Saturday, October 25, 2014

Buy/sell plans last week of October

I will be trying to allocate additional positions to meet my sector allocation goals. Below are graphs showing what I have now and what my goals are. I am going to aim at adding more energy and industrial stocks this week.

Present (left)                               Goal (right), click to enlarge pics


I really would like to increase my current 17.1% in energy and 2.6% in industrials. The ultimate goal is 24% in energy and 7% in industrials.

In addition to the cash, I will be selling my ~$1000 position in CMCSA this week to fund my purchases. CMCSA is not a dividend champion or contender and I had it more as a speculative play when I had free trades. 


Industrials:
I believe low gas prices will help the industrial sectors. Current gas prices have dipped tremendously. I am eyeing UTX, MMM, LMT, NSC, and ITW. In terms of MMM's price, I think the PE is a bit too high for me. I am preferring the PE (in relation to their past history) for UTX, NSC, and ITW. I am looking at NSC instead of CSX and UNP due to its lower PE. LMT has is a bit on the pricey side but it offers a nice yield and decent payout ratio. Most industrial stocks do not have yields over 3%. I prefer LMT over RTN, despite it being a higher PE, because LMT has a higher yield.

UTX





MMM  - a bit pricey :(




ITW




LMT - bit pricey but nice 3.31% yield and nice recent div increase..


NSC



Energy:
Whenever the price of oil falls I get a smile on my face. Not only do I pay less at the pump, but I can pick up extra shares of CVX and XOM with my extra money. I have added around $1000 to Chevron last week. This week I plan to add more but into a different oil major. Unfortunately the price of the oil companies have risen slightly since the lows of a couple days ago. However, they are still down from their highs by a significant amount. I am deciding to add to my position in XOM this week and make it a full position. XOM has the lowest yield relative to COP, CVX, and BP. However, it provides the least volatility and has a decent share buyback program. I threw BP out the window as an option since they have messy oil spill issues (and its dividend history is screwed up). I ended up having to decide between COP and XOM. COP dropped significantly more than XOM recently (so it's a better value) but it is a more volatile stock. COP has the advantage of higher growth and a higher yield. Ultimately though, I prefer stability over gains and I value XOM's moat. There are certain dividend aristocrats you can't go wrong with and XOM is one of them (that is until oil runs out...).

XOM

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