Brian Nelson

Beer and Cigarettes

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Update: Shortly after the publishing of the following article, Reynolds American announced that it would acquire Lorillard in a deal valued at $27.4 billion, or a deal price of $68.88 per share (in-line with the high end of our fair value estimate range for Lorillard, as predicted). For more details >> ————— Let’s pick up right where we left off. On May 22, we commented that Reynolds American (RAI) and Lorillard (LO) have been looking to combine operations. Here’s what we wrote at that time: According to recent reports, tobacco giants Reynolds American and Lorillard continue to work to tie the knot. The speculated deal is rumored to be a three-way transaction that involves Reynolds’ shareholder British American Tobacco (BTI), … Read more

Dividend Increases for the Week Ending July 11\t

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Below we provide a list of firms that raised their dividends during the week ending July 11. 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 Computer Services (CSVI): now $0.22 per share quarterly dividend, was $0.16. ConocoPhillips (COP): now $0.73 per share quarterly dividend, was $0.69. Highway Holdings Limited (HIHO): now $0.05 per share quarterly dividend, was $0.04. Home Federal Bancorp (HFBL): now declares $0.07 per share quarterly dividend, was $0.06. Paychex (PAYX): now $0.38 per share quarterly dividend, was $0.35. Ryder System (R): now $0.37 per share quarterly dividend, was … Read more

eBay is One of the Cheapest Stocks on the Market

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A data breach and a Google (GOOG) search algorithm change were key concerns heading into June for eBay (EBAY), but the firm’s same-store sales pace during the month showed that little could stop the fundamental momentum at the online retailing giant. Though the pace of its same-store sales expansion may never reach the breakneck rate of Amazon (AMZN), we prefer eBay’s profit focus and believe its competitive advantages are as strong as–or even stronger than–Amazon’s. Here is the June same-store sales data from ChannelAdvisor (ECOM): Amazon – Amazon’s June SSS came in at 34.4%, an increase compared to May’s 28.1%. The Amazon Fire Phone was announced in June and could have caused some knock-on effects. eBay – eBay’s June came … Read more

There’s No Space Like Aerospace

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The recovery from the stock-market bottom in March 2009 has been five years in the making, but as the cyclical threat of an eventual global downturn looms, the aerospace industry is one of the few industries that we think will continue to be resilient in the face of such pressures. We expect commercial aircraft build rates to continue to climb at least through 2018. If the multi-year backlogs of unfulfilled deliveries at the large airframe makers aren’t enough, Boeing’s (BA) updated 20-year outlook for commercial aerospace demand, released June 10, was about as rosy as can be. The reason for such a long-range view has to do with the nature of aircraft building. When airframe makers build next-generation aircraft, they … Read more

Ford’s China Sales Continue to Impress

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June proved to be another great month for Best Ideas portfolio holding Ford (F) in China (1). First-half sales numbers, released Monday, increased to nearly 550,000 wholesale vehicles compared to just over 400,000 in the first half of 2013. Ford’s June sales alone increased 17%, to 87,783. The news showcases Ford’s continued sales momentum in the country, something we’ve been monitoring closely for some time. The Ford Focus, Ford Kuga, Ford Mondeo and the Ford EcoSport have been key sources of strength, with the Focus becoming a huge hit with consumers in the country. A latecomer to China, Ford may be trailing early-movers such as GM (GM) and Volkswagen (VLKAY), but the automaker’s rate of sales growth continues to significantly … Read more

Utilities Are Safe Income Vehicles…Most of the Time

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Many dividend growth investors have capital invested in steady-eddy utilities firms, and there is nothing wrong with that. In fact, we also have exposure to the Utilities Select SPDR ETF (XLU) in the Best Ideas portfolio and to PPL (PPL) in the Dividend Growth portfolio. Though the regulated ‘returns’ and steady performance of utility-entities are quite attractive, especially when they pay annual dividend yields of 3%-4% per annum or more, we think it is very important for investors of all types to understand that the dividends of utilities are not without risks. In fact, the nature of their capital structure sometimes exposes utilities to more risks than other entities, especially with respect to the dividend. Before we get started, it’s … Read more

GE ‘Wins’ Alstom’s Assets

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Over the weekend, General Electric (GE) announced that the Alstom Board of Directors has unanimously approved GE’s offer to buy the Power and Grid businesses of France-based Alstom. The US-based industrial giant’s bid prevailed over that of a convoluted offer from a Siemens (SI) and Mitsubishi consortium that had hoped to spoil the tie-up and prevent GE from strengthening its presence in Europe. Here are the details of the GE-Alstom transaction: GE’s offer to acquire the Power and Grid businesses of Alstom remains unchanged at $13.5 billion (€9.9 billion) enterprise value and $3.4 billion (€2.5 billion) of net cash, totaling $16.9 billion (€12.35 billion). The all-cash transaction is valued at 7.9 times pro-forma earnings before interest, taxes, depreciation and amortization … Read more