The November Edition of the Best Ideas Newsletter!
November 16, 2014
Please download the November edition of the Best Ideas Newsletter .
Dividend Increases for the Week Ending November 14
November 16, 2014
Below we provide a list of firms that raised their dividends during the week ending November 14. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Automatic Data Processing (ADP): now $0.49 per share quarterly dividend, was $0.48. CBL & Associates Properties (CBL): now $0.265 per share quarterly dividend, was $0.245. Dow Chemical (DOW): now $0.42 per share quarterly dividend, was $0.37. General Growth Properties (GGP): now $0.17 per share quarterly dividend, was $0.16. Griffon (GFF): now $0.04 per share quarterly dividend, was $0.03. Group 1 Automotive (GPI): now $0.19 per share quarterly
Cisco Is Breaking Out
November 14, 2014
We’re adding Cisco (CSCO) to both the Best Ideas portfolio and Dividend Growth portfolio. Communications networking giant Cisco recently registered a 9 on the , and the firm’s dividend has always been one of the strongest in our coverage. Shares yield ~3% and boast an incredible 3.4 ratio on the Dividend Cushion. These marks are very similar to one of our other dividend growth favorites, Microsoft (MSFT). Both tech giants benefit from huge cash positions on the balance sheet, a characteristic that we view as vital to a sustainable and growing dividend. Though Cisco has registered a 9 on the Valuentum Buying Index before (at $15.82 in September 2011 and at $19.06 in August 2012), we’ve been hesitant to add shares to
Look Out Below: Crude Oil Prices Continue to Tumble
November 13, 2014
West Texas Intermediate crude oil (Dec’14) fell under $75 per barrel today, now almost $30 lower than its 52-week high, reaching the lowest level since September 2010. Brent crude also fell to a four-year low. We view the move in crude as a net-negative for the economy and S&P 500 earnings, even though many from transportation to retail will benefit from lower energy costs. The energy sector accounts for roughly 10% of the S&P 500 (SPY), and ExxonMobil (XOM) and Chevron (CVX) top the index’s top 10 holdings. We think falling crude oil prices are more a reflection of expectations for declining global economic activity, which in itself, signals that trouble is on the horizon. North American shale production continues
Berkshire Scoops Up Duracell; Hasbro Ponders Dreamworks
November 13, 2014
Edited November 14, 2014. We should have known that Warren Buffett (BRK.A, BRK.B) was interested in acquiring Procter & Gamble’s (PG) battery business, Duracell. Today, we found out that he was. In exchange for a recapitalized Duracell Company, including $1.7 billion in cash at closing, Berkshire Hathaway will fork over $4.7 billion worth of Procter & Gamble shares to the former parent to bring Duracell’s operations into Berkshire Hathaway. The transaction is expected to close in the second half of 2015. We think it’s mostly a win for Procter & Gamble. The company had announced its decision to shed Duracell in its most recent quarterly report, a move we had been heavily in favor of. Based on trading action following
A Sneak Peek at Valuentum’s Slides for the AAII Presentation in Chicago This Saturday!
November 11, 2014
Let’s take a sneak peek at President Brian Nelson’s slides for this weekend’s presentation in Chicago! Firms mentioned: MSFT, GOOG, AIR, BRCM, CSCO, SPY, AAPL, QCOM, MA, DPZ, SVU, RNDY, DDE, STRA, EXC, CLF, PBI, CTL, JCP and others. <select image to download the slide deck>
Homebuilders Bucking Downtrend
November 10, 2014
Homebuilders have a reason to be optimistic as of late. Not only has the SPDR S&P Homebuilders ETF (XHB) firmed up, but Toll Brothers (TOL) released strong fundamental news, helping to buoy the industry. Toll Brothers operates at the high-end of the homebuilding industry. Its average home price, for example, has historically been ~$650,000 compared to ~$300,000 for its publicly-traded peers. As a result, we’d view Toll’s main competitors as small private builders catering to luxury demographics, not necessarily the large public builders. The firm’s performance, however, is worth watching as yet another data point with respect to the industry’s health. Pent up housing demand has been accruing for years, and new home inventory is limited, which makes for an
Dividend Increases for the Week Ending November 7
November 10, 2014
Below we provide a list of firms that raised their dividends during the week ending November 7. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Aaron’s (AAN): now $0.023 per share quarterly dividend, was $0.021. Acadia Realty Trust (AKR): was $0.24 per share quarterly dividend, was $0.23. Agrium (AGU): now $0.78 per share quarterly dividend, was $0.75. Atmos Energy (ATO): now $0.39 per share quarterly dividend, was $0.37. AmTrust Financial Services (AFSI): now $0.25 per share quarterly dividend, was $0.20. Cantel Medical (CMN): now $0.05 per share semi-annual dividend, was $0.045.
Sears Has Stopped Shrinking But Is This Really Good News?
November 9, 2014
It appears that when things at a company are so bad, any glimmer of hope can result in an outsize upside stock-price reaction that is often unjustified on the basis of fundamentals. This appears to be what happened to Sears’ (SHLD) stock last week. The company was at the center of a massive short squeeze Friday, to a magnitude we haven’t seen in some time. We don’t think fundamentals at Sears have changed all that much. The struggling retailer said that EBITDA in the third quarter of 2014 would be equally as poor as that of the same period in 2013. The measure could be a $325 million loss (-$325 million) in the quarter, and this would be worse than the $178
4 Friday Earnings Reports for Your Radar
November 7, 2014
Let’s dig into a number of reports from firms in the news Friday. Abercrombie & Fitch (ANF) Investors in teen retail stocks are literally trying to catch lightning with respect to fashion trends. Predicting fashion in any demographic isn’t easy, but we’d point to anticipating teen behavior as the most difficult analytical proposition within any retail segment. It shouldn’t be surprising that fundamentals within the teen retail space are volatile, and Abercrombie & Fitch’s third-quarter update matched such a profile. During the period, net sales in its third quarter fell 12% and comparable store sales dropped 10%. From the release: Sales during the quarter were below expectations with comparable sales in September and October being significantly weaker
