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.