What's Cheap?

[EricL]

(02-17-2014, 02:09 PM)Be Here Now Wrote:

(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.

You are correct, according to most recent presentation they are hedged on nat gas through 2017. Rising NGL prices should help the bottom line however.

[CritMass]

Just read an article today on SA about "Why not Buy at 52 Week High?". The premise was looking ahead at the forecast year to come, etc. Leaving cash sit making nothing vs putting it to work. Just another perspective I guess.

[hendi_alex]

Buying a stock that is making new highs is one thing, buying at general highs when the market is getting long in the tooth, may be something entirely different. Could be fodder for the buy high, sell low crowd! I still think that a decent allocation of patient cash is an underrated asset. How many years will it take today's dividend investor to buy and get anywhere close to the return that was gotten by patient cash that bought shares of favorite issues in the winter thru early spring of 2009? I was caught fully deployed then, and vowed to almost always keep a supply of opportunity cash on hand.

[TomK]

(02-20-2014, 09:08 AM)hendi_alex Wrote: Buying a stock that is making new highs is one thing, buying at general highs when the market is getting long in the tooth, may be something entirely different. Could be fodder for the buy high, sell low crowd! I still think that a decent allocation of patient cash is an underrated asset. How many years will it take today's dividend investor to buy and get anywhere close to the return that was gotten by patient cash that bought shares of favorite issues in the winter thru early spring of 2009? I was caught fully deployed then, and vowed to almost always keep a supply of opportunity cash on hand.

I feel the same way, even though I'm not sure the math supports it. It may be that staying fully invested, which ensures you don't miss any up days and that you earn maximum dividends (which are reinvested), beats having dry powder to deploy when there is a correction. It just depends on how imminent and how deep the correction is. If the correction is near, and deep, then you can come out ahead holding cash. If the correction is far off and shallow, you can come out behind holding cash.

But math isn't the end of the story, and if your crystal ball is cloudy, there is plenty of psychological comfort -- for me, anyway -- in having some cash around. It smooths out your exposure to market volatility, keeps you prepared for a rainy day, and gives you a great tool to work with when the correction does come.