Wynn Resorts Stock: Automatically Banned From Consideration

The balance sheet at Wynn Resorts (WYNN) is so terrible that, as a threshold matter, it precludes me from ever considering an investment in this casino stock.

Last August, Wynn Resorts opened its $4 billion ode to excess in Macau. The expenses were obscene, with the lake alone costing over $100 million. The best-case analyst scenario calls for this resort to contribute $210 million in annual profits to the bottom-line for Wynn shareholders. The pessimistic forecasts are not even sure that this resort will be profitable over the long term.

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Sodastream Stock: Identifying Poor Investments Ahead of Time

I never caught the bug to write glowing reviews about Sodastream (SODA) stock when it became fashionable during the 2011-2013 stretch that saw the price of its stock rise from $23 to $79. At the time, it had quickly grown its annual profits from $13 million to $43 million by selling $80 beverage carbonation systems that turn tap water into a carbonated soft drink that gives you about a dozen choices to mimic the soda offerings of Coca-Cola, PepsiCo, and Dr. Pepper.

Just three years later, the price of the stock has come down $36 and the $43 million profits have come down to the $23 million range. What insight would have made it possible to determine, in advance, that Sodastream was a passing fad rather than a rising insurgent capable of challenging the tri-opoly of Big Soda?

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Updating Warren Buffett’s Tech Stock Advice

In an old letter to shareholders of Berkshire Hathaway, Warren Buffett offered his opinion that tech stocks made poor candidates for long-term investments because:

“A business that must deal with fast-moving technology is not going to lend itself to reliable evaluations of its long-term economics. Did we foresee thirty years ago what would transpire in the television-manufacturing or computer industries? Of course not. Nor did most investors and corporate managers who enthusiastically entered those industries. Why, then, should Charlie and I now think we can predict the future of other rapidly evolving businesses?”

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