07-15-2014, 03:04 PM
(07-15-2014, 02:46 PM)Be Here Now Wrote:(07-15-2014, 08:50 AM)EricL Wrote: Here is a link to my portfolio update on Seeking Alpha.
Will likely be another move in the next couple of days as Lorillard/Reynolds announced their merger this morning. LO sold off hard and is about 10% below the merger price so I think I will hold off and let the dust settle a bit before selling my shares. I own RAI in another account and rather than waiting for the merger to finalize I plan on selling my position and re-directing the cash. I'm leaning towards buying another utility for the portfolio.
You have a large portfolio, and since you are obviously young and have children you need to spend quality time with, I simply wonder where you get the time for your due diligence. When I was in the working world I had zero time even though I had no small children at home.
I commented on your article with some concerns about IBM. Hopefully others will chime in and you can get more feedback.
If you can wait for a good price for MO, I recommend starting a position. MO has some characteristics to its price action that make buying opportunities fairly easy to recognize. Now is not the time.
I am a night owl, so most of my research and reading is done at night after my wife and kids are in bed.
Personally, I think the concerns over IBM are overblown. They have been selling off pieces of the hardware business to focus more on the services and software segments, which are higher margins. This has caused revenue growth to stagnate, but earnings and cash flow are still pretty strong. With a low payout ratio the dividend should continue to grow and the current cheap valuation will allow them to retire a lot of shares at discounted prices.
You said that revenues have decreased by roughly 4% over the last 5 years, but during that time the earnings have doubled from $8.93 to an estimated $17.90 this year and dividends have more than doubled from $1.90 to $4.40. While revenues may be important, I don't have much concern with a 4% drop in revenues while the other metrics that are more important to me are continuing to rise.
If I'm wrong, the stock is just 2.7% of my portfolio. If I'm right, there should be considerable long term capital gains as the stock return to its historical earnings multiple.
I own MO in another account, I paid $35.15 for it last August and am happy with the results so far.