What's Cheap?

[Kerim]

I know we do this thread all the time, but things change quickly and ideas need frequent updating. A lot of stocks went down a bunch in the last couple of days, but I would not yet even call it a significant dip, market-wise. Nonetheless, I see a few dividend growth favorites looking fairly attractive. Right now, I'm looking most closely at:

TGT
DE
PM
COP

Any other favorites falling into the bargain bin?

[jmjor]

How about TUP - got slaughtered today, maybe the down market in combination with some connection to Herbalife and MLM. I bought some today.

[fiveoh]

I bought some pm and cvx today. Full on pm now. I've been looking at cop but unsure about how much they will be growing the dividend in the short term. Last year was 4% which is below my threshold and mostly funded by them selling assets not cash flow.

[Vincenzo]

I think CVX (Chevron).

According to Morningstar:
Their 10 year average revenue growth is 9.34%
Their 10 year average earnings per share growth is 37.92%
Their 10 year average return on equity is 23.61%
Their 10 year average price to book ratio is 1.92. It is currently 1.57.
Their 10 year average dividend increase is 9.49%. It's currently yielding 3.44% and has a payout ratio of 31%. Their 10-year payout ratio is roughly 28.33%
The 10 year total return on the stock is 13.25%, whereas it was 9.33% for the industry and 7.41 for the S&P.
Their current stock price (116.29) is not too far from their 52-week low (113.50).

Please check these numbers for yourself.

[EricL]

Have an article in the queue with SA that I'm hoping to get published. The consumer discretionary stocks I had on the list were COH, TUP, GPS, GME and PETM.

Also I think KO is attractive ahead of their expected dividend increase and GE has also pulled back quite a bit from the high and is up to a 3.3% yield.

I like LNCO/LINE, its been in an uptrend and yielding 9% and gas prices have been going through the roof which should bode well for the dividend. COG, CHK, COP, EOG are some other gassers that should benefit if the trend continues. Looking at the 6-14 day forecast I think there is still some decent upside in natural gas prices and we could be looking at tight supplies come spring.

[Vincenzo]

(01-24-2014, 11:17 PM)EricL Wrote: Also I think KO is attractive ahead of their expected dividend increase

That's a really good point, EricL. For some reason (maybe because I'm a dummy), I didn't think to base my stock screening on expected upcoming dividend increases. I think KO has a 10-year average dividend increase of 9.8%. A 9.8% increase in their current dividend would put the yield at approximately 3.17% at today's share price. Even if they raise the dividend by, say, only 5%, that would still push the yield up to 3% at today's price.

And Morningstar has their forward P/E at 15.9, Yahoo! has it at 17.50, and MSN has it at 15.79.

[Dividend Watcher]

I went away yesterday because my step-mom had surgery and wasn't able to get on the Internet until tonight. I missed the excitement and don't know if any intra-day buys popped up. Just checked my portfolios and watchlists and the only things that appeal to me right now are DE, ROST,and CVX. I'm overfull of CVX and ROST and not sure I want to add to DE here or wait until the cyclical drop in earnings over the next couple years. None of my low-ball limit orders traded.

We need a few more days like Friday and then I'll feel more comfortable.

[timdman]

I added to JNJ and COF on
Friday, and I'm thrilled that Monday is pay date for GE dividend since I reinvest. There's cheap and then there's cheaper but in an improving US economy these should be OK. When hits come like Friday's I think of something Warren Buffet said - paraphrased - I want my stocks to stay cheap so I can keep buying them for years, then go up after I've accumulated enough. Let's see if things get cheaper on Monday...

[hendi_alex]

What's cheap. Almost nothing! But for me, cheap is a fire sale. A company would have to have huge forward growth for me to consider a p/e of 15 to represent a good value. Maybe at a p/e of 10, when the general market is being punished. Now that probably represents cheap.

[Dexter]

It's hard to define cheap because I don't know what the future holds.

Right now I'm slowly adding to,
KO <--- looking forward to that dividend raise
MCD
MSFT
WMT

[hendi_alex]

When the market is sitting at artificially orchestrated highs, fueled mostly by manipulative Fed. policy, it is pretty easy to see 'expensive' or generally stretched valuations. How much of the expansion of corporate profits is a direct result of the low borrowing costs provided by the Fed? How much of the stretch in valuations comes from yield chasing as the retired community has been forced to take on risk because of non existent returns on Government bonds and CD's? What is going to happen to across the spectrum of risk assets when and if CDs once again start giving traditional yields in the range of inflation plus 1-2%? IMO this market is top heavy for a variety of reasons, and its lofty level is 100% dependent upon the continued punch bowl provided by Uncle Sam.

[Be Here Now]

(01-24-2014, 11:17 PM)EricL Wrote: Have an article in the queue with SA that I'm hoping to get published. The consumer discretionary stocks I had on the list were COH, TUP, GPS, GME and PETM.

Also I think KO is attractive ahead of their expected dividend increase and GE has also pulled back quite a bit from the high and is up to a 3.3% yield.

I like LNCO/LINE, its been in an uptrend and yielding 9% and gas prices have been going through the roof which should bode well for the dividend. COG, CHK, COP, EOG are some other gassers that should benefit if the trend continues. Looking at the 6-14 day forecast I think there is still some decent upside in natural gas prices and we could be looking at tight supplies come spring.

The problem with natural gas prices for LINE/LNCO is that LINE hedges 100% of their output. This prevents them from realizing additional net revenue when NG prices rise, which is the penalty they pay for being protected from decreased net revenues when NG prices fall.