Talk of a pullback and fear of emerging market contagion is all around the net these past couple weeks. So much so that I thought I would make it a part of my monthly dividend screen.
This month the Dividend score is: Yield, 5 year dividend growth rate, Payout ratio.
Fundamental score: P/E, Tweed Factor (Yield + dividend growth rate vs P/E), and the % of price vs the 52 week low. Simply put, the closer a stock is to its 52 week low the higher the score. My thought here is wanting to find an undervalued stock but also capital preservation. If something has been beat down already its probably not going to fall much more if the market drops.
My screen found a ton of new companies to review. So much so that I crossed off the usual suspects. Small banks, insurance, and China are already off the list so everything left I already own or its new.
One interesting thing I noticed, 5 of my 13 positions that are on the list are in this month's top picks. That makes me feel pretty happy going in to any potential pullback.
Companies quick to cross off...
WU: Previously crossed off. Negative EPS growth.
COP: Already invested.
CVX: Duplicate from existing investment COP. I don't want to go too heavy into a sector and because I keep an eye on my investments I want to keep my research as low as possible.
IBM: Already invested.
PM: I don't invest in tobacco. I hold no ill will or think any less of those of you that do. Just a personal choice.
RCII: Rent-A-Center: Previously crossed off.
XOM: Yet another big oil company
WMT: Already invested
TCAP: Used to be invested. Now I have PSEC and TCPC.
RKT: Already invested.
AFL: Already invested.
LO: Tobacco.
HP: Reviewed last month.
New companies for possible review...
TGH: Textainer Group: These guys take on debt, buy shipping containers, then lease them out. I like it as a play for worldwide growth but not now with emerging markets shaky. I also don't like that their debt is floating rate. Not sure if a 5% yield and 17% dividend growth rate is worth that.
DE: Deere and Company: Heavy farming equipment. They look quite undervalued at a 9.5 P/E from their history of 14. They have a 9.5% EPS growth and 16.4% dividend growth which is quite nice. I'm curious as to why the estimates are for lower EPS in 2014. Their debt/assets is rater high for me at 50%+ but I am not sure if that is standard for heavy manufacturing companies. Like most companies these days they are doing big buybacks. Looks to be about 4% a year. I might have to take a look at DE.
MUR: Murphy Oil: Oil and Gas in the USA and UK. Massive pullback or not, a 1.2% EPS 10 year average for growth is terrible.
HCC: HCC Insurance Holdings: An insurer in the U.S. and parts of Europe. I don't know if I like them in property, casualty, accident, health, surety (insurance on debt), credit, and aviation types fo insurance. That's all over the place. However their growth looks good and they appear to be undervalued at this time.
ACN: Accenture plc: Being a plc we know they are from the U.K. or Ireland. In this case they are an Irish business consulting company. They appear to be at value and I am looking for dividend yield and deeply undervalued stocks.
TGT: Target: I have recently seen a lot of bloggers jump into TGT. While I am already invested in WMT, I am strongly considering selling it. Both companies are quite comparable and TGT has an extra 0.5% yield. However I am concerned that their 2013 EPS seems 25% lower then 2012. Do any of you TGT investors know why? I'll need to find out why and figure out if its temporary.
CB: The Chubb Corporation: Yes that is the company's real name. I was actually invested with them for awhile. They are an insurance company catering to wealthy individuals and businesses. If you look at a chart you can see they have had a nice run since 2009. While they have had a nice pullback and are at their 52 week low, they are significantly over their 10.8 P/E average. Still, their 2014 EPS estimate is 30% higher then 2013 so I would not be surprised to see them up this year.
AFSI: Amtrust Financial Services: Another insurance company. What is it with my screen hitting insurance companies? AFSI has a 1.77% and that is enough to make me stick with AFL.
RL: Ralph Lauren: Never would have thought this would appear on my screen but I cannot let that bias me away from a potential investment. 1.1% yield after a nasty pullback tells me they aren't a serious dividend company. Then again they have a 37% dividend growth rate and only a 17% payout ratio. Perhaps they are. Its 10 year historic P/E is 21. That's a lot of growth expectation and RL has delivered. But if they ever stop and it gets classified as a value company its going to struggle price wise. I'll keep an eye on this one.
EPB: El Paso Pipeline. EPB is a master limited partnership. They have pipelines for oil and natural gas and act like a tollbooth for other companies transporting their energy products. I like that EPB has an 8%. That is about what I would need to pull me away from WHZ or NDRO with their double digit yields. MLPs can bought land and grow so have that going for them vs land trusts that are always declining. However I am concerned why they dropped 20% almost overnight. It has to be more then the January pullback that hit the general market.
MAT: Mattel: I recently was in Hasbro (HAS) so I find it interesting that these guys are showing up. They missed Q4 earnings by a large amount and dropped by 10%. This does though give them a 4% yield and places them back in their historic P/E range. If ever there was a clearer example of watching fundamentals it is MAT as if you look at them on Fastgraphs they keep coming back to fair value. I'll be looking at them closely as with the Q4 miss they are still expecting an increase in EPS next year.
BCE: BCE Inc: A Canadian telecom and cellphone company. 5.4% yield looks nice and they do appear to have had a nice pullback. I'd have to see if they have international exposure. I don't see much growth for U.S. and Canadian cellphone markets. Its not like thats a brand new tech about to sign up a lot of new customers.
OXY: Occidental Petroleum Corp: A large U.S. oil company but not imo part of Big Oil (XOM, COP, CVX). Even with their recent pullback, Fastgraphs shows them overvalued by their metrics and by a historic P/E ratio.
BHP: BHP Billiton Limited: A mining company taht has erratic but overall climbing EPS. Averaging 21% EPS growth a year. This Billiton is out of Australia. Funny storry with BHP and BBL. They were separate mining companies, one from Australia and one from the U.K. They merged but kept their serparate ticker symbols. So they are the same company but their stock behaves differently. Their yields can also differ by 0.5% or so. BHP is interesting in that they are jumping in on the potash bandwagon and working on a multi billion dollar mine. It wont be available until 2017 or 2018 but they are moving forward. Might be a challenge for my POT so I will need to keep an eye on them. They look extremely undervalued and I need to look into them.
KR: Kroger: Grocery store chain. KR is a company I have on my watch list and they score extremely high on my system. Their recent pullback has put them very undervalued. A 2% yield is rough but perhaps this could be a trade vs a dividend investment. A 10% EPS growth rate and a 15% dividend growth rate at least warrants research.
BBL: BHP Billiton plc: The U.K. side BHP. My thoughts are listed above.
GPS: The Gap: With a 2% yield, 6.7% dividend growth rate and a 21% payout ratio they easily have more room to be paying a dividend but aren't. To me that seems like they aren't committed to a dividend so I will pass.
INTC: Intel: Though this is the first time they have been on my screen, I have researched them in the past. They are a value trap that looks good but is struggling. They were too late to get on the mobile bandwagon and have paid the penalty ever since with years of declining EPS.
This month's research screen winner is...
PETM: Petsmart Inc: Lots of interesting candidates for the best company for my screen to research but it goes to PETM. As with RL, I wouldn't have thought Petsmart would be a company I might invest in. First off they have had consistent EPS growth of 13.6% a year with only a minor dip in 2008 which they recovered. Along with pet supplies they also have pet grooming and kennel options. They also have some veternarian options in some of their stores. Their 1.2% yield is at first troubling but then you see they have a 35% dividend growth rate... they aren't afraid to throw cash our way.
In 2007 they paid $0.12 a year and had share price in the low $20s... a measly 0.6% yield.
Today they pay $0.76 a year with a $63 share price a 1.24% yield however thats a 3.8% yield on cost. Oh and a share price rise that outpaces the S&P by a huge margin.
I'll be researching PETM more closely.
For your consideration. Here is an unfiltered list of companies within 5% of their 52week low, essentially at the bottom. Some might be duplicate from above and some are of pretty low quality but for any of you interested in getting decent companies that have dropped by a large amount...
Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
This month the Dividend score is: Yield, 5 year dividend growth rate, Payout ratio.
Fundamental score: P/E, Tweed Factor (Yield + dividend growth rate vs P/E), and the % of price vs the 52 week low. Simply put, the closer a stock is to its 52 week low the higher the score. My thought here is wanting to find an undervalued stock but also capital preservation. If something has been beat down already its probably not going to fall much more if the market drops.
| Name | Symbol | Industry | Score | Div | Fund |
| Western Union Company | WU | Financial Services | 10 | 4 | 6 |
| Textainer Group | TGH | Transportation | 8 | 3 | 5 |
| ConocoPhillips | COP | Oil & Gas | 8 | 4 | 4 |
| Chevron Corp. | CVX | Oil & Gas | 7 | 3 | 4 |
| IBM | IBM | Technology-Hardware | 7 | 3 | 4 |
| Deere & Company | DE | Farm Equipment | 7 | 3 | 4 |
| PetSmart Inc. | PETM | Retail-Specialty | 6 | 1 | 5 |
| Philip Morris International | PM | Tobacco | 6 | 2 | 4 |
| Rent-A-Center Inc. | RCII | Retail-Specialty | 6 | 2 | 4 |
| Murphy Oil Corp. | MUR | Oil & Gas | 6 | 2 | 4 |
| HCC Insurance Holdings | HCC | Insurance | 6 | 2 | 4 |
| Accenture plc | ACN | Business Services | 6 | 2 | 4 |
| ExxonMobil Corp. | XOM | Oil & Gas | 6 | 2 | 4 |
| Target Corp. | TGT | Retail-Discount | 6 | 3 | 3 |
| Wal-Mart Stores Inc. | WMT | Retail-Discount | 6 | 3 | 3 |
| Chubb Corp. | CB | Insurance | 5 | 1 | 4 |
| Triangle Capital Corp. | TCAP | BDC-Financial Services | 5 | 1 | 4 |
| AmTrust Financial Ser | AFSI | Financial Services | 5 | 1 | 4 |
| Rock-Tenn Company | RKT | Packaging | 5 | 1 | 4 |
| Ralph Lauren Corp. | RL | Apparel | 5 | 2 | 3 |
| El Paso Pipeline MLP | EPB | MLP-Oil&Gas Pipelines | 5 | 2 | 3 |
| Mattel Inc. | MAT | Recreation | 5 | 2 | 3 |
| BCE Inc. | BCE | Telecommunications | 5 | 2 | 3 |
| Occidental Petroleum | OXY | Oil&Gas | 5 | 2 | 3 |
| BHP Billiton Ltd. | BHP | Mining/Oil&Gas | 5 | 2 | 3 |
| AFLAC Inc. | AFL | Insurance | 5 | 2 | 3 |
| Kroger Company | KR | Retail-Grocery | 5 | 2 | 3 |
| Lorillard Inc. | LO | Tobacco | 5 | 2 | 3 |
| BHP Billiton plc | BBL | Mining/Oil&Gas | 5 | 3 | 2 |
| Gap Inc. | GPS | Retail-Clothing | 5 | 3 | 2 |
| Intel Corp. | INTC | Technology-Hardware | 5 | 3 | 2 |
| Helmerich & Payne Inc. | HP | Oil & Gas | 5 | 3 | 2 |
My screen found a ton of new companies to review. So much so that I crossed off the usual suspects. Small banks, insurance, and China are already off the list so everything left I already own or its new.
One interesting thing I noticed, 5 of my 13 positions that are on the list are in this month's top picks. That makes me feel pretty happy going in to any potential pullback.
Companies quick to cross off...
WU: Previously crossed off. Negative EPS growth.
COP: Already invested.
CVX: Duplicate from existing investment COP. I don't want to go too heavy into a sector and because I keep an eye on my investments I want to keep my research as low as possible.
IBM: Already invested.
PM: I don't invest in tobacco. I hold no ill will or think any less of those of you that do. Just a personal choice.
RCII: Rent-A-Center: Previously crossed off.
XOM: Yet another big oil company
WMT: Already invested
TCAP: Used to be invested. Now I have PSEC and TCPC.
RKT: Already invested.
AFL: Already invested.
LO: Tobacco.
HP: Reviewed last month.
New companies for possible review...
TGH: Textainer Group: These guys take on debt, buy shipping containers, then lease them out. I like it as a play for worldwide growth but not now with emerging markets shaky. I also don't like that their debt is floating rate. Not sure if a 5% yield and 17% dividend growth rate is worth that.
DE: Deere and Company: Heavy farming equipment. They look quite undervalued at a 9.5 P/E from their history of 14. They have a 9.5% EPS growth and 16.4% dividend growth which is quite nice. I'm curious as to why the estimates are for lower EPS in 2014. Their debt/assets is rater high for me at 50%+ but I am not sure if that is standard for heavy manufacturing companies. Like most companies these days they are doing big buybacks. Looks to be about 4% a year. I might have to take a look at DE.
MUR: Murphy Oil: Oil and Gas in the USA and UK. Massive pullback or not, a 1.2% EPS 10 year average for growth is terrible.
HCC: HCC Insurance Holdings: An insurer in the U.S. and parts of Europe. I don't know if I like them in property, casualty, accident, health, surety (insurance on debt), credit, and aviation types fo insurance. That's all over the place. However their growth looks good and they appear to be undervalued at this time.
ACN: Accenture plc: Being a plc we know they are from the U.K. or Ireland. In this case they are an Irish business consulting company. They appear to be at value and I am looking for dividend yield and deeply undervalued stocks.
TGT: Target: I have recently seen a lot of bloggers jump into TGT. While I am already invested in WMT, I am strongly considering selling it. Both companies are quite comparable and TGT has an extra 0.5% yield. However I am concerned that their 2013 EPS seems 25% lower then 2012. Do any of you TGT investors know why? I'll need to find out why and figure out if its temporary.
CB: The Chubb Corporation: Yes that is the company's real name. I was actually invested with them for awhile. They are an insurance company catering to wealthy individuals and businesses. If you look at a chart you can see they have had a nice run since 2009. While they have had a nice pullback and are at their 52 week low, they are significantly over their 10.8 P/E average. Still, their 2014 EPS estimate is 30% higher then 2013 so I would not be surprised to see them up this year.
AFSI: Amtrust Financial Services: Another insurance company. What is it with my screen hitting insurance companies? AFSI has a 1.77% and that is enough to make me stick with AFL.
RL: Ralph Lauren: Never would have thought this would appear on my screen but I cannot let that bias me away from a potential investment. 1.1% yield after a nasty pullback tells me they aren't a serious dividend company. Then again they have a 37% dividend growth rate and only a 17% payout ratio. Perhaps they are. Its 10 year historic P/E is 21. That's a lot of growth expectation and RL has delivered. But if they ever stop and it gets classified as a value company its going to struggle price wise. I'll keep an eye on this one.
EPB: El Paso Pipeline. EPB is a master limited partnership. They have pipelines for oil and natural gas and act like a tollbooth for other companies transporting their energy products. I like that EPB has an 8%. That is about what I would need to pull me away from WHZ or NDRO with their double digit yields. MLPs can bought land and grow so have that going for them vs land trusts that are always declining. However I am concerned why they dropped 20% almost overnight. It has to be more then the January pullback that hit the general market.
MAT: Mattel: I recently was in Hasbro (HAS) so I find it interesting that these guys are showing up. They missed Q4 earnings by a large amount and dropped by 10%. This does though give them a 4% yield and places them back in their historic P/E range. If ever there was a clearer example of watching fundamentals it is MAT as if you look at them on Fastgraphs they keep coming back to fair value. I'll be looking at them closely as with the Q4 miss they are still expecting an increase in EPS next year.
BCE: BCE Inc: A Canadian telecom and cellphone company. 5.4% yield looks nice and they do appear to have had a nice pullback. I'd have to see if they have international exposure. I don't see much growth for U.S. and Canadian cellphone markets. Its not like thats a brand new tech about to sign up a lot of new customers.
OXY: Occidental Petroleum Corp: A large U.S. oil company but not imo part of Big Oil (XOM, COP, CVX). Even with their recent pullback, Fastgraphs shows them overvalued by their metrics and by a historic P/E ratio.
BHP: BHP Billiton Limited: A mining company taht has erratic but overall climbing EPS. Averaging 21% EPS growth a year. This Billiton is out of Australia. Funny storry with BHP and BBL. They were separate mining companies, one from Australia and one from the U.K. They merged but kept their serparate ticker symbols. So they are the same company but their stock behaves differently. Their yields can also differ by 0.5% or so. BHP is interesting in that they are jumping in on the potash bandwagon and working on a multi billion dollar mine. It wont be available until 2017 or 2018 but they are moving forward. Might be a challenge for my POT so I will need to keep an eye on them. They look extremely undervalued and I need to look into them.
KR: Kroger: Grocery store chain. KR is a company I have on my watch list and they score extremely high on my system. Their recent pullback has put them very undervalued. A 2% yield is rough but perhaps this could be a trade vs a dividend investment. A 10% EPS growth rate and a 15% dividend growth rate at least warrants research.
BBL: BHP Billiton plc: The U.K. side BHP. My thoughts are listed above.
GPS: The Gap: With a 2% yield, 6.7% dividend growth rate and a 21% payout ratio they easily have more room to be paying a dividend but aren't. To me that seems like they aren't committed to a dividend so I will pass.
INTC: Intel: Though this is the first time they have been on my screen, I have researched them in the past. They are a value trap that looks good but is struggling. They were too late to get on the mobile bandwagon and have paid the penalty ever since with years of declining EPS.
This month's research screen winner is...
PETM: Petsmart Inc: Lots of interesting candidates for the best company for my screen to research but it goes to PETM. As with RL, I wouldn't have thought Petsmart would be a company I might invest in. First off they have had consistent EPS growth of 13.6% a year with only a minor dip in 2008 which they recovered. Along with pet supplies they also have pet grooming and kennel options. They also have some veternarian options in some of their stores. Their 1.2% yield is at first troubling but then you see they have a 35% dividend growth rate... they aren't afraid to throw cash our way.
In 2007 they paid $0.12 a year and had share price in the low $20s... a measly 0.6% yield.
Today they pay $0.76 a year with a $63 share price a 1.24% yield however thats a 3.8% yield on cost. Oh and a share price rise that outpaces the S&P by a huge margin.
I'll be researching PETM more closely.
For your consideration. Here is an unfiltered list of companies within 5% of their 52week low, essentially at the bottom. Some might be duplicate from above and some are of pretty low quality but for any of you interested in getting decent companies that have dropped by a large amount...
| Name | Symbol | Industry | Score | Div | Fund |
| Chesapeake Fin | CPKF | Banking | 8 | 4 | 4 |
| Chevron Corp. | CVX | Oil & Gas | 7 | 3 | 4 |
| IBM | IBM | Technology-Hardware | 7 | 3 | 4 |
| Philip Morris Int | PM | Tobacco | 6 | 2 | 4 |
| Target Corp. | TGT | Retail-Discount | 6 | 3 | 3 |
| CCFNB Bancorp Inc. | CCFN | Banking | 6 | 2 | 4 |
| China Mobile Limited | CHL | Telecommunications | 6 | 2 | 4 |
| PetSmart Inc. | PETM | Retail-Specialty | 6 | 1 | 5 |
| Rent-A-Center Inc. | RCII | Retail-Specialty | 6 | 2 | 4 |
| W.R. Berkley Corp. | WRB | Insurance | 5 | 1 | 4 |
| RLI Corp. | RLI | Insurance | 5 | 2 | 3 |
| Ralph Lauren Corp. | RL | Apparel | 5 | 2 | 3 |
| El Paso Pipeline MLP | EPB | MLP-Oil&Gas Pipelines | 5 | 2 | 3 |
| Aaron's Inc. | AAN | Retail-Rental | 4 | 1 | 3 |
| Excel Trust Inc. | EXL | REIT-Diversified | 4 | 2 | 2 |
| McDonald's Corp. | MCD | Restaurants | 4 | 2 | 2 |
| First Keystone Corp. | FKYS | Banking | 3 | -1 | 4 |
| Syngenta AG | SYT | Agriculture | 3 | 1 | 2 |
| Brady Corp. | BRC | Business Services | 1 | -1 | 2 |
| Orange County Banc | OCBI | Banking | 1 | -1 | 2 |
| Consolidated Edison | ED | Utility-Electric | 1 | -2 | 3 |
| South Jersey Ind | SJI | Utility-Gas | 0 | 1 | -1 |
| Fastenal Company | FAST | Building Materials | -1 | -1 | 0 |
| Cenovus Energy Inc. | CVE | Oil&Gas | -1 | -1 | 0 |
| Erie Indemnity Co | ERIE | Insurance | -1 | 0 | -1 |
| Hawkins Inc. | HWKN | Chemical-Specialty | -2 | -1 | -1 |
| Kellogg Company | K | Food Processing | -2 | -2 | 0 |
| WGL Holdings Inc. | WGL | Utility-Gas | -3 | -2 | -1 |
| Boardwalk Pipeline MLP | BWP | MLP-Natural Gas | -3 | -2 | -1 |
| AT&T Inc. | T | Telecommunications | -3 | -2 | -1 |
| Southern Company | SO | Utility-Electric | -3 | -2 | -1 |
Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.
I actually like small banks (e.g. Gronlandsbanken, European Islamic Investment Bank) and china stocks (e.g. Ultrasonic). What is the reason to cross them off prior to research even if they are on the CCC list?
ReplyDeletePS: I am aware that my examples are most likely not on the CCC list.
That a fair and reasonable question.
DeleteSmall Banks: I have nothing against them as a customer. I belong to a small local credit union. I think small banks offer better services locally to small businesses and the community. My problem is only as an investor.
If the average volume of shares is measured in the 100s instead of hundreds of thousands or millions, then there isn't much liquidity if I need to exit my position fast at a price I want.
I also see these banks missing estimates and struggling profit wise when 1 loan of $1million went bad and written off. Thats going to be a factor when a bank services a couple counties of say 18,000 people total.
China: I cannot trust the accuracy of financial records from a country whose 1 party government owns many companies, hides their data and shuts down and stops any differing viewpoint or watchdog groups. I recall when short sellers pointed out accounting problems with some big Chinese companies. They weren't lying it was flat out fraud in their statements, the stocks collapsed and the companies went bankrupt. The government response was to protect these companies against the short sellers. Now I am not saying Chinese companies are bad investments. All I am saying is that I have no way of determining the bad from the good.