Thursday, September 26, 2013

New Purchase - BAX


I thought I was finished buying shares for September, this purchase was not planned...

This BAX purchase will bolster my annual passive income stream by $43.12 on a 2.93% yield.  I was not charged a commission, since I received free trades as a bonus for singing up for a new Scottrade account.  I like BAX a lot at current levels ever since it took a rather large share price hit the other day.  This purchase will meet my expectations if it can boost annual dividend payments by 7% (hopefully supported by 6-7% earnings growth).

It appears the reason for this particular stock decline was based on a downgrade.  Apparently disruptive products from competing companies are thought to have diminished BAX's market share (product is 16% revenue) faster than expected based on telephone surveys.   Analysts believe competition will continue taking market share for the foreseeable future.  Analysts usually do have insight on the stocks they follow, however the upgrades/downgrades are meant for the short term investor in most cases.  Long term I like Baxter.

I thought this stock was undervalued before all this happened, I think it's now even more undervalued.  While the competition and BAX's debt load are something to keep an eye on, I like this company, the sector it is a part of, and more importantly the valuation on its common stock shares.  I do not see Baxter as a core holding, however I do plan to accumulate more shares as long as the company continues to pay higher dividends. 

6 comments:

  1. I agree with you 100%, I also bought shares yesterday at $67.39. Wish I waited a extra day. ooh well. :) best wishes.

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    1. I also wish I had waited one more day, oh well close enough. It might continue to slide... Take care!

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  2. I think both of you made a great buy! I've liked the company for a long time even when lower, but never pulled the trigger. Some of the company's products will be needed by healthcare professionals well into the future.

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  3. CI,

    I bought some BAX last week as well. Gotta love when a high quality company takes a nosedive for no apparent fundamental reason. I'll take downgrades all day long. :)

    Best wishes!

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    1. Glad to see you like Baxter. I'm not sure there was no fundamental reason however. One of their products is under heavy pressure from competing companies. That product is 16% revenue and almost 30% profits.

      I like BAX, however it was never intended to be a large holding for me.

      Take care!

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