4 YEAR HIGH

Consumer Conifidence hit a 4 year high in March. Ignoring higher gas prices and instablility in Iraq, Consumer optimism focused on the increase in US jobs and
overall improvement in the US business climate.

GOOGLE : MORE TO SELL

Google hits the S&P index on March 31. The internet search company is selling 5.3m shares of Class A stock to meet the extra demand created by Google's listing to the S& P 500 index. This is Google's 3rd offering and according to the press release
Proceeds from the offering will be used for general corporate purposes, including working capital and capital expenditures, and possible acquisitions of complementary businesses, technologies or other assets. Google will replace Burlington Resources Inc. in the closely watched index tomorrow. Burlington Resources Inc., a major oil producer based in Houston, is being acquired by ConocoPhillips Inc.
The sale is a move that would take Google reserves of cash and marketable securities to more than $10bn.

WAL-MART WORLD

The world discovers the value of the World’s #1 retail company. Although the US contributes 80% of Walmartsales, WMT increased its international business 18% last year with international profits at $3 billion.
Operating in 44 countries, with 2,276 stores outside of the U.S., (3700 in the US) WMT reported $56.3 billion in overseas sales for 2005. WMT is not only building stores around the world, but distribution centers to receive and process store goods. These centers are 10 times the local stores. China has several distribution centers to supply the countries 56 stores and. Wal-Martplans to hire 150,000 people in China over the next five years, to accommodate it’s plans for major store expansion. WMT power lies not only in its product distribution, but in its influence over employees and it’s markets. Retail Forward, Inc. has predicted that Wal-Martwill top $500 billion by 2010. That will translate into more power and more countries.
Some Facts on WMT according to MSN Money:
--Revenue in year ended Jan. 31: $312.43 billion, making it the world's largest retailer
--Profit: $11.23 billion.
_ More than 5,700 stores, including Wal-Mart and Sam's Club warehouses.
_ About 1.7 million employees, whom the company calls "associates."
_ Headquarters: Bentonville, Ark.
_ History: The first Wal-MartDiscount City opened in 1962, although founder Sam M. Walton had operated variety stores going back to 1945 in Arkansas. The first Sam's Club opened in 1984, and the first Super center, combining groceries and merchandise, opened in 1988. Since 1992, the company has ventured overseas, including Mexico, Canada, Argentina, Brazil, Germany and the United Kingdom.

Legacy Airlines Are Ready For Take-Off - Forbes.com

Legacy Airlines Are Ready For Take-Off - Forbes.com

Forbes reports that Goldman Sachs Analyst, Glenn Engel, has bumped his earnings estimates for several airlines. The article is a bit twisted. It starts with a headline about legacy carriers, follows with a report of stronger than expected earnings for AMR , CAL, LCC and NWAC but then goes on to suggest that domestic revenues is where the action is.

I strongly disagree with the point about domestic prospects relative to international prospects. The action in today's market is a direct result of extremely strong international trade and therefore growth in international traffic. It is the re-deployment of assets to international venues that is dragging the domestic market along for the ride. Carriers such as DAL have cut domestic routes to add to international routes. Company after company, including Siemens and Dell have recently announced expansions in India or China. The airline traffic growth action is in international flights.

Sure, the move of assets to international routes does add to the competition. The Continental growth in transatlantic revenues was in the area of 22% last quarter! After three relatively slow years, orders for new planes set a record last year. These planes will be delivered in 2008. A much larger portion than normal will be delivered to the Asian market.

Engel raised his 2006 and 2007 estimates for CAL, to $1.70 and $3.55 respectively. The 2006 bump was 21%. In my opinion both estimates will prove to be low; it is simply hard to appreciate the difference in revenues from planes with a few empty seats to planes with no empty seats. The price of all seats is more if all seats are projected to be full. Another way of saying this is that in the short to intermediate term, the fare set for any particular flight has absolutely nothing to do with the cost of providing the service but has 100% to do with the demand for the service.

So far, in the month of March, CAL, is operating at an unprecedented load of over 80%! To achieve a load factor of 80%, an airline has to fly a large majority of its flights with zero empty seats. Having operated an ocean front beach rental business for 20 years, I know what happens to prices when occupancy is very tight. Unfortunately for the internet shopper, the give-aways disappear. For the past 18 months or so, CAL, has joined the other carriers in regular fare increases. Even after 19 price increases, the seats are full. Expect fare hikes to continue. It may sound Machiavellian but if all seats continue to be full, then the airline is not charging enough.

The Standard and Poors estimate set last December tops the Engel estimate by 14 cents in 2006. Furthermore, S&P reports that during the "good times" in the airline business, airlines can easily trade at 21 times projected earnings. Using Engel's lower numbers, 21 times gives one price targets on CAL, of $35.70 in 2006 and $74 in 2007! S&P has a 2006 price target of $37.

This morning, Express Jet showed up at the top of the list on our Stock of the Week value screen. The stock was a big winner today. However, I asked Sandra to pull the recommendation because I believe the action is truly in the international markets. Domestic revenues will rise but frequent flyers generally want to accumulate their miles where they can be used internationally. Express Jetis too dependent on the good graces of CAL, and other international players for my taste.

My regular readers already know that I am a fan of Ken Fisher. I used Ken Fisherphilosophy when I rode the Nextel bucking bronco from $3 to $25 dollars and I am using it now on this fantastic CAL, "Ken FisherBucking Bronco" ride. Ken says that if you can find an economic situation where you have the minority opinion and where you know you are right, then you can make a pile of money. It is with some sadness that I witness the perception starting to turn.

Just a short time ago, the "talking heads" were willing to boldly state that one should never own an airline stock. Recently the boldness has started to fade. For example, Pat Dorsey with Morningstar, recently stated that airline stocks should not be part of your long term holdings, he would not touch the stocks but he believes the cyclical move could last awhile. With my first grand daughter due today and with the pressures generated when one is closing and selling a business, I have missed most of the recent Mad Money shows. Therefore, I do not know if Jim Cramer has capitulated yet. Never-the-less, it is clear that attitudes are starting to change. The press about airlines is still very negative with talk about everything from fuel prices to bird flu, but more and more one sees articles about better earnings forecast. Even the positive articles about improved earnings tend to "blame" the earnings on gimmicks such as charging more for the emergency exit seats.

The good news is that these stocks, AMR and CAL, in particular, still have a long way to go. Institutions still own about 95% of all shares outstanding and there are substantial short positions in each stock. There are imperfect arbitrages involved in some of short positions. I have not studied the exact nature of this but from the SEC statements one can see that there are convertible securities involved. The projected dilution from conversions are offset by reductions in interest costs. It appears that some of the short positions are naked or at least skimpily dressed with option hedges.

I plan to invest aggressively in these stocks until the public ownership rises to 25% or more. This will require a lot of positive press. It is hard for many investors to average up. The almost Pavlovic response of most investors is to want to sell when they buy a stock for $7 and it trades in a couple of years at $28, most investors would not even make it to $28. My friends and family accounts added shares last September at $9 odd, last October at $11 odd, at $17 odd in November or December and at $21 and $23 odd in January and February. The most recent purchase were made today. We expect to be adding shares next year at $50 or more. The shares purchased at $7 are wonderful and we can only wish we had had the money to buy more but the thing to do now is to buy as many as is reasonable at today's prices.

This morning, we added to our Yahoo position (we believe Yahoo , Google, EBAY and MSFT. are going to virtually take over the telephone business). So, while we are not a one trick pony, we do like CAL. John Maynard Keynes once said that perfect diversification is equal to zero profit. We are loaded with CAL, and AMR and are enjoying a wonderful bucking bronco ride. We are holding on for dear life and enjoying every moment.

STILL BUYING CAL AND AMR!

Even after 700% and 1100% runs in CAL and AMR, it still makes sense to average up! Our profits in these stocks were anticipated but the numbers still blow us away. The shares we added just 5 months ago have zoomed from $11.35 to about $28. Gains of about 150% in five months not counting the fact that many of our accounts trade on margin! Some accounts are up 500% in 5 months! Life is good! God is good!

A few readers have asked if we are still buyers and the answer is YES!

Take a look at the CAL web site (from the link above) and you will see that the month to date consolidated load though March 22 is 80.5%. This number includes the "back haul flights"! The last time planes were flying with so many seats full was in 1946! New capacity is insufficient to meet new demand at current prices!

After adjusting for any possible splits, it is plausible to believe CAL and AMR are on the way to $170 per share in less than three years. One of the reasons the gains can be so large is because the "perception to reality" spread is "inverted" but it is gradually starting to roll over.

I have recently corresponded regularly with the travel columnist in a major newspaper. He, like many others, is convinced that the airline business is a "bad business". This bias leads him to ignore or to even mis-state the facts. He makes statements such as, "Even the management at CAL does not expect to make a profit in 2006". My reading is that management does not expect to make a profit the first quarter, but then the first quarter is always a weak quarter. CAL is followed by 8 analyst who have an average 2006 earnings projection of $1.84. Earnings announcements to be made around mid April will cause these analyst to increase their forecast.

Having written many times before about the exponential increases in revenues that are resulting from the multiplication of higher fares times more seats sold, I will not go into the details here. However, the following list is all one needs to know about the current environment for investing in CAL or AMR:

1. Annual operating costs have been cut by a billion dollars or more at each of these airlines in the past few years.

2. The "New Global Economy" has dramatically increased the demand for international travel.

3. Carriers have made 20 or more price adjustments in the past year and fares will continue to climb as new planes are not being built as fast as the demand growth.

Here are a few of the supplemental details you might feel the "need to know".

1. "Low cost carriers" such as Southwest Airlines, do not own the rights to fly to international locations in competition with CAL or AMR.

2. Legacy carriers have very high fixed costs but after revenues exceeds costs almost all of incremental revenues flow to the bottom line.

3. In addition to the very high operating leverage, these airlines have very high financial leverage. Which means there is dramatic room for additional cost reductions as debt is paid down.

4. Cash flows are growing rapidly which will allow refinancing or payoff of the higher cost dept.

5. Many low fare coach seats are being replaced with high fare business and first class seats. The demand from the business traveler is for the wider seats and the decrease in supply of coach seats is driving those fares higher.

6. Transatlantic growth of 22% is pulling planes away from domestic routes. Total industry capacity is flat to down while total demand is up.

7. The older fuel hog planes are being retired or converted to freight planes (have you seen the FedEx traffic growth?). Further reducing seats available.

8. CAL and AMR have seen increasing freight business. New computer tracking of packages has helped. CAL has renewed and added significant international mail hauling business.

9. Bankrupted carriers such as DAL and NWAC are scaling back capacity.

10. Buy these bucking broncos and you will likely make serious money over the next three years.

Google Base Search Box Within Main Google Results

When Google Base was first announced, I said it was going to be very BIG. My opinion has not changed.

In recent weeks, it has been announced that Google Basewill be used by several major retailers in Europe to sort and display their wares. The article linked above shows how ubiquitous Google Baseis going to become.

The idea is that when one searches through the "normal" Google Search Box, one will occasionally be offered drop down boxes to "define" the search. In the example given, a search for homes for sale might bring back a drop down list for locations or for listing type.

Multiple listing services have frustrated many folks by trying to "hoard the info". I have personally been frustrated in trying to keep track of properties for sale or properties that have sold in Myrtle Beach SC.

Those with property for sale will be foolish not to list properties on Google Base. MLS should export all listing summaries to Google Base. As should many other information data bases.

The process can be automated. Thus, the effort to reach thousands of potential customers can be minimal. Like my old friend, Jim Brinkley has often said, in business, economics always wins; another way of saying that if you build a better mouse-trap the world will beat a path to your door.

Google Basesearch boxes are going to start showing up more and more often. Many other exciting advances are being made almost daily. Recently, Yahoo added VoIP to its instant messaging service, EBAY added text message bill pay and Google. added Google Finance. All of these are competitive products that will grow a huge audience. Google Basemay prove to be the most important of them all.

Gamestop (GME) has been one of the best performers in our Stock fo the Week Portfolio. We purchased GME in March of 2005 at $19.95 per share. Today it was selling at $41.36. Gamestop has returned 53+ % and based on all company predictions, we should expect to see it continue to rise.

With 4th quarter reports in,Gamestop achieved record sales, increased our gross margins, even though very low margin hardware sales grew by almost 5% as a percentage of sales, and kept our expenses well under control, even as 792 new stores were added at a record pace. Net earnings for the year surpassed $100 million leaving astron balance sheet on the table with $400 million in cash with operating cash flows for the year came at approximately $283 million.

In 2006, Gamestop expects to open approximately 400 more new stores. Gamestop currently has a 21% market share on all new video game products sold in the US and is now doing business in 14 countries outside the US; with 866 international stores.

According to COO, Dan DeMateo, sales for handheld systems in 2006 are expected to double over 2005.

CFO Dave Carlson reported that he expects to have at least a 25 % growth rate in 2006 with the largest comp in the fourth quarter when the PS3 and Nintendo revolution launch.