Saturday, May 17, 2014

Stock Watchlist: May 2014

May is a hard time to pick stocks. The S&P500 hit record highs and most stocks are above 20 PE. There are still some decent picks. Below is a list of stocks I am eyeing with my short comments. I am trying to prioritize the dividend champions on my watchlist page: Watchlist. I am also eyeing other stocks that aren't traditional dividend growth stocks. The charts below show the price history and PE history. PE should not be the only way to see if a stock is a buy, but it helps me screen out stocks quickly.

The Duck is on my radar! There have been a lot of posts stating that this stock is severely undervalued. I think the the stock is fair value to slightly undervalued. The stock had a PE of 15-20 before the financial crisis. After the 2008-2009 recession, it went back up to around 15 but has been dropping down ever since. The duck has a large business in Japan. It didn't help that Japan got hit with a Tsunami that blew up their nuclear power plant. The weakening Yen isn't helping the stock either. It now hangs at around 9 to 10 for the last 2 years. I think the Japanese crisis is overstated and this stock should be worth more. It's a dividend champion that has solid dividends increasing every year.

Comcast is priced quite well right now. Their earnings growth is projected to be double digit percents in near year and 5 year timeframe. The PEG is really low at 1.08. The only problem is the dividend is a measly 1.79%. They started dividends in 2008 and the growth is in the double digits so I think this would be a good growth stock in my portfolio. Their EPS and income and dividends all rose over the last 10 years even during the great recession of 2008. They also have acquired Time Warner for 45 billion. For anyone who has lived in California for many years, you would know the monopoly these companies have on cable internet. When I moved back, there was literally no other cable provider except Comcast and AT&T. Nobody will buy AT&T in silicon valley due to their ridiculous reliability and abysmally slow speeds. Comcast is the only solution and if you want anyone else, there is nobody else. They essentially have a monopoly and everyone is at the whim of their pricing scheme. As a result, I am forced to pay 60$ a month for internet. People cannot live without internet, so I don't see this company losing income and dying anytime soon.

The gas giant. Or sister giant.. I want to get this stock somehow in my portfolio but it's a bit overpriced. I will patiently wait. XOM has similar figures as well. I prefer CVX over XOM for the growth; however, I will probably have CVX and XOM in a 80/20 ratio in my portfolio.

General Mills. Another champion I would like to own one day but it's a bit too pricey right now.

Genuine Parts Company. I would like to own this dividend legend one day. It is looking like fair value right now.

Honeywell has double digit growth % estimates this year, next year, and next 5 years. The PEG is an attractive 1.77. I feel the price is fair valued right now. Forward PE is 14.82. This stock has had a massive rally the last couple of years so the dividend yield has been going down steadily. It's now at 1.97% but I expect this to increase as they raise their dividends. The stock has a higher beta so it's more volatile, as seen in 2000 and 2008. I currently prefer HON over GE for a stock in industrial goods. If the Alstom deal goes through for GE, hopefully the GE stock will be lowered due to paying a premium to buy Alstom. I'll enter in GE when the PE falls. I still do not have GE's trust after what happened in 2000 and 2008.

I work in the tech industry and I don't think IBM is leaving anytime soon. They are a huge company with customers that are set in using their products. Having customers move their platform from IBM to someone else will be a large cost. However, their recent revenue stagnation worries me. It is hard to change IBM. They are slow and bureaucratic. They have been buying back shares like crazy and the PE is priced really well compared to the past (graph only shows one year). I think the stock is undervalued and would like to get in on this as it drops further.

Kimberly Clark Corp. I'm sure most readers know about this dividend champion. I think this stock is fair value right now. The PE was less than 15 back in 2011 and slowly grew to where it is today. It's been jumping between 23 and 20. This stock has a solid dividend and steady growth over the years.

Difficult to measure PE of KMI, but I feel the stock is fair value right now. I would enjoy the dividends from their lucrative business. Although they're killing the environment, I feel that the pipeline and storage of energy will always be a growing requirement in the US economy.

PG is a dividend legend in the consumer goods category. The PE is a bit high right now but I feel that it's a fair value for a solid company. I feel that owning this great company at fair value is a better choice for me than owning a smaller value company at a super low price.

ROST has a solid increase in revenue, income, EPS, and dividends year after year. Even through the 2008-2009 recession they had increases on every front. I feel that their stock is undervalued right now and this stock is a strong buy. However, the dividends is a measly 1.15%. The dividend is growing at double digit rates. Their projected growth for next year and next 5 years are double digits as well, which makes the PEG an attractive 1.53. Although I wouldn't want a very large chunk of this stock in my portfolio (since I am still looking for dividend champions) I think it will prove to be a good addition to the other blue-chip stocks I will be buying.

Seems like a good price. US Bancorp did suffer from the financial crisis in 2008-2009. I am not a fan of holding a lot of banks and insurance companies but I have WFC and USB on my watchlist. WFC is on a rally for the last couple of months, but I think WFC is still of fair value. Keep in mind both WFC and USB killed dividends during the crash so they are not reliable dividend stocks.

I think Verizon is at fair value price. After Warren Buffett announced his large purchase, the stock shot up to $49. I think this is a better choice than AT&T due to its higher growth estimate. I will most likely have positions in both AT&T and VZ eventually since both provide solid dividend yields and both will likely exist for many decades to come. Nearly every American today will need a cellphone (... make that a smartphone...), which requires service from these telco giants. People will also be forced to sign into these pricey contracts for their entire lives if they want to remain in touch with the modern world. The usage of 4G LTE and future internet technologies to keep every American online (we all know everyone uses Facebook and Google daily..... and us investors enjoy reading our blogs and stock news) will be income sources for T and VZ.

After disappointing earnings (another stock that blamed it on the cold weather.....cough cough.) the stock is not looking so hot. This is one of the stocks I want in my portfolio so I think I will enter if this drops further. Walmart is one of those stocks that will still have sales during recessions. I myself hate to admit it, but I shop at Walmart because the prices are cheaper. Everytime I go shopping at Walmart, I have to wait in the terribly long and slow checkout line. It is always full.... There will always be people who need to shop for food and soap and clothes on the cheap. There are worries that Amazon and other online marketplaces will take over Walmart, but I feel that for daily consumer goods, food, and care products, most people will rather drive 5 minutes to their local Walmart instead of waiting days for an order to arrive from Amazon. I also feel that if I were to buy clothes (not that I buy clothes from Walmart..) or shoes from somewhere, I would like to try the clothes on to see how it fits and looks which makes regular brick and mortar stores better. However Walmart also sells other goods like electronics, cookware, furniture, home maintenance supplies, etc that can be easily purchased on Amazon without having to see it in person. I still believe in Walmart's business model and their market control from their extremely cheap prices makes them like a monopoly when compared with smaller businesses.

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