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Tech stocks - Friday, October 10, 2008

Trying To Find Some Positives In A Negative Market

With another day of massive carnage in the market behind us, the staff at tech:stocker has been given the challenge of trying to find some hope for investors. Initially, we couldn't. But our editor insisted we offer something for our readers that would offer them some hope for the future. As we scoured the news and our charts, we found two signs of hope for potential investors.

First, we are excited about Citigroup's (C:NYSE) decision to admit defeat and let Wells Fargo (WFC:NYSE) acquire Wachovia (WB:NYSE) without taking legal action. This merger should put Wells Fargo in a strong position to compete with Bank of America (BAC:NYSE). We've been hearing rumors from our friends on the street that Citigroup desperately needed to acquire Wachovia but when they saw the amount of low-quality assets on the books, Wachovia became a little less desirable. Still, Citigroup needs to make a move so it will be interesting to see what they do next. For now, we are happy with the new Wells Fargo.

We are also encouraged by Apple's (AAPL:NASDAQ) upcoming announcement on Tuesday. As devoted fans of the Mac laptop (even though our 6-month-old MacBook Pro was recently down for two weeks), we're excited at the possibility of a new Apple laptop being introduced in the $800 price range. As long as the new computer doesn't hurt the brand like the C230 sports coupe did Mercedes (trust us, don't ever buy a C230 sports coupe unless their resale value drops below the Ford Focus, Pontiac Vibe, and the PT Cruiser), Apple should be able to expand its customer base in these tough economic times. While Tuesday's announcement won't send the stock skyrocketing, it should help stabilize it.

The last piece of positive encouragement comes from a company that resides in our backyard, Bank Of Marin (BMRC:NASDAQ).

With 9 branches in Marin County and 3 in Sonoma County, Bank of Marin isn't about to keep the collective CEOs of Bank of America, Wells Fargo, and US Bancorp (USB:NYSE) awake at night wondering what they are going to do next. But maybe they should adopt some of this micro cap's practices.

Bank of Marin claims to have zero subprime mortgages on the books and no exposure to Fannie Mae and Freddie Mac. That has to be reassuring to potential investors. Our only concern is how many Alt-A mortgages the bank is sitting on (Alt-A mortgages is one of factors that makes us hesitant about jumping on board the Wells Fargo coach). Alt-A are not receiving a lot of coverage in the media because of the subprime collapse but as the housing market continues to lag, expect to hear more about this type of mortgage.

The location of Bank of Marin should make it attractive to potential investors. With the median home price in Marin County still a hefty $875k, which means there are plenty of potential customers who can max out the FDIC's $250k limit.

And after living in Marin County for over 9 years, we know that our fellow "Marinites" are extremely fond of convenience and enjoy patronizing the local businesses.

For those who need some numbers to convince them that this little bank has some potential, how about a P/E ratio of 11.1 and solid track record of increasing earnings over the last 10 quarters (they had a slight stumble in the first quarter of this year but it is hardly worth mentioning).

While we can't recommend buying Bank Of Marin in these unsettled economic times, we do recommend keeping an eye on this stock. While wealthy Marin County isn't immune to the economic malaise hitting the U.S., it may be able to whether it better than other parts of the country.