Posts Tagged Buys

Buy – EXC

Exelon is trading at a 52 week low. This is a phenomenal utility, with a solid 6.57% dividend yield. Exelon maintains is the largest nuclear plant operator in the United States. It acquired many of its operations from other operators who were unable to run them safely and well. It bought most at pennies on the dollar and actually got the dismantling costs included in the purchase price for several units, which gives it a very big edge on cost containment. Its ability to produce low-cost electricity with minimal greenhouse gas emissions.  The company should produce substantial, sustainable, and growing shareholder value for many years, regardless of what path power prices take. It is the only utility that gets Morningstar’s wide economic moat rating.  This is the basement where you get in. BUY/ACQUIRE

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Buy – CSX

CSX – This railroad is a classic value stock. Trading in the high 20’s today we’ve been picking it up when it ranges between 19 and 21. This railroad got its act together during the rail renaissance. They haven’t returned to 2004 load levels yet, but they are well on their way back, even with a few road bumps along the way. We expect the economy to improve gradually over the next 3-4 years and with it, loads will go up on the railroad.  It pays a 2.5% dividend on a big stable company that has assets that are virtually impossible to replace or compete with in their market. CSX moves a lot of coal, which just took a hammering this morning on the idea that Mr. Obama will be involved in more green energy going forward, but ignores the huge overseas buys of coal that will fire up once China goes back into full gear and coal demand world-wide picks up.  That, and CSX is not as tied to coal as they were decades ago. Morningstar has it as a 5-Star at this price. BUY

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Buy on EXPEDITORS INTERNATIONAL OF WASHINGTON (EXPD)

EXPEDITORS INTERNATIONAL OF WASHINGTON (EXPD) – This is one of the few forward growth stock plays that we’re issuing, largely because of the unique parameters of EXPD’s high cash flow, low debt business model.

Expeditors International of Washington is a non-asset-based freight-forwarding and third-party logistics, or 3PL, provider.  It is the best and nearly the biggest in its business.  It has been profitable, and is a long-run-focused firm sitting on a mountain of cash.  It owes no debt, and produces strong cash flows of 17+% while deploying nearly no assets. Expeditors’ has had a record of steady growth, high margins, and high returns on invested capital.

We see it as a long term holding. With prices affected by sluggish demand for shipping, it is still trading near the bottom of its range.  Morningstar gives it a fair market value of $61.00, so current price is about a 38% discount to FMV.  The 1.7% dividend is nothing to write home about comparatively to our other holdings, but it does keep inflation out of the picture and allows time for a growth upswing in transportation which should start within a few months after the November elections here, and some improvements in Asia’s economy that are trending toward increased shipping.

It’s trading flat to down slightly (4% from our original position), but we’re adding shares as opportunities around $38.00 or less present themselves.  BUY/ACQUIRE.

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