shows up on the quarterly financial reporsts. Fortunately, this company offers a nice "shareholder benefit" in the form of shipboard credit on our cruises (http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N... for official offer and http://www.rclinvestor.com/phoenix.zhtml?c=103045&p=irol... for FAQ) that makes this research a bit easier on the wallet.

If you are new to investing, I also recommend taking a look at Darded Restaurants (NYSE: DRI; http://www.darden.com for investor site). This company is a "cash cow" that's still growing at a decent pace while buying back its own shares and paying a very strong (more than 3% yield) dividend. The current price is more than triple what I paid for my first shares about a decade ago, and I expect that it will continue to be a strong performer. You'll probably find some of this company's restaurants near enough to home so you can check them out yourself, too.

Norm.
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