Author Archives: NLObserver Team

Dow Theory: Cyclical Bull Market Confirmed

Posted on April 6, 2011 | Leave a comment
On April 4, 2011, we were provided with a Dow Theory confirmation of the cyclical bull market, within a secular bear market, when the Dow Jones Industrial Average exceeded the prior peak of 12,391.25 set on February 18, 2011.
As has been the case throughout this bull market run, the Transportation Average has taken the lead on the way up. This most recent move by the Industrial Average only confirms what the Dow Jones Transportation Average managed to accomplish on March 31, 2011 by closing at 5,299.89. At least for the next month and a half, the economy is expected to continue to grow. What we see from the Transports on the way up we may also see on the way down.

What do the new short-term highs mean for the market overall? It appears to indicate that the Dow Industrials will continue to stagger towards the old high that was established October 9, 2007 at 14,164. For us, a possible leading indicator for the market (even before the Transports) is the price of gold and silver. If precious metals can continue to rise then the Dow has a more favorable chance of rising. However, if precious metals are falling then, in this stage of the interest rate cycle, the general market will have little chance of going up.

According to Dow Theory, all technical indications in the stock market should translate into the economy. Dow Theory was never intended to predict the stock market. Instead, Dow Theory was intended to determine if the prospects for the economy were favorable or not, using the stock market as a leading indicator. The best example of this is in Robert Rhea’s easy to read book, The Dow Theory Applied to Business and Banking.

 
Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in book, Dow Theory, Robert Rhea

Speculation Observation: Teva Pharmaceutical Industries (TEVA) at $50.27

Posted on April 5, 2011 | 2 comments
A reader indicates that Teva Pharmaceutical Industries (TEVA) is a great stock although there is some confusion as to why the company is trading at such a low price. We took a look at Teva and came up with the following thoughts.
According to Value Line dated January 14, 2011, Teva has paid a dividend since 2000. The average dividend yield when the stock price peaked has been 0.69% and the average dividend yield at the low price has been 1.06%. Based on the close of trading on April 4, 2011, Teva has a dividend yield of 1.74%.
In order for the stock to trade at the historical normal low price/high yield; Teva should trade at $82.07. If Teva were to eventually trade back at the historical high price/low yield, then the stock potentially could rise to $126.
We’re going to take the conservative route and assume that Teva’s new low yield/high price is at the 1.06% yield level. This suggests that the upside target for the stock is 64%. We arrive at this conclusion assuming that all is lost for Teva to ever go back to the 10-year dividend yield range between 0.69% and 1.06%.
An additional consideration is the growth rate of the dividend, which has averaged 26% in the last 5 years. Looking ahead, we considered the most conservative approach to estimating what the stock would be if Teva were to increase the dividend by only 10%. At the historical low price/high yield (1.06%), Teva would be worth $86.79 the same time next year. Any amount below $86 and Teva would be extremely undervalued, all things being equal, or about to go out of business (it’s possible).
As with the historical dividend yield range, the price to book ratios (P/B) are correspondingly out of alignment. In the last 10-year, Teva’s P/B ratio at the highs has averaged 4.41x. At the low in the stock price, the P/B ratio has normally traded at 2.65x. With Teva trading at 2.05x book, the price could easily rise by 30% to $65 just to achieve the prior low price to book ratio range.
For the NLO team, the downside risk is much more important than the upside prospects. According to Dow Theory, Teva has the following downside targets:
  • $47.06 (fair value based on 7/2006 low)
  • $41.30
  • $29.77
Charles H. Dow indicated that the fair value of a stock is the average price that is paid by investors. The fair value is the point at which an investor, as opposed to speculators, will consider buying or selling a stock. The fair value that we’ve arrived is based on the low of July 2006. If Teva were to decline below $47.06, the prospects for $29.77 become almost inevitable. Our concern is that the macro conditions favor a market decline, which would put additional downside pressure on Teva.  As Teva declines below fair value we will provide an updated estimate of fair value upon request.

Please revisit New Low Observer for edits and revisions to this post. Email us.

2 Comments

Posted in Speculation Observation, TEVA, Teva Pharmaceutical

Tagged

Nasdaq 100 Watch List

Posted on April 1, 2011 | 1 comment
Below are the Nasdaq 100 companies that are within 26% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although theses companies are very risky, they provide significant opportunity to outperform the market in the coming year.

Symbol Name Trade P/E EPS Yield P/B % from Low
CSCO Cisco Systems $17.04 12.89 $1.32 1.40% 2.08 0.41%
URBN Urban Outfitters $30.35 18.97 $1.60 0 3.48 4.55%
AMGN Amgen Inc. $53.08 11.08 $4.79 0 2.08 5.61%
TEVA Teva Pharma. $50.54 13.79 $3.66 1.80% 2.05 7.55%
ATVI Activision Blizzard $11.01 33.36 $0.33 1.50% 1.27 10.21%
INTC Intel Corporation $19.72 9.81 $2.01 3.60% 2.25 12.05%
MSFT Microsoft Corp. $25.48 10.87 $2.34 2.50% 4.4 12.10%
MRVL Marvell Tech. $15.93 11.89 $1.34 0 1.84 14.85%
SPLS Staples $20.06 16.58 $1.21 2.00% 2.02 14.96%
CELG Celgene Corp. $57.30 30.48 $1.88 0 4.53 19.33%
AKAM Akamai $37.60 41.59 $0.90 0 3.26 19.59%
QGEN Qiagen N.V. $20.31 33.85 $0.60 0 1.89 20.46%
EXPE Expedia, Inc. $22.26 15.25 $1.46 1.30% 2.32 21.64%
APOL Apollo Group $41.41 11.36 $3.65 0 4.17 22.70%
MAT Mattel, Inc. $25.26 13.6 $1.86 3.70% 3.31 25.42%

Nasdaq 100 Summary

On our last  Nasdaq 100 watch list, Cephalon (CEPH) was within 6% of the 52-week low.  This week, Cephalon was presented with an offer that seemed exceptional.  Valeant (VRX) announced that it was willing to offer a buyout of Cephalon at $73.  The market reaction to this was to push Cephalon above the offer price to $75.  At the same time, Valeant's stock price has jumped more than 15% indicating that the market feels that Cephalon could use a shake-up.  Our individual recommendation of Cephalon was issued on February 15, 2011 and can be found here. 
Also on our watch list from February 20, 2011, Celgene (CELG) has quietly crept 7% higher from where it once was.  According to Value Line dated January 14, 2011, Celegene has no debt, minimal increase of shares outstanding in the last three years, return on equity and return on capital are both in the high teens and book value that has grown over 11x since 2003.
Another company that we're watching closely is Amgen (AMGN).  The price of Amgen has vacillated in a narrowing range since 2008.   At the same time, Amgen has seen its shares outstanding decrease by 27.7% since 2002.  Amgen has very compelling financials which belies the lackluster performance in the stock price.

Nasdaq 100 Performance Review

Symbol Name 3/26/2010 3/26/2011 % change
GILD Gilead Sciences $45.34 $42.08 -7.19%
GENZ Genzyme Corp. $53.00 $75.94 43.28%
APOL Apollo Group $61.28 $43.51 -29.00%
QCOM Qualcomm $41.10 $52.75 28.35%
FSLR First Solar $116.50 $150.44 29.13%
SRCL Stericycle, Inc. $54.50 $88.82 62.97%
- Average - - 21.26%
NDX Nasdaq 100 1952.63 2326.26 19.13%
Our watch list from March 26, 2010 (found here) performed well considering that Apollo Group (APOL) has continued to fall due to closer scrutiny of Apollo's business practices.  Gilead Sciences (GILD) managed to decline -30% before coming full circle with a 1-year loss of "only" -7%.  The average gain for the whole group was 21.26% which was slightly ahead of the Nasdaq 100 index by 2.13%.
Please revisit New Low Observer for edits and revisions to this post. Email us.

1 Comment

Posted in Nasdaq 100 Watch List

Tagged

Sell Cephalon (CEPH) at the Market

Posted on March 30, 2011 | Leave a comment
Our premise that exceptional values starts with quality companies trading near a 52-week low has been proven again. Just like our calls on Beckman Coulter (BEC), Wesco Financial (WSC), Genzyme (GENZ) and many others, our articles on Cephalon (CEPH) have shown that quality cannot be ignored.
In a series of articles starting in August of 2009, we recommended considering the purchase of CEPH at $56.61. Subsequently, in March 2010, we recommended selling CEPH at around the $71 price range, which was two dollars short of the high at $73. Finally, on February 11, 2011, we recommended that followers of this site reconsider CEPH at $58.99. Soon after our recommendation, CEPH declined to the most recent low of $57. A month and a half later, Cephalon (CEPH) is getting a hostile bid from Valeant Pharmaceuticals (VRX) for approximately $73 a share.
Although our cursory examination of the offer by VRX seems generous, we believe that CEPH probably should, and could, be worth closer to $115 rather than $73. Regardless of this concern, we believe that 23% in 46 days affords us the opportunity to recommend selling the stock at the current price. There are too many opportunities on our Nasdaq 100 and Dividend Watch Lists. Based on our last recommendation, the annualized return on this position would be close to 200% in a tax-deferred account.
Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in CEPH, Cephalon Inc., Sell Recommendations

Tagged

Stock List Review: InvestorPoet’s 8 Core Stocks

Posted on March 29, 2011 | Leave a comment
This is a one-year performance recap of the stocks mentioned in an article published on March 29, 2010 generated by InvestorPoet of Poetic Portfolios blog.
Company Symbol March 29, 2010 March 28, 2011 % change
Costco Wholesale COST $59.36 $71.26 20.05%
AT&T T $24.91 $29.36 17.86%
ADP ADP $43.15 $50.35 16.69%
Markel MKL $372.70 $405.12 8.70%
Pepsico PEP $64.57 $64.34 -0.36%
Proctor & Gamble PG $61.82 $60.66 -1.88%
Johnson & Johnson JNJ $62.52 $59.24 -5.25%
Intel INTC $21.65 $20.34 -6.05%
Average - - - 6.22%
Dow Industrial Average - 10895.86 12197.88 11.95%
S&P 500 - 1173.22 1310.19 11.67%
The average total return for this portfolio over the last year was 6.22% while the median was 4.17%. Only three of the stocks exceeded the return of the major indexes while the remainder of stocks registered modest gains or slight losses over the last year.
*All 2010 stock prices are adjusted to reflect dividends and splits. Date range is March 29, 2010 to March 28, 2011. 
Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in InvestorPoet

Tagged

Stock List Review: Chuck Carnevale’s Undervalued Blue Chips

Posted on March 27, 2011 | Leave a comment
This is a 1-year performance recap of the stocks mentioned in an article published on March 26, 2010 generated by Chuck Carnevale of EDMP Inc.
Symbol Name 3/26/2010 3/18/2011 % change Yield at rec'd
MKC McCormick 36.67 49.61 35.29% 2.70%
ADP ADP 42.86 50.37 17.52% 3.00%
CLX Clorox Co. 62.47 69.48 11.22% 3.10%
SYY Sysco Corp. 28.18 27.86 -1.14% 3.50%
PG Procter & Gamble 61.78 60.88 -1.46% 2.80%
PEP Pepsico, Inc. 64.61 63.98 -0.98% 2.70%
ABT Abbott Labs 51.07 48.03 -5.95% 3.00%
HCBK Hudson City Bancorp 13.31 9.87 -25.85% 4.30%
Average 3.58% 3.14%

The average total return for this portfolio was 3.58% while the median was –1.06%. Only two of the stocks managed to exceed the market performance. The remaining 6 stocks averaged –4.02% over the last year. Although this list comprised mainly of Dividend Achievers, stocks that have increased their dividend every year for the last 10 years, the performance was well below that of the Dow Industrials and S&P 500 Index which averaged over 12.62% and 12.63%, respectively. 
McCormick & Company (MKC) and Automatic Data Processing (ADP) handily exceed the returns of the Dow Industrials and Standard and Poor’s Index with 35.29% and 17.52% returns, respectively. The other current and former Dividend Achievers were all in the negative by narrow margins except Hudson City Bancorp (HCBK). The small losses over the last year justifies retaining long-term positions in the Dividend Achievers as long as the earnings support growth and consistency of the dividends.

It is noted that at the time of the recommendation of these stocks, they were at or near their respective 52-week highs. This is a critical element, recommending stocks at the high, that we strive to avoid. Our most recent list of Dividend Achievers with the one year performance can be found here. 

*All 2010 prices are adjusted to reflect dividends and splits.

 

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in Chuck Carnevale

Tagged

Stock List Review: Dividends4Life’s Avoiding the Cash Trap

Posted on March 26, 2011 | Leave a comment
This is a 1-year performance recap of the stocks mentioned in an article published on March 26, 2010 generated by Dividends4Life of Dividends Value.
Symbol Name 2010 Adj. Price* 2011 Price % change Yield at rec'd
RAVN Raven Industries 28.16 58.65 108.27% 2.89%
HIFS Hingham Savings 32.34 51.00 57.70% 2.83%
COP ConocoPhillips 49.11 80.24 63.39% 4.22%
WSM Williams-Sonoma 26.18 39.45 50.69% 1.88%
SBUX Starbucks 24.16 36.90 52.73% 1.58%
CSBK Clifton Savings 9.15 11.94 30.49% 2.50%
VLGEA Village Super Market 26.52 29.14 9.88% 3.61%
RTN Raytheon Co 55.56 50.80 -8.57% 2.62%
Average 45.57% 2.77%
Dow Industrials 10850.36 12220.59 12.63%
S&P 500 1166.59 1313.8 12.62%
The average total return for this portfolio over the last year was 45.57% while the median was 50.69%. Only two of the eight stocks underperformed the market. The remaining six stocks averaged a whopping 60% gain in the last year.
Raven Industries (RAVN), which has increased its dividend every year for 25 years and sports an exceptionally low dividend yield last year, outranked the gains of every stock on the list by almost double with a total return exceeding 108%. The average yield of all the stocks on the list was 2.77%.

*All 2010 prices are adjusted to reflect dividends and splits

 

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in Dividends4Life

Tagged

NLO Dividend Watch List

Posted on March 25, 2011 | Leave a comment
The market rallied strong and finish the week on a positive note. We can't help but feel bullish going into next week after the S&P 500 worked its way passed the 1,304.28 mark prior to March 11 (when the earthquake struck Japan). We will have to wait and see if the market can continue its upward momentum and give us another Dow Theory re-confirmation of the cyclical bull market within a secular bear market.

March 25, 2011 Watch List

Our watch list this week contains 28 companies that are within 11% of their 52-week low.

Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
SJW SJW Corp. 22.65 1.80% 17.42 1.30 0.69 3.05% 53%
SYY Sysco Corp. 27.86 2.69% 14.36 1.94 1.04 3.73% 54%
WABC Westamerica BanCorp.  50.13 2.94% 15.62 3.21 1.44 2.87% 45%
PPL PP&L Corporation 24.57 3.45% 11.38 2.16 1.40 5.70% 65%
TGT Target Corp. 49.95 3.57% 12.49 4.00 1.00 2.00% 25%
JNJ Johnson & Johnson   58.98 3.73% 12.34 4.78 2.16 3.66% 45%
HCBK Hudson City Bancorp, Inc. 9.87 3.79% 9.06 1.09 0.60 6.08% 55%
MCY Mercury General Corp. 38.83 4.13% 13.97 2.78 2.40 6.18% 86%
CHFC Chemical Financial Corp.  19.62 4.42% 22.30 0.88 0.80 4.08% 91%
PEP PepsiCo Inc. 63.98 6.07% 16.32 3.92 1.92 3.00% 49%
MRK Merck & Co., Inc 32.57 6.09% 116.32 0.28 1.52 4.67% 543%
CWT California Water Service 36.1 6.77% 19.94 1.81 1.23 3.41% 68%
HGIC Harleysville Group Inc.  32.37 6.80% 13.38 2.42 1.44 4.45% 60%
TRH Transatlantic Holdings, Inc. 47.41 7.55% 7.66 6.19 0.84 1.77% 14%
LLY Eli Lilly & Co. 34.48 7.68% 7.53 4.58 1.96 5.68% 43%
ABT Abbott Laboratories 48.03 7.71% 16.23 2.96 1.92 4.00% 65%
BMI Badger Meter, Inc. 39.65 8.81% 20.76 1.91 0.56 1.41% 29%
PRK Park National Corp. 64.37 8.92% 14.27 4.51 3.76 5.84% 83%
KMB Kimberly-Clark Corp. 65.1 9.28% 14.63 4.45 2.80 4.30% 63%
AWR American States Water Co. 34.16 9.35% 19.30 1.77 1.04 3.04% 59%
WMT Wal-Mart Stores, Inc. 52.35 9.59% 11.74 4.46 1.46 2.79% 33%
CL Colgate-Palmolive Co. 80.15 9.61% 18.60 4.31 2.32 2.89% 54%
AVP Avon Products, Inc. 27.43 9.72% 19.73 1.39 0.92 3.35% 66%
VLY Valley National BanCorp.  13.55 9.89% 16.73 0.81 0.72 5.31% 89%
NWN Northwest Natural Gas Co. 46.07 9.95% 16.88 2.73 1.74 3.78% 64%
BOH Bank of Hawaii Corp. 47.25 10.04% 12.43 3.80 1.80 3.81% 47%
WEYS Weyco Group, Inc.  24.59 10.32% 21.38 1.15 0.64 2.60% 56%
RLI RLI Corp. 56.39 10.87% 9.40 6.00 1.16 2.06% 19%
28 Companies






Watch List Summary

On the top of our list this week is San Jose, CA-based water utility SJW Corp. (SJW). The stock has been under pressure this week. The current yield of 6% is attractive but with nearly $30B of debt and only $650M of cash on hand, it may not be worth the risk/reward.
Target (TGT) is another name with tremendous upside potential gauging by the relative dividend yield establish by IQTrend. Historically, shares are undervalue at 1% yield. With the stock trading nearly 2%, it has the potential to double, all else being equal.
Another name we'd like to highlight is Abbott Lab (ABT). We go back to our 2009 analysis of the company and find some interesting qualitative changes. The stock was trading at 3.4% yield and roughly $47. Today, with a price of $48, ABT would yield 4%. We see that the stock offers more value at $48 than at $47.

Top Five Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from March 26, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.
Symbol Name 2010 Price 2011 Price % change
XOM Exxon Mobil Corp.   66.54 83.62 25.67%
FPL* FPL Group, Inc. 47.81 54.10 13.16%
MON Monsanto Co. 71.10 70.76 -0.48%
TMP Tompkins Financial Corp. 37.75 41.34 9.51%
BRO Brown & Brown, Inc. 17.81 25.09 40.88%



Average 17.75%





DJI Dow Jones Industrial 10,850.36 12,220.59 12.63%
SPX S&P 500 1,166.59 1,313.80 12.62%

*FPL is now NEE

The performance of our top five stocks topped the overall market by 5%. Thanks to two key performer, Exxon (XOM) and Brown & Brown (BRO).

Disclaimer

On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in NLO Dividend Watch List

Tagged

Stock List Review: Kurt Wulff’s McDep.com

Posted on March 21, 2011 | Leave a comment
This is a 1-year performance recap based on the most popular stock lists that appeared on SeekingAlpha.com. On March 21, 2010, the most popular stock list was generated by Kurt Wulff of McDep Associates. Kurt's list was titled "6 Cheap Oil Opportunities."

Symbol Name 3/19/2010 3/18/2011 % Change
XOM Exxon Mobil Corp. $65.36 $80.85 23.70%
COSWF.PK Canadian Oil Sands $28.55 $31.58 10.61%
TOT Total S.A. $53.91 $57.58 6.81%
CVX Chevron Corp. $72.43 $102.80 41.93%
PTR PetroChina Co. $112.48 $133.63 18.80%
COP ConocoPhillips Co. $50.40 $75.35 49.50%
Average 25.23%
Median 21.25%
Dow Industrials 10,741.98 11,858.52 10.39%
S&P 500 1,159.90 1,279.21 10.29%
Amex Oil Index 1,075.26 1,310.54 21.88%

Based on the total return performance of the list, the average gain was 25.23% while the median return was 21.25%. Kurt's stock list, on an average and median basis, significantly outperformed the Dow Jones Industrial Average and the S&P 500 index.  Additionally, Kurt's average return exceeded the Amex Oil Index (XOI) by 3.35%.

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in Kurt Wulff

Tagged

Stock List Review: Dividends4Life’s "Future Yield"

Posted on March 19, 2011 | 1 comment
This is a 1-year performance recap based on the most popular stock list that appeared on SeekingAlpha.com.  On March 19, 2010, the most popular stock list was generated by Dividends4Life of Dividends Value in an article titled "9 Dividend Stocks Building Future Yield." 

Company Symbol 3/19/2010 3/18/2011 Gain/Loss
Birner Dental bdms $16.24 $19.62 20.81%
Warwick Valley Telephone wwvy $13.29 $14.90 12.11%
Lennox lii $42.84 $50.97 18.98%
PepsiCo pep $64.58 $63.24 -2.07%
Astro-Med alot $7.35 $7.69 4.63%
Mead Johnson mjn $50.33 $55.90 11.07%
Guess? Inc. ges $44.23 $38.27 -13.48%
Air Products apd $72.59 $88.00 21.23%
Prospect Capital psec $10.94 $11.87 8.50%
Average 9.09%
Median 11.07%
Dow Industrials 10,741.98 11,858.52 10.39%
S&P 500 1,159.90 1,279.20 10.29%
Based on the total return performance of the list, the average gain was 9.09% while the median return was 11.07%.  Although the stock list's average return didn't exceed the performance of the Dow Jones Industrial Aveage or the S&P 500 of the same period, the median return implies that this list offered reasonable opportunity to exceed the market return if the buyer used discretion when purchasing the stocks.

Because this is only a one year review, we believe that there may be no relationship to the short-term outcome versus the long-term expectations.  Remember, past performance is no guarantee of future failure.

Please revisit New Low Observer for edits and revisions to this post. Email us.

1 Comment

Posted in Dividends4Life

Tagged

NLO Dividend Watch List

Posted on March 11, 2011 | Leave a comment

Theodore Roosevelt said "Do what you can, with what you have, where you are". Here are ways you can help those who are affected by the Earthquake in Japan.

Our watch list this week contains 31 companies that are within 11% of their 52-week low.
March 11, 2011 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
HCBK Hudson City Bancorp, Inc. 9.92 1.54% 9.10 1.09 0.60 6.05% 55%
SYY Sysco Corp. 27.83 2.58% 14.35 1.94 1.04 3.74% 54%
SHEN Shenandoah Telecom 16.01 2.89% 17.59 0.91 0.33 2.06% 36%
BMI Badger Meter, Inc. 37.68 3.04% 19.73 1.91 0.56 1.49% 29%
WABC Westamerica BanCorp.  50.25 3.18% 15.65 3.21 1.44 2.87% 45%
FCBC First Community Bancshares 12.26 3.20% 9.97 1.23 0.40 3.26% 33%
MCY Mercury General Corp. 39.31 3.72% 14.14 2.78 2.40 6.11% 86%
CWT California Water Service 35.17 4.02% 19.43 1.81 1.23 3.50% 68%
WEYS Weyco Group, Inc.  23.21 4.13% 20.18 1.15 0.64 2.76% 56%
SJW SJW Corp. 23.34 4.90% 17.95 1.30 0.69 2.96% 53%
CHFC Chemical Financial Corp.  19.72 4.95% 22.41 0.88 0.80 4.06% 91%
JNJ Johnson & Johnson   59.69 4.98% 12.49 4.78 2.16 3.62% 45%
AWR American States Water Co. 32.93 5.41% 22.40 1.47 1.04 3.16% 71%
ATNI Atlantic Tele-Network, Inc. 32.09 5.49% 12.30 2.61 0.88 2.74% 34%
PPL PP&L Corporation 25.26 6.36% 11.69 2.16 1.40 5.54% 65%
TGT Target Corp. 51.53 6.84% 12.88 4.00 1.00 1.94% 25%
PEP PepsiCo Inc. 64.65 7.18% 16.49 3.92 1.92 2.97% 49%
HGIC Harleysville Group Inc.  32.58 7.49% 13.46 2.42 1.44 4.42% 60%
RBCAA Republic BanCorp., Inc.  18.10 7.67% 5.86 3.09 0.57 3.15% 18%
SYBT S.Y. BanCorp., Inc.  23.93 7.99% 14.33 1.67 0.72 3.01% 43%
CL Colgate-Palmolive Co. 79.18 8.29% 18.37 4.31 2.32 2.93% 54%
AVP Avon Products, Inc. 27.16 8.64% 19.54 1.39 0.92 3.39% 66%
ABT Abbott Laboratories 48.46 8.68% 16.37 2.96 1.92 3.96% 65%
LLY Eli Lilly & Co. 34.86 8.87% 7.61 4.58 1.96 5.62% 43%
RLI RLI Corp. 55.47 9.06% 9.25 6.00 1.16 2.09% 19%
KMB Kimberly-Clark Corp. 64.65 9.15% 14.53 4.45 2.80 4.33% 63%
TRH Transatlantic Holdings, Inc. 48.28 9.53% 7.80 6.19 0.84 1.74% 14%
WMT Wal-Mart Stores, Inc. 52.59 10.09% 11.79 4.46 1.46 2.78% 33%
VLY Valley National BanCorp.  13.59 10.22% 16.78 0.81 0.72 5.30% 89%
BOH Bank of Hawaii Corp. 46.96 10.26% 12.36 3.80 1.80 3.83% 47%
PRK Park National Corp. 64.10 10.65% 14.21 4.51 3.76 5.87% 83%
31 Companies






Watch List Summary

On the top of our list this week is Hudson City Bancorp (HCBK). The stock has been under pressure this week. Current yield of 6% is attractive but with nearly $30B of debt and only $650M of cash on hand, it many not be worth risk/reward.

Sysco (SYY) remains second on our list again. Our guess is that the stock has been hit by the high food costs and the inability to pass such costs on to customers. Two weeks ago shares were trading at 3.73% yield which is slightly lower than where we are. If share revert to "undervalue" range of 2% according to IQTrend, that's a 87% upside from here.

Target (TGT) is another name with a tremendous upside potential gauging by the relative dividend yield establish by IQTrend. Historically, shares are undervalue at 1% yield. With the stock trading nearly 2%, it has the potential to double, all else being equal.

Top Five Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from March 12, 2010 and have check their performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2010 Price 2011 Price % change
XOM Exxon Mobil Corp.   66.80 82.12 22.93%
AWR American States Water Co. 32.50 32.93 1.32%
MON Monsanto Co. 72.35 67.51 -6.69%
FPL FPL Group, Inc. 47.07 55.69 18.31%
CWT California Water Service 36.55 35.17 -3.78%



Average 6.42%





DJI Dow Jones Industrial 10,624.69 12,044.40 13.36%
SPX S&P 500 1,149.99 1,304.28 13.42%

The performance of our top five stocks lagged the overall market. Exxon (XOM) was a slow starter but once crude price picked up, it carried on the momentum. California Water (CWT) and Monstanto (MON) were the major drag for our top five.

Disclaimer
On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in NLO Dividend Watch List

Tagged

Nasdaq 100 Watch List

Posted on March 6, 2011 | Leave a comment
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. Although these companies are very risky, they provide significant opportunity to outperform the market in the coming year.
Symbol Name Trade P/E EPS Yield P/B % from Low
CSCO Cisco Systems, Inc. $18.40 13.92 $1.32 0.00% 2.25 0.93%
CEPH Cephalon, Inc. $56.17 10.66 $5.27 0.00% 1.66 2.13%
AMGN Amgen Inc. $52.32 10.92 $4.79 0.00% 2.04 4.10%
TEVA Teva Pharma. $50.32 13.73 $3.66 1.70% 2.07 7.09%
ATVI Activision Blizzard $11.27 34.15 $0.33 1.50% 1.30 12.81%
CELG Celgene Corp $54.26 28.86 $1.88 0.00% 4.83 12.99%
EXPE Expedia, Inc. $20.78 14.23 $1.46 1.40% 2.07 13.55%
MSFT Microsoft Corp $25.95 11.08 $2.34 2.40% 4.54 14.18%
MRVL Marvell Tech $16.13 12.28 $1.31 0.00% 2.27 16.29%
SPLS Staples, Inc. $20.43 17.78 $1.15 1.70% 2.25 17.08%
MICC Millicom Intl $89.59 5.88 $15.24 2.70% 3.07 18.96%
Watch List Insights

All things being equal, the number of shares outstanding affects the reported earnings of a company.  Some companies have no debt but they have increased the shares outstanding by a significant amount.  Ultimately, a company from 1994 with the same number of shares outstanding, or fewer, is a better value proposition as long as their debt hasn't increased at the same time. 

Below is the watch list with the percentage change in the shares and the year the data started from.  As you will note, companies like Amgen, Activision and Microsoft have decreased the number of shares outstanding.  Provided their debt position hasn't increased in the same time frame, they may be quality investment opportunities.

Symbol
shares outstanding +/-
Since
21%
1994
82%
2000
-6%
1994
73%
2000
-4%
2008
387%
1994
17%
2004
-7%
1994
38%
2000
53%
1994
n/a
n/a

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of March 6, 2010 (article here) and have checked their performance one year later. The companies on that list are provided below with the closing price for March 5, 2010 and March 4, 2011. 
Only three of the companies on our list managed to exceed the Nasdaq 100 while the other four on the list underperformed the index.  Stericycle (SRCL) was the biggest winner with a 55.19% gain.  Apollo Group (APOL) was the biggest loser over the last year with a decline of -29.01%.

Symbol Name 3/5/2010 3/4/2011
% change
FSLR First Solar $108.61 $146.57
34.95%
ERTS Electronic Arts $17.12 $18.79
9.75%
GILD Gilead Sciences $47.61 $40.71
-14.49%
APOL Apollo Group $62.39 $44.29
-29.01%
QCOM QUALCOMM $38.76 $58.15
50.03%
ATVI Activision Blizzard $11.03 $11.27
2.18%
SRCL Stericycle $55.35 $85.90
55.19%
Average
15.51%
NDX Nasdaq 100 1,888.56 2,359.96
24.96%

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in Nasdaq 100 Watch List

Tagged

March 2011 Estimated Ex-Dividend Dates

Posted on March 1, 2011 | Leave a comment
Below are the approximate ex-dividend dates for the month of March 2011 for companies that appear on our Dividend Achiever, Nasdaq 100, Dow Jones Transportation Index and International Dividend Achiever Watch Lists. All companies are ranked by ex-dividend dates.
Companies that show up on our Watch Lists could be considered the equivalent of the bargain bin of high quality blue chip stocks. Because these companies have either increased their dividends every year for at least 10 years in a row or are part of established indexes and within 20% of their respective 52-week low, you know that you’re not overpaying for a company that has demonstrated profitability and the ability to rebound from challenging times.
Symbol Name Price % from Low Yield Div/Shr EPS Est. Ex-date
CHFC Chemical Financial $19.83 5.53% 3.90% 0.80 0.88 3/1/2011
ANAT American National Insur $79.63 7.40% 3.80% 3.08 5.37 3/1/2011
LUV Southwest Airlines $11.71 12.38% 0.20% 0.02 0.61 3/1/2011
AROW Arrow Financial $24.26 13.94% 4.00% 1.00 1.94 3/1/2011
PEP Pepsico $63.21 4.79% 3.00% 1.92 3.92 3/2/2011
ORI Old Republic Intl $12.23 7.85% 5.50% 0.69 0.13 3/2/2011
KMB Kimberly-Clark $65.47 10.63% 4.30% 2.80 4.45 3/2/2011
CCBG Capital City Bank Group $12.26 13.94% 3.20% 0.40 -0.02 3/2/2011
STR Questar $17.59 18.37% 3.40% 0.61 1.91 3/2/2011
UVSP Univest Co of Pennsylv $17.71 12.73% 4.40% 0.80 0.95 3/7/2011
WMT Wal-Mart Stores, Inc $52.07 9.00% 2.30% 1.21 4.46 3/8/2011
NTRS Northern Trust Co $51.08 12.76% 2.10% 1.12 2.74 3/8/2011
BDX Becton, Dickinson $79.20 19.15% 2.00% 1.64 5.55 3/8/2011
EXPE Expedia $19.69 7.61% 1.40% 0.28 1.46 3/9/2011
CBSH Commerce Bancshares $39.82 13.45% 2.30% 0.92 2.52 3/9/2011
ALL Allstate Co $31.44 17.05% 2.70% 0.84 1.71 3/9/2011
SYBT S.Y. Bancorp $24.17 10.62% 2.90% 0.72 1.67 3/10/2011
WEYS Weyco Group $24.94 11.89% 2.60% 0.64 1.15 3/10/2011
WRE Washington REIT $30.56 15.58% 5.70% 1.74 0.55 3/10/2011
MRK Merck $32.46 5.73% 4.70% 1.52 0.28 3/11/2011
FFIN First Fin'l Bankshares $50.05 14.93% 2.70% 1.36 2.86 3/11/2011
CMA Comerica Inc  St $38.10 15.07% 1.00% 0.40 0.88 3/11/2011
CTBI Community Trust $28.52 16.41% 4.20% 1.22 2.16 3/11/2011
CBU Community Bank System $24.86 16.55% 3.80% 0.96 1.89 3/11/2011
HGIC Harleysville Group $36.13 19.20% 4.00% 1.44 2.42 3/11/2011
VLY Valley National $13.44 9.00% 5.30% 0.72 0.81 3/13/2011
HI Hillenbrand $21.47 13.12% 3.50% 0.76 1.45 3/13/2011
SFNC Simmons First National $28.38 17.37% 2.70% 0.76 2.15 3/13/2011
MCY Mercury General Co $38.90 2.64% 5.90% 2.40 2.78 3/14/2011
ATVI Activision Blizzard $10.95 9.61% 1.50% 0.17 0.33 3/14/2011
FNF Fidelity National Financial $13.70 8.73% 3.50% 0.48 1.61 3/15/2011
TDS TDS $32.61 13.07% 1.30% 0.45 1.37 3/15/2011
RCI Rogers Communication $35.11 10.48% 4.10% 1.45 2.71 3/16/2011
VGR Vector Group Ltd.  $16.54 19.16% 9.40% 1.60 0.73 3/16/2011
ECL Ecolab Inc.  $48.48 15.26% 1.50% 0.70 2.23 3/17/2011
SPLS Staples $20.86 19.54% 1.70% 0.36 1.15 3/21/2011
TLK P.T. Tel. Indonesia, $33.88 11.70% 0.60% 0.19 2.52 3/22/2011
PNY Piedmont Natural Gas $29.24 19.35% 3.80% 1.12 1.96 3/22/2011
PEBO Peoples Bancorp $13.29 19.41% 2.90% 0.40 0.34 3/22/2011
SUBK Suffolk Bancorp $20.63 0.98% 2.90% 0.60 1.55 3/28/2011
OFC Corporate Office Prop $35.50 6.51% 4.70% 1.65 0.43 3/29/2011
IBKC IBERIABANK Co $56.56 17.08% 2.40% 1.36 1.88 3/29/2011
BANF BancFirst Co $41.78 19.82% 2.40% 1.00 2.7 3/29/2011
IRET Investors REIT $9.25 16.06% 7.40% 0.69 0.09 3/30/2011
If you happen to be researching these companies for potential investment, it would be advisable to consider the ex-dividend date prior to possible purchases. Owning the shares of the company that you're interested in before the ex-dividend date entitles you to the upcoming dividend payment.
Owning the shares on or after the ex-dividend date means that you would have to wait at least three months before receipt of the next dividend payment. Please verify the ex-dividend date and payout ratio before committing funds to these stocks. Additionally, do not base your next long or short-term purchase on the dividend payment or yield. Instead, get as much research in as you possibly can before the ex-dividend date "just in case" you're actually interested in buying the stock. Payout ratios that exceed 100% should be considered speculative investments.

 

Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in ex-dividend date, March 2011

Tagged

NLO Dividend Watch List

Posted on February 25, 2011 | 1 comment
Our watch list this week contains 22 companies that are within 10% of their 52-week low.

February 25, 2011 Watch List

Symbol Name Price % Yr Low P/E EPS (ttm) Dividend Yield Payout Ratio
RBCAA Republic BanCorp., Inc.  17.21 2.44% 5.57 3.09 0.57 3.31% 18%
SYY Sysco Corp. 27.91 2.88% 14.39 1.94 1.04 3.73% 54%
CWT California Water Service 35.13 3.90% 18.59 1.89 1.23 3.50% 65%
PPL PP&L Corporation 24.81 4.46% 11.43 2.17 1.40 5.64% 65%
MRK Merck & Co., Inc 32.19 4.85% 9.41 3.42 1.52 4.72% 44%
JNJ Johnson & Johnson   59.64 4.89% 12.48 4.78 2.16 3.62% 45%
HCBK Hudson City Bancorp, Inc. 11.38 5.37% 10.44 1.09 0.60 5.27% 55%
PEP PepsiCo Inc. 63.6 5.44% 16.22 3.92 1.92 3.02% 49%
WABC Westamerica BanCorp.  51.8 6.37% 16.14 3.21 1.44 2.78% 45%
LLY Eli Lilly & Co. 34.09 6.46% 7.44 4.58 1.96 5.75% 43%
CL Colgate-Palmolive Co. 78.12 6.84% 18.13 4.31 2.12 2.71% 49%
ABT Abbott Laboratories 47.64 6.84% 16.09 2.96 1.92 4.03% 65%
MCY Mercury General Corp. 40.62 7.18% 14.61 2.78 2.40 5.91% 86%
AWR American States Water Co. 33.68 7.81% 22.91 1.47 1.04 3.09% 71%
WMT Wal-Mart Stores, Inc. 51.75 8.33% 11.60 4.46 1.21 2.34% 27%
TGT Target Corp. 52.36 8.56% 13.71 3.82 1.00 1.91% 26%
FCBC First Community Bancshares 12.52 8.87% 10.18 1.23 0.40 3.19% 33%
CAG ConAgra Foods, Inc. 23.00 9.42% 15.44 1.49 0.92 4.00% 62%
NWN Northwest Natural Gas Co. 46.05 9.90% 16.39 2.81 1.74 3.78% 62%
KMB Kimberly-Clark Corp. 65.08 9.97% 14.62 4.45 2.80 4.30% 63%
WEYS Weyco Group, Inc.  24.58 10.27% 21.37 1.15 0.64 2.60% 56%
VLY Valley National BanCorp.  13.67 10.87% 16.88 0.81 0.72 5.27% 89%
22 Companies




Watch List Summary

On the top of our list this week is Republic Bancorp (RBCAA). It is a small regional bank with market cap of just $360 million. The company has an impressing record of dividend payments even through the financial crisis (see chart). Despite the turmoil in the market, it managed to keep the payout ratio below 40%. The highest that figure came was in 2007 at 37%. Republic Bancorp may worth looking into.

Next on our list is Sysco (SYY), a distributor to the food service industry. Our guess is that the stock has been hit by the high food costs and the inability to pass such costs on to customers. What the market may be overlooking is the short-term fundamentals versus the longer-term viability. As recent as last month Sysco raised their dividend payout by 4%.  This is an indication that company management believes that, despite the high food prices, prospects for Sysco aren't as dire as people may believe.

After topping our list two weeks ago, Abbott (ABT) rose 4.5%.

Top Five Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from February 26, 2010 and have check their performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2010 Price 2011 Price % change
THFF First Financial Corp. 26.28 32.22 22.60%
XOM Exxon Mobil Corp.   65.00 85.34 31.29%
MON Monsanto Co. 70.65 72.21 2.21%
CWT California Water Service 35.88 35.13 -2.09%
SRCE 1st Source Corp.  14.93 19.4 29.94%



Average 16.79%





DJI Dow Jones Industrial 10,325.26 12,130.45 17.48%
SPX S&P 500 1,104.49 1,319.88 19.50%

The performance of our top five stocks were not as impressive as the overall market. California Water (CWT) and Monsanto (MON) held our list to a 16% average gain. Monsanto took a big hit mid-year when the company reduced earning guidance mid year. The shares tumbled and nearly marked the -40% zone as seen in the chart. Investors who went against the tide and bought Monsanto in June/July were handsomely rewarded.

Disclaimer

On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.

Please revisit New Low Observer for edits and revisions to this post. Email us.

1 Comment

Posted in NLO Dividend Watch List

Tagged

Nasdaq 100 Watch List

Posted on February 20, 2011 | Leave a comment
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. Although theses companies are very risky, they provide significant opportunity to outperform the market in the coming year.
Symbol Name Price P/E EPS Yield P/B % from Low
CSCO Cisco Systems, Inc. $18.85 14.26 $1.32 0 2.26 1.56%
AMGN Amgen Inc. $52.24 10.91 $4.79 0 2.04 3.94%
CEPH Cephalon, Inc. $58.63 11.13 $5.27 0 1.68 6.60%
TEVA Teva Pharma. $51.89 14.16 $3.66 1.70% 2.13 10.43%
ATVI Activision Blizzard, Inc $11.07 33.55 $0.33 1.50% 1.3 10.81%
CELG Celgene Corp. $53.47 28.44 $1.88 0 4.79 11.35%
EXPE Expedia, Inc. $20.96 14.36 $1.46 1.30% 2.15 14.54%
MSFT Microsoft Corp. $27.06 11.55 $2.34 2.40% 4.72 19.05%
MICC Millicom Intl. Cellular $90.27 5.92 $15.24 2.60% 3.06 19.86%

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of February 21, 2010 (article here) and have checked their performance one year later. The companies on that list are provided below with the closing price for February 19, 2010 and February 18, 2011. 
Four of the companies on our list managed to exceed the Nasdaq 100 while the other four on the list underperformed the index.  Stericycle (SRCL) was the biggest winner with a 60.92% gain.  Gilead Sciences (GILD) was the biggest loser over the last year with a decline of -19.53%.
Symbol Name 2010 2011 Change
APOL Apollo Group $56.92 $45.82 -19.50%
ERTS Electronic Arts $16.75 $19.28 15.10%
FSLR First Solar $116.00 $168.22 45.02%
ATVI Activision $10.79 $11.07 2.59%
PPDI Pharma Prod. $21.20 $27.97 31.93%
SRCL Stericycle $54.30 $87.38 60.92%
GENZ Genzyme $55.97 $75.38 34.68%
GILD Gilead $48.84 $39.30 -19.53%
Average 18.90%
NDX Nasdaq 100 1823.32 2392.47 31.22%
Please revisit New Low Observer for edits and revisions to this post. Email us.

Leave a comment

Posted in amgn, atvi, CELG, CEPH, CSCO, EXPE, MICC, MSFT, Nasdaq 100 Watch List, TEVA

Tagged