Top Five Watch List Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from December 20, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.
|Symbol||Name||2013 Price||2014 Price||% change|
|MLM||Martin Marietta Materials||96.17||119.26||24.0%|
|PM||Philip Morris International||85.52||83.05||-2.9%|
|DJI||Dow Jones Industrial||16,221.14||17,804.80||9.8%|
Watch List Review
The best performer was Martin Marietta Materials (MLM). While the stock ended the year up 24%, it gained as much 43% within 6 months. We were skeptical about the stock at such high multiple a year ago (P/E of 42) but that was because the company was expected to grown their net income by 49% (from $2.60 in 2013 to $3.87 in 2014). As of this writing, analysts expect the company to earn $3.48 in 2014 which is 10% less than projected. Analysts now expect the company to earn $5.19 per share in 2015 which is a 49% increase from 2014 and brings Forward P/E to 22. It would be interesting to see how this projection play out in the face of a global slowdown. We believe that one of the key element that should help the in 2015 is the falling oil price. While oil isn’t a direct input into the company material cost, we assumed that the cost to transport their product should reduced substantially.
The second best performer from our top five was Consolidated Edison (ED). Our expectation was that the stock would under-perform the market but that didn’t pan out. It turns out that yield coninued to fall as deflationary environment continue to take hold. The stock now yield 2.5% which is extremely low for a utility company. It is hard to say that the stock is of good value.
IBM (IBM) was the worse peformer out of the top five. The most interesting aspect of that, IBM had the lowest P/E ratio. This goes to show that while buying stock with low P/E ratio may appeared to be a safe bet, one shouldn’t rely on a single ratio as a determination of value.
U.S. Dividend Watch List: December 19,2014
This volatile market has taken the market on a roller coaster ride. The market rose 3.4% for the week. As such, our watch list contracted to contain 39 companies. Continue reading