NEW LOW OBSERVER

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 27, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Watch List Review

Our top five companies outperformed the market by a decent margin thanks to two utility companies, Consolidated Edison (ED) and SCANA Corp (SCG). We were completely wrong about the direction of these two companies. We said of utilities at the time that "...we remain bearish on the sector." In hindsight, we were completely wrong about the timing of the call.

We also highlighted Target (TGT) in our review. Although the stock wasn't among the top five, we were convinced that the stock had potential given the one-time event of hacking which brought the stock down. We said:

Events such as this one should not alter the underlying business of the company in the long run. At 16x earnings and a 2.77% dividend yield, we may be tempted to start building a position in the near future.

We took a position in Target on February 12th and the stock is up +31% since.

U.S. Dividend Watch List: December 26,2014

The holiday shortened week didn't stop the market from moving forward. The S&P 500 was up +1.3% while the Dow broke the 18k mark and was up +1.5% for the week. Below are 28 companies on our watch list. Continue reading →

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.

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 a 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 the forward P/E to 22.  It would be interesting to see how this projection plays out in the face of a global slowdown.  We believe that one of the key elements that should help in 2015 is falling oil prices.  While oil isn’t a direct input into the company's material cost, we assume that the cost to transport their product should be 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 interest rates continued to fall as the deflationary environment persisted. 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 worst performing out of the top five. The most interesting thing is that, at the time, IBM had the lowest P/E ratio. This goes to show that while buying stock with low P/E ratio may appear 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 investors 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 →

The market was down -3.5% for the week which pulled the year-to-date gains of +8.4%. Oil prices tanked and is currently trading under $60 a barrel. As a result, we are seeing more companies on our watch list than usual. The total number of companies increased from 40 to 75. Continue reading →

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 6, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Watch List Review

Cumulatively, our top five fail to keep up with the market.  Consolidated Edison (ED) was the best performer with a gain of 13%.  We were not too convinced that Consolidated Edison would do well in a rising rate environment.  While rate hasn’t risen, share have gained ground and drive dividend yield lower.

IBM (IBM) was the worse performing stock of these five companies.  We have mentioned before that fair value for the stock would be around $160 thus making the stock less attractive to our team.

U.S. Dividend Watch List: December 5,2014

Below are 40 companies that are worth considering on our watch list. Continue reading →