I hope you enjoyed your Thanksgiving and were surrounded by family, friends and good food. Now it’s Black Friday, a sort of holiday of its own and the busiest shopping day of the year. I’m not willing to brave a crowd for a deal, so I greatly prefer the former holiday to the latter and will be staying as far away from malls as possible today.
I do have one interesting anecdote about Black Friday.
The day after Thanksgiving isn’t the first Friday to be dubbed Black Friday, in fact, it’s just the latest in a long history of Black Fridays. Investors know that disastrous days in the financial markets are often dubbed “Black” whatever-day-of-the-week it was, with Black Tuesday 1929 sticking out in memory as the stock market crash that signaled the start of the Great Depression. The largest one-day drop in stock market history, in 1987, was dubbed Black Monday.
So it’s no surprise that the first historical Black Friday I can find was so-named because of a financial crisis.
On Friday, September 24, 1869, the price of gold on U.S. markets soared to historical highs and then crashed by the end of the day. The cause of the spike and plummet was an attempt by a couple of speculators, James Fisk and Jay Gould, to corner the gold market.
Below you can see a picture of the black board in the New York Gold Room where the prices were recorded that day; it was saved as evidence for the investigation into the crash.
—-
But not every “Black Friday” was a stock market crash. Black Friday 1881 was windstorm off the coast of Scotland that killed 189 fisherman.
In England, Black Friday 1910 was the first time police force was used against women demonstrating for the vote.
In January 1939, a day of bushfires that killed 71 people and destroyed several Australian towns was dubbed Black Friday.
A particularly deadly day of WWII was also called Black Friday, as was a 1978 massacre in Tehran and a 1987 Canadian tornado that killed 27.
Most recently, the day that real-money online poker was banned in the U.S. was dubbed Black Friday 2011.
In contrast, stock market crashes don’t look so bad. It does seem a little odd that a name with such a dark history was appropriated for a consumer holiday... so if you are going to Wal-Mart or the mall today, be sure to be safe.
Of course, there are still plenty of deals available for those of us with no interest in “doorbusting.” The Monday after Thanksgiving has been dubbed “Cyber Monday” for the online sales that start then, although they’ve been migrating earlier as well. Many Black Friday deals are now available online as well as in stores.
—-
For investors, there are lots of deals available in the stock market today too. Though the market has made up some ground this week, mainly on Monday, there are still plenty of bargains to be had. On Tuesday, I offered up some value-priced names from the latest Dividend Digest. Today I have a smaller, more speculative (and much newer) value pick for you from the most recent Investment Digest. It was recommended by Bill Mathews, editor of the aptly named newsletter, The Cheap Investor, which finds bargains among small, low-priced stocks. For adventurous investors, I think it’s worth a look here.
“Groupon, Inc. (GRPN) has created a new way for local merchant partners to attract customers and sell goods and services. ... Each day Groupon emails its subscribers discounted offers on goods, services and travel that are targeted by location, purchase history and personal preferences. Current and potential customers also access its deals directly through its websites and mobile applications. Its revenue is derived from an agreed upon percentage of the Groupon purchase price.
“Groupon was a hot Initial Public Offering (IPO) at $20 on November 4, 2011. The stock opened up at $28, moved to a high of $31.14 that day and has gone down ever since. Insiders own 55% of the 653 million total shares outstanding, and 164 institutions own about 50% of the float (shares in public hands). Institutions have purchased 63 million more shares than they sold for the quarter ended June 30, 2012. The company has an excellent balance sheet with $1.2 billion ($1.82 per share) in cash, a book value of $1.20 per share and no debt. The only negative is that with 653 million shares outstanding and the stock price in a downward trend, there’s a chance that the company could execute a reverse stock split.
“[In the third quarter, Groupon’s] North American revenues grew 81% year-over-year, driven by growth in direct revenue, or the amount earned from the sale of products for which Groupon is the merchant of record. Groupon Goods reached an annual run rate of nearly $1.5 billion in global billings and nearly $500 million in revenues shortly after its one-year anniversary. ...
“Revenue for the fourth quarter 2012 is expected to be between $625 million and $675 million, an increase of between 27% and 37% compared with the fourth quarter 2011. Income from operations for the fourth quarter 2012 is expected to be between $0 million and $20 million, compared with a loss from operations of $15 million in the fourth quarter 2011. ...
“On November 9, the price plunged 30% in reaction to Groupon’s third quarter financial results. What’s strange is the results were significantly better than they were a year ago, when the stock was over $30 per share. We think smart investors should start accumulating the stock at this attractive level. If Groupon continues its growth trend, it has the potential to at least double over the next year or two. Buy Recommendation.”—Bill Mathews, The Cheap Investor, December 2012
Even if you’re not one for bargain hunting in stores or through Groupon, GRPN is undeniably cheap here. Just remember, buying stocks that are still in downtrends can be risky and requires patience.
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Investment of the Week
