The stock market cooled off last week presenting a number of companies that look attractive. As a whole I do not think stocks are at bargain levels right now, but I am paying close attention to a select group. If we see additional market declines I will most likely pick up one of these names later this month.
-Emerson Electric (EMR): Emerson had a substantial earnings miss last week, but it still grew EPS from the previous year. Every company will miss earnings from time to time, the fact that it is growing EPS is a good sign for dividend growth. My target buy price: <$48
P/E: 15.62 / Yield: 3.28 / Payout Ratio: 47.6% / Est. LT EPS Growth: 11.3% / Yrs of Div Growth: 55 (champion) / Industrials sector
-Air Products and Chemicals (APD): APD had a slight earnings miss a few weeks ago which seems to have triggered a price decline. I would note that Air Products is expected to earn less in 2012 than it did in 2011. My target buy price: <$83
P/E: 16.05 / Yield: 2.99 / Payout Ratio: 43.83% / Est. LT EPS Growth: 7.7% / Yrs of Div Growth: 30 (champion) / Materials sector
-Owens and Minor (OMI): OMI also had a slight earnings miss a few weeks ago. Even with the earnings whiff, Owens and Minor is still growing earnings per share, which is always good. In my opinion, OMI is trading at an attractive price right now. My target buy price: <$29(already there)
P/E: 15.57 / Yield: 3.09 / Payout Ratio: 44.81% / Est. LT EPS Growth: 8.7% / Yrs of Div Growth: 15 (contender) / Healthcare sector
-Toronto Dominion (TD): TD is a Canadian bank that has been on a tear the past year. It has been growing EPS and trouncing estimates along the way. This is an example of why I do not put full faith in analysts. I'm looking to increase exposure to foreign stocks and financials. TD fits the bill as I am willing to overlook the dividend freeze in 2010. My target buy price:$80
P/E: 12.98 / Yield: 3.56 / Payout Ratio: 42.5% / Est. LT EPS Growth: 9.9% / Yrs of Div Growth: 2 (froze in 2010) / Financial sector
Those all look like pretty good picks. I've been wanting to increase my weight in the energy sector, so I am closely watching COP and CVX (I already own CVX). Beyond that, I'm mainly on the lookout for opportunities to add to existing positions in my portfolio.
ReplyDeleteI have been thinking about building up to 30 positions to receive lots of checks, then concentrating on making those checks bigger. We have to take what the market gives us though.
DeleteThis looks like a nice list. I'm not that familiar with APD or TD but I'll take a look now that you pointed them out. OMI & CVX are high on my shopping list.
ReplyDeleteI bought TD today. I feel the P/E is low for the amount of expected growth. They will report earnings in a few weeks, it might present an opportunity.
DeleteCI,
ReplyDeleteThanks for sharing your shopping list. Good stuff there.
I especially like EMR here. I think it's a solid long-term holding.
I haven't looked much at OMI in the past, but I know it's somewhat popular in DG circles. I'll have to take another look as the yield appears pretty decent, and higher than I remember it being.
Best wishes!
Yes EMR looks to be a great long term pick. It has one of the longest dividend growth streaks in the world which says a lot about the company.
DeleteBought a slug of APD this past week. It's looking good under 80. Time to sit back and watch the dividend increases and reinvested dividends go to work. Once you focus on those two aspects, it's easier to ignore the price swings. In fact, you start to hope the market goes down so that your reinvested dividends buy more shares. Nice shopping list. May you have some dry powder to take advantage in the next few weeks.
ReplyDeleteI look at my stocks the same way. I try not to pay attention to price swings except for making new purchases. APD is still very high on my radar. If it sees more weakness I'll probably pick some up next month.
DeleteIf you are looking to increase exposure to foreign stocks, take a look at NSRGY, NVS and STO. Do your own research and see if they make sense as potential investments. All return a good amount of cash to shareholders.
ReplyDeleteThanks for the tip, I'll look into those. I'm not a fan of annual/semiannual dividends or withholding taxes however. I've been thinking about UK stocks such as BP and UL.
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