It is becoming increasingly difficult to find value these days. Most of my favorite stocks are trading at levels higher than I am willing to pay. I've already increased my stake in companies I've identified as under valued which has lead me to search for new opportunities. I scoured the CCC lists and came up with 3 companies that fit my objectives. All three are either under or fairly valued right now.
14.3 P/E / 7.4% Projected Growth / 116% Debt to Equity
3.81% Yield / 17.6% Div Growth / 47% Payout Ratio / 9 Yrs Increases
Most of us are probably already familiar with Hasbro, they sell toys and games. I grew up with popular Hasbro products such as Transformers, Monopoly, and Mr. Potato Head. It's funny how some of these products like My Little Pony go back in style. I was reading about a subset of American males who are infatuated with My Little Pony and call themselves "bronies." There was an article in the Army Times about bronies in the military, it was a hoot. We joke about this all the time at work, who would have thought? All jokes aside Hasbro is a serious company in the business of entertaining people. It is currently under valued and very shareholder friendly. It has a great dividend growth rate with room for additional increases. I would expect that long term the dividend growth would slow down some to be more in line with EPS growth. It does carry quite a bit of debt, which is something to watch out for. A toy company is not my first choice for a core holding, but I could see starting a small to medium sized position with HAS.
14.6 P/E / 9.2% Projected Growth / -166% Debt to Equity (negative equity)
5.24% Yield / 27.8% Div Growth / 70% Payout Ratio / 5 Yrs Increases
Lorillard is a fine company in the tobacco industry that would compliment my Philip Morris holding. LO is best known for its Newport brand of menthol cigarettes. I have seen Newport making a push into the non mentholated market with its red label. Before I left for Korea I noticed Newport red label was running specials and many smokers were indeed lured in by the low prices. LO sells products mostly in the United States and doesn't seem to focus on international sales. It has a huge stock buyback program which has lead to negative equity and quite a bit of debt. This is pretty common in the tobacco industry. It is something to keep an eye on, but not too concerning. For dividend investors LO could be be a goldmine. It offers a high yield, high dividend growth, and future EPS growth to keep the machine rolling. It's currently trading in the fair value range.
Republic Services (RSG):
15.3 P/E / 6.6% Projected Growth / 93% Debt to Equity
3.37% Yield / 6.7% Div Growth / 48% Payout Ratio / 10 Yrs Increases
RSG is a trash collection service whose biggest competitor is Waste Management. To be honest I'm more familiar with WM since it was our trash collector when I was growing up. RSG is a bit smaller than WM and has a noticeably lower yield. However it also has lower debt, a better payout ratio, and is projected to grow at a slightly higher rate. Republic grows its business through an acquisition strategy; it buys smaller companies and integrates them under the RSG umbrella. In fact if you look at its balance sheet you'll notice it has a huge amount of goodwill from all the past acquisitions. RSG and WM are commonly put in the industrials sector of stocks. To me its more like a utility. I like WM for its yield and RSG because it's more financially sound. RSG is slightly undervalued at this point in time.
What do you guys think? Are you familiar with these companies?