JT’s DAILY (WEEKLY as of 12/9/2013) BLOG for Month Of April 2017

Note: All previous month's posts are available in the archives, as noted above. 

All postings for the month are available here, sorted in descending order - i.e. most recent at the top.

1st Posting for Week Beginning Monday 04/24/2017

Posted Sunday 04/23/2017 10:00 AM

Volatility returned last week, as Monday and Thursday saw triple-digit gains on the headline Dow Industrials index, while Tuesday and Wednesday saw triple-digit declines. Friday ended with a whimper, as all the major indexes posted small declines. Oil prices declined over the week, as US rig counts edged upward. The Saudi “war” on US shale producers isn’t taking many of them out, but it is affecting Canadian oil sands producers and deep-water production, both of which require high oil prices to remain viable economically.

Stocks on my lists going ex-dividend this week are as follows:

Enterprise Products Partners L P (EPD), 4/26/2017, yield 6.00%.

AGNC Investment (AGNC), 4/26/2017, yield 10.45%. AGNC pays monthly.

Alliant Energy (LNT), 4/26/2017, yield 3.17%.

STAG Industrial (STAG), 4/26/2017, yield 5.32%. STAG is a monthly payer.

Enerplus (ERF), 4/26/2017, yield 1.18%. ERF is a monthly payer. The one-time high yield Canadian Trust, now a C-Corp, has fallen upon hard times, paying holders a mere one cent CAN per share per month, which is reduced further by currency conversion to $0.0074 for US holders.

Prospect Capital (PSEC), 4/26/2017, yield 10.71%. PSEC pays monthly.

ConAgra (CAG), 4/26/2017, yield 1.96%.

Blackstone Group L P (BX), 4/27/2017, yield 6.98%.

Magellan Midstream Partners L P (MMP), 4/27/2017, yield 4.60%. MMP is one of the more solid MLPs, which unfortunately (for new buyers) is reflected in its high price and low (for an MLP) yield.

Realty Income (O), 4/27/2017, yield 4.08%. O remains wildly popular (and high-priced), even though it would seem the decline of “brick & mortar” retail may indicate a tougher environment ahead for the “triple net lease” champion. O famously pays monthly, as it touts itself as “the monthly dividend company”.

ONEOK Partners L P (OKS), 4/27/2017, yield 6.00%.

Plains All American Pipeline L P (PAA), 4/27/2017, yield 7.24%. PAA has been perceived by some as “skating on the edge”, with a high potential for a dividend cut. But with facilities in the heart of the resurging shale production area (Permian Basin), PAA’s payout seems safe for now.

Kinder Morgan (KMI), 4/27/2017, yield 2.41%. The poster child for “over-promise and under-deliver” when it comes to energy company dividends is steadily improving its debt situation and holding strong on cash flow, and may yet surprise to the upside with a dividend increase in the next year or two. But for now, considering the low yield after a huge dividend cut a little more than a year ago, the low price is richly deserved, as investors are none too keen on KMI just now.

Earnings season is here once again. It began last week, with all eight of the stocks I track scheduled to report doing so as planned. See last week’s post for the names and dates. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha. The pundits are mostly predicting a tough quarter for earnings, and several of last week’s announcements are more or less in line with that expectation. Certainly none of the reports could be characterized as “hitting the ball out of the park”, an over-used phrase describing a positive earnings surprise.

The pace of reports increases this week, with thirty-nine of the stocks on my lists scheduled to report, listed as follows by date:

04/24/2017

Kimberly Clark (KMB), NuStar Energy L P (NS), Barrick Gold (ABX), Newmont Mining (NEM).

04/25/2017

Coca Cola (KO), McDonalds (MCD), Novartis (NVS), Valero Energy (VLO), AT&T (T), Realty Income (O).

04/26/2017

Entergy (ETR), General Dynamics (GD), Hershey Co (HSY), Norfolk Southern (NSC), Pepsico (PEP), Procter & Gamble (PG), Waste Management (WM), AGNC Investment (AGNC), Ensco (ESV), Kimco Realty (KIM), Martin Midstream Partners L P (MMLP), Mid-America Apartment Communities (MAA), Washington Real Estate (WRE).

04/27/2017

American Electric Power (AEP), Iron Mountain (IRM), Potlatch (PCH), Raytheon (RTN), SCANA (SCG), United Parcel Service (UPS), Digital Realty (DLR), Intel (INTC), MicroSoft (MSFT).

04/28/2017

Chevron (CVX), Colgate Palmolive (CL), Exxon Mobil (XOM), Public Service Enterprise Group (PEG), Sanofi (SNY), Ventas (VTR).

Last week was another slow week for upgrades/downgrades, at least as far as my stocks were concerned, although that will change in the week ahead, as earnings results generate upgrades/downgrades. Announcements I noticed are listed following:

McDonalds (MCD) was upgraded from Market Perform to OutPerform at Wells Fargo, and also at Bernstein.

Enterprise Products Partners L P (EPD) was initiated at Buy at Guggenheim.

Buckeye Partners L P (BPL), ONEOK Partners L P (OKS), and Plains All American Pipeline L P (PAA) were all initiated at Neutral at Guggenheim.

Colgate Palmolive (CL) and Kimberly Clark (KMB) were both initiated at Hold at Jeffries.

Diebold Nixdorf (DBD) was initiated at Buy at Feltl & Co.

Potlatch (PCH) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Energy Transfer Equity L P (ETE) was upgraded from Hold to Buy at Jeffries.

Coca Cola (KO) was upgraded from Neutral to OutPerform at Credit Suisse.

Royal Dutch Shell (RDS.A, RDS.B) was downgraded from Neutral to Sell at Citigroup.

NuStar Energy L P (NS) was upgraded from Market Perform to OutPerform at Wells Fargo.

McDonalds (MCD) was reiterated at OutPerform at Telsey Advisory Group.

NuStar Energy L P (NS), Kinder Morgan (KMI), and Magellan Midstream Partners L P (MMP) were all initiated at Neutral at Wells Fargo.

As earnings season gets into high gear, the most we can hope for is that earnings or lack thereof will dominate the financial news, not national and international political news. That hope may be dashed by election results in France, which may portend a EURO crisis, which would weigh heavily on the financial markets. Regardless, the first quarter results will probably be indicative of financial performance going forward for most firms, and will weigh on stock prices, which many if not most believe are over-extended and ready for a decline. With an over-allocation to cash and awaiting better buying opportunities, I’m in the group hoping for a decline. Still, with around 70% in stocks, I am also in the camp of being careful what I wish for. I would like a modest decline to allow me to invest at decent prices, but I sure do not want a huge crash like we had in 2008, which would lead to dividend cuts.

JT

1st Posting for Week Beginning Monday 04/17/2017

Posted Sunday 04/16/2017 11:00 AM

Stocks started out flat last week, then declined as the week went on, posting a modest decline overall for the week on all the major averages. Still, it was not a major sell off, just a slow, grinding decline. Geopolitical unease was blamed for the uninspiring action, according to many pundits, with the recent events in Syria and Korea dominating the headlines.

The list of stocks I follow going ex-dividend this week is a short one, as was the case last week:

Main Street Capital (MAIN), 4/18/2017, yield 5.73%. MAIN pays monthly.

Gladstone Investment (GAIN), 4/19/2017, yield 8.26%. GAIN also pays monthly.  

Procter & Gamble (PG), 4/19/2017, yield 3.05%.

Colgate Palmolive (CL), 4/19/2017, yield 2.16%.

Horizon Technology Finance (HRZN), 4/19/2017, yield 11.24%. HRZN is a monthly payer.

Senior Housing Properties Trust (SNH), 4/19/2017, yield 7.11%.

Eni SpA (E), 4/21/2017, yield 3.97%. Eni pays twice a year. This is the first payment of 2017. Note that the yield is before tax withholding by the home country where Eni is based, Italy. If it’s any consolation, Italy really needs the money!

While none of my stocks reported last week, several are on the list of scheduled reports this week, as yet another quarterly earnings reporting period looms. Firms and reporting dates are as follows:

Johnson & Johnson (JNJ), 4/18/2017.

Kinder Morgan Inc (KMI), 4/19/2017.

Blackstone Group L P (BX), 4/20/2017.

Nucor (NUE), 4/20/2017.

Phillip Morris (PM), 4/20/2017.

Verizon (VZ), 4/20/2017.

General Electric (GE), 4/21/2017.

NextEra Energy (NEE), 4/21/2017.

Last week was another slow week for upgrades/downgrades, at least as far as my stocks were concerned. Announcements I noticed are listed following:

Smucker J M (SJM) was downgraded from Equal Weight to UnderWeight at Morgan Stanley.

AGNC Investment (AGNC) was downgraded from OutPerform to Market Perform at Wells Fargo.

Pepsico (PEP) was upgraded from Neutral to Positive at Susquehanna.

NuStar Energy L P (NS) was upgraded from UnderPerform to Neutral at Credit Suisse.

Verizon (VZ) was reiterated at Equal Weight at Barclays.

As noted earlier, this week marks the beginning of another quarterly earnings reporting period, often referred to as “earnings season”. The usual prognostications for disappointing results or worse are again predominant, and of course that leads to the usual additional prognostications of an imminent market decline, which of course will be further exacerbated by worrying geopolitical news. Of course, all these prognostications may well turn out to have been 100% right on, but if history is any guide, they most likely will not. There is no doubt that the current environment presents many challenges for business operations, but of course that is always the case. My belief is that the current (high) valuations of most attractive stocks are the biggest threat to positive investment results, not the current business and geopolitical environment.

JT

1st Posting for Week Beginning Monday 04/10/2017

Posted Saturday 04/08/2017 09:00 PM

Stocks basically went nowhere last week, gyrating up and down minimally, then ending up only slightly below where they were at the start of the week. A disappointing monthly Jobs report plus unease over the strike against Syria depressed the market on Friday, but only slightly.

Only five stocks on my lists will be going ex-dividend this week:

Raytheon (RTN), ex-dividend date 04/10/2017, yield 2.12%.

Kayne Anderson Energy Development Co (KED), ex-dividend date 04/11/2017, yield 9.33%. KED is actually not a stock, but a closed-end fund, one of four managed by KA Fund Advisors LLC, all of which are focused on the energy sector.

Mid America Apartment Properties (MAA), ex-dividend date 04/11/2017, yield 3.39%.

RPM International (RPM) ex-dividend date 04/11/2017, yield 2.32%.

Consolidated Communications Holdings (CNSL), ex-dividend date 04/11/2017, yield 6.52%.

Only one of my stocks reported last week, RPM International (RPM), on 4/6/2017. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha.

None of the stocks I follow are scheduled to report this week.

Upgrades/downgrades coming out on my stocks last week were as follows:

HCP Inc (HCP) was upgraded from Neutral to Buy at BofA/Merrill.

Eaton (ETN) was upgraded from Neutral to Buy at Longbow.

Cisco Systems (CSCO) was initiated at Hold at Berenberg.

Exelon (EXC) was downgraded from OutPerform to Market Perform at Wells Fargo.

Novartis (NVS) was downgraded to Market Perform at Cowen & Co.

GlaxoSmithKline (GSK) was upgraded from UnderPerform to Neutral at Exane BNP Paribas.

Eni S p A (E) was Downgraded from Equal Weight to UnderWeight at Morgan Stanley.

Sanofi (SNY) was initiated at Buy at Argus.

Wal-Mart Stores (WMT) was upgraded from Market Perform to OutPerform at Telsey Advisory Group.

Medical Properties Trust (MPW) was upgraded from Hold to Buy at Jeffries.

Sanofi (SNY) was downgraded from Hold to Reduce at HSBC Securities.

Williams Partners (WPZ) was upgraded from Neutral to Buy at Citigroup.  

The week ahead will likely be similar to the last umpteen weeks, in that the political news and geopolitical events will dominate the headlines, and will influence the markets more than the economic news or business developments. Stocks are gyrating in place, awaiting a major development to move up or down in any meaningful way. Until something happens, the best approach is probably to do nothing.

JT

1st Posting for Week Beginning Monday 04/03/2017

Posted Sunday 04/02/2017 09:00 PM

A funny thing happened last week as the long-expected market decline that started in mid-March resumed on Monday. The decline abruptly ended, and stocks mostly gained after Monday. Even though Friday saw a modest sell-off, the major averages all gained on the week, with the NASDAQ and the small-cap RUT index leading the rebound. 

Stocks on my lists going ex-dividend this week are as follows:

Kimco Realty (KIM), 4/3/2017, yield 4.92%.

Cisco Systems (CSCO), 4/4/2017, yield 3.44%. Not bad for a tech stock.

Sysco (SYY), 4/5/2017, yield 3.44%. Often dubbed “the other sysco”, this food service stock could be hurt if restaurant traffic slows,

AT&T (T), 4/6/2017, yield 4.69%. One of the two telecom heavyweights.

Verizon (VZ), 4/6/2017, yield 4.71%. The other telecom heavyweight.

Darden Restaurants (DRI), 4/6/2017, yield 2.70%.

General Mills (GIS), 4/6/2017, yield 3.44%.

Universal (UVV), 4/6/2017, yield 3.05%. This tobacco wholesaler continues to pay its shareholders, but someday the decline in tobacco use has to hurt the stock. The yield would have to be more than this to interest me.

Nestle S A (NSRGY), 4/7/2017, yield 3.01%. NSRGY pays but once a year, better buy quick if you want in. While a solid firm, paying only once a year does not excite me.

Raytheon (RTN), 4/10/2017, yield 2.08%.

As for earnings, both stocks scheduled to report last week did so as scheduled, Darden Restaurants (DRI) on 3/28/2017 and Paychex (PAYX) on 3/29/2017. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha.

Only one company (of those I follow) is scheduled to report this week, RPM International (RPM) on 4/6/2017.

Upgrades/downgrades coming out on my stocks last week are as follows:

Mid-America Apartment Communities (MAA) was initiated at OverWeight at Barclays.

Unilever (UN, UL) was resumed at Hold at Liberum.

HCP Inc (HCP) was upgraded to Inline at Evercore ISI Group.

Martin Midstream Partners L P (MMLP) was reiterated at Buy at Stifel.

Exelon (EXC) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

ConocoPhillips (COP) was upgraded from Neutral to Buy at UBS.

Plains All-American Pipeline L P (PAA) was resumed at Equal Weight at Barclays.

Fifth Street Financial (FSC) was downgraded from Market Perform to UnderPerform at Raymond James.

Consolidated Communications (CNSL) was resumed at OutPerform at Wells Fargo.

CenturyLink (CTL) was reinstated at OverWeight at Morgan Stanley.

Darden Restaurants (DRI) was reiterated at Buy at Canaccord Genuity, reiterated at Sector Perform at RBC Capital Markets, and downgraded to Neutral at BTIG Research. Apparently

these analysts have different views on the meaning of last week’s earnings report from DRI.

Pan American Silver (PAAS) was downgraded from OutPerform to Market Perform at BMO Capital Markets.

Intel (INTC) was initiated at OutPerform at Macquarie.

The 2nd American Civil War continues unabated, as the “swamp creatures” and their underlings in both parties fight back savagely to prevent the undoing of their cushy existence. Wall Street, most of the media, and probably all of academia are allied with the Democrats in their fanatical opposition, while many “establishment” Republicans fall into the same old habits of kowtowing to the opposition. They are demonstrating once again that what can be counted on from them is their amazing ability to snatch defeat from the jaws of victory. Middle America, most of law enforcement, and probably most of the military are in favor of draining the swamp. As we now see, it ain’t gonna be easy!

So what does all this have to do with investing? Everything, unfortunately. As has been true for a long time, balance sheets, margins, financial ratios and a hundred other traditional measures used to evaluate stocks are far less relevant than they used to be. What happens in the domestic political struggle and geopolitical events are what will drive stocks for the foreseeable future. Another threat not reflected in traditional measures is the impact of technology and change, which can have a devastating impact on even the strongest franchises, as business models that were decades in the making become suddenly obsolete. And good luck predicting what will happen here and abroad. My advice is to build up cash, be very cautious about new buys, and above all, pay attention, even though it is tempting to turn off the news and the internet-connected computer and go hide somewhere.

JT

1st Posting for Week Beginning Monday 03/27/2017

Posted Sunday 03/26/2017 07:00 PM

Stocks continued to decline last week, with the headline Dow Industrials index posting a loss each and every day, although only one day, Tuesday, was into the triple digits. The pundits are mostly agreed that the “Trump Rally” is ending, with some predicting a major pullback, as the

President’s plans run into a wall of opposition from the vested interests, as the “swamp” fights back. Admittedly, the administration has been hampered somewhat, but my view is they will learn from their missteps and regroup. One thing that is becoming apparent is that the markets are influenced much more by geopolitical developments than by investment fundamentals these days, and have been for some time.

A few more stocks I follow are going ex-dividend this week, as follows:

Enerplus (ERF), 3/27/2017, yield 1.19%. ERF pays monthly.

MFA Financial (MFA), 3/27/2017, yield 9.82%.

AGNC Investment (AGNC), 3/29/2017, yield 10.87%. AGNC pays monthly.

STAG Industrial (STAG), 3/29/2017, yield 5.59%. STAG is a monthly payer also.

Windstream Holdings (WIN), 3/29/2017, yield 10.70%.

Annaly Capital Management (NLY), 3/29/2017, yield 10.71%.

National Health Investors (NHI), 3/29/2017, yield 5.29%.

Nucor (NUE), 3/29/2017, yield 2.46%.

Realty Income (O), 3/30/2017, yield 4.24%. O pays monthly.

Kimco Realty (KIM), 4/3/2017, yield 4.80%.

As for earnings, two of my stocks reported last week as scheduled, General Mills (GIS) on 3/21/2017, and ConAgra Foods (CAG) on 3/23/2017. For earnings details, see the firm’s press releases, articles on the mainstream financial media, brokerage compilations, or my preferred resource, Seeking Alpha.

The week ahead will again see two of the firms I track reporting earnings, Darden Restaurants (DRI) on 3/28/2017, and Paychex (PAYX) on 3/29/2017. DRI, the only restaurant stock paying any kind of dividend, has defied gravity for a long time, posting decent results in spite of being in an extremely crowded, competitive sector in our “over-restauranted” economy. It will be interesting to see if the outperformance continues.

The pace of upgrades/downgrades has slowed somewhat since the end of earnings season, but as always, there were a few analysts putting forth their opinions last week. While I seldom agree with the opinions, I still find it to be of interest the see what they are, sometimes as a guide as to what NOT to do. Here they are:

Welltower (HCN) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

HCP Inc (HCP) was upgraded from UnderWeight to Equal Weight at Morgan Stanley.

These are not ringing endorsements, for good reason. The healthcare sector and everything related to it is almost entirely dependent upon the government and insurance companies for continued prosperity, and both are taking unsustainable losses that cannot continue indefinitely. Change is coming to the “Medical Industrial Complex”, deservedly so, but no one knows what that change will be. That is not a formula that inspires investment in the firms that will be impacted, most likely negatively.

Pan American Silver (PAAS) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Buckeye Partners L P (BPL) was initiated at Hold at SunTrust.

Colgate Palmolive (CL), Coca Cola (KO), Kimberly Clark (KMB), and Procter & Gamble (PG) were all initiated at Neutral at JP Morgan. Again, a vote of minimal confidence, as the biggest, safest stocks the market has to offer are only rated as Neutral.

ConAgra (CAG), General Mills (GIS), Kellogg (K), and J M Smucker Co were all downgraded from Market Perform to UnderPerform at Bernstein. Ditto what I said immediately preceding, the same comment applies.

Freeport-McMoRan (FCX) was upgraded from Sell to Hold at Deutsche Bank.

Ventas (VTR) was initiated at Hold at SunTrust.

General Mills (GIS) was downgraded from Buy to Hold at Stifel.

Frontier Communications (FTR) was downgraded from Neutral to Sell at Goldman.

Windstream Holdings (WIN) was resumed at Sell at Goldman.

Freeport-McMoRan (FCX) was upgraded from Sell to Hold at Berenberg.

Altria (MO) and Norfolk Southern (NSC) were both downgraded from Sector Perform to UnderPerform at RBC Capital Markets.

General Mills (GIS) was reiterated at Hold at Argus.

Unilever (UN, UL) was upgraded from Equal Weight to OverWeight at Barclays.

Calumet Specialty Products Partners L P (CLMT) was downgraded from Neutral to UnderPerform at Credit Suisse.

Entergy (ETR) was downgraded from Buy to Neutral at Goldman.

Considering the escalating political war in Washington, the public and private debt levels, and the deteriorating international situation, the market outlook is about as gloomy as has been seen for years. Decades of the “go along, get along” and “kick the can down the road” policies of our political “leaders” since Reagan have put us now in a situation where these approaches are not going to stave off a reckoning much longer. The upgrades/downgrades alone are as bearish as I can remember for a given week. The biggest, safest, most stable firms are given lackluster prospects, while precious metals firms, the perennial lowest of the low as far as Wall Street is concerned, are upgraded. This reflects the extreme bearish sentiment. But what really bothers me is I agree with that sentiment, even as the adage “what the consensus believes is usually wrong” is in the back of my mind. To reconcile this internal conflict, I have determined that I WILL buy if a decline opens up buy opportunities for the safest, strongest, etc. firms, but not until their prices come down somewhat. That may be about to happen. Until it does, I’m holding on to my cash (even though it yields nothing), and waiting.

JT