Stocks declined slightly last week, as lackluster trading was the norm, with no big moves either way on any day of the four trading days. Crude oil likewise declined a bit, although the end-of-the-week price for WTI remained only a few cents below $40, as the dramatic advance that has occurred since early March has mostly held up, for the moment at least.

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

American Capital Agency (AGNC), 3/29/2016, yield 12.99%. AGNC pays monthly.

National Health Investors (NHI), 3/29/2016, yield 5.54%.

Nucor (NUE), 3/29/2016, yield 3.26%.

Prospect Capital (PSEC), 3/29/2016, yield 14.32%. PSEC pays monthly.

Annaly Capital Management (NLY), 3/29/2016, yield 11.52%.

Windstream (WIN), 3/29/2016, yield 8.00%.

STAG Industrial (STAG), 3/29/2016, yield 7.17%. STAG pays monthly.

Kimco Realty (KIM), 4/1/2016, yield 3.67%.

Cisco Systems (CSCO), 4/4/2016, yield 3.74%.

Raytheon (RTN), 4/4/2016, yield 2.16%.

Only one of my stocks reported last week, as General Mills (GIS) reported FQ3 EPS of $.65, beating by three cents. Revenue, however, of $4B missed by $80M, down 8% Y/Y. 

See the firm’s website or Seeking Alpha for details.

As for the week upcoming, only one of my stocks is scheduled to report, Paychex (PAYX), on 3/30/2016.

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

ENI S p A (E) was upgraded from Sector Perform to OutPerform at RBC Capital Markets.

Mid-America Apartment Communities was downgraded from Buy to Neutral at Mizaho.

Digital Realty (DLR) was downgraded from Buy to Hold at Stifel Nicolaus.

Intel (INTC) was downgraded from Market Perform to UnderPerform at Bernstein.

Memorial Production Partners LP (MEMP) was downgraded from Buy to Neutral at Citigroup.

Chevron (CVX) was downgraded to Market Perform at Raymond James.

Waste Management (WM) was initiated at Neutral at Stern Agee CRT.

Nucor (NUE) was downgraded from Buy to Hold at Deutsche Bank.

Novartis (NVS) was downgraded from OutPerform to Market Perform at Leerink Swann.

Pan American Silver (PAAS) was downgraded from Buy to Hold at Deutsche Bank.

Exelon (EXC) was initiated at OverWeight at Barclays.

General Dynamics (GD) was downgraded from Buy to Hold at Deutsche Bank.

Altria (MO) was downgraded from Buy to Neutral at BofA/Merrill.

Phillip Morris (MO) was upgraded from Neutral to Buy at BofA/Merrill.

Ventas (VTR) was downgraded from Buy to Neutral at Goldman.

The week ahead will feature a number of closely-watched economic releases, including a couple of reads on the housing market, and culminating Friday with the Labor Department’s monthly “jobs report”, considered by most pundits to be the most important regularly-scheduled economic release, flawed though it is. The headline number, the Unemployment Rate (U3), trumpeted by the regime as a hallmark of their success in managing the economy, ignores the drastic reduction in labor force participation, not to mention the alarming lack of wage growth. Buried in the report are a number of more meaningful indicators, such as the U5 Unemployment Rate, which includes discouraged workers and all other marginally attached workers, and the U6 Unemployment Rate, which adds on those workers who are part-time purely for economic reasons, meaning they cannot find a full-time position.

Lately, it seems like the market is being held hostage to the price of crude oil, with a decline in oil prices generating a decline in stock prices. After the recent bounce in oil prices, it is anybody’s guess as to where it goes from here, but if I had to make a call, I would say down, as the over-supply condition shows little sign of abating anytime soon. Keep some dry powder on hand and be ready to strike if an opportunity arises, but don’t hold your breath, it may not come along anytime soon.

JT

Last week stocks advanced five out of five days for the Dow Industrials, three out of five days for the New York Composite and S&P 500, and four out of five days for the NASDAQ. All of the averages ended up with a gain overall for the week. The unlikely rally thus continues, for another week at least.

Reviewing the recap of stocks on my lists going ex-dividend this week will not take long, there are but four:

Solar Capital (SLRC), 3/22/2016, yield 9.11%.

Medtronic (MDT), 3/22/2016, yield 2.01%.

Phillip Morris (PM), 3/22/2016, yield 4.13%.

MFA Financial (MFA), 3/23/2016, yield 11.61%.

As for earnings, only one of my stocks is scheduled to report, General Mills (GIS) on 3/23/2016.

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

Annaly Capital (NLY) was downgraded from Buy to Neutral at Compass Point.

Westar Energy (WR) was initiated at Buy at Mizuho.

Johnson & Johnson was upgraded from Sell to Neutral at Goldman. This had to be a valuation sell, JNJ is executing splendidly.

Noble Corp PLC (NE) was downgraded from Positive to Neutral at Susquehanna.

Cisco Systems (CSCO) was initiated at OutPerform at RBC Capital Markets.

Kellogg (K) was upgraded from Sell to Neutral at Goldman.

HCP Inc (HCP) was downgraded from Buy to Neutral at UBS.

CenturyLink (CTL) was downgraded from Hold to UnderPerform at Jeffries.

Enterprise Products Partners (EPD) was downgraded from OutPerform to Neutral at Credit Suisse.

Kinder Morgan Inc (KMI) was downgraded from OutPerform to Neutral at Credit Suisse.

Medtronic (MDT) was initiated at Buy at Nomura.

MicroSoft (MSFT) was assumed at OutPerform at Oppenheimer.

ONEOK Partners LP (OKS) was downgraded from Neutral to UnderPerform at Credit Suisse.

Spectra Energy Partners LP (SEP) was downgraded from OutPerform to Neutral at Credit Suisse.

Chevron (CVX) was initiated at Neutral at Nomura.

McDonalds (MCD) was initiated at Neutral at Longbow.

Royal Dutch Shell (RDS.B) was initiated at Buy at Nomura.          

Total S A (TOT) was upgraded from Neutral to Buy at Nomura.

Exxon (XOM) was initiated at Reduce at Nomura.

Newmont Mining (NEM) was downgraded from Buy to Hold at Standpoint Research.

Just as I was salivating over the terrific buy opportunities sure to come along in March, as the pundits were predicting a March meltdown, the market began to rally in mid-February, and picked up steam nearly every week since. I did manage to pick up some great stocks at (in hindsight) some great prices in the weeks prior to the upsurge, but as usual, I was too cautious in committing capital, and now the opportunity has passed, leaving me with only half the position sizes I wanted, and too much cash earning nothing. The trader’s lament, as well as the investor’s, is “if only I had been more courageous” and bought more when the opportunities were there to be had. Still, picking up Welltower (HCN) at $56 (now $67), Ventas (VTR) at $49) (now at $61), ConocoPhillips (COP) at $32 (now at $43), and Wal-Mart (WMT) at $59 (now at $67) indicates I did not totally miss out. In each case, I bought 50 shares, and now wish I had bought 100. Better half a loaf than none, I guess. Looking ahead, I don’t see myself buying anything more anytime soon. Time to pull back and just enjoy the spring weather.

JT

Stocks were barely at break-even last week through the first four days of the week, until a sizeable advance on Friday guaranteed a positive week for all the major stock averages. There was minimal economic news last week, with the presidential primaries dominating the news cycle.

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

TICC Capital (TICC), 3/15/2016, yield 22.22%.

Medical Properties Trust (MPW), 3/15/2016, yield 7.35%.

Greif (GEF), 3/16/2016, yield 5.81%.

PennantPark Investment (PNNT), 3/16/2016, yield 18.57%.

Kraft Heinz Company (KHC), 3/16/2016, yield 3.02%.                                              

Total S A (TOT), 3/16/2016, yield 5.90%.

Gladstone Investment (GAIN), 3/17/2016, yield 10.64%. GAIN pays monthly.

Crown Castle Investment (CCI), 3/16/2016, yield 4.16%.

BlackRock Investment (BKCC), 3/16/2016, yield 9.49%.

Apollo Investment (AINV), 3/17/2016, yield 15.04%.

Main Street Capital (MAIN), 3/17/2016, yield 7.08%. MAIN pays monthly.

Stocks on my lists reporting last week were as scheduled, Grief (GEF), BlackRock Investment (BKCC), and TICC Capital (TICC).  For specifics, see the firms’ press releases, available on their web sites, compilations of articles on brokerage web sites, the financial press web sites, or my preferred resource, Seeking Alpha.

None of my stocks are scheduled to report this week.

A number of upgrades / downgrades came out last weeks on my stocks:

Exelon (EXC) was upgraded from Hold to Buy at Argus.

Kimco Realty (KIM) was downgraded from Buy to Hold at Argus.

Phillip Morris (PM) was upgraded from Neutral to Outperform at Exane BNP Paribus.

Entergy (ETR) was downgraded from Neutral to Sell at Citigroup.

Chevron (CVX) was upgraded to Sector Perform at Wolfe Research.

Ensco (ESV) was downgraded to Sell at Fearnley.

Statoil (STO) was downgraded to Reduce at Swedbank.

Chevron (CVX) was upgraded from Sell to Neutral at Goldman.

Noble Corp (NE) was downgraded from Neutral to Sell at Goldman.

Noble Corp (NE) was downgraded from Neutral to UnderWeight at Piper Jaffray.

National Health Investors (NHI) was upgraded from UnderPerform to Neutral at BofA/Merrill.

STAG Industrial (STAG) was downgraded from Neutral to UnderPerform at BofA/Merrill.

Statoil (STO) was downgraded to Hold at SEB Equity Research.

Royal Dutch Shell (RDS.B) was upgraded from Sector Perform to Sector OutPerform at Scotia Howard Weil.

Mid-America Apartment Communities (MAA) was downgraded from Buy to Hold at DA Davidson.

Total S A (TOT) was downgraded to Buy at Goldman.

Newmont Mining (NEM) was downgraded from Buy to Neutral at BofA/Merrill.

Statoil (STO) was downgraded from Sector OutPerform to Sector Perform at Scotia Howard Weil.

Blackstone Group L P (BX) was downgraded from Buy to Hold at Deutsche Bank.

Nucor (NUE) was initiated at Neutral at Credit Suisse.

The week ahead will see more economic releases than last week, with CPI, PPI, Industrial Production, and a couple of housing-related releases on tap. The rally of the past three weeks has surprised most market observers, myself included. Crude oil and gold have likewise moved up from the recent lows set earlier this year. Prior to the advance that started around February 12, the doomsayers seemed to be quite prescient. As usual, the consensus forecast has been wrong once again. The question now is what is ahead? The economic and earnings trends are not encouraging, but then they haven’t changed for months – the economy is stalled, and companies are hard-pressed to maintain earnings, much less squeeze out increases. Stocks are mostly over-valued, with even the depressed sectors up from their recent lows. Right now, my view is stocks are too high to buy, and not high enough to sell or short. I will hold back for the moment, and await better opportunities before making any moves.

JT

I am implementing a new routine for the first posting of each month, which is that I am going to preface my usual report with a quick recap of what this Facebook Page and my related web site (www.optimumstockinvesting.com) are all about. Namely, to present a comprehensive approach to investing in stocks. I have an identified subset of stocks I follow, categorized into four lists, or tiers. I originally decreed that the number of stocks followed would be capped at 100, but currently the total is 132. Tier1 stocks are the safest, strongest firms, the least likely to cut their dividends or go bankrupt. Tier1 yields are usually in the low single digits. Tier2 stocks are less safe, with risk factors that Tier1 stocks do not have, and while dividend cuts may occur, the firms are unlikely to go bankrupt, barring a severe economic downturn, or more likely, disastrous management decisions, such as an ill-advised acquisition. For example, MLPs are by definition in this category, as they have a built-in risk factor of an adverse change in the tax code. Tier3 stocks are either high-yield or high potential for capital gains, and can do very well if the economy remains strong or the fundamentals change for the better in their sector. Included here are BDCs, MREITs, rural telecoms, metals miners, and less substantial MLPs. Obviously, if hard times strike, these firms will cut or eliminate their dividends, and may go bankrupt. Tier4 stocks are the “walking dead”, stocks previously on the other lists, but now their dividends are absent or reduced, and bankruptcy is a real possibility. I have given up on these firms, but I will continue to track them as an exercise in masochism, as long as they continue to hang on. There is even a remote chance they may recover and get back to at least my Tier3 list.

My web site explains the approach I follow in detail, and contains a wealth of information and resources. My approach is based on the value investing approach outlined by Ben Graham in his classic works, updated a bit for the modern era, with just a hint of a trader’s mindset incorporated. The key take-away I want viewers to gain from my creation is an understanding of the risks inherent in stocks, as well as the rewards, and the need for caution and diversification, and most of all, the realization that ANYTHING can happen, nothing is 100% safe or guaranteed!

Now, back to my regularly scheduled presentation.

After a brief hiccup on February 29, stocks posted gains the rest of the week, ending the week with a substantial advance. Crude oil prices moved in tandem with stocks, with WTI closing Friday above $36, reaching a level not seen since the first week of January.

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

Westar Energy (WR), 3/7/2016, yield 3.52%.

Triangle Capital (TCAP), 3/7/2016, yield 11.16%.

Public Service Enterprise Group (PEG), 3/8/2016, yield 3.81%.

SCANA (SCG), 3/8/2016, yield 3.53%.

Reynolds American (RAI), 3/8/2016, yield 3.28%.

Newmont Mining (NEM), 3/8/2016, yield .37%.

Wal-Mart (WMT), 3/9/2016, yield 3.02%.

Frontier Communications (FTR), 3/9/2016, yield 7.38%.

Coca Cola (KO), 3/11/2016, yield 3.20%.

Merck (MRK), 3/11/2016, yield 3.53%.

Altria (MO), 3/11/2016, yield 3.63%.

DrPepper Snapple (DPS), 3/11/2016, yield 2.30%.

Ares Capital (ARCC), 3/11/2016, yield 10.75%.

Fifth Street Finance (FSC), 3/11/2016, yield 14.34%. FSC pays monthly.

Digital Realty (DLR), 3/11/2016, yield 4.27%.

I apparently missed Waste Management (WM) last week, which went ex-dividend on 3/3/2016, yielding 2.86%.

Of four stocks tentatively scheduled to report last week, only one, Medtronic (MDT), actually reported. Greif (GEF) and TICC Capital (TICC) are now scheduled for this week, on 3/7/2016 and 3/10/2016, respectively. Linn Energy LLC (LINE) did not report, announcing instead that the 10Ks will be delayed for LINE and LinnCo (LNCO). BlackRock Capital Investment (BKCC) is scheduled to report on 3/9/2016.

As always, a number of upgrades / downgrades on my stocks occurred last week:

Energy Transfer Equity (ETE) was downgraded from Strong Buy to Market Perform at Raymond James.

Freeport-McMoran (FCX) was initiated at Hold at Berenburg.

ENI S p A (E) was upgraded from Neutral to Buy at Citigroup.

Emerson Electric (EMR) was downgraded from Buy to Hold at Standpoint Research.

Nucor (NUE) was downgraded from OverWeight to Sector Weight at Key Banc Capital Markets.

Noble Corp PLC (NE) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Walgreen Boots Alliance (WBA) was upgraded from Neutral to Buy at Mizuho.

Freeport-McMoran (FCX) was upgraded from UnderPerform to Neutral at BofA/Merrill.

Windstream (WIN) was downgraded from OutPerform to Market Perform at Raymond James.

Nucor (NUE) was upgraded from Hold to Buy at Standpoint Research.

STAG Industrial (STAG) was upgraded from Equal Weight to OverWeight at Capital One.

Intel (INTC) was upgraded from Neutral to OutPerform at Robert W Baird.

Ventas (VTR) was upgraded from Neutral to Buy at Mizuho.

MicroSoft (MSFT) was initiated at Neutral at Macquarie.

Vodafone (VOD) was initiated at Buy at Nomura.

The week ahead will be a light week, as far as economic releases are concerned. With the news flow dominated by politics, stocks may take a week off, as far as major moves are concerned. The rally of recent days has not changed things much. Quality stocks are still overvalued, and depressed sectors, such as energy, are still depressed, just not as much as they were a couple of weeks ago. Nothing much in the way of stock news is imminent, other than perhaps the long-predicted wipeout of LINE and LNCO holders.

JT

Stocks gained three days and declined two days last week, but overall managed to post a gain for the week. Crude oil stayed above $30 all week, as far as the benchmark West Texas Intermediate grade was concerned. The political primaries, especially on the Republican side, dominated the news flow. Even as more and more voices are being raised warning that a recession is likely, and the corresponding stock sell off could be 50% or more, the averages just keep on advancing, albeit in a two steps forward, one step backward fashion.

Focusing on the positive, dividends just keep on being paid. Stocks on my lists going ex-dividend this week are:

Pepsico (PEP), 3/2/2016, yield 2.79%.

Roche Holdings LTD (RHHBY), 3/2/2016, yield 3.08%. This is an annual dividend.

Potlatch (PCH), 3/2/2016, yield 5.71%.

Kimberly Clark (KMB), 3/2/2016, yield 2.76%.

CenturyLink (CTL), 3/2/2016, yield 7.10%.

Eaton (ETN), 3/3/2016, yield 3.98%.

Molson Coors (TAP), 3/3/2016, yield 1.89%.

Ventas (VTR), 3/3/2016, yield 5.30%.

Hercules Technology Growth Capital (HTGC), 3/3/2016, yield 11.60%.

Ensco (ESV), 3/3/2016, yield .51%. ESV bowed to the inevitable and reduced the dividend to 1 cent.

Iron Mountain (IRM), 3/3/2016, yield 6.48%.

Yields on BDCs reflect that, for now at least, payouts are continuing even as the share prices have declined substantially, as investors fear a storm is coming and these “less than blue chip” firms will be hard hit. REIT yields are also high, reflecting recent price declines reflecting concern over rising interest rates and also a sliding economy.

 One dividend missed in prior weeks was Noble Corp (NE), which went ex-dividend 2/4/2016. NE currently yields 7.30%.

Of 30 names listed last week expected to report earnings, 28 did so as scheduled. See last week’s posting for the names and dates. Rather than repeat here information that is abundantly available elsewhere, I point the reader desiring specifics to the firms’ press releases, available on their web sites, compilations of articles on brokerage web sites, the financial press web sites, or my preferred resource, Seeking Alpha. The two symbols listed last week that did not report were Linn Energy (LINE) and TICC Capital (TICC). Both have rescheduled for this week, as indicated below, along with two other firms scheduled to report:

Linn Energy LLC (LINE), 2/29/2016.

Medtronic (MDT), 3/1/2016. 

Grief (GEF), 3/2/2016.

TICC Capital (TICC), 3/3/2016.

The news cycle for the week ahead will likely be dominated by the “Super Tuesday” primaries, with earnings season all but over, and not much scheduled in the way of economic releases until later in the week. Thursday and Friday will see a number of significant economic news releases, including the key monthly Jobs report from the Department of Labor. As for stocks, other than depressed sectors, there are very few buy opportunities available, based on traditional valuation measures. And the depressed sectors (energy, BDCs, MREITs) are depressed because of a somewhat dim outlook for these sectors. My advice is to hold onto dry powder, be patient, and hold off unless an irresistible opportunity comes along. Even then, go in cautiously and incrementally. Undervalued stocks have a way of becoming even more undervalued, especially after one has just bought in.

JT