Posts Tagged Stock Buys
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
GENERAL MTRS CO COM (GM)
Some GM bonds became GM common stock when the company emerged out of bankruptcy. We became “involuntary shareholders” of the new GM when some of the GMAC bonds were converted from debt to equity. There is a long bumpy test track to GM’s long-term success. American restructuring has made the company hugely profitable in the U.S. Sales of light trucks are going screamingly well. They build great products. Even the oft-maligned “Volt” if you see one up close, is an exceptional vehicle.
Their European divisions are still a boat anchor. Europe’s financial woes, combined with government problems in idling or closing plants make Opel and Vauxhall more net liabilities over the next few years until Europe can right its economy.
The restructuring has given them a much easier way of funding $32B in pension obligations, though and they’ve moved more than $6.4B into their voluntary funding. Share appreciation will help reduce their debt load with VEBA, the stakeholders with the pensions, as they sell off their shares to pay the costs of retirees.
The government stake in GM needs to be bought back from the Treasury. They invested a 7% stake in Peugeot as part of a cost-restructuring of parts supply for their European divisions, which we understand. Confidence will be boosted when they retire the Treasury’s huge stake in GM. That’s a political football waiting for after the election, to avoid politicizing GM and dragging the damaging “Government Motors” mantra in to cover Mitt Romney’s “let them die” remarks. Even though you would think it would be good for Mr. Obama to say that GM was repaying the Treasury, anything negative, as we’ve seen outweighs its intellectual positives with the minions of Rush.
The long-term prospects, though, for GM, which is doing very well at least with American consumers, look bright in a few years. Warren Buffet’s investment of 10M shares for Berkshire Hathaway (BRK.B) is a good sign, as its’ not cheerleading; it’s a sound analysis of GM’s bottom line projected forward. GM Financial will slowly rebuild their mighty vehicle financing division. Right now shares are trading at their historic (albeit short history) lows. We’re not taking a huge position, but we will bring it up a bit. BUY.
GETTY RLTY CORP (GTY)
Value opportunity. Getty Realty Corp. is the largest gas station-based real estate investment trust (REIT) in the United States They also lease petroleum distribution terminals. The Company’s properties are located in 21 states across the United States with concentrations in the Northeast and the Mid-Atlantic regions. They operate under Getty, BP, Exxon, Mobil, Shell, Chevron, Valero, Fina and Aloha.
The REIT owns the Getty trade name in connection with its real estate and the petroleum marketing business in the United States.
As of December 31, 2011, GTY owned 996 properties and leased 153 properties. In January 2011, it acquired fee or leasehold title to 59 Mobil-branded gasoline stations in a sale/leaseback and loan transaction with CPD NY Energy Corp.
It has also had to reposition its properties leased by Getty Oil, which declared bankruptcy and took 788 stores into that proceeding.
The large drop in income caused a temporary suspension of the dividend, which had been a cushy .48/share last June. The properties have been repossessed and are now being released. There is interesting potential for dividend growth in this REIT stock as it returns to full health. The short-term yield is 2.63% but it has the potential to return to its 5.8% dividend once the inventory is re-leased. This is a speculative investment in that one assumes that GTY will be able to re-lease all of the stations that were tied up the bankruptcy proceeding. MODEST BUY/ACCRUE.