Archive for category Buying
The market has been seesawing up and down. As I have mentioned in previous columns, this is apt to happen for a while. People are nervous, and when they panic it rains carnage that is the carrion of a good value investor’s diet. Here are some ideas:
MBT – Mobile Telesystems (Mobil’nye TeleSistemy OAO) – I’m not taking a huge stake in this Russian telephone company that is as big there as AT&T or Verizon is here. The uncertainties of government always loom in post-Soviet Russia. This company not only has great growth potential, it is also turning out an 8.8% dividend on yesterday’s closing price. It also was trading at over double its current price within the last 52 weeks. The rest of the world economies drag on price more than anything organic to MBT’s marketplace.
EXPD – I like logistics companies. High cash flow, low overhead, and very low debt. They don’t own anything. They broker the deals to get freight moved at better prices. We held on to Forward Air for years, until it hit a peak before the last roller coaster and we sold it. Expeditors International of Washington is the performance leader among non-asset-based freight-forwarding and third-party logistics providers. This blue chip logistics firm, which pays a sub-inflation 1.3%, looks like a good buy as long as it stays below 41.00 a share.
We go in and out of 3M (MMM) as prices dictate. The company is on the bottom of a cycle pushed down only by larger economic forces. It’s a good buy below $80.00.
France Telecom (FTE) is still a great acquisition. They own a huge chunk of Europe, and are making other international inroads Their stock pays out a 10.10% dividend at yesterday’s close. Not bad.
With a long time horizon in mind, two of the larger housing builders with the legs to ride out the current recession I acquire when they hit bottom-feeder prices. KB Home (KBH) and Toll Brothers (TOL) are lean, mean, and well run. Banks don’t want foreclosed properties, so they’re pushing short sales hard. There will be a bubble of these that will soak up much of the housing demand for a year or two. After that, as inventories in over-extended properties dry up, building can begin back on the road to normal. These two builders look to profit the most from the recovery. KB Home pays a 4.5% dividend that warrants your patience and is a bargain today at about 5.55. It’s a deal under 9.80. Toll Brothers does not, but also has a great footprint once we end this long, gloomy part of the cycle.
Remember that all of these stocks are suggestions and based on actual purchases made. You should research further on your own, ask your stock guru, investment advisor, priest, rabbi, mystic or whomever else gives you investment guidance.
The air has been let out of the last run up in the market. Currently 41 stocks appear in our value window, a significant increase from the handful that were there when I recommended for you to sell anything which may be unable to turn a bigger profit in the next 24 months while the stocks were at the top of the market.
Of them, seven are in high value territory, with one, Avon Products, an avoid at the moment until we see more about what they do to navigate through their troubles. Several have already been recommended. Credit Suisse is a possibility, but we are still studying it.
Buy of the day is PayChex Inc, (PAYX). About a 4.75% dividend on a stock trading at 26.00-26.10 today which is a great buy for a company with a wide moat, great growth prospects and a leader in its industry.
The market has again hit overheated levels. Our valuation tool, which, in a pricey market will sport 20 stocks, about 8 of which are in good value range is down by 50%. Only 10 stocks make our “window” and of them, only two, Abbott Labs (ABT) and France Telecom (FTE) are still in an attractive range, although they were far more so earlier in the year.
We have already positioned stock portfolios to some of the high yield companies that were discussed here previously.
If you have made good money, particularly in a stock that would be market sensitive to a correction or two, now may be a good time to sell it and take your profits. CDs trade at below-inflation rates after taxes. Money markets have had troubles in severe corrections cashing out quickly. We feel that high yield stocks are your best bet for return and relative stability (They’re still stocks, though, and subject to some level of correction along with the market. Use the charts from 2008-2009 as your guide to see how well these companies do in a downturn.)
If you see a stock, however, that can ride through a few oil-driven corrections (The likely thing to be blamed for a correction), then you should just consider sticking with it and riding out this latest wave on your stock surfboard.
When the wave crashes, it will be time to buy again.
Three opportunities continue in the market, with little else looking particularly well priced for a value play of the kind that I seek out with high cash flow and something of a dividend to pay for your patience. Exelon, France Telecom and Abbott Labs have all been acquisition targets, and if you bought them earlier you are seeing the float upward with the market right now, with a small spike for Exelon’s merger news.
I recommend a number of stocks that I have bought or hold. I believe in putting your money where your mouth is. This is a partial review of stocks that you might acquire, add to, or hold:
Bad weeks are good weeks for value vultures. The NTT DoCoMo (DCM) buy, had you jumped on in that two day window, you were able to acquire it and add about a 6-8% bonus for the timing. Still, at under 20.00, it is an attractive buy, especially as mobile communications are going to be key for large areas rebuilding and in the event of more permanent evacuations from areas around the damaged nuclear facility.
The Japanese market is going to reel for at least a few days over the Tsunami and the now 9.0 earthquake. I am buying the ADR for NTT DoCoMo Inc, (DCM) the largest mobile phone provider in Japan. The networks are down in places, and emergency crews get first dibs on the working network up North, but it is operating all over the country and their data network, which is not under emergency order, is flying as an alternative in the areas where they have to stay off of voice lines. There will be some down quarters ahead, to be sure, with damage and the loss of so much, but, unlike their land-line counterpart at NTT, they will be able to see profits quicker, and their pre-earthquake outlook looks to be about the same. It would be a ho-hum stock had the market not sapped it yesterday, and this morning on the Nikkei. I spoke to Morningstar’s analyst to get a read on the situation, and his update is on their analysis. It’s a pretty good buy at current ADR prices as long as they stay under 20-21. I am researching other options and will keep you posted.
As I’ve mentioned before recently, the market is highly over-valued, based on the metrics which I use to follow value stocks. I told you about three weeks ago to take some profit out of your investments from 2008-2009 that have already hit windfall levels. Hopefully you did so. Now you have some cash to reinvest. Where?
There are a few stocks, based on the value window that I’ve given you in the past, that meet the criteria of a good investment that pays a dividend right now. Very few. 8 in fact. Of which, I already own enough of all 8 that I don’t want more. If you followed along and sold some of your investments from 2008 and 2009 at a rather healthy profit, you’re sitting with cash on the sidelines much like me, or Berkshire Hathaway, although we’re all about $40B behind them.
So what do you buy?
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