NEW LOW OBSERVER

Previous Year Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from April 8, 2016 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

The top five companies did exceptionally well with average gains of +43.70%. During the same period, the Dow Jones Industrial Average and S&P 500 returned +17.50% and +15%, respectively. At the time, it was clear to us that the financial sector was the weakest of all industry groups judging by the number of companies belonging to the watch list. The following excerpt was taken from our post last year.

There are too many banks on the list to focus on so anyone interested in taking a early stake in the sector should consider ETFs such as XLF or VFH as the low may not be in yet.  The Wall Street Journal published a good piece on the sector titled, Miserable Year for Banks: Stocks Suffer as Rates Stay Low.

Those ETFs mentioned above (XLF and VFH) returned +32% in one year.

In addition to the financials, we pointed out two companies in the agriculture sector to watch out for, they were Monsanto (MON) and Lindsay (LNN) which returned +34% and +27%, respectively. We said the following about these two companies:

Two companies in the agricultural sectors are trading near their yearly low and worth a look.  Monsanto (MON) and Lindsay (LNN) may have not reached their respective "bottoms" but one should start research at these levels to identify their respective intrinsic values. Our valuation models suggest a possible downside risk of -30% for both companies. How likely are they to reach that level is to be seen. However, one can never pick the exact bottom of the stock price and multiple purchases is a great strategy to deploy. Because Lindsay (LNN) was on our list last year and remain in the same position, we interpret this as a potential bottoming process in the company.

U.S Dividend Watch List: April 7, 2017

The market continues to trade in a tight range between 2,300 and 2,350. We'll have to see if it can hold the 2,300 level and possibly retest 2,400. Despite being near an all-time high, we continue to seek long-term investments at a reasonable price and below are 28 companies you should consider. Continue reading →

Prior Year 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 25, 2016 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

The average return for the top five companies from last year is +27.30% with the biggest gain coming from General Dynamics (GD). The company was trading at 14x net income last year when it appeared on the list. Fast forward to today, the stock is trading at nearly 20x net income so while net income rose only 5%, most of the gain came from multiple expansion. The worst performer was AIG (AIG) which gained +14.90% or 0.2% below the market.

U.S Dividend Watch List: March 24, 2017

The market fell -1.40% for the week with the S&P 500 is approaching 2,300. We'll take a flyer on the idea that a consolidation phase is occurring before any move up or down. Below is the watch list containing 26 companies on our dividend watch list. Continue reading →

The S&P 500 appears to be consolidating between 2,350 and 2,400. We will be looking to see if the bull can push above 2,400 level this week.

Although the stock market is virtually at its all-time high, the market fundamentals are comparable to last year. We observed the market multiple of 24x in September 2016 which is the same multiple we are seeing now.  One thing to note is rising interest rates during the same time frame.  The 10-year notes rose to 2.50% from 1.60%, a staggering +56% increase in rate. However, at the same time the stock market is up more than +10%.

As the saying goes, a rising tide lifts all boats.  A bull market lifts all companies and there are only 20 companies on our watch list this week. Continue reading →