Dividend Achiever Watch List

Posted on June 4, 2010 by | Leave a comment
At the end of the week, our watch list contracted to 80 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 20% of the 52-week low for June 4, 2010. 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.

Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
VIVO Meridian Bioscience Inc.  17.18 0.06% 21.75 0.79 0.76 4.42% 96%
CWT California Water Service Group 34.67 0.38% 17.96 1.93 1.19 3.43% 62%
LLY Eli Lilly & Co. 32.37 1.09% 8.34 3.88 1.96 6.05% 51%
CTWS Connecticut Water Service, Inc.  20.30 1.15% 17.20 1.18 0.91 4.48% 77%
FFIN First Financial Bankshares, Inc.  48.54 1.42% 18.81 2.58 1.36 2.80% 53%
MON Monsanto Co. 49.02 1.79% 20.43 2.40 1.06 2.16% 44%
UMBF UMB Financial Corp.  37.00 1.82% 16.09 2.30 0.74 2.00% 32%
XOM Exxon Mobil Corp.   59.53 1.82% 13.56 4.39 1.76 2.96% 40%
FII Federated Investors Inc 21.80 1.96% 11.12 1.96 0.96 4.40% 49%
DNB Dun & Bradstreet Corp. 70.49 2.01% 14.13 4.99 1.40 1.99% 28%
NJR New Jersey Resources Corp. 34.32 2.48% 15.53 2.21 1.36 3.96% 62%
ADM Archer Daniels Midland Co. 24.83 2.50% 10.22 2.43 0.60 2.42% 25%
AVP Avon Products, Inc. 25.73 2.92% 20.26 1.27 0.88 3.42% 69%
AROW Arrow Financial Corp.  24.35 3.00% 13.02 1.87 1.00 4.11% 53%
SHEN Shenandoah Telecom Co. 16.13 3.66% 14.66 1.10 0.32 1.98% 29%
VVC Vectren Corp. 22.52 3.97% 14.82 1.52 1.36 6.04% 89%
T AT&T Inc 24.17 4.23% 12.02 2.01 1.68 6.95% 84%
FRS Frisch's Restaurants, Inc 20.78 4.37% 10.49 1.98 0.52 2.50% 26%
SVU SUPERVALU INC 12.68 4.53% 6.85 1.85 0.35 2.76% 19%
NTRS Northern Trust Corp.  49.01 4.91% 15.41 3.18 1.12 2.29% 35%
HSC Harsco Corp. 25.88 4.95% 19.31 1.34 0.82 3.17% 61%
NWN Northwest Natural Gas Co. 42.96 5.22% 15.97 2.69 1.66 3.86% 62%
THFF First Financial Corp. Indiana  26.71 5.45% 14.68 1.82 0.92 3.44% 51%
MDU MDU Resources Group Inc. 18.08 5.67% 12.91 1.40 0.63 3.48% 45%
HRB H&R Block, Inc. 15.73 5.71% 10.70 1.47 0.60 3.81% 41%
PFE Pfizer Inc 14.76 5.85% 13.67 1.08 0.72 4.88% 67%
AWR American States Water Co. 33.05 5.93% 18.46 1.79 1.04 3.15% 58%
GS* Goldman Sachs Group, Inc.   142.25 6.00% 5.92 24.01 1.40 0.98% 6%
BEC Beckman Coulter, Inc. 56.29 6.15% 23.55 2.39 0.72 1.28% 30%
JNJ Johnson & Johnson   58.01 6.36% 12.19 4.76 2.16 3.72% 45%
HCC HCC Insurance Holdings, Inc. 24.70 6.37% 8.23 3.00 0.54 2.19% 18%
SFNC Simmons First National Corp.  26.07 6.41% 15.90 1.64 0.76 2.92% 46%
WMT Wal-Mart Stores, Inc. 50.40 6.44% 13.23 3.81 1.21 2.40% 32%
ABT Abbott Laboratories 46.53 7.09% 13.65 3.41 1.76 3.78% 52%
FPL FPL Group, Inc. 48.63 7.37% 11.00 4.42 2.00 4.11% 45%
PGN Progress Energy, Inc. 37.67 7.54% 13.85 2.72 2.48 6.58% 91%
PBI Pitney Bowes Inc   21.98 7.85% 11.45 1.92 1.46 6.64% 76%
KO Coca-Cola Co 51.27 8.67% 16.87 3.04 1.76 3.43% 58%
WGL WGL Holdings, Inc. 33.06 8.86% 14.25 2.32 1.51 4.57% 65%
ATO Atmos Energy Corp. 26.50 9.14% 12.74 2.08 1.34 5.06% 64%
WEYS Weyco Group, Inc.  22.75 9.27% 18.50 1.23 0.64 2.81% 52%
MGEE MGE Energy Inc.  34.25 9.74% 15.71 2.18 1.47 4.29% 67%
APD Air Products & Chemicals, Inc. 66.55 9.96% 16.68 3.99 1.96 2.95% 49%
WTR Aqua America Inc 16.93 10.01% 21.43 0.79 0.58 3.43% 73%
UGI UGI Corp. 25.51 10.05% 11.65 2.19 1.00 3.92% 46%
TMP Tompkins Financial Corp. 38.17 10.17% 12.64 3.02 1.36 3.56% 45%
PX Praxair, Inc. 74.12 10.31% 18.12 4.09 1.80 2.43% 44%
BDX Becton, Dickinson and Co. 70.08 10.52% 13.45 5.21 1.48 2.11% 28%
WAG Walgreen Co. 30.84 10.58% 14.48 2.13 0.55 1.78% 26%
SIAL Sigma-Aldrich Corp.  50.69 10.67% 17.30 2.93 0.64 1.26% 22%
STFC State Auto Financial Corp.  16.76 10.92% 18.02 0.93 0.60 3.58% 65%
SBSI Southside Bancshares, Inc.  19.31 11.04% 7.26 2.66 0.68 3.52% 26%
PNY Piedmont Natural Gas Co., Inc. 25.01 11.16% 11.80 2.12 1.12 4.48% 53%
MATW Matthews International Corp.  31.36 11.99% 15.15 2.07 0.28 0.89% 14%
TR Tootsie Roll Industries Inc  24.50 12.23% 26.06 0.94 0.32 1.31% 34%
BCR CR Bard, Inc. 78.97 12.65% 16.70 4.73 0.68 0.86% 14%
CL Colgate-Palmolive Co. 77.24 13.06% 18.89 4.09 2.12 2.74% 52%
XRAY DENTSPLY International Inc.  31.46 13.19% 17.19 1.83 0.20 0.64% 11%
TRH Transatlantic Holdings, Inc. 45.33 13.33% 7.24 6.26 0.84 1.85% 13%
SJW SJW Corp. 23.52 14.01% 27.35 0.86 0.68 2.89% 79%
CHRW C.H. Robinson Worldwide, Inc.  55.90 14.68% 26.12 2.14 1.00 1.79% 47%
MHP McGraw-Hill Cos., Inc. 27.34 16.09% 11.16 2.45 0.94 3.44% 38%
SYBT S.Y. BanCorp., Inc.  23.03 16.31% 19.03 1.21 0.68 2.95% 56%
CVX Chevron Corp. 71.28 17.08% 10.82 6.59 2.88 4.04% 44%
PAYX Paychex, Inc.  27.97 17.32% 21.19 1.32 1.24 4.43% 94%
CTAS Cintas Corp.  25.01 17.42% 23.37 1.07 0.48 1.92% 45%
CTBI Community Trust BanCorp., Inc.  26.05 17.61% 15.60 1.67 1.20 4.61% 72%
PEP PepsiCo Inc. 61.44 17.90% 15.59 3.94 1.92 3.13% 49%
ED Consolidated Edison, Inc.  41.66 17.92% 12.70 3.28 2.38 5.71% 73%
WABC Westamerica BanCorp.  53.63 18.08% 17.03 3.15 1.44 2.69% 46%
BANF BancFirst Corp.  37.17 18.11% 16.67 2.23 0.92 2.48% 41%
MDT Medtronic, Inc. 38.00 18.49% 13.62 2.79 0.82 2.16% 29%
KMB Kimberly-Clark Corp. 60.18 19.36% 13.49 4.46 2.64 4.39% 59%
BMS Bemis Co Inc 27.95 19.39% 21.50 1.30 0.92 3.29% 71%
HGIC Harleysville Group Inc.  31.20 19.59% 11.35 2.75 1.30 4.17% 47%
BMI Badger Meter, Inc. 39.04 19.83% 17.99 2.17 0.48 1.23% 22%
BRC Brady Corp. 27.66 20.26% 18.32 1.51 0.70 2.53% 46%
CFR Cullen/Frost Bankers, Inc. 52.42 20.26% 17.30 3.03 1.80 3.43% 59%
HRL Hormel Foods Corp. 40.50 20.39% 14.84 2.73 0.84 2.07% 31%
CLX Clorox Co. 63.07 20.41% 14.84 4.25 2.20 3.49% 52%
80 Companies




*Goldman Sachs isn't a former or current dividend achiever but we feel that it is worth watching because it's a proxy of our financial system.

Watch List Summary

The best performing stock from last week's list was Hormel (HSC) which rose 1.8%.  The worst performing stock was State Auto Financial (STFC) which fell 7.3%.  Overall, the Dividend Achiever watch list lost 2.6% versus the Dow which was down only 1.8%. Because our list has more than a handful of great companies, I urged investors to filter through company with maximum of 50% payout ratio. This should minimized the risk of dividend reduction. If you understand the companies history and their ability to pay dividend, payout ratio in excess of 50% may be considered.

Readers should use the March 2009 low (or companies' most distress time) as a base case for investing.  Our conservative view is to embrace the worse case scenario prior to investing.  March 2009 low fits that description.  Although we use the one year (52 weeks) time frame, the past year was nothing but major bull run and anyone who bought at or near the low can be taking profit.  It's important to place these companies in your own watch list so that when opportunities arise, you can purchase them with greater margin of safety.

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It’s a Matter of Economics, Cree is Overpriced

Posted on June 3, 2010 by | Leave a comment
A stock that we’ve been watching closely is Cree Incorporated (CREE) which is a U.S. based developer and manufacturer of light emitting diode [LED] products and other types of compound semiconductors. We've been following this stock since the price was in the mid-$40 range and the P/E was in excess of 50.

CREE recently touched a high of $83 and has pulled back to the $70 range. The P/E ratio has expanded to 60 with the expectation that earning will rise 154% in 2010 (from average estimates on 6/3/10 by $0.66 to $1.68) and followed by a rise of 37% that is expected in 2011 (from $1.68 to $2.30). On a forward earnings basis, stock looks reasonably price at 30 times next year earnings. The caveat here is that it is based on next year earnings.

Competitors
Today’s article from The Wall Street Journal titled "LED's Bright Prospects Could Dim", reaffirmed our thinking of what was the hot company / market in 2009 could become the cold one in the not too distant future. Currently, CREE has a healthy operating margin of 19.7% while the industry's margin sits at around 8.22%. The key is question is, will CREE be able to protect its competitor from creeping into its margins? Our answer to that is, it is only a matter of time before competitors start crowding into the market in pursuit of the healthy margins. Some of competitors are Lumileds (Philips), Sharp, Nichia, Toyoda Gosei, Taiwan Semiconductor  (TSM), and many smaller companies in China.

More Clues From Equipment Supplier

The talk of competition is where things get pretty interesting. Seeing the fat margins that are ripe for the picking, Kulicke & Soffa (KLIC) ), a $500 million market cap company that sells assembly equipment seems to be getting in the game. KLIC is one of the largest companies in their market. What's important is KLIC serves as a leading indicator for the chip industry, LED included. KLIC’s most recent earnings report provided great insight into the state of their backlog. Increasing backlog is an important indicator because it typically leads to excess inventory. Increased inventory leads to a possible contraction of profit margins.

Below is the breakdown of the current and historical backlog for KLIC:

  • 2010 - $132,000
  • 2009 - $15,000
  • 2008 - $73,000
  • 2007 - $59,000
  • 2006 - $60,000
  • 2005 - $62,000

If you take the average of the last six years, the backlog is $66,833. Taking the average of 2005 - 2008 (excluding the extremes), we get $63,500. In both cases, the recent surge to $132,000 is extraordinary. This is caused by KLIC trying to rebuild inventory after depleting it during the credit crisis. Adjusting for the extreme situation, our calculations show that the backlog in 2010 is up by 97.5% from the average of the last 6 years and 108% above the average excluding the extremes.

Additionally, Kulike & Soffa isn't your typical LED equipment supplier as noted by the CEO:

The other point I guess I'd make is that in the 2007-2008 peak we had no LED business. So the LED business is all incremental to that.

This tells us that LED makers are going the last mile to make LEDs. Kulicke & Soffa is also expanding their product offerings so we could be completely wrong in that respect. Regardless, the capacity build up is real. Here's another statement from the CEO from the conference call:

When I look at how we've got bonders allocated in the current quarter and into the future, we're seeing a big spike in LED bonders above those levels. So there is a lot of good things happening in terms of stories. And the other thing about the LED again is that that seems more like a secular story than a cyclical story; it should have longer legs to it.

The bullish tone is great for Kulicke & Soffa but doesn't bode well for CREE.

Technical Picture

The chart below is a weekly chart containing P/E ratio and rolling earnings of CREE going back to 1999. The tech bubble in 2000 carried the stock above $100 mark and P/E ratio well above 200.  The stock has been stuck in a trading range of $15 and $30 for most of the decade.

The important part is that earnings haven't improved materially over the intervening period. Current earnings of $1 is still below the 2005 mark but the price has moved well out of proportion to the historical norm. If the stock can get above $105 with good support from earnings, then the stock is off to the race on the upside. Although we can't imagine anymore upside without calling it a bubble based on the chart.

Bottom Line
We think CREE is overpriced and we point it out not as a short selling opportunity but as an observation. CREE has the tone of a growth stock with expanding multiples (P/E) coming to an end. Some of what we have explained above may be more complicated than it needs to be. If so, a simple way to look at it is that CREE trades at more than 60 times its current earnings, very expensive by any standard. They will probably face more competition in the coming years if not months. As a result, profit margins should diminish. This will eventually lead to lower earnings that will likely lead to (all things being equal) a drastic decline in the stock price.

Sources:
LED's Bright Prospects Could Dim
Kulicke & Soffa 2Q10 Press Release
Cree's Competitors
Kulicke & Soffa Industries, Inc. F2Q10 (Qtr End 04/03/10) Earnings Call Transcript

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International Dividend Achievers

Posted on May 30, 2010 by | 1 comment
Below are the top ten current and former International Dividend Achievers (ranked by dividend yield) that trade as ADRs on the New York Stock Exchange.  I had to choose the top ten because there are over 40 international Dividend Achievers that are within 20% of the low.  This list is based on Mergent's designation of companies that have had a history of dividend increases over "several" years in a row. 
Please be sure to calculate the payout ratios before buying these stocks  Payout ratios above 70% are cutting it close if you're not prepared for the potential risk.  The stock symbols next to the company names take you directly to the history of dividend payments.  As always, only buy these stocks if you're willing to accept losing 50%, otherwise, the risk may outweigh the reward.  Thanks again to the author of The Stock Market Advantage for the suggestion on including international stocks.
Symbol Name Price % from Low Yield
STD Banco Santander $10.15 10.69% 9.20%
NGG National Grid $40.54 3.10% 8.80%
AZN AstraZeneca $42.25 5.47% 8.10%
BP British Petroleum $42.95 5.76% 7.80%
BTI British American Tobacco $58.55 9.77% 7.40%
TEF Telefonica $57.37 5.36% 6.90%
TOT Total S.A. $46.63 8.27% 6.60%
RUK Reed Elsevier $27.99 5.74% 6.10%
TMX Telefonos de Mexico $14.07 8.23% 5.60%
GSK GlaxoSmithKline $33.46 4.07% 5.50%
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Canadian Dividend Achievers

Posted on May 29, 2010 by | Leave a comment
This list of Canadian Dividend Achievers is published by Mergent's includes current and former Canadian Dividend Achievers and then ranking the companies based on those closest to the 52-week low. Do your homework on these companies and, whenever possible, please report back to us with your findings along with source citations.
Symbol Name Trade Pct from Yr Low
CLC-UN.TO CML HEALTHCARE INCOME FUND $10.22 0.20%
IMO.TO IMPERIAL OIL $39.95 5.83%
IGM.TO IGM FINANCIAL INC. $39.74 6.57%
RBA.TO RITCHIE BROS AUCTIONEERS INC. $21.52 6.64%
CCJ.TO CAMECO CORP $25.68 6.87%
SU.TO SUNCOR ENERGY INC. $32.08 7.29%
ESI.TO ENSIGN ENERGY SERVICES INC. $13.24 8.61%
ALA-UN.TO ALTAGAS INCOME TRUST $16.99 9.26%
ARF-UN.TO ARMTEC INFRA. FUND $18.90 13.86%
TRI.TO THOMSON REUTERS CORPORATION $37.24 15.98%
TRP.TO TRANSCANADA CORP. $34.91 16.33%
POW.TO POWER CORP CDA $27.47 16.35%
CTC-A.TO CANADIAN TIRE CORP LTD CL A NV $57.44 19.22%
SNC.TO SNC-LAVALIN SV $46.32 19.54%
PWF.TO POWER FINANCIAL CORP. $29.33 19.71%

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Nasdaq 100 Watch List

Posted on May 29, 2010 by | 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 or are about to go out of business. These companies are deemed highly speculative unless otherwise noted.

Symbol Name Price P/E EPS Yield P/B % from Low
SYMC Symantec Corporation $14.17 16.25 $0.87 0.00% 2.58 1.00%
APOL Apollo Group, Inc. $53.16 13.3 $4.00 0.00% 6.02 1.84%
QCOM QUALCOMM Incorporated $35.56 18.97 $1.88 2.10% 2.81 3.01%
GILD Gilead Sciences, Inc. $35.92 11.52 $3.12 0.00% 4.45 3.28%
ERTS Electronic Arts Inc. $16.51 0 -$2.08 0.00% 2 5.16%
AMGN Amgen Inc. $51.78 10.99 $4.71 0.00% 2.22 5.46%
GENZ Genzyme Corporation $48.65 118.1 $0.41 0.00% 1.78 7.18%
ATVI Activision Blizzard, Inc $10.75 45.74 $0.24 1.40% 1.23 8.26%
RYAAY Ryanair Holdings plc $23.54 0 $0.00 0.00% 0 9.23%
YHOO Yahoo! Inc. $15.34 27.54 $0.56 0.00% 1.71 9.81%
LOGI Logitech International S.A. $14.19 39.2 $0.36 0.00% 2.53 10.60%
RIMM Research In Motion Limited $60.69 0 $0.00 0.00% 0 11.77%
CEPH Cephalon, Inc. $58.86 11.74 $5.01 0.00% 1.86 12.01%
BIIB Biogen Idec Inc $47.43 14.36 $3.30 0.00% 2.18 13.60%
FSLR First Solar, Inc. $112.36 14.9 $7.54 0.00% 3.47 13.83%
SPLS Staples, Inc. $21.52 19.91 $1.08 1.70% 2.35 14.96%
FISV Fiserv, Inc. $47.55 14.9 $3.19 0.00% 2.35 15.67%
SIAL Sigma-Aldrich Corporation $53.32 18.19 $2.93 1.20% 3.84 16.42%
XRAY DENTSPLY International $32.43 17.73 $1.83 0.60% 2.64 16.70%
DELL Dell Inc. $13.33 16.56 $0.81 0.00% 4.4 17.65%
ORCL Oracle Corporation $22.57 20.17 $1.12 0.90% 3.98 17.80%
STLD Steel Dynamics, Inc. $14.67 21.35 $0.69 2.00% 1.58 18.02%
MXIM Maxim Integrated Products $17.76 73.09 $0.24 4.50% 2.26 18.72%
CHRW C.H. Robinson Worldwide $58.11 27.18 $2.14 1.70% 9.17 19.22%
TEVA Teva Pharmaceutical $54.82 21.77 $2.52 1.20% 2.53 19.41%
PAYX Paychex, Inc. $28.54 21.7 $1.32 4.30% 7.45 19.71%
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Dividend Achiever Watch List

Posted on May 28, 2010 by | Leave a comment
At the end of the week, our watch list contracted to 66 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 20% of the 52-week low for May 28, 2010. 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.
Symbol Name Price % Yr Low P/E EPS (ttm) Div/Shr Yield Payout Ratio
VIVO Meridian Bioscience Inc.  17.48 1.10% 22.13 0.79 0.76 4.35% 96%
FII Federated Investors Inc 22.21 1.88% 11.33 1.96 0.96 4.32% 49%
LLY Eli Lilly & Co. 32.79 2.40% 8.45 3.88 1.96 5.98% 51%
XOM Exxon Mobil Corp.   60.46 3.42% 13.77 4.39 1.76 2.91% 40%
ADM Archer Daniels Midland Co. 25.27 4.34% 10.40 2.43 0.60 2.37% 25%
T AT&T Inc 24.30 4.79% 12.09 2.01 1.68 6.91% 84%
CTWS Connecticut Water Service, Inc.  20.80 5.00% 17.63 1.18 0.91 4.38% 77%
SHEN Shenandoah Telecom 16.93 5.16% 15.39 1.10 0.32 1.89% 29%
FRS Frisch's Restaurants, Inc 20.95 5.22% 10.58 1.98 0.52 2.48% 26%
DNB Dun & Bradstreet Corp. 72.99 5.63% 14.63 4.99 1.40 1.92% 28%
MON Monsanto Co. 50.87 5.63% 21.20 2.40 1.06 2.08% 44%
AVP Avon Products, Inc. 26.49 5.96% 20.86 1.27 0.88 3.32% 69%
CWT California Water Service Group 35.83 6.04% 18.56 1.93 1.19 3.32% 62%
VVC Vectren Corp. 23.05 6.42% 15.16 1.52 1.36 5.90% 89%
WMT Wal-Mart Stores, Inc. 50.56 6.78% 13.27 3.81 1.21 2.39% 32%
UMBF UMB Financial Corp.  38.95 7.18% 16.93 2.30 0.74 1.90% 32%
GS* Goldman Sachs Group, Inc.   144.26 7.50% 6.01 24.01 1.40 0.97% 6%
NWN Northwest Natural Gas Co. 43.97 7.69% 16.35 2.69 1.66 3.78% 62%
AROW Arrow Financial Corp.  25.48 7.78% 13.63 1.87 1.00 3.92% 53%
HCC HCC Insurance Holdings, Inc. 25.07 7.97% 8.36 3.00 0.54 2.15% 18%
FFIN First Financial Bankshares, Inc.  50.24 8.00% 19.47 2.58 1.36 2.71% 53%
JNJ Johnson & Johnson   58.30 8.24% 12.25 4.76 2.16 3.70% 45%
NJR New Jersey Resources Corp. 35.45 8.31% 16.04 2.21 1.36 3.84% 62%
BEC Beckman Coulter, Inc. 57.44 8.32% 24.03 2.39 0.72 1.25% 30%
NTRS Northern Trust Corp.  50.81 8.75% 15.98 3.18 1.12 2.20% 35%
PFE Pfizer Inc 15.23 9.25% 14.10 1.08 0.72 4.73% 67%
MDU MDU Resources Group Inc. 18.70 9.29% 13.36 1.40 0.63 3.37% 45%
ABT Abbott Laboratories 47.56 9.46% 13.95 3.41 1.76 3.70% 52%
FPL FPL Group, Inc. 49.93 10.25% 11.30 4.42 2.00 4.01% 45%
SFNC Simmons First National Corp.  26.36 10.29% 16.07 1.64 0.76 2.88% 46%
HSC Harsco Corp. 27.21 10.34% 20.31 1.34 0.82 3.01% 61%
WEYS Weyco Group, Inc.  22.99 10.42% 18.69 1.23 0.64 2.78% 52%
KO Coca-Cola Co 51.40 10.87% 16.91 3.04 1.76 3.42% 58%
SVU SUPERVALU INC 13.47 11.05% 7.28 1.85 0.35 2.60% 19%
PGN Progress Energy, Inc. 38.59 11.08% 14.19 2.72 2.48 6.43% 91%
PBI Pitney Bowes Inc   22.64 11.09% 11.79 1.92 1.46 6.45% 76%
AWR American States Water Co. 34.37 11.52% 19.20 1.79 1.04 3.03% 58%
THFF First Financial Corp. Indiana  28.35 11.92% 15.58 1.82 0.92 3.25% 51%
BDX Becton, Dickinson and Co. 71.30 12.44% 13.69 5.21 1.48 2.08% 28%
UGI UGI Corp. 26.14 12.77% 11.94 2.19 1.00 3.83% 46%
WTR Aqua America Inc 17.45 13.39% 22.09 0.79 0.58 3.32% 73%
APD Air Products & Chemicals, Inc. 69.06 14.11% 17.31 3.99 1.96 2.84% 49%
PNY Piedmont Natural Gas Co., Inc. 25.41 14.61% 11.99 2.12 1.12 4.41% 53%
TR Tootsie Roll Industries Inc  25.04 14.70% 26.64 0.94 0.32 1.28% 34%
HRB H&R Block, Inc. 16.08 14.86% 10.94 1.47 0.60 3.73% 41%
WAG Walgreen Co. 32.04 14.88% 15.04 2.13 0.55 1.72% 26%
TMP Tompkins Financial Corp. 39.82 14.94% 13.19 3.02 1.36 3.42% 45%
PX Praxair, Inc. 77.60 15.49% 18.97 4.09 1.80 2.32% 44%
BCR CR Bard, Inc. 80.97 15.51% 17.12 4.73 0.68 0.84% 14%
MATW Matthews International Corp.  32.38 15.64% 15.64 2.07 0.28 0.86% 14%
ATO Atmos Energy Corp. 27.12 15.70% 13.04 2.08 1.34 4.94% 64%
MGEE MGE Energy Inc.  35.32 16.34% 16.20 2.18 1.47 4.16% 67%
SIAL Sigma-Aldrich Corp.  53.32 16.42% 18.20 2.93 0.64 1.20% 22%
SBSI Southside Bancshares, Inc.  20.25 16.44% 7.61 2.66 0.68 3.36% 26%
XRAY DENTSPLY International Inc.  32.43 16.70% 17.72 1.83 0.20 0.62% 11%
RNST Renasant Corp.  14.38 17.39% 18.92 0.76 0.68 4.73% 89%
WGL WGL Holdings, Inc. 33.85 17.49% 14.59 2.32 1.51 4.46% 65%
MHP McGraw-Hill Cos., Inc. 27.80 18.05% 11.35 2.45 0.94 3.38% 38%
HRL Hormel Foods Corp. 39.80 18.31% 14.58 2.73 0.84 2.11% 31%
SYBT S.Y. BanCorp., Inc.  23.44 18.38% 19.37 1.21 0.68 2.90% 56%
DBD Diebold, Inc. 28.98 18.87% 40.25 0.72 1.08 3.73% 150%
CHRW C.H. Robinson Worldwide, Inc.  58.11 19.22% 27.15 2.14 1.00 1.72% 47%
STFC State Auto Financial Corp.  18.08 19.66% 19.44 0.93 0.60 3.32% 65%
PAYX Paychex, Inc.  28.54 19.71% 21.62 1.32 1.24 4.34% 94%
BRO Brown & Brown, Inc. 19.60 20.10% 18.67 1.05 0.31 1.58% 30%
KMB Kimberly-Clark Corp. 60.70 20.39% 13.61 4.46 2.64 4.35% 59%
66 Companies






*Goldman Sachs isn't a former or current dividend achiever but I feel that it is worth watching because it could be the proxy of our financial system.

Watch List Summary

The best performing stock from last week's list was Harsco (HSC) which rose 4.9%.  The worst performing stock was Monsanto (MON) which fell 7.4% after the company guided down their earning outlook and free-cash flow. Looks like Barron's article on 5/17/10 was a little early (although the firm did reduced their price target from $90 to $65). Strange stuff if you ask me. Although there was plenty of volatility in the market, last week watch list and the Dow ended the week virtually flat.

Readers should use the March 2009 low (or companies' most distress time) as a base case for investing.  Our conservative view is to embrace the worse case scenario prior to investing.  March 2009 low fits that description.  Although we use the one year (52 weeks) time frame, the past year was nothing but major bull run and anyone who bought at or near the low can be taking profit.  It's important to place these companies in your own watch list so that when opportunities arise, you can purchase them with greater margin of safety. 
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Canadian Dividend Achievers

Posted on May 25, 2010 by | Leave a comment
A reader asks, "Have you ever considered adding foreign companies to this watch list? Some of them have very enticing dividends?"  
Our Answer: In general, we have considered foreign companies and have come to the conclusion that we don't have much of an interest in them.  Our view is that investors should invest in the companies that they have the best access to quality information.  Another bias that we have about foreign investing is that most American companies derive a large portion of their earnings overseas thereby nullifying the need to invest abroad.  Finally, as an American investor, if you can't find quality companies to invest in then maybe sending your money far afield isn't going to resolve the dilemma. 

With that said, we're introducing the Canadian Dividend Achievers, as defined by Mergent's, to our site.  Getting a copy of Mergent's Dividend Achievers is highly recommended since it has more details on all the companies in question. We'll publish this list weekly as we do with the Nasdaq 100 and the (American) Dividend Achievers using the same criteria. 

Symbol Name Price % from Yr Low
SU.TO SUNCOR ENERGY INC. 30.66 2.54%
IMO.TO IMPERIAL OIL 39.2 3.84%
CLC-UN.TO CML HEALTHCARE INCOME FUND 10.75 3.97%
ESI.TO ENSIGN ENERGY SERVICES INC. 12.75 4.59%
IGM.TO IGM FINANCIAL INC. 39.19 5.92%
RBA.TO RITCHIE BROS AUCTIONEERS INC. 21.65 7.28%
ALA-UN.TO ALTAGAS INCOME TRUST 16.69 7.33%
CCO.TO CAMECO CORP 25.8 7.37%
POW.TO POWER CORP CDA 26.44 11.99%
ARF-UN.TO ARMTEC INFRASTRUCTURE INCOME FU 18.75 12.95%
TRP.TO TRANSCANADA CORP. 34.5 14.96%
PWF.TO POWER FINANCIAL CORP. 28.21 15.14%
TRI.TO THOMSON REUTERS CORPORATION 37.09 15.51%
CTC-A.TO CANADIAN TIRE CORP LTD CL A NV 56.15 18.21%
NWF-UN.TO NORTH WEST UN 17.9 20.30%
FTT.TO FINNING INTL 17.47 20.48%

It is our goal to include the International Dividend Achievers (current and former Dividend Achievers) that trade on the U.S. exchanges. Much thanks to Stocksystm for his wonderful site The Stock Market Advantage and for getting us off our duffs and moving this site to a new level higher. We know that this isn't exactly what you wanted (i.e. high yielding international stocks) however, we hope our tracking of Dividend Achievers from Canada and hopefully non-North American Dividend Achievers will satiate your appetite for the time being. We're still aiming for "quality" and "consistency" whenever possible.
Disclaimer: If it seemed that we know little or nothing about the (American) Dividend Achievers then that goes double for the Canadian Dividend Achievers.  We're only using those companies that are designated by Mergent's as current and/or former Canadian Dividend Achievers and then ranking the companies based on those closest to the 52-week low. Do your homework on these companies and, whenever possible, please report back to us with your findings along with source citations.  We really want to know more about our neighbors to the north.
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Correction to Graham Rule

Posted on May 25, 2010 by | Leave a comment
I'd like to make a correction to my earlier mistake on calculating one of the Graham Rule. On May 14th watch list, I said that "I ran a new filter through this list using Graham rule of earning yield being higher than twice the long-term rate which I use 10 years T-bill."  This isn't the case.

The correct method as posted on an article "Benjamin Graham's Stock Selection Criteria" is for an earning yield at least twice the AAA yield (which can be found under market data on our side bar).

Based on that one criteria, the following five companies (from May 14th) past the test.

Symbol Name Earning Yield
LLY Eli Lilly & Co. 11%
GS Goldman Sachs Group 17%
HCC HCC Insurance Holdings 12%
SVU SUPERVALU INC 14%
MRK Merck & Co., Inc 14%

The AAA yield at the end of April 2010 is 5.29%. Any company with earning yield exceeding 10.58% would qualify under this rule.

This is just one of many rules Graham set. Many other look at the balance sheet for companies' viability if worse case hit. I'll be doing a study on the Dow 30 to see how well the Blue Chip fit into this model. - Art

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Benjamin Graham’s Stock Selection Criteria

Posted on May 24, 2010 by | Leave a comment
A reader asked, "On Friday May 21, 2010 post, you mentioned 10 criteria that Ben Graham used for investing. How do I find them?"  You can find Graham's criteria from a research paper titled "A Test of Ben Graham's Stock Selection Criteria".

Here are the 10 criteria:

  1. An earnings-to-price yield at least twice the AAA bond yield.
  2. A price-earnings ratio less than 40 percent of the highest price-earnings ratio the stock had over the past five years.
  3. A dividend yield of at least two-thirds the AAA bond yield.
  4. Stock price below two-thirds of tangible book value per share.
  5. Stock price two-thirds “net current asset value.”
  6. Total debt less than book value.
  7. Current ratio greater than two.
  8. Total debt less than twice “net current asset value.”
  9. Earnings growth of prior ten years at least 7 percent on an annual basis.
  10. Stability of growth of earnings in that no more than two declines of 5 percent or more in the prior 10 years.
How well do these criterion work? I have yet to test this method myself, so I can only reference them to someone who has. This article highlight some of the findings. We urge anyone who is not familiar with the Ben Graham approach to value investing to pick up these two books, The Intelligent Investor and Security Analysis.  We will attempt to use some of these criteria and apply them to our watch list. - Art
Sources:
  • Klerck WG and Maritz AC, 1997, "A test of Graham's stock selection criteria on industrial shares traded on the JSE," Investment Analysts Journal, 45:25-33.
  • Graham M and Uliana E, 2001, "Evidence of a Value-Growth Phenomenon on the Johannesburg Stock Exchange," Investment Analysts Journal, 53:7-18.
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Nasdaq 100 Watch List

Posted on May 22, 2010 by | Leave a comment
Although we track companies that are near their 52-week lows, the true benchmark for all stocks is the lowest point reached from the period of 2006 to the present.  This means that in order to determine if the company of interest is of "value," you must contrast the current data with the lowest quarterly/annual  earnings, P/E, P/B, P/S, share price during the last 3 to 4 years. 

Do not accept the fact that these companies are undervalued unless compared to the worst period after the financial crisis began.  If, as an investor, you cannot accept the potential of the stock of interest falling to, or below, the November 2008 or March 2009 lows, then your money should not be in the stock in question.  This concept is emphasized in the quote by Charles H. Dow in our posting titled "A Comprehensive View On Valuing Earnings."  

Below are the Nasdaq 100 companies that are within 21% of their respective 52-week low. 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 thorough due diligence.   

Symbol Name Price P/E EPS Yield P/B % from Low
GILD Gilead Sciences, Inc. 36.57 11.73 3.12 0.00% 4.54 1.33%
RYAAY Ryanair Holdings plc 23.14 0 0 0.00% 0 2.39%
QCOM QUALCOMM 35.89 19.14 1.88 2.10% 2.82 3.04%
ATVI Activision 10.24 43.59 0.24 1.40% 1.19 3.15%
GENZ Genzyme 49.41 119.93 0.41 0.00% 1.75 4.93%
SYMC Symantec 14.71 16.87 0.87 0.00% 2.6 5.30%
APOL Apollo Group, Inc. 55.5 13.88 4 0.00% 6.29 6.32%
ERTS Electronic Arts Inc. 16.7 0 -2.08 0.00% 1.96 6.37%
AMGN Amgen Inc. 52.44 11.13 4.71 0.00% 2.29 8.80%
CEPH Cephalon, Inc. 57.79 11.52 5.01 0.00% 1.87 9.97%
YHOO Yahoo! Inc. 15.48 27.78 0.56 0.00% 1.64 10.77%
LOGI Logitech 14.22 39.28 0.36 0.00% 2.41 10.83%
STLD Steel Dynamics, Inc. 14.01 20.39 0.69 2.20% 1.44 12.71%
RIMM RIMM 61.61 0 0 0.00% 0 13.46%
SPLS Staples, Inc. 21.52 21.04 1.02 1.70% 2.3 14.96%
FSLR First Solar, Inc. 113.95 15.11 7.54 0.00% 3.28 15.44%
SIAL Sigma-Aldrich 52.87 18.03 2.93 1.20% 3.68 16.89%
BIIB Biogen Idec Inc 48.98 14.83 3.3 0.00% 2.23 17.32%
FISV Fiserv, Inc. 47.43 14.86 3.19 0.00% 2.29 18.58%
XRAY DENTSPLY 33.06 18.08 1.83 0.60% 2.65 18.96%
MXIM Maxim Integrated 17.69 72.8 0.24 4.50% 2.21 20.67%

Watch List Summary

The stock that fell the most from last week's watch list was Symantec (SYMC) which lost -8.75%.  The stock that gained the most was Apollo Group (APOL) at 5.15%.  In all, the Nasdaq 100 Watch List of last week lost -3.21% as compared to the Nasdaq 100 index which lost -4.42%. 
One of my favorite stocks, Dentsply Intl (XRAY), is appearing on our list for the first time in very long time.  According to Yahoo! Finance, "DENTSPLY International Inc. designs, develops, manufactures, and markets dental consumable products, dental laboratory products, and dental specialty products worldwide."  As a Dividend Achiever and a member of the Nasdaq 100, XRAY had a 15-year history of consecutive dividend increases until March 2010.  The compounded annual growth rate (CAGR) of the dividend is in the low twenties.  The lack of an increase in the last quarter is "acceptable" and probably prudent considering the state of our economy going forward.  XRAY is definitely a company to research and accumulate as the price gets closer to the March 2009 low.
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Dividend Achiever Watch List

Posted on May 21, 2010 by | 1 comment
At the end of the week, our watch list contracted to 59 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 20% of the 52-week low for May 21, 2010. 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.

Symbol Name Price % Yr Low P/E EPS Div/Shr Yield Payout Ratio
MON Monsanto Co. 54.95 2.10% 22.90 2.40 1.06 1.93% 44%
HSC Harsco Corp. 25.94 2.45% 19.36 1.34 0.82 3.16% 61%
ADM Archer Daniels Midland Co. 25.41 2.58% 10.46 2.43 0.60 2.36% 25%
LLY Lilly (Eli) & Co. 33.12 2.89% 8.54 3.88 1.96 5.92% 51%
VIVO Meridian Bioscience Inc.  17.99 3.93% 22.77 0.79 0.76 4.22% 96%
XOM Exxon Mobil Corp.   60.88 4.14% 13.87 4.39 1.76 2.89% 40%
FII Federated Investors Inc 22.65 4.86% 11.56 1.96 0.96 4.24% 49%
GS Goldman Sachs Group, Inc.   140.62 5.00% 5.86 24.01 1.40 1.00% 6%
MDU MDU Resources Group Inc. 17.98 5.27% 12.84 1.40 0.63 3.50% 45%
FRS Frisch's Restaurants, Inc 21.00 5.47% 10.61 1.98 0.52 2.48% 26%
DNB Dun & Bradstreet Corp. 73.33 6.12% 14.70 4.99 1.40 1.91% 28%
VVC Vectren Corp. 22.71 6.17% 14.94 1.52 1.36 5.99% 89%
T AT&T Inc 24.85 7.16% 12.36 2.01 1.68 6.76% 84%
HCC HCC Insurance Holdings, Inc. 24.74 7.19% 8.25 3.00 0.54 2.18% 18%
CWT California Water Service Group 36.10 7.79% 18.70 1.93 1.19 3.30% 62%
UMBF UMB Financial Corp.  39.33 8.23% 17.10 2.30 0.74 1.88% 32%
WMT Wal-Mart Stores, Inc. 51.37 8.49% 13.88 3.70 1.21 2.36% 33%
BEC Beckman Coulter, Inc. 56.54 8.84% 23.66 2.39 0.72 1.27% 30%
SVU SUPERVALU INC 13.23 9.07% 7.15 1.85 0.35 2.65% 19%
SHEN Shenandoah Telecom 17.57 9.13% 15.97 1.10 0.32 1.82% 29%
UGI UGI Corp. 25.39 9.53% 11.59 2.19 1.00 3.94% 46%
CTWS Connecticut Water Service, Inc.  21.43 9.67% 18.16 1.18 0.91 4.25% 77%
ABT Abbott Laboratories 46.94 9.67% 13.77 3.41 1.76 3.75% 52%
WTR Aqua America Inc 16.91 9.88% 21.41 0.79 0.58 3.43% 73%
AWR American States Water Co. 33.87 9.90% 18.92 1.79 1.04 3.07% 58%
AVP Avon Products, Inc. 26.66 9.94% 20.99 1.27 0.88 3.30% 69%
NWN Northwest Natural Gas Co. 43.69 10.24% 16.24 2.69 1.66 3.80% 62%
FFIN First Financial Bankshares, Inc.  51.34 10.36% 19.90 2.58 1.36 2.65% 53%
PBI Pitney Bowes Inc   22.51 10.45% 11.72 1.92 1.46 6.49% 76%
PFE Pfizer Inc 15.40 10.47% 14.26 1.08 0.72 4.68% 67%
NJR New Jersey Resources Corp. 35.36 10.50% 16.00 2.21 1.36 3.85% 62%
APD Air Products & Chemicals, Inc. 66.94 10.61% 16.78 3.99 1.96 2.93% 49%
WEYS Weyco Group, Inc.  23.10 10.95% 18.78 1.23 0.64 2.77% 52%
NTRS Northern Trust Corp.  51.88 11.04% 16.31 3.18 1.12 2.16% 35%
KO Coca-Cola Co 51.59 11.28% 16.97 3.04 1.76 3.41% 58%
FPL FPL Group, Inc. 50.59 11.70% 11.45 4.42 2.00 3.95% 45%
AROW Arrow Financial Corp.  25.66 11.71% 13.72 1.87 1.00 3.90% 53%
THFF First Financial Corp. Indiana  28.43 12.24% 16.43 1.73 0.90 3.17% 52%
BDX Becton, Dickinson and Co. 71.49 12.74% 13.72 5.21 1.48 2.07% 28%
SFNC Simmons First National Corp.  27.01 13.01% 16.47 1.64 0.76 2.81% 46%
JNJ Johnson & Johnson   60.88 13.03% 12.79 4.76 2.16 3.55% 45%
BCR CR Bard, Inc. 79.57 13.70% 16.82 4.73 0.68 0.85% 14%
PGN Progress Energy, Inc. 38.46 13.96% 14.14 2.72 2.48 6.45% 91%
ATO Atmos Energy Corp. 26.80 14.33% 12.88 2.08 1.34 5.00% 64%
PX Praxair, Inc. 77.10 14.75% 18.85 4.09 1.80 2.33% 44%
TMP Tompkins Financial Corp. 40.22 16.09% 13.32 3.02 1.36 3.38% 45%
SBSI Southside Bancshares, Inc.  20.27 16.56% 7.62 2.66 0.68 3.35% 26%
BRO Brown & Brown, Inc. 19.10 17.00% 18.19 1.05 0.31 1.62% 30%
PNY Piedmont Natural Gas Co., Inc. 25.35 17.09% 11.96 2.12 1.12 4.42% 53%
SYBT S.Y. BanCorp., Inc.  23.28 17.58% 19.24 1.21 0.68 2.92% 56%
SIAL Sigma-Aldrich Corp.  52.87 17.83% 18.04 2.93 0.64 1.21% 22%
HRB H&R Block, Inc. 16.37 18.28% 11.14 1.47 0.60 3.67% 41%
WAG Walgreen Co. 33.10 18.68% 15.54 2.13 0.55 1.66% 26%
XRAY DENTSPLY International Inc.  33.06 18.96% 18.07 1.83 0.20 0.60% 11%
WGL WGL Holdings, Inc. 34.02 18.99% 14.66 2.32 1.51 4.44% 65%
MATW Matthews International Corp.  32.78 19.11% 15.84 2.07 0.28 0.85% 14%
BMI Badger Meter, Inc. 38.94 19.52% 17.94 2.17 0.48 1.23% 22%
HGIC Harleysville Group Inc.  31.37 20.24% 11.41 2.75 1.30 4.14% 47%
RNST Renasant Corp.  14.74 20.33% 19.39 0.76 0.68 4.61% 89%
59 Companies






Watch List Summary
The best performing stock from last week's list was Monsanto (MON) which rose 0.6% after a positive note from Barron's on 5/17/10.  The worst performing stock was Shenandoah Telecommunication (SHEN) which fell 9%. Overall, the Dividend Achiever watch list lost 3.8% versus the Dow which lost 4%.
Again, I ran a new filter through this list using Graham rule of earning yield being higher than twice the AAA bond yield (5.29%). The result is that 5 companies passed the test. That's 8% of the companies on the list. Let me remind you that this is only one criteria out of ten. I'll do an analysis on this issue for the up-coming article.
Readers should use the March 2009 low (or companies' most distress time) as a base case for investing.  Our conservative view is to embrace the worse case scenario prior to investing.  March 2009 low fits that description.  Although we use the one year (52 weeks) time frame, the past year was nothing but major bull run and anyone who bought at or near the low can be taking profit.  It's important to place these companies in your own watch list so that when opportunities arise, you can purchase them with greater margin of safety.

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How to Use the Jobs Indicator to Buy Apple Stock

Posted on May 19, 2010 by | Leave a comment
There is a little known way that you can use the Jobs Indicator to determine the very best time to buy Apple (AAPL) stock.  Whenever Steve Jobs decides to sell a large portion of his stock, that is the ideal time to buy Apple (AAPL) stock. 
In the first chart, we can seen that Steve Jobs decides to sell a large portion of his stock 7 years after the peak in the price and 79.6% from the 1991 top.  Apparently, Microsoft (MSFT) seemed to think that AAPL was cheap at twice the price that Jobs sold out.  I don't know the exact reason Jobs sold at the bottom in 1997. However, you have to admit that as an indicator, Jobs selling the stock at the time was the greatest indication of when to buy Apple stock.  I wonder if Microsoft still has that $150 million investment in AAPL.  If MSFT still holds that position, the value of the Apple investment is now worth $5.7 billion.
In the charts below, you will see the other time that Jobs "sold" out of Apple (AAPL) stock.  This is a more controversial case of selling, surrendering or voluntarily giving up his options since it was later found that "...Jobs was granted 7.5 million stock options in 2001 without approval from the board of directors and documentation was falsified to indicate a full board meeting had taken place as required, according to a report."
Jobs was later cleared of possible criminal charges related to actually falsifying documents.  Instead, two of his most loyal staffers were thrown under the bus.  The reason for the ill-timed transaction in 2003 might not be reflective of Steve Jobs' "judgment."  However, whenever Jobs gives up a large portion of his holdings in Apple (AAPL), there seems to have been great opportunities to pick up shares in the stock on the cheap.
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Nasdaq 100 Watch List

Posted on May 16, 2010 by | Leave a comment
Below are the Nasdaq 100 companies that are within 21% of their respective 52-week low. 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 considerable due diligence.

Name (SYMBOL) Price P/E EPS Yield P/B Pct from Yr Low
Activision Blizzard, Inc (ATVI) $10.69 45.49 0.24 1.40% 1.25 7.65%
Amgen Inc. (AMGN) $54.69 11.61 4.71 0.00% 2.42 15.14%
Apollo Group, Inc. (APOL) $52.78 13.2 4 0.00% 6.18 1.11%
Biogen Idec Inc (BIIB) $50.13 15.18 3.3 0.00% 2.32 20.07%
Cephalon, Inc. (CEPH) $60.69 12.1 5.01 0.00% 1.98 15.49%
Electronic Arts Inc. (ERTS) $17.42 0 -2.31 0.00% 2.28 10.96%
Genzyme Corporation (GENZ) $50.43 122.4 0.41 0.00% 1.83 7.09%
Gilead Sciences, Inc. (GILD) $37.78 12.12 3.12 0.00% 4.74 0.61%
Logitech (LOGI) $14.74 40.72 0.36 0.00% 2.69 14.89%
QUALCOMM (QCOM) $37.30 19.89 1.88 2.00% 3 5.88%
Ryanair Holdings plc (RYAAY) $24.72 0 0 0.00% 0 4.39%
Sigma-Aldrich (SIAL) $54.23 18.5 2.93 1.20% 4.01 21.00%
Staples, Inc. (SPLS) $22.12 21.62 1.02 1.60% 2.39 18.16%
Stericycle, Inc. (SRCL) $56.70 26.83 2.11 0.00% 5.49 21.00%
Symantec Corporation (SYMC) $16.12 18.49 0.87 0.00% 2.89 15.39%
Yahoo! Inc. (YHOO) $16.39 29.37 0.56 0.00% 1.84 17.32%

Watch List Summary

The stock that fell the most from last week's watch list was Apollo Group (APOL) which fell -3% for the week. Yahoo! (YHOO) gained the most for the week with 7.19%.

In all, the Nasdaq 100 Watch List of last week gained 1.15% as compared to the Nasdaq 100 index which gained 3.12%.  As quickly as Cintas (CTAS) got on the Watch List is as quickly as it came off the watch list.  Although CTAS is not on the watch list, I would still continue to follow the company for additional analysis and possible purchase at the right price. 
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Dividend Achiever Watch List

Posted on May 14, 2010 by | Leave a comment
At the end of the week, our watch list contracted to 42 companies. Here is the watch list which ranks current and former Dividend Achievers that are within 20% of the 52-week low for May 14, 2010. 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.

Symbol Name Price % Yr Low P/E EPS Dividend Yield Payout Ratio
MON Monsanto Co. 54.61 0.98% 22.75 2.40 1.06 1.94% 44%
LLY Eli Lilly & Co. 33.92 5.37% 8.74 3.88 1.96 5.78% 51%
FRS Frisch's Restaurants, Inc 21.01 5.52% 10.61 1.98 0.52 2.48% 26%
FII Federated Investors Inc 23.16 7.22% 11.82 1.96 0.96 4.15% 49%
HSC Harsco Corp. 27.56 7.99% 20.57 1.34 0.82 2.98% 61%
VIVO Meridian Bioscience Inc.  18.73 8.20% 23.71 0.79 0.76 4.06% 96%
DNB Dun & Bradstreet Corp. 74.98 8.51% 15.06 4.98 1.40 1.87% 28%
XOM Exxon Mobil Corp.   63.60 8.79% 14.49 4.39 1.76 2.77% 40%
ADM Archer Daniels Midland Co. 26.77 9.31% 11.02 2.43 0.60 2.24% 25%
T AT&T Inc 25.40 9.53% 12.64 2.01 1.68 6.61% 84%
WMT Wal-Mart Stores, Inc. 52.12 10.07% 14.09 3.70 1.21 2.32% 33%
GS Goldman Sachs Group, Inc.   143.23 11.08% 5.97 24.01 1.40 0.98% 6%
HCC HCC Insurance Holdings, Inc. 25.74 11.53% 8.58 3.00 0.54 2.10% 18%
VVC Vectren Corp. 23.95 11.97% 14.60 1.64 1.36 5.68% 83%
SVU SUPERVALU Inc. 13.64 12.45% 7.37 1.85 0.35 2.57% 19%
ABT Abbott Laboratories 48.50 13.45% 14.22 3.41 1.76 3.63% 52%
BEC Beckman Coulter, Inc. 58.85 13.54% 24.62 2.39 0.72 1.22% 30%
NTRS Northern Trust Corp.  53.18 13.83% 16.72 3.18 1.12 2.11% 35%
PBI Pitney Bowes Inc   23.34 14.52% 12.16 1.92 1.46 6.26% 76%
UMBF UMB Financial Corp.  41.66 14.64% 18.03 2.31 0.74 1.78% 32%
FFIN First Financial Bankshares, Inc.  53.69 15.44% 20.81 2.58 1.36 2.53% 53%
BDX Becton, Dickinson and Co. 73.26 15.53% 14.06 5.21 1.48 2.02% 28%
APD Air Products & Chemicals, Inc. 69.57 15.85% 17.44 3.99 1.96 2.82% 49%
PX Praxair, Inc. 77.90 15.94% 19.05 4.09 1.80 2.31% 44%
PFE Pfizer Inc 16.20 16.21% 15.00 1.08 0.72 4.44% 67%
CTWS Connecticut Water Service, Inc.  22.64 16.34% 19.03 1.19 0.91 4.02% 76%
FPL FPL Group, Inc. 52.71 16.38% 11.93 4.42 2.00 3.79% 45%
CWT California Water Service 39.06 16.63% 20.24 1.93 1.19 3.05% 62%
MDU MDU Resources Group Inc. 19.44 16.76% 13.89 1.40 0.63 3.24% 45%
WTR Aqua America Inc 17.97 16.76% 22.75 0.79 0.58 3.23% 73%
NWN Northwest Natural Gas Co. 46.76 17.99% 17.38 2.69 1.66 3.55% 62%
PGN Progress Energy, Inc. 40.00 18.52% 14.71 2.72 2.48 6.20% 91%
JNJ Johnson & Johnson   63.97 18.77% 13.44 4.76 2.16 3.38% 45%
BCR CR Bard, Inc. 82.70 19.44% 17.48 4.73 0.68 0.82% 14%
WEYS Weyco Group, Inc.  24.92 19.69% 20.26 1.23 0.64 2.57% 52%
BRO Brown & Brown, Inc. 19.52 19.73% 18.59 1.05 0.31 1.59% 30%
AROW Arrow Financial Corp.  27.51 19.76% 14.71 1.87 1.00 3.64% 53%
ATO Atmos Energy Corp. 28.11 19.92% 13.51 2.08 1.34 4.77% 64%
SHEN Shenandoah Telecom 19.32 20.00% 30.19 0.64 0.32 1.66% 50%
SFNC Simmons First National Corp.  28.69 20.04% 17.49 1.64 0.76 2.65% 46%
THFF First Financial Corp. Indiana  30.49 20.37% 17.62 1.73 0.90 2.95% 52%
MRK Merck & Co., Inc 32.88 34.92% 7.10 4.63 1.52 4.62% 33%
42 Companies






Watch List Summary

The best performing stock from last week's list was Shenandoah Telecommunication (SHEN) which rose 14%. The worst performing stock was Monsanto (MON) which fell 7.6%. Overall, the Dividend Achiever watch list gained 2.6% versus the Dow which was up 2.25%.

I ran a new filter through this list using Graham rule of earning yield being higher than twice the long-term rate which I use 10 years T-bill. The result is that 19 companies passed the test. That's 40% of the companies on the list!

Again, I reiterate readers to use this list to your advantage. There are (and will be) great companies paying nice dividends with low payout ratios. Place these companies in your own watch list so that when opportunities arise, you can purchase them with greater margin of safety.
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Dow Theory

Posted on May 13, 2010 by | Leave a comment
The decline from the intermediate high on May 12, 2010 is now putting in place the prospects for another classic secondary reaction of the Dow Industrials. According to Dow Theory, secondary reactions can range from 33% to 66% of the move upward from the previous low in the last secondary reaction.

In the chart below, you can see that the last secondary low took place at point C on February 5, 2010.

Depending on the point you choose (using the closing price or the intraday low), the Dow reached a low at 9822.83 on February 5th. From the low, the peak in the Dow occurred on April 26th at the intraday high of 11,308.95. Based on the difference of the low and the high, the next potential downside targets are as follows:
  • 10,565.89
  • 10,318.21
  • 9822.83
According to Charles H. Dow, analysis of market action needs to take in any periods that have similar characteristics. In this case, I believe that the Dow is tracing out exactly the same pattern as had happened from January 19th to February 5th. In the points A1, B1, and C1 we can see the pattern that might materialize according to Dow’s theory.
So far, we have already traced out the pattern from A1 to B1. The turn at B1 has laid the groundwork for what we can expect might happen next. The prospect is that we fall below 10,375 and possibly turn upward somewhere around 10,200. However, because of the extreme decline that occurred on May 6th, the Dow could fall as low as point C and still reverse back to the point B1.
If the Dow falls below the blue line at point C, then we can label the market trend as bearish. In addition, all of the moves in the Dow Industrials must be confirmed by the Transportation index. The ideal scenario is that the index goes back to B1 at the very least. However, with all the recent turmoil in the markets, I would not be surprised if we got a bear market signal below point Z.
It should be noted that although I have only discussed a bunch of lines going up and down, the ideas behind the concepts are rooted in fundamentals. The very same fundamentals that formed the basis for investors like Graham, Dodd and Buffett.

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