Monthly Archives: February 2010

3 Stocks Back on the Dividend Achiever Watch List

Posted on February 12, 2010 by | Comments Off on 3 Stocks Back on the Dividend Achiever Watch List
There are three stocks that I wish to bring to your attention that are on our Dividend Achiver Watch List. The most important element of these three stocks is that they were individually recommended by our team in the past and are now worth re-examining at this time to verify their respective merits.
First on our list is Matthews International (MATW). Matthews International was initially recommended on March 31, 2009 near the lows of the bear market. At the time, according to Dow Theory, we felt that the company had upside targets of $31, $40, and $49. On August 4, 2009, we issued a sell recommendation of (MATW) when it was trading at $31.95. Subsequently, (MATW) was able to get within $0.50 of the $40 target. After hitting the $39 range, (MATW) has fallen to the current level of $32.50. (MATW) has increased the dividend for 14 consecutive years in a row.
According to Value Line, (MATW) has a book value of $14.32. If we assume the lowest quarterly earnings during the worst of the economic crisis from Q4 2007 to Q1 2009 and project those earnings (the most conservative estimate) into the future, we get a Q1 2011 P/E ratio of 16.92. Value Line also considers (MATW) at fair valuation around $41.86 or 13 times cash flow per share. Using the most optimistic scenario according to Dow Theory, (MATW) is considered fairly valued at $35.77.
The next company of interest on the Dividend Achiever Watch List is AquaAmerica (WTR). For what it is worth, our team recommended (WTR) at one of the lowest points in 2009 on October 31, 2009. Our December 16, 2009 sell recommendation achieved a gain of 10% in 46 days. After hitting the high of $17.89, (WTR) has fallen to the current level of $16.59.
According to Value Line, (WTR) is considered at fair valuation when it trades at $19.30. If we take the worst period of earnings during the market decline from Q4 2007 to Q1 2009 and project those earnings into the future, AquaAmerica would have a P/E ratio of 37.70. Again, we're seeking the worst case scenario in our future projections. This allows us to better assess the risks we are about to take. As long as WTR can stay above the $14 low of 2008, the fair value should be around $18.70.
Finally, the stock with the most potential among the three is Northwestern Natural Gas (NWN). NWN was recommended on October 3, 2009 when the stock was trading a $40.94. At the time the recommendation was made the stock was at a relative low and proceeded to move higher. In the research that I did on (NWN) I found that since 1970, the stock has typically bottomed in the first four months of the year 72% of the time. Additionally, NWN has bottomed in the month of February eleven of the last 39 years or 28% of the time. This makes the decline from December at the price of $46 all the more interesting. We issued a sell recommendation of NWN on December 21, 2009 when the stock was selling around $45.25.
According to Value Line, NWN is considered to be fairly valued at $36.66. This implies that (NWN) has further to fall. However, with the consistency of hitting bottom in the first quarter of the year, especially in February, NWN is worthy of consideration at these levels. Suffice to say, I am most tempted by NWN and will continue to follow this stock for ideal entry points.
-Touc

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Posted in MATW, NWN, WTR

Dividend Achiever Watch List

Posted on February 12, 2010 by | Comments Off on Dividend Achiever Watch List

At the end of the week, my watch list contains 27 companies. Here is my watch list for February 12 , 2010.

Symbol Name Price % Yr Low P/E EPS Div/Shr Yield Payout Ratio
THFF First Financial Cor 26.49 4.58% 14.48 1.83 0.90 3.40% 49%
XOM EXXON MOBIL CP 64.80 4.75% 16.28 3.98 1.68 2.59% 42%
CWT CALIFORNIA WATER 35.92 7.26% 17.96 2.00 1.19 3.31% 60%
AWR AMER ST WATER 32.05 7.69% 19.82 1.62 1.04 3.24% 64%
WTR AQUA AMERICA INC 16.59 7.80% 21.83 0.76 0.58 3.50% 76%
RBCAA Republic Bancorp, Inc. 15.54 8.14% 7.69 2.02 0.53 3.41% 26%
SRCE 1st Source Corp. 15.09 9.03% 19.10 0.79 0.60 3.98% 76%
NTRS Northern Trust Corp. 50.01 9.24% 15.68 3.19 1.12 2.24% 35%
FPL F P L GROUP INC 45.57 9.86% 11.48 3.97 1.89 4.15% 48%
WGL WGL HOLDINGS INC 31.75 11.05% 14.12 2.25 1.47 4.63% 65%
SHEN Shenandoah Telecom 17.98 11.68% 29.00 0.62 0.32 1.78% 52%
NWN NORTHWEST NAT GAS 42.15 11.77% 14.59 2.89 1.66 3.94% 57%
SYBT S.Y. Bancorp, Inc. 20.56 12.41% 14.79 1.39 0.68 3.31% 49%
UMBF UMB Financial Corp. 37.86 12.51% 17.21 2.20 0.74 1.95% 34%
WEYS Weyco Group, Inc. 22.82 13.48% 22.82 1.00 0.60 2.63% 60%
TMP TOMPKINS FINANCIAL 36.44 13.70% 13.55 2.69 1.36 3.73% 51%
WMT WAL MART STORES 52.90 13.81% 15.33 3.45 1.09 2.06% 32%
MON* MONSANTO COMPANY 75.82 13.90% 27.27 2.78 1.06 1.40% 38%
MLM MARTIN MARIETTA 78.25 16.36% 29.75 2.63 1.60 2.04% 61%
UGI U G I CP 24.62 16.46% 11.14 2.21 0.80 3.25% 36%
T AT&T INC. 25.07 16.93% 11.83 2.12 1.68 6.70% 79%
NJR N J RESOURCES CP 35.31 17.90% 55.00 0.64 1.36 3.85% 212%
BCR BARD C R INC 81.97 18.90% 17.82 4.60 0.68 0.83% 15%
PNY PIEDMONT NAT GAS CO 24.63 19.10% 14.73 1.67 1.08 4.38% 65%
MATW Matthews International 32.50 19.88% 16.58 1.96 0.28 0.86% 14%
MGEE MGE Energy Inc. 32.78 20.21% 15.46 2.12 1.47 4.48% 69%
SJW S J W CP 22.01 20.80% 24.46 0.90 0.68 3.09% 76%
27 Companies
*Although Monsanto (MON) isn't a Dividend Achiever, we feel that it has a good potential of becoming one.


New addition to this week's list is Matthews International (MATW).

Market Note
Berkshire B was added to the S&P 500 today thus attracting an unusual amount of volume. For more, click here. - Art

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Posted in Dividend Achiever Watch List

2009 Transaction Overview

Posted on February 9, 2010 by | Comments Off on 2009 Transaction Overview
After transaction costs, the total return in the portfolio for 2009 was 36%. The dividend yield received on the account was 5.26%, with the dividend accounting for 16.14% of the total change in the account value. I am open to questions about the rational for selecting a particular stock at a given time during 2009.

As you will notice, my best investment for 2009 was Helmerich & Payne (HP) with a 16% gain using 49% of the portfolio. The worst investment was American National Insurance (ANAT) which lost 22% with 23% of the portfolio. The best gain from the Nasdaq 100 Watch List was Pharmaceutical Products (PPDI) with a gain of 9.78% using 26.71% of the portfolio. Three trades Hythiam (HYTM), Evotec (EVTC) and YRCW(YRCW) were pure speculations with minor portions of the portfolio. The losses of HYTM and EVTC were easily offset by the gains of YRCW. As I've said many times before, gold and silver stocks act as perpetual options on the price of the precious metal. My postions in Agnico-Eagle Mines (AEM) and Hecla Mining (HL) were attempts to participate in the run-up in the metals. Each of the transaction with HL and AEM were completed within a month.

Symbol Close Date % Gain/Loss % of Portfolio
AEM 2/4/2009 4.51% 20.28%
HL 2/5/2009 -23.78% 4.55%
ANAT 2/23/2009 -22.57% 23.61%
SYY 2/23/2009 -6.69% 30.33%
HP 3/26/2009 16.06% 49.00%
MO 6/5/2009 13.22% 48.33%
VIVO 6/12/2009 13.71% 49.64%
CAH 7/30/2009 8.53% 27.32%
PPDI 8/5/2009 9.78% 26.71%
EVTC 9/16/2009 -5.90% 1.60%
HYTM 9/23/2009 -42.31% 0.53%
YRCW 9/24/2009 37.27% 1.37%
MO 10/9/2009 -2.10% 55.40%
BOH 10/23/2009 8.60% 50.13%
CEPH 11/2/2009 0.23% 26.70%
WTR 12/11/2009 5.31% 21.07%
NWN 12/11/2009 5.91% 27.25%
CAH 12/30/2009 0.93% 25.61%
My investment style is in no way an endorsement of the way to invest your money. All recommendations on which stocks to consider buying are listed as Investment Observations. I'm glad to hear your thoughts, questions and comments.
-Touc

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Posted in 2009 Transaction Overview

Article Commentary and Reply

Posted on February 8, 2010 by | Comments Off on Article Commentary and Reply

The following is a response by a reader regarding the February 8, 2010 article outlining all of the transactions from 2008:

Reader Comment:

I am assuming that by "portfolio" is meant all investable funds among all asset classes like stocks, bonds, commodities, etc.

1) You had 94% of all investable funds in Wesco at one time which to me appears extreme concentration in one asset class, regardless of how confident one is about the prospects. And since the future is unpredictable, I believe the risk/reward outcome unnecessarily becomes a hostage to the "Black Swan" events.

I do note that you had a timely and efficient loss control mechanism in place and that you sold out at a minimal loss. But that might be because you had such a huge overweight in that one stock, forcing you to watch it like a hawk. Had it been a small weight, you might have acted differently, even not having sold out and thus made a much greater profit in absolute terms since Wesco climbed 10% to 15% higher soon after you sold it.

This is a good example of why single, huge overweight concentration in one security is generally counterproductive because we are forced into taking quick actions based on short term volatility and transient perceptions of risk.

2) Almost ten times out of a total of 40 trades you let your realized losses exceed 10% and in one case even go as high as 46%. I am not averse to enduring high unrealized losses in special cases wherein we are convinced about the intrinsic value of the investment, and are willing to "ride out the storm". This is a part of the process of investing. However, I wonder what intrinsic value, or a miraculous turnaround, you were seeing holding Fannie May during the summer and early fall of 2008. Granted, you had a small allocation to this name at the time, but the expectations surrounding this trade appear to me to be speculative in nature.

3) After September every trade was a losing trade (except the three with small profits), all the way through the end of the year. And that was not in the least unusual, since being in the stock market was simply not the right strategy at the time. I am not sure what the Dow Theory was telling us around this time -- during this period of extreme volatility and spreading risks throughout the investment landscape globally. Maybe you can throw some light with respect to the Dow Theory in this context, for this period. And also whether any other asset allocations were considered and rejected. (For instance, 4Q08 provided bountiful profits in the Treasury bonds with minimal volatility and low risk.)

Touc's Reply:

Yes, by portfolio I mean all investable funds that are transacted through a brokerage firm. The percentages given are specific to any and all cash holdings in all brokerage accounts. As part of a truly diversified portfolio, I hold physical gold and silver, real estate and a minority ownership in a restaurant.
Your points about extreme concentration are quite valid, on the surface. However, as you’ll note in my article “Diversification Doesn’t Matter,” the general declines of the market are going to take out an investor no matter how diversified. In fact, the more diversified the account within the realm of stocks, the more likely diminished returns will occur.
Regarding the issue of “black swan” events, as a student of stock market crashes and panics, I have built in the prospect of a “black swan” in every transaction. First, I assume that I will lose at least 50% of my investment before entering into an investment. Second, I accept the reality of the situation based on such thinking. Third, by having an undiversified portfolio, I can clearly address scenarios that exceed losses of 50% or more without a deleterious impact on my mental faculties. With this in mind, I can better determine the risks that I’m about to take.
The matter of Wesco Financial (WSC) is an interesting one to point out. There are at least a couple thoughts, which I will try to elucidate upon. First and foremost is the transaction that preceded the WSC trade. In less than 2 months I was able to advance 96% of my portfolio by 10% with Family Dollar Stores (FDO). All that mattered to me was to not wipe out the gain immediately after accomplishing such a feat. As pointed out, I probably would have acted differently had the position been smaller. The tendency of most diversified (smaller postions) investors is to watch calmly as their entire portfolio declines until the market or stock cannot fall any further, at which point the investor panics and sells at the bottom.
The next issue of concern regarding the Wesco (WSC) trade is the missed gains that followed after selling the stock. This is something that is most pronounced with the entire sell recommendations that I have given on both Dividend Inc. and New Low Observer. In my opinion, investors face two types of greed, one for profit and one for loss. Under the conditions of both forms of greed, only losses can become permanent. I seek to mitigate both extremes of greed for what I am ultimately able to keep. I am unanimous (wink) in declaring that I seek mediocre returns or “fair profits.” In some respects, my willingness to accept missed gains and 50% losses keeps me righted. The fact that my returns have exceeded the downward spiral of 2008 with positive gains is only icing on the cake.
To be honest, I never felt the strain of getting in or out of a stock quickly enough. There never was a sense of being rushed. No wondering in the middle of the night what is going to happen to my outsized trade? After all, either I’m right or I am wrong and the markets will tell me soon enough. For this reason, I was never overwhelmed by the sense that somehow I missed an opportunity. I kept my eye on all the current and former Dividend Achievers and stuck to my core competency.
Fannie Mae (FNM) wasn’t a situation of whether the company had any intrinsic value or not. I simply speculated that the government assurance would bolster the share price of FNM. I was completely wrong about the FNM speculation. However, I ensured that the losses didn’t exceed the gains from the (AIG) speculation that occurred on 2/28/2008, 9/23/2008 with 82% and 38% respectively. Also, I didn’t want to wipe out the Bear Stearns (BSC) speculation of March 14, 2008 with 26% of the portfolio. Another matter of concern is the fact that by September 29, 2008, I had amassed gains of 41% in the same portfolio. I knew I was “playing” with house money. FNM just happened to be one (of many) that didn’t go my way.
The question of my take on Dow Theory in the last quarter of 2008 is very clear. In a Dividend Inc. article titled “A Key Point for the Market” dated October 6, 2008, I stated the following*:
“Today the Dow Jones Industrial Average has fallen to the minimum of 9525.32. This exceeds the Dow Theory projection of 9531.11 posted on this blog on September 17, 2008. Nothing that has happened thus far is surprising according to Dow's Theory. It becomes academic at this point to suggest that we are either going to the 7197.60 level…”
On September 17, 2008, in an article titled “Dow Theory on the Dow Industrials,” I stated the following*:
“After today's stock market action the Dow Jones Industrial Average closed at the level of 10,609.66. This is below the 50% Principal as devised by E. George Schaefer. The 50% principal indicates that if a stock or index falls below this level it will fall, at minimum to the 2/3 level of Dow's Theory. Right now the 2/3 level for the Dow Jones Industrial Average is 9531.11. If the Dow falls below the 2/3 level the next stop will be 7,197.60.”
Although Dow Theory had given a bear market signal, as indicated by Richard Russell’s November 2007 Barron’s article, I stuck to my core competency which is current and former Dividend Achievers with some speculation in gold and silver stocks. Dow Theory, for me, has acted as a guidepost for the market’s general direction, which affects the concentration of each individual stock. However, if Dow Theory were interpreted as Charles Dow has indicated (an approach which I reiterate throughout the site), investors would do well to heed Dow’s remark that “even in a bear market, this method of trading will usually be found safe…”
Thank you for your sincere interest and the opportunity to discuss, at length, the ideas that went into some of my trades during 2008.
-Touc
*anyone interested in the articles dated September 17, 2008 or October 6, 2008 can send an email to me. Those who regularly received the RSS feed or automatic updates should look under the respective dates that the feeds or emails went out from Dividend Inc. I hope you still have those articles.

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Posted in Black Swan, Charles Dow, Dow Theory, Richard Russell, Transaction Review

2008 Transaction Overview

Posted on February 8, 2010 by | Comments Off on 2008 Transaction Overview
Below are all of my closed transactions for 2008 with the percentage realized gain or loss along with the percentage of the portfolio of each position. Closed positions are those that were done after the purchase of the stock took place. Therefore, purchases that took place in 2007 may have been close in 2008 while purchases in late 2008 may not have reflected a gain or loss until 2009. As an example, FDO was purchased in late December 2007 and sold late January 2008.
After transaction costs, the total return in the portfolio for 2008 was 14.35%. The dividend yield received on the account was 2.53%, with the dividend accounting for 17.62% of the total change in the account value. I am open to questions about the rational for selecting a particular stock at a given time during 2008. One thing that will be noticed about the differences between 2008 and 2009 is that 2009 has far fewer transactions.
Because this portfolio actually made money when the major indices lost close to 40% in 2008, I'm hoping to replicated this approach (mainly to avoid losing money in a market downturn.) I would appreciate any constructive insights or thoughts by you the reader. I'm hoping this will be an instructive moment for everyone involved. If you don't wish to post in the comment section then send me an email.I will be posting my transaction history for 2009 here shortly.

-Touc
Symbol
Close date
 Total % Gain % of Portfolio
(FDO)
 
1/31/2008
 
10.65%
 
96.67%
(WSC)
 
2/11/2008
 
-3.93%
 
94.28%
(AIG)
 
2/28/2008
 
12.52%
 
82.65%
(CTAS)
 
3/13/2008
 
-3.81%
 
29.43%
(CDE)
 
3/13/2008
 
-12.42%
 
1.91%
(BSC)
 
3/14/2008
 
7.33%
 
26.10%
(HTX)
 
3/24/2008
 
1.73%
 
29.52%
(KGC)
 
3/24/2008
 
-16.73%
 
38.15%
(CTAS)
 
4/16/2008
 
-4.34%
 
31.11%
(GSS)
 
4/16/2008
 
-13.21%
 
1.77%
(NC)
 
7/23/2008
 
27.30%
 
32.11%
(MSA)
 
8/11/2008
 
19.02%
 
36.71%
(WIN)
 
8/14/2008
 
5.55%
 
27.27%
(BGG)
 
8/27/2008
 
1.27%
 
31.38%
(ANAT)
 
9/9/2008
 
-11.64%
 
28.26%
(EXPD)
 
9/9/2008
 
-5.51%
 
33.01%
(HPQ)
 
9/9/2008
 
115.03%
 
0.07%
(NSEC)
 
9/9/2008
 
-17.36%
 
3.08%
(TDS)
 
9/9/2008
 
-3.97%
 
38.10%
(NEM)
 
9/17/2008
 
3.27%
 
32.03%
(HL)
 
9/18/2008
 
5.70%
 
39.06%
(AIG)
 
9/23/2008
 
33.94%
 
38.27%
(ANAT)
 
9/29/2008
 
2.80%
 
29.25%
(ADM)
 
9/30/2008
 
-8.43%
 
20.77%
(WAG)
 
9/30/2008
 
-1.75%
 
44.09%
(TMR)
 
10/7/2008
 
-14.66%
 
11.36%
(NXG)
 
10/7/2008
 
-12.72%
 
11.40%
(AEM)
 
10/10/2008
 
-3.03%
 
15.58%
(FNM)
 
10/10/2008
 
-46.25%
 
7.14%
(GSS)
 
10/10/2008
 
-8.66%
 
12.11%
(JOF)
 
10/14/2008
 
2.34%
 
22.18%
(DOG)
 
10/15/2008
 
1.14%
 
43.23%
(AIG)
 
10/20/2008
 
-2.55%
 
66.35%
(BMI)
 
10/22/2008
 
-5.40%
 
35.38%
(EUM)
 
10/27/2008
 
5.26%
 
46.63%
(AEM)
 
10/28/2008
 
-4.08%
 
25.83%
(ABX)
 
10/28/2008
 
-2.92%
 
24.26%
(CTL)
 
10/31/2008
 
-9.93%
 
34.18%
(NC)
 
10/31/2008
 
-0.14%
 
43.42%
(NC)
 
11/7/2008
 
-12.16%
 
49.47%

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Posted in AIG, ANAT, bgg, bsc, CDE, ctas, expd, FDO, gss, HL, hpq, htx, kgc, msa, NC, NEM, nsec, tds, win, wsc

Nasdaq 100 Watch List

Posted on February 7, 2010 by | Comments Off on Nasdaq 100 Watch List
Below are the Nasdaq 100 companies that are within 20% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models or are about to go out of business. These companies are deemed highly speculative unless otherwise noted. -Touc
Symbol Name Trade P/E EPS Yield P/B Pct from Yr Low
First Solar
114.19
15.22
7.50
N/A
3.93
13.17%
Apollo Group
59.93
14.42
4.16
N/A
6.45
13.53%
Gilead Sciences
46.38
16.44
2.82
N/A
6.43
14.18%
Activision Blizzard
10.21
41.67
0.25
N/A
1.14
15.63%
QUALCOMM
38.04
30.53
1.25
1.80%
2.99
16.54%
Electronic Arts
17.26
N/A
-4.06
N/A
2.08
17.02%
Genzyme
55.17
31.45
1.75
N/A
1.89
17.16%
Stericycle
52.00
26.58
1.96
N/A
5.76
17.22%

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Posted in apol, atvi, erts, fslr, GENZ, GILD, qcom, SRCL

Market Commentary

Posted on February 7, 2010 by | Comments Off on Market Commentary
It was a volatile week for the Dow which closed the week 12 points above 10,000. During the week the Dow climbed as high as 10,300 then fell below 9,900. The charts below illustrate things to look out for.
The Dow has gotten support (green arrow) from the 150 days moving average back in July 2009. Another two supports came at the 50 days moving average. Currently, the market showed some strength in being able to rebound off the moving average and closed well above it.
The Transportation index shows a entirely different story. After a strong run up to 4,200 level, the index appears to be getting weaker and weaker. The index was supported back in July but Thursday closed below the 150 day moving average which is bearish. Moreover, the index tried to break above the 150 day moving average but couldn't managed to get through (red arrow).
The two charts above suggest some kind of divergence between the two indexes. I'm not implying that this is a Dow Theory sell signal but that possibility isn't far out given the way the market is behaving. In addition, even if a sell signal is to occurred, it doesn't mean sell all your holdings and go into cash. Similar to a buy signal which investors shouldn't interpret as "all in." Investors should instead focus on seeking fair profits which isn't hard to understand but rather hard to implement.
Short-term rally could come within a week or two as the bottoming in several technical indicators (RSI & MACD) indicated.
I suggest everyone to revisit our article 3 Steps to Investment Success for a better understanding of our investing strategy.
- Art

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Posted in Commentary, fair profit

Dividend Achiever Watch List

Posted on February 5, 2010 by | Comments Off on Dividend Achiever Watch List

At the end of the week, my watch list contains 27 companies compared to 22 companies from the previous week. Here are the companies on my watch list as of February 5 , 2010.

Symbol Name Price % Yr Low P/E EPS Div/Shr Yield Payout Ratio
THFF First Financial Corp 27.45 3.47% 15.00 1.83 0.90 3.28% 49%
XOM EXXON MOBIL 64.80 4.75% 15.09 4.29 1.68 2.59% 39%
SHEN Shenandoah Telecom 17.09 6.15% 27.56 0.62 0.32 1.87% 52%
CWT CALIFORNIA WATER 36.03 7.58% 18.02 2.00 1.19 3.30% 60%
SRCE 1st Source Corporation 14.93 7.88% 18.90 0.79 0.60 4.02% 76%
RBCAA Republic Bancorp, Inc. 15.73 9.46% 7.79 2.02 0.53 3.37% 26%
WTR AQUA AMERICA INC 16.92 9.94% 22.26 0.76 0.58 3.43% 76%
AWR AMER ST WATER 32.74 10.01% 20.21 1.62 1.04 3.18% 64%
NTRS Northern Trust Corp 50.54 10.40% 15.84 3.19 1.12 2.22% 35%
WGL WGL HOLDINGS INC 31.63 10.63% 13.23 2.39 1.47 4.65% 62%
UMBF UMB Financial Corp 37.60 11.74% 17.90 2.10 0.74 1.97% 35%
NWN NORTHWEST NAT GAS 42.23 11.99% 14.61 2.89 1.66 3.93% 57%
WEYS Weyco Group, Inc. 22.61 12.43% 22.61 1.00 0.60 2.65% 60%
SYBT S.Y. Bancorp, Inc. 20.66 12.96% 15.30 1.35 0.68 3.29% 50%
TMP TOMPKINS FINANCIAL 36.22 13.01% 13.46 2.69 1.36 3.75% 51%
FPL F P L GROUP INC 47.40 14.27% 11.94 3.97 1.89 3.99% 48%
WMT WAL MART STORES 53.45 15.00% 15.49 3.45 1.09 2.04% 32%
MON* MONSANTO CO. 76.74 15.28% 27.62 2.78 1.06 1.38% 38%
BCR BARD C R INC 79.92 15.93% 17.37 4.60 0.68 0.85% 15%
NJR N J RESOURCES CP 34.79 16.16% 54.36 0.64 1.36 3.91% 213%
UGI U G I CP 24.70 16.84% 10.47 2.36 0.80 3.24% 34%
MLM MARTIN MARIETTA 78.62 16.91% 29.90 2.63 1.60 2.04% 61%
T AT&T INC. 25.24 17.72% 11.91 2.12 1.68 6.66% 79%
PNY PIEDMONT NAT GAS 24.69 19.39% 14.78 1.67 1.08 4.37% 65%
MGEE MGE Energy Inc. 32.63 19.66% 15.39 2.12 1.47 4.51% 69%
SJW S J W CP 21.86 19.98% 24.29 0.90 0.68 3.11% 76%
SVU SUPERVALU INC 14.59 20.28% 32.42 0.45 0.35 2.40% 78%
27 Companies

*Although Monsanto (MON) isn't a Dividend Achiever, we feel that it has a good potential of becoming one.

Out of this week's list is Pitney Bowes (PBI) which rose 6.8% in one week and raised its dividend from 36 cents to 36.5 cents, an increase of 1.3%.
Back on the list are Piedmont Nat Gas (PNY), San Jose Water (SJW), and SuperValu (SVU). - Art

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Posted in Dividend Achiever Watch List

Electromagnetic Interference: Toyota (TM) Isn’t Alone

Posted on February 4, 2010 by | Comments Off on Electromagnetic Interference: Toyota (TM) Isn’t Alone
The alarm over the recent discovery of braking problems with Toyota (TM) automobiles has garnered a lot of attention in the news for good reason.  After all, the once esteemed car manufacturer that could do no wrong has suddenly been found to have a flaw.  
Some market analysts contend that, as Toyota scrambles to seek ways to offset the PR  damage, companies like Honda (HMC), Ford (F) and General Motors (GM), Hyundai (SEO:005380) and Chrysler Group will benefit from the stumbles of Toyota.  However, the flaw in this case may be a problem which has existed for a long time and has been known to occur among modern devices that require a computer chip and complex electrical components.  The extent of the problem is not limited to Toyota and will be revealed as such in due time.  The problem is known as electromagnetic interference (EMI).
When searching the internet, you can find numerous articles that outline the long existing problem with EMI.  However, it is best to start with the earliest examples of EMI.  During WWII, EMI was commonly known as a gremlin who would take over the electrical system of a fighter plane wrecking havoc on the control systems especially during thunderstorms or highly charged atmosphere.  Like in the movie "Gremlins," you would never want your electrical system to get wet because the problems that you experience would "multiply."  Airplanes have always been most susceptible to EMI issues due to their passage through the atmosphere.
 As our world becomes designed around electronic devices, there becomes the threat that everything we rely upon is at risk of failing to an extent which is irreversible and potentially fatal.  Although the threat is limited it does exist where it didn't exist before.  
It is my opinion that Toyota (TM) is at the leading edge of dealing with EMI while other car manufacturers wring their hands at how to recall their vehicles before the next fatality or serious crash.  In the "Study to Predict the Electromagnetic Interference for a Typical House in 2010,"  the author, Anita Woogara at Bristol University, says:
"Cars and other vehicles now contain many electronic systems. These range from electronic engine management systems to achieve maximum efficiency to electronically operated airbags to protect the driver in the event of a crash. Unfortunately this leaves cars more vulnerable to electromagnetic interference. Mobile phones and passing taxi radios have been known to interfere with Anti-skid Braking Systems (ABS) and airbags, causing drivers to lose control of the car. Car ignition has been changed recently to a short high voltage spark, although better for exhaust emissions this causes wideband interference. As the car industry is very competitive, cutbacks are often made on the wiring, which increases the risk of susceptibility.
  • The inclusion of computers in cars for navigation purposes will also increase the susceptibility.
Automobiles are covered in the Automotive Directive; this excludes them from the EMC Directive on sub-assemblies and devices that may be sold separately from the vehicles. All of the systems in the car have to be able to work simultaneously without interference from each other; ignition interference and external radiated interference. However, interference from objects brought into the car, such as mobile phones and laptops, may have been missed out. Additionally, household electronics can be affected by cars outside, in the street or garage, which is especially relevant in houses with small front gardens."
The long standing issues with EMI presents a challenge for those wishing for more sophisticated electronic devices in, and around, their vehicles.  I suspect that Toyota will emerge from this matter in a far better position than most market analysts expect.  Toyota's problems, especially with the Prius, reflect the highly advanced nature of the automobiles that they create.  Anyone willing to compete against Toyota will be faced with trying to solve the EMI dilemma while integrating highly advanced electronic devices and features.

Back of the Envelope Analysis on Toyota (TM)
  • Fair Market Value according to Dow Theory: $89.59
  • Mean Value according to Value Line: $45.20
  • Oversold at:$60 and below
 When viewed from the perspective of Dow Theory, we see that TM has struggled with being able to rise significantly above the $89.59 level after rising from the low of $41.17 in early 2003 and then descending from the peak of $138 in February 2007.  We can expect that the current downside target for TM will be around the double bottom of $56 set in March of 2009.

-Touc

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Sell Abbott Labs (ABT) at the Market

Posted on February 3, 2010 by | Comments Off on Sell Abbott Labs (ABT) at the Market
It is now time to recommend that Abbott Labs (ABT) be sold at the market. The stock has performed moderately since the stockwatch/investment observation was issued on September 24, 2009. It is highly recommended that anyone who bought the stock based on our insight should re-read the posting. Unfortunately, it was not possible to buy this stock at any price lower than on the recommended date.

ABT's stock price has gone nothing but up since the recommendation. However, in the pursuit of "seeking fair profits" the returns that this stock has provided within the last 133 days say that it is necessary to consider alternative opportunities. The key to investment success and a key principle of economics is to seek the best alternatives.

ABT was recommended when it closed at $46.94 on September 24th. As of February 3, 2010, ABT was quoted at $54.60. Based on yesterday's closing price of $54.44, ABT has gained 16.80% (including reinvested dividends.) The annualized return on this position would be close to 46%. Selling this stock now generates a return of 4.94x greater than the amount of the dividend yield if held for a full year. Additionally, the 16.80% gain exceeds the return on a 30-year treasury purchased on September 24, 2009 by 4.01x (if held to maturity.)

Those not interested in following through with our sell recommendation can feel comfortable knowing that ABT is a great long-term holding with a 16.80% downside cushion since our investment observation. As the price of ABT rises, it should be noted that the stock faces significant upside resistance at $56.50, $57.50 and $60.

As we have indicated in the purposes and function of this site, our goal is to:

  • maximize the annual yield of each trade.
  • reduce time between buying and selling of each stock.
  • exceed the annual yield of government guaranteed alternatives in each trade.
Investment observations are intended to be a starting point for investigating a quality company at a reasonable price. It is hoped that after doing the background research you can buy the stock at a lower price. Ideally the stock should be held in a tax deferred account and should not consist of less than 20% of your holdings. Personally, we prefer holding only 2-3 stocks at a time.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the Investment Observation was made (please avoid making this mistake.) We aim for mediocrity in our returns, therefore we are happy with 9-12% annual gains. However, since codifying this approach to investing in 2005, we have had annual returns of 20% and above every year since.

It is always recommended that when selling a stock, one should not place stop orders, limit orders or orders after hours. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, we would rather leave some money on the table rather than have it taken away from us by the trades that are placed by institutions and market makers.

-Touc.

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Posted in ABT, Sell Recommendations