Name that company
For most of the 1800s, aluminum was a semiprecious metal and scarcer than silver. In the late 1880s, though, my young founder discovered an economical way to make aluminum, and he helped drive down the price of aluminum. I've always been the world's premiere aluminum company. I also make packaging machinery, vinyl siding, plastic bottles and closures, fiber optics, and electrical distribution systems for cars and trucks. I employ 140,000 people in some 36 nations. Who am I? (Answer: Alcoa)
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Shiny Apple?
Investors with a taste for technology and a knack for swimming against the tide might consider Apple Computer, the company that pioneered the PC revolution.
Disappointing earnings, inventory buildup and a slowing economy led the shares into a free fall last year. At about $20 per share, Apple's a long way from its high of almost $76 in early 2000.
Yet Steve Jobs, the chief executive who has made the company an innovator and given its products the brand identity its competitors lack, believes the PC will continue to lie at the center of the computing universe, even as cell phones, personal digital assistants and other simple Internet devices proliferate.
As with many technology transitions, the reported death of the PC industry probably is premature. Today, Apple has about $11 per share in cash, which means that the rest of the business is valued at about $9 per share (a total of about $3 billion). That's not much for a company that has created a distinct franchise.
Remember that risks with a company such as Apple are high.
Much of Apple's renaissance is based on Jobs' vision. The company will have to innovate routinely to stay ahead of the curve. Although the PC industry remains a growth business, investors can expect it to slow as the market gets saturated.
Still, for opportunistic investors, Apple may be worth a look.
If it ain't broke ...
A few years ago I began investing in CitiBank (now Citigroup). My average price was roughly $27 per share. Hard times set in and it went to about $12. I doubled up and brought my average price to $19. When the stock hit about $60, I believe, the savvy Saudi prince who was a major investor in the company sold millions of shares. I figured he knew something I didn't, so I sold half of my shares. What a capital gain I had to pay taxes on! Meanwhile, the stock rose to about $90 and I bailed out. Nice profit and capital-gain taxes again. I didn't need the money, but thought it had gone as far as it was going to go. You guessed it it went to $130 or so and split. My lesson learned: Like Warren Buffett, don't sell anything that is doing OK. Russell T. Butler, Lakeland, Fla.
The Fool Responds: That's a pretty smart dumb investment! You're right, though. One of the toughest things for successful long-term investors to learn is patience.
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