JT’s DAILY BLOG for Month Of April 2012
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
All times are Eastern Time - same as the NYSE
Final Posting Monday, 4/30/2012 4:30 PM
Today was a somewhat lack-luster session, as stocks dipped modestly at the open, then stayed there all day, trading in a narrow range. The major averages finished April about where they were at the end of March. In fact, the Dow30 average finished April almost exactly where it ended up at the end of March. April's ending and March's ending readings are 13213 and 13212, respectively.
I missed reporting on ENI S P A (E) Friday. E reported adjusted earnings per ADR of $1.78, up 6.6% from the year-ago quarter. These results also beat analysts’ consensus estimates.
Back to today, Senior Housing Trust (SNH) reported Q1 FFO of $.45, missing estimates by a penny. Revenue of $145M, up 47.2% Y/Y, beat by $2M. SNH finished the day with a slight gain.
Tomorrow begins a new month, with the pace of earnings picking up once again. Perhaps they will be positive and rescue the rally, or conversely, perhaps they will disappoint and a swoon will result. At this point, I have no idea which it will be, and I doubt if anyone else does either. That’s why we have to play the game, to see which it will be.
1st Posting Monday, 4/30/2012 9:00 AM
Asian markets finished mixed, with the Nikkei and Shanghai up, the others down. European markets are all showing modest losses at this moment. U.S. futures are also portending a negative open for the markets here. The major economic release of the day, Personal Income and Spending, has just been released, with values more-or-less as expected. The Chicago area PMI, due out at 9:45 AM, is the only other scheduled release today.
Several upgrades/downgrades have come out this morning on stocks I follow:
Medtronic (MDT) was upgraded from Neutral to Buy at Lazard Capital.
Proctor and Gamble (PG) was downgraded from OutPerform to Perform at Oppenheimer.
Olin Corp (OLN) was downgraded from Buy to Neutral at Longbow.
AstraZeneca (AZN) was upgraded from Hold to Buy at Jeffries.
AstraZeneca was also upgraded by JP Morgan, from UnderWeight to Neutral.
Several of the stocks I follow will be going ex-dividend this week:
Monday, April 30: none.
Tuesday, May1: Pfizer (PFE), yield 3.81%.
Wednesday, May 2: Norfolk Southern (NSC), yield 2.56%; Energy Transfer Equity L P (ETE), yield 6.24%; Energy Transfer Partners (ETP), yield 7.46%; Plains All American L P (PAA), yield 5.12%.
Thursday, May 3: Eaton Corp (ETN), yield 3.10%; HCP Inc (HCP), yield 4.84%; Southern Company (SO), yield 4.26%; BreitBurn Energy Partners (BBEP), yield 9.77%.
Friday, May 4: Magellan Midstream Partners L P (MMP), yield 4.75%; NuStar Energy L P (NS), yield 8.09%; Paychex Inc (PAYX), yield 4.11%; Health Care Reit (HCN), yield 5.22%.
Earnings season reaches a crescendo this week. Tentative reporting dates for stocks I follow are:
Monday, April 30: ONEOK Partners L P (OKS), Mercury General (MCY), Boardwalk Pipeline Partners L P (BWP), Senior Housing Properties (SNH), PDL Biopharma (PDLI).
Tuesday, May1: Emerson Electric (EMR), HCP Inc (HCP), Solar Capital Ltd (SLRC), MFA Financial (MFA).
Wednesday, May 2: Magellan Midstream Partners L P (MMP), Public Service Enterprise Group (PEG), Enterprise Products Partners (EPD), Pennantpark Investment Corp (PNNT), American Capital Agency Corp (AGNC).
Thursday, May 3: Intel (INTC), SCANA Corp (SCG), BlackRock Kelso Capital (BKCC), Main Street Capital (MAIN), Triangle Capital (TCAP), Annaly Capital Management (NLY), Consolidated Communications Holdings (CNSL).
Friday May 4: Exelon Corp (EXC), Alliant Energy Corp (LNT), Buckeye Partners L P (BPL), Safety Insurance Group (SAFT), Otelco (OTT).
A couple of earnings reports already out this morning are:
Mercury General (MCY) reported Q1 EPS of $.71, beating estimates by two cents. Revenue was in-line.
Boardwalk Pipeline Partners (BWP) reported Q1 EPS of $.43, in-line. Revenue of $312.9M was flat Y/Y, missing estimates by $6M.
Time to publish this novel and get ready for action.
Final Posting Friday, 4/27/2012 7:15 PM
Stocks continued the earnings-induced rally today, albeit at a more moderate pace, with all of the major averages finishing the day with modest gains. Just focusing on the venerable Dow Jones Industrial Average of 30 stocks, the most-watched even though not the most-representative market gauge, we have gained on a weekly basis three weeks in a row. Since hitting a closing low on April 10, the Dow has steadily gained since. So as to not get too giddy, note that the average is just about where it began the month of April, effectively making a round trip. With one trading day to go in the month, it is a toss-up whether the close at the end of April will be above or below the close at the end of March.
Otelco (OTT) ended the day down a penny. This speculation is now above break-even, but not by much. I will hold on and await the early May conference call, which will likely determine the fate of this trade, in the short-term at least.
Nustar Energy (NS) took another modest dip today, now down to $54 and change from an interim high of $62 in early March. Nothing brings down an MLP like a management confession that distributions are only 55% covered by distributable cash flow. My original purchases in the $53 to $55 range, so clever a few weeks ago, aren’t looking so good right now. I have to admit, this one is a real short-term disappointment.
Three utilities that I bought recently are all up slightly since my purchases; American Electric Power (AEP), Public Service Enterprise (PEG), and Westar Energy (WR). These were all solid value stock purchases.
I believe in the Ben Graham value investing approach, and when you buy a depressed stock, you have to be prepared for the price to become even more depressed in the short-term. As long as you have done your homework and are convinced that the problems are short-term, and the fundamentals are sound, you don’t let market gyrations affect you too much. To me, this approach at least gives you a fighting chance to make some money. Buying a popular, over-loved stock at the apex is a much less appealing proposition.
The week, but not the month, is done. So far, earnings are running nearly 3 to 1 better than expected. While it is still too early to declare this earnings round an over-all success, it certainly looks possible at this stage.
1st Posting Friday, 4/27/2012 9:15 AM
Asian markets finished with losses, except for India, as the Sensex posted a small gain. European markets are all in the green at this moment, a bit surprising, considering that S&P downgraded Spain another notch today. U.S. futures are indicating a positive open is in store, after a so-so initial reading on 1st quarter GDP came out. The number expected was 2.5%, while the number received was a little less, at 2.2%. The only other economic release planned for today is the final April Michigan Sentiment Index, around 10:00 AM.
Only a couple of upgrades/downgrades have come out today on stocks I follow:
United Parcel (UPS) was upgraded from OutPerform to Strong Buy at Raymond James.
Unilever (UL) was upgraded from Reduce to Hold at ABN Amro.
Moving on to earnings, I have a few more this morning to report:
Chevron (CVX) reported Q1 EPS of $3.27, beating by five cents. Revenue of $60.7B missed by $12B.
Merck (MRK) reported Q1 EPS of $.99, beating by a penny. Revenue was in-line.
Proctor and Gamble (PG) reported Q1 EPS of $.94, beating estimates by a penny. Revenue of $20.2B, up 2% Y/Y, missed by $100M.
Sanofi (SNY) reported Q1 profit up 13%, and net sales up 9.4%. Guidance was not too positive, as full-year profit is expected to drop 15% because of generic competition.
Ventas (VTR) reported Q1 FFO of $.91, beating by two cents. Revenue of $573.7M beat estimates by $7M.
Total Petroleum (TOT) reported Q1 adjusted net income that was down slightly from a year ago, but in-line with estimates. Net profit was down 7%. TOT warned Q2 production will be impacted by the North Sea gas blowout, plus other factors.
Final Posting Thursday, 4/26/2012 5:00 PM
Stocks staged a strong rally today, overcoming a weak Unemployment Claims reading, after a surprise gain in Pending Home Sales, up 4.1%, when only a .5% increase was expected.
A few additional upgrades/downgrades/initiations of note that came out today were:
Triangle Capital (TCAP) was initiated at OutPerform at Raymond James.
Prospect Capital (PSEC) was initiated at Market Perform by Raymond James.
Main Street Capital (MAIN) was initiated at Market Perform by Raymond James.
Fifth Street Finance (FSC) was initiated at Strong Buy at Raymond James.
Additional earnings that came out during the day were:
Digital Realty Trust (DLR) reported Q1 FFO of $1.06, beating by a penny. Revenue of $283M, up 12.9% Y/Y, beat by $3M. DLR dropped $.61 on the day, closing at $73.75.
Waste Management (WM) reported Q1 EPS of $.38, missing by three cents. Revenue was in-line. WM declined $.77 today, closing at $35.31.
Realty Income (O) reported Q1EPS 0f $.50, beating by a penny. Revenue was in-line. O lost $.05 today, closing at $39.41.
Valley National Bancorp (VLY reported Q1 EPS of $.18, missing by a penny. VLY lost $.25 today, closing at $12.73.
Cincinnatti Financial (CINF) reported Q1 EPS of $.53, beating estimates by $.11. Revenue of $986M, up 6% Y/Y, beat by $29M. CINF did not report until after the bell. The stock gained $.37 on the day, closing at $35.74.
Otelco (OTT) rebounded modestly today, to close at $6.28.
I added a few shares of NuStar (NS) to my position today, at $54.85. I under-estimated how far NS would drop, I could have done much better. Still, I believe that now is a buying opportunity, so I bought.
One more day to go and we’ll have survived another week.
1st Posting Thursday, 4/26/2012 9:15 AM
Asian markets finished mixed, with Japan, Hong Kong, and Australia posting gains, while Shanghai and India closed with small losses. European markets are all trading down except for Britain, which is hanging on to a small gain. U.S. futures are slightly negative at the moment, as we await the weekly numbers on Unemployment Claims, due out shortly. The only other economic item scheduled for today is Pending Home sales, due out at 10:00 AM.
A couple of upgrades/downgrades of interest that have come out this morning are:
NuStar Energy (NS) was downgraded from Buy to Hold by Stifel Nicolaus, citing headwinds from the San Antonio refinery operations.
ConocoPhillips was upgraded from UnderPerform to Neutral at MacQuarie, even as the price target was lowered from $74 to $60. This was a strange upgrade. I can’t recall ever seeing an upgrade combined with a lowered price target.
The story today will be earnings, earnings, and more earnings, as the week’s reporting reaches a climax. Companies on my lists that have reported since last night’s posting are:
Kayne Anderson Energy Development (KED) reported positive results for the quarter ended February 29, 2012, with the key BDC metric of net asset value increasing $1.53 per share for the quarter, now up to $24.54 per share. This compares to the closing price yesterday of $24.78. Anytime a BDC can be purchased near the net asset value, it is considered a value purchase.
Royal Dutch Shell (RDS.B) reported Q1 earnings of $7.66B, up 11% from the comparable quarter of the prior year. The company warned of oil price volatility in the coming months. I wonder if they also warned it might rain every once in awhile? Kind of a worthless warning, in other words.
AstraZeneca (AZN) reported Q1 net profit of $1.64B, a 44% decline from the comparable quarter, and well below estimates of $2B. Like all of the major drug firms, expiring patents are crimping earnings. Shares are trading down 3.6% in London.
Unilever (UL) reported sales up 8.4% Y/Y, beating consensus estimates of 6.4%.
Lockheed Martin (LMT) reported Q1 EPS of $2.02, beating estimates handily. Revenue of $11.3B, up 6.3% Y/Y, beat by $700M.
Pepsico (PEP) reported Q1 EPS of $.69, beating by 2 cents. Revenue of $12.4B, up 4% Y/Y, was in-line. That’s a lot of chips and soda.
Raytheon (RTN) reported Q1 EPS of $1.33, beating by $.15. Revenue of $5.94B, down 2% Y/Y, still beat estimates by $160M.
United Parcel (UPS) reported Q1 EPS of $1.00, missing by 2 cents. Revenue was in-line. Shares are trading down in the premarket.
Exxon Mobil (XOM) reported Q1 EPS of $2.00, missing by nine cents. Shares are down over 1% in the premarket.
Entergy (ETR) reported Q1 EPS of $.44. Revenue of $2.38B, down 6.2% Y/Y, missed by $120M.
There will be more earnings to report on as the day unfolds. Meanwhile, the unemployment numbers have been released, with new claims for unemployment coming in at 388K, slightly above the 373K estimated by economists. This has further dampened enthusiasm, with U.S. futures declining further, indicating a modestly negative start to the day’s trade.
Time to publish and get ready.
Final Posting Wednesday, 4/25/2012 4:15 PM
I must report earlier than usual today, I have to go run some errands before the day is over.
Stocks posted hefty gains on all the major averages, although still shy of a triple-digit Dow30 up day, but not by much. The indices rose at the open, and pretty much stayed there all day, in a fairly narrow range. The Fed announcement was for more of the same, with the comforting words (to some people) from the Chairman that additional QE would be considered “if necessary”. At least with Bernanke, you know what you’re going to get.
On the subject of the government and the Fed, there is a terrific new series on “Frontline” on PBS about the 2008 financial crisis. I watched the first broadcast last night. If you missed it, don’t despair, it is available online at the PBS website. I’m not sure when the next installment will be shown, I must check it before tonight, in case it shows right away.
NuStar Energy LP (NS) reported after the market started today, with Q1 EPS of $.23, missing analysts projections by 9 cents. Revenue of $1.7B, up 40.5% Y/Y, beat by $400M. While Pipeline and storage operations eked out small gains over the comparable prior quarter, asphalt and fuels marketing endured losses. Further losses occurred in heavy fuels bunkering, offset by gains in crude trading. The San Antonio refining operation experienced losses, as did gasoline hedges. Overall, results were mixed at best. Management stated that organic growth projects under way should allow for improved results later on in 2012. The results were not great, no doubt, but what likely led to the sell off in excess of $2.00 was the statement that distributable cash flow (DCF) was only enough for a .55x coverage ratio. For an MLP, coverage under 1.00x is a cause for concern. I personally believe the decline to the $55 range represents a buying opportunity, although I will be anxiously awaiting the next quarterly results to see if there is improvement.
Kayne Anderson (KED) will report after the close today, so I will report on KED in tomorrow mornings’ post.
American Capital Agency (AGNC) announced today that they will now report on May 2.
Otelco (OTT) has stabilized for the moment, in the range $5.50 to $6.00. The conference call to review 1st Quarter results and other matters will be on May 4 at 10:00 AM. The stock will likely be somewhat volatile during that call. I never had to agonize over whether to double down or not, it (so far) has not dropped below $5.00, my next potential buy level. I adjusted my max buy level to $5.75 today, and left OTT on my Tier3 list for now.
Coca Cola (KO) may soon be below my buy targets, but I probably still won’t buy, as it will only be because of a 2:1 split, which was announced today as having been recommended by the board.
1st Posting Wednesday, 4/25/2012 9:15 AM
Asian markets closed in mixed fashion, with Japan, Shanghai, and India up, Hong Kong and Australia down. European markets are all trading in plus territory at the moment. U.S. futures are markedly positive, indicating an open to the upside. It sometimes seems that the more articles come out predicting a crash or other doom and gloom scenarios, the more the markets rally. It has got to be frustrating for these prognosticators when the markets don’t do what they “should” do.
Durable Orders is the main economic release on tap for today. I love that phrase, “on tap”, it reminds me of college days, plus I own stock in Molsen Coors (TAP). Anyway, back to Durable Orders; it has been released, coming in at a negative 4.2% vs. a negative 1.5% expected. Not good, but the futures seem to have ignored it. Also today, the Fed meeting will wrap up, with a statement due out at 12:30 PM. I wonder if they will raise interest rates? They sure can’t lower them any further. Ha Ha, that was a joke. The Fed statement is a ho-hum event these days, although some day it will become important again, I suppose.
A couple of downgrades that have come out this morning on my stocks are:
McDonalds (MCD) was downgraded from Buy to Hold by Argus.
Wal-Mart (WMT) was also downgraded from Buy to Hold by Argus, citing the recent news about bribes paid to Mexican officials and the ongoing investigation.
Earnings out early today are:
Southern Company (SO) reported Q1 EPS of $.42, missing by a nickel. Revenue of $3.6B, down 10% Y/Y, missed estimates by $500M. No notation on the pre-market trading in SO so far today.
Dr Pepper Snapple (DPS) reported Q1 EPS of $.48, in-line with estimates. Revenue of $1.36B, flat Y/Y, was in-line. Shares are down in the pre-market.
NextEra Energy (NEE) reported Q1 EPS of $1.02, beating estimates by 4 cents. Revenue of $3.37B, up 7.6% Y/Y, was in-line.
Boeing (BA) reported Q1 EPS of $1.22, beating by $.27. Revenue of $19.4B, up 30% Y/Y, beat by $1B. Shares up 3.1% in pre-market trade.
Northrop Grumman (NOC) reported Q1 EPS of $1.96, beating by $.37. Revenue of $6.2B missed by $100M.
So far in this earnings season, results haven’t been half-bad. But we still have a ways to go before we can come to any conclusions.
Time to get ready.
Final Posting Tuesday, 4/24/2012 5:25 PM
Stocks staged a surprise rally today, with all of the major averages posting solid gains, except for the NASDAQ, which logged in a small loss. The latter was due to Apple (APPL) and Netflix (NFLX), two big names as far as the NASDAQ is concerned, posting substantial declines, which weighed on the index.
A number of stocks I follow have already reported earnings today:
Norfolk Southern (NSC) reported Q1 EPS of $1.23, beating estimates by $.09. Revenue of $2.79B, up 6.5% Y/Y, also beat by $20M. NSC gained $.80 today, closing at $70.25.
Illinois Tool Works (ITW) reported Q1 EPS of $.97, beating estimates by 2 cents. Revenue of $4.55B, up 6.4% Y/Y, was in-line. ITW gained $1.46 today, closing at $56.68.
3M (MMM) reported Q1 EPS of $1.59, beating estimates by $.11. Revenue of $7.49B, up 2.4% Y/Y, was in-line. MMM gained $1.40 today, closing at $88.53.
Novartis (NVS) reported Q1 net profit was down 16.6% to $2.31B, below consensus by $.15B. Revenue stagnated as Diovan experienced weaker sales. The U.S. patent for the drug will expire in Q3, at which time NVS will take an even bigger hit. NVS lost $.82 today, closing at $54.80.
AT&T (T) reported Q1 EPS of $.60, beating by 3 cents. Revenue of $31.1B, up 1.8% Y/Y, was in-line. T gained $1.11 today, closing at $31.72.
Reynolds American (RAI) reported Q1EPS of $.63, missing by 2 cents. Revenue of $1.93B, down 2.9% Y/Y, missed by $50M. RAI dropped $2.08 today, closing at $39.64.
I discussed Otelco (OTT) yesterday, the small telecom that took the big hit from a lost contract with cable company Time Warner. OTT continued down today. After reading over the news, I felt like the news was bad, but not that bad, and with the bond portion of the original hybrid security still being paid, the yield was back up to double digits, which if maintained would make OTT a great buy at the new price range. I decided to venture in as a distress purchase / value play, making a small purchase at $6.15, where it seemed to be stabilizing early this morning. Just in case it dipped further, I put in a second order to buy more at $5.90. To my surprise, it dipped all right, all the way down to under $5.50. So I now own 50 shares at an average cost of $6.02. OTT closed at $5.70. My original hypothesis still holds, for the moment, but if it plunges again, I’ll have to think long and hard before I double down further.
1st Posting Tuesday, 4/24/2012 9:45 AM
Asian stocks finished higher, except for Japan, where the Nikkei dropped by .78%. European market are all modestly positive at the moment, as Europe recovers from the big drop yesterday. U.S. futures were positive until the Case-Shiller 20 City Home Price Index for February was released. It showed that prices dropped another .8% in February, with the Y/Y drop now at 3.5%. The MarketWatch headline reads, “Decade-low home prices”. Enough said. U.S. futures are now flat to slightly negative. At 10:00 AM the latest readings on Consumer Confidence, New Home sales, and FHFA Housing Prices will be released. I do not expect good news to come out of that trio.
Several of my stocks have already reported this morning. I will comment on all of my stocks that release today, along with an observation of how they traded on the day, when I post this evening, since I am a bit behind just now. Only one upgrade/downgrade has come out so far today on stocks I track, as Statoil (STO) was upgraded from UnderPerform to OutPerform at Exane BNP Paribas.
Time to see what the day will bring.
Final Posting Monday, 4/23/2012 5:15 PM
Today was another strange day in the market, in the sense that on a day when the venerable Dow30 index ended up with a triple digit loss, the Trader’s Index, or TRIN, actually trended downward all day, and there were no TICK readings below minus 1000. Remember, the TRIN goes down when the market goes up, and vice versa, at least usually - but not today. The explanation is that the market opened way down, but then steadily advanced all day, recovering about 40% of the initial drop. All of the major averages ended with losses, but up from the early morning lows.
A few upgrades/downgrades of note that came out during the day were:
Fifth Street Financial (FSC) was downgraded from Buy to Neutral at Janney Capital.
Exxon Mobil (XOM) was upgraded from Market Perform to OutPerform at Raymond James.
Otelco (OTT) was downgraded from OutPerform to UnderPerform by RBC Capital, and also by Raymond James.
Otelco announced over the weekend that a contract with Time Warner Cable accounting for 11.7% of OTT’s revenue will not be renewed after 2012, and in response the dividend on the common stock portion of the OTT hybrid securities was suspended. The interest portion on the units will continue to be paid, at the rate of $.24375 per unit, at least for the next cycle. The stock dropped a calamitous $5.37 today, a 44% haircut. I had recently added OTT to my ultra-high yield Tier3 list, on the strength of a “Strong Buy” rating from Raymond James on February 8th. I wrongly assumed the stock was not as risky as the small capitalization would imply, else a major firm wouldn’t come out with a “Strong Buy” on it. OTT did take off after that, reaching as high as $14.00 or so, but had been drifting back down close to my buy price of $12.00. I was considering putting in an order to buy, but hadn’t gotten around to it yet. Sometimes procrastination is a good thing. Needless to say, I will re-evaluate OTT, and either drop it entirely, or leave it on the list with a much lower buy price.
Moving on to the first round of earnings releases for the week, we have:
ConocoPhillips (COP) reported Q1EPS of $2.02, missing estimates by four cents. The shares dropped over $1.25 at the open, but recovered somewhat to only close down $.55 from Friday’s close, finishing the day at $72.33.
Eaton (ETN) reported Q1 EPS of $.92, beating estimates by two cents. Revenue of $3.96B, up 4.1% Y/Y, was in-line. Eaton dropped strongly at the open, but by the close pulled to within four cents of Friday’s close, finishing at $47.40.
Potlatch (POT) reported Q1 EPS of $.13, beating estimates by $.06. It always helps to have a low bar to clear, I guess. Revenue of $112.4M, off 8% Y/Y, still beat estimates by $3M. The bar wasn’t low enough for POT to look good, evidently, as the stock closed down over 2.5%, down $1.11 from Friday’s close, to $42.82.
I tried again to buy PenGrowth Energy (PGH) today, missing it by one cent, with my limit order set to $8.45, while the low of the day was $8.46. If I really wanted it, I guess I would have raised the order, but by the time I realized I had missed it on the opening swoon, it was already back up to $8.58, so I said to heck with it for now.
1st Posting Monday, 4/23/2012 8:55 AM
I'm sick and
tired of you setting me up
Setting me up just to knock-a knock-a knock-a me down, down, down
I'm goin down, down, down
I'm goin' down, down down
Bruce Springsteen, “I’m Going Down”, 1985.
When I took my first look at the markets this morning, this Springsteen hit from the 80’s came to mind. Asian stocks are down, supposedly because of a reported slowdown in Chinese manufacturing (that’s bad news?), and also at the end of their trading sessions, they were given a shove further down as reports of the French presidential election began coming out. Europe is trading down, with all bourses reporting big losses, most in excess of 2%. In France, the Socialist candidate, Francois Hollande, led current president Sarkozy in the balloting, although not by enough to avoid a run-off, set for May 6. If he becomes the president, it is going to throw the Eurozone into turmoil, as he has indicated he intends to challenge much of what Sarkozy and German leader Merkel have agreed to, in dealing with the Euro crisis.
U.S. futures are indicating a significant drop is in store for the open. No economic reports are due out today, and so far, none of the stocks I follow have been upgraded or downgraded.
A stream of earnings reports that began flowing last week will turn into a fire-hose engulfment this week. Companies I follow that will be reporting are listed by day. Note that these dates are tentative, last-minute changes can occur.
Monday, 04/23/2012: ConocoPhillips (COP), Eaton Corp (ETN), Potlatch Corp (PCH).
Tuesday, 04/24/2012: 3M Co (MMM), AT&T (T), Reynolds American (RAI), Illinois Tool Works (ITW), Novartis A G (NVS), Valley National Bancorp (VLY).
Wednesday, 04/25/2012: Boeing Co (BA), NextEra Energy (NEE), Northrop Grumman (NOC), NuStar Energy LP (NS), Southern Company (SO), Dr Pepper Snapple (DPS), Kayne Anderson Energy Dev Co (KED), American Capital Agency Corp (AGNC).
Thursday, 04/26/2012: Exxon Mobil (XOM), Pepsico Inc (PEP), United Parcel Service (UPS), AstraSeneca PLC (AZN), Lockheed Martin (LMT), Raytheon Co (RTN), Royal Dutch Shell PLC (RDS.B), Waste Management Inc (WM), Amerigas Partners LP (APU), Cincinnati Financial (CINF), Digital Realty Tr (DLR), Entergy Corp (ETR), Olin Corp (OLN), Old republic Intl (ORI).
Friday, 04/23/2012: Procter & Gamble Co (PG), Chevron Corp (CVX), Merck & Co (MRK), Realty Income Corp (O), ENI S P A (E), Ventas Inc (VTR).
Maybe today will see a buy opportunity or two come up.
Final Posting Friday, 4/20/2012 6:15 PM
Today was a strange day in the market. Stocks opened higher, and then hardly moved, slowly giving up some of the gains as the afternoon wore on, closing with about 2/3 of the gains that had been achieved in the opening half hour. The TRIN (Traders Index) was as flat as I have ever seen it, and the TICK readings were very subdued, with no readings above +1000, and only two below -1000. I had a couple of orders in that I expected would be filled, but no movement meant that even orders close to the current price failed.
A couple of additional upgrades/downgrades that have come out today on my stocks are:
MicroSoft (MSFT) was upgraded from Neutral to Buy at Davenport.
Energy Transfer Equity (ETE), the General Partner for MLP Energy Transfer Partners, had coverage resumed at OverWeight by Barclays.
OENOK Partners L P (OKS) had coverage resumed at Buy by UBS. Something doesn’t seem right here. MarketWatch showed this morning that ONEOK was downgraded from Buy to Hold by UBS, while later today, E*Trade shows coverage resumed at Buy. Take your pick, I guess. OKS is a great MLP, but unfortunately, it is fully reflected in the price, so I would go with the Hold recommendation.
Plains All American (PAA) was resumed at OverWeight by Barclays.
I tried to sell an October call at a $30.00 strike on Statoil (STO). The order was a limit order at the ask, but with no movement to speak of, it did not get filled.
Time to call it a week.
1st Posting Friday, 4/20/2012 9:25 AM
Asian markets finished mixed, with Japan and India down, all others up. European markets are all trading up, oblivious to an election Sunday in France that could significantly increase turmoil in the Eurozone. The Socialist candidate is poised to unseat Sarkozy, on a platform that will put France and Germany 180 degrees apart on how to deal with the Euro crisis. Yet the markets are taking a stance most often identified with Alfred E. Neuman, the Mad Magazine icon, characterized as “What, Me Worry?”. I wonder if Mad Magazine still exists? It was very popular with college students in the 50’s, taking a cynical view of just about everything in American life.
Back to the bitter reality. Maybe it won’t be so bitter today, as U.S. futures are up strongly, indicating a positive start to the trading day. There are no economic releases on tap.
Only one of my stocks has been tagged by the upgrade/downgrade bogeyman this morning, as OENOK Partners L P (OKS) was downgraded from Buy to Hold by UBS.
Now for the most recent earnings releases of stocks I follow:
General Electric (GE) reported Q1 EPS of $.34, beating estimates by a penny. I thought Jack Welch retired. That was one of his trademarks, managing earnings to beat by a penny. Continuing, GE reported revenue of $35.2B, down 8% Y/Y, but still $500M above estimates. Shares are up in the premarket. One positive is that revenue gained on the industrial side, and the decline occurred in GE Capital. That is a positive from the standpoint that investors don’t want to see GE relying too heavily on the finance unit for positive results overall.
American Electric Power (AEP) reported Q1 EPS of $.80, in-line with estimates. Revenue of $3.6B, down 2.7% Y/Y, missed estimates by $130M.
Kimberly Clark (KMB) reported Q1 EPS of $1.24, beating estimates by $.07. Revenue of $5.2B, up 4% Y/Y, beat estimates by $160M.
That’s about it for now. Time to see if this up day materializes or fades away.
Final Posting Thursday, 4/19/2012 5:25 PM
Stocks ended the day with fairly hefty losses, although they did climb back a bit from the lows reached around 2:30 in the afternoon. The lack of employment progress displayed by the Claims for Unemployment released early this morning was joined by lackluster readings on New Home Sales and Business Conditions in the Philadelphia region, both out at 10:00 AM. All served to mute enthusiasm and contribute to a down day.
Earnings that have come out since this morning are:
Genuine Parts (GPC) reported Q1 EPS of $.93, easily beating estimates of $.87. Revenues also beat estimates slightly, coming in at $3.18B vs. estimates of $3.16B.
Nucor (NUE) reported Q1 EPS of $.46, beating estimates by $.07. Revenue was in-line at $5.1B, up 4.9% Y/Y.
MicroSoft (MSFT) reported FQ3 EPS of $.60, slightly above estimates. Revenue of $17.41B , up 6% Y/Y, beat estimates by $230M. Both the Windows division and the Office division picked up the pace from the prior quarter, indicating that the death of the PC, like Mark Twain, may have been exaggerated.
General Electric (GE) reports tomorrow, which may be a market-moving event.
Time to call it a day.
1st Posting Thursday, 4/19/2012 9:25 AM
Asian markets finished mixed, while European markets are mostly trading with modest losses, as only the FTSE 100 is above the flatline. U.S. futures are essentially flat, after the latest weekly Unemployment Claims numbers out this morning indicate that employment gains seem to have plateaued in recent weeks.
Earnings are the story to report on. Several of the stocks I follow have reported since yesterday’s posting:
Kinder Morgan Energy Partners (KMP) reported late yesterday; Q1 EPS of $.61 missed estimates by $.02, and revenue of $1.8B, down 3% Y/Y, missed estimates by $.5B. The shares are trading down this morning in the pre-market. KMP is the second-largest MLP by market cap.
DuPont (DD) reported Q1 EPS of $1.61 this morning, beating estimates by $.06. Revenue reported in-line with expectations.
Verizon (VZ) reported Q1 EPS of $.59, beating estimates by a penny. Revenue was in-line. Shares are trading up in the pre-market.
Later today earnings are expected out for MicroSoft (MSFT), Nucor (NUE), and Genuine Parts (GPC).
Barring major geopolitical news, the earnings story(s) will likely dictate the market action over the next few days. Although it is very early in the game, so far it hasn’t been half-bad. It’s kind of like a football game where the first quarter is only 5 minutes gone, the home team is at mid-field, and has just made a first down. A decent start, but nothing to get excited about.
Final Posting Wednesday, 4/18/2012 5:00 PM
Stocks posted a fairly substantial sell off today, with all of the major averages posting losses. It was a slow news day, with nothing much to blame for the pull back. One headline pointed to disappointing results last night from Intel (INTC) and International Business Machines (IBM), although both posted decent results, just not “hit the ball out of the park” results.
CSX Inc (CXS) reported Q1 earnings of $449M, up 14% and a new quarterly record. The railroad recovery continues.
A couple or three upgrades/downgrades of note that came out since this morning are:
Exxon (XOM) was upgraded from Hold to Buy by Deutsche Bank.
ConocoPhillips (COP) was downgraded from Buy to Hold by Deutsche Bank.
TICC Capital (TICC) had coverage initiated at Market Perform by Wells Fargo.
I predicted a ho-hum day, and so it was.
1st Posting Wednesday, 4/18/2012 9:00 AM
Asian markets all ended with gains, while European markets are all trading in the red at this moment, with Spain taking a big hit, down over 3%. U.S. futures are modestly negative, indicating a pull-back is in store at the open, after the big rally of the preceding day.
Only one upgrade/downgrade of note to report this morning, after receiving a long list yesterday. Energy Transfer Partners L P (ETP) had coverage resumed at Goldman, with a Neutral rating.
Abbott Labs (ABT) reported this morning, with Q1 EPS coming in at $1.03, beating estimates by $.03. Revenue was $9.46B, up 1.4% Y/Y, which beat estimates by $90M. The company also reported that the plan to split into two companies is on track, to occur by year-end.
When the week began, I was all primed to go shopping, expecting lower prices would be coming on stocks on my shopping list. Now, even if we have a couple of down days, we will only be about where we started. The best thing to do, I have decided, is to fold up my wallet and find other amusements for awhile. At this point I don’t expect to make any trades this week, although I might consider selling a call on Statoil (STO) with a $28 strike, if STO can get up over $27.
Time to get more coffee and prepare for ….. a nap, maybe? I’ve been up since 6:00AM.
I’m expecting a dull day, but maybe I’m wrong.
Final Posting Tuesday, 4/17/2012 5:00 PM
A funny thing happened today on the way to the correction; stocks rallied in a big way, with the venerable Dow30 average gaining nearly 200 points. Supposedly a Spanish bond auction that went better than expected contributed to the upbeat tone. At any rate, a surge of this magnitude was unexpected by most market pundits, myself included.
Tomorrow may see a reversal, partly as a reaction, plus tech bellwether Intel (INTC), reporting after the close, laid an egg. The tech giant reported respectable results, with EPS of $.50, beating estimates of $.53, but not by nearly enough to satisfy expectations of substantially more impressive results. The stock was trading down nearly 3% in after-market trading.
Other notables reporting after-hours today were: IBM, which reported a higher profit at $2.61 EPS vs. $2.31 EPS in the year-ago comparison period, and Yahoo (YHOO), which reported that earnings rose 28%, in a bit of a surprise, giving Yahoo shareholders a ray of hope not seen for awhile.
One downgrade I missed this morning on one of the stocks I follow was CSX Corp (CSX), as the railroad was downgraded from Buy to Hold at Argus.
All in all, it was a good day for the bulls, and the jury is still out on whether the predicted correction has evaporated almost as quickly as it began, or whether it will eventually prevail.
1st Posting Tuesday, 4/17/2012 9:30 AM
Asian stocks ended mostly down, with India being an exception, closing up over 1%. European stocks are all trading to the upside, as the U.S. markets prepare to open. U.S. futures are indicating a strong start for stocks here. The Housing Starts/Building Permits data came in mixed, with fewer starts than expected, but more permits than expected.
Two stocks on my lists reported this morning before the bell:
Johnson & Johnson (JNJ) reported Q1 EPS of $1.41, beating estimates by $.07. Revenue came in at $16.1B, flat Y/Y, missing by $125M. What’s a measly $125M among friends? Shares are up in the per-market.
Coca Cola (KO) reported Q1 EPS of $.89, beating estimates by a penny. Revenue came in at $11.1B, up 6% Y/Y, beating estimates by $300M.
Intel (INTC) is scheduled to report after the close.
A number of the stocks I follow received upgrades/downgrades/initiations of coverage this morning:
Global Hunter initiated coverage on a number of MLPs today, including several on my lists. Initiated at Buy were Kinder Morgan (KMP), Breitburn Energy Partners (BBEP), and ONEOK Partners (OKS). Initiated at Accumulate, a slightly lower rating, were, Plains All American Pipeline (PAA) and Enterprise Products Partners (EPD). Initiated at Neutral were Energy Transfer Partners (ETP) and Boardwalk Pipeline Partners (BWP).
A couple of additional coverages initiated or changed were Illinois Tool Works (ITW), initiated at Neutral by SunTrust, and ENI S P A (E), upgraded from Hold to Buy at Jeffries.
The Argentine oil firm YPF is in the news, along with the (former) 57% owner, Spanish oil firm Repsol (REPYY), as Argentina has expropriated Repsol’s interest, giving the Argentine government control of YPF. Private YPF shareholder’s still own their percentage of YPF, it appears, but they likely will not be receiving much in the way of dividends for awhile – probably for a long while. As Spain and the European union take legal action, expect this soap opera to remain in the news for awhile.
Well, I’m behind today, the markets started witout me, time to catch up.
Final Posting Monday, 4/16/2012 5:15 PM
It was a strange day on Wall Street, with the Dow30 index closing up 72 points, and the New York Composite Average and the small cap Russell 2000 both also ending in positive territory. Meanwhile, the S & P 500 index and the NASDAQ both posted losses. This strange outcome was mainly due to Apple (AAPL) and Google (GOOG) both posting losses, even as most stocks posted gains. The two tech goliaths by market cap are not in the Dow30 average, are certainly not in the small cap average, and are not traded on the NYSE. But, they have an outsized impact on the S&P 500, which is a market-cap weighted index of only 500 stocks, and the NASDAQ, where it can be said, “as goes AAPL and GOOG, so goes the NASDAQ”. The encouraging Retail Sales data for March was followed up with less-than-stellar readings on Business Inventories, New York area manufacturing, and Housing, the latter via the NAHB Housing Index. Other than Citigroup ( C ) this morning before the bell, no big names reported today.
It should get more interesting as the week continues, and some market-moving earnings reports start to come out. Stay tuned.
1st Posting Monday, 4/16/2012 9:15 AM
Asian markets finished in the red except for India, as the Sensex posted a moderate .33% gain. European markets are performing in a contrarian mirror image fashion, mostly in the green with one exception being Spain, as the IBEX 35 IDX is slightly negative. U. S. futures are very modestly positive at the moment, awaiting the release of Retail Sales data for March.
Only one upgrade/downgrade has come out so far today on stocks I follow; SCANA (SCG) was downgraded from Neutral to Sell by Goldman, citing construction risk on the new nuclear project, valuation, and potential earnings revisions.
Graham Summers has a new letter out this morning, predicting (what else) doom and gloom, citing a coming European disaster and diminishing returns from further Fed easing or even hints of same. I received an email form of the letter, watch for it on MarketWatch or Seeking Alpha.
Only two of my stocks have ex-dividend dates this week, both monthly payers, both occurring on 4/18/2012; Main Street Capital (MAIN), yielding 6.92%, and Gladstone Investment Corp (GAIN), yielding 8.26%.
Earning season gets in high gear this week, with Citigroup ( C ) being the first big name out of the gate, reporting a $2.9 Billion profit. The stocks on my lists slated to report this week are shown by date below. These dates are tentative, based on the E*Trade snapshot view, but should be in the ball park, and are adequate as a guide to what to look for.
Intel (INTC), Johnson & Johnson (JNJ), Coca Cola (KO).
Abbott Labs (ABT).
Genuine Parts (GPC), MicroSoft (MSFT), Nucor (NUE), Du Pont E I Nemours (DD).
American Electric Power (AEP), General Electric (GE), Kinder Morgan Energy Partners (KMP), McDonalds Corp (MCD).
Retail Sales have been released, and were better than expected, with the result being the U.S. futures have improved a little. Also, in European trading, still ongoing, Spain has turned slightly positive. It looks like the end of the world will not be happening today, no doubt disappointing some pundits. But there’s always tomorrow.
Final Posting Friday, 4/13/2012 7:30 PM
The stock market correction resumed today after a two day hiatus, as the market sustained the largest weekly decline of 2012. Reasons given were slower growth in China, renewed concerns over Spain and the European debt crisis, and disappointing U.S. economic data. It was not caused by the initial earnings reports of the just-commenced 1st quarter results reporting season, as several big names reported better than expected numbers. The companies referred to are Alcoa (AA), Google (GOOG), JP Morgan (JPM), and Wells Fargo (WFC). Unfortunately, we can’t count on the positive reports to continue, we have to expect that some firms will disappoint.
I bought more Enerplus (ERF) today at $18.75, near the day’s low of $18.72. These are levels not seen in this stock since the financial crisis. It could get worse before it gets better, but I believe this will turn out to be one of those “grit your teeth and just buy it” moments that will pay off within a couple of years, with the monthly dividends to ease the pain in the meantime. The fact that ERF is being hit this hard along with other companies affected by the low natural gas prices tells me that the natural gas pricing situation is becoming a crisis for some firms. I expect some natural gas production is being shut in as I write this. Eventually this will get resolved and the price will recover, I just can’t say when.
Another firm feeling the pain is Amerigas Partners L P (APU), the propane distributor. In this case it is not so much low prices, it is low demand caused by the endless summer of a winter we have just enjoyed. Again, relief will be awhile in coming, but it will come eventually. I just do not expect to see half a dozen extremely mild winters in a row. If I thought that was what the future was going to bring, I would have held off on APU instead of buying in the last two weeks.
No one ever said being a value investor would be easy.
1st Posting Friday, 4/13/2012 8:15 AM
Yesterday, while I was traveling, stocks staged a major rally. Combining the gains from Wednesday and Thursday takes back Tuesday’s losses, plus a little more, leaving the major averages just a bit above where we ended up on Monday. Asian markets closed mostly with gains, with India being the only laggard. European stocks are all trading down at the moment. U.S. futures are currently indicating an open to the downside will occur. After all, it is Friday the 13th. Of course, the CPI release out at 8:30 AM could change that.
Two upgrades/downgrades that have occurred on stocks I follow are:
AT&T (T) was upgraded from Neutral to OverWeight at JP Morgan. This occurred yesterday after my morning post.
Altria (MO) was upgraded from Neutral to Buy at Davenport, with a price target of $34. If you follow this recommendation, take a deep breath, there is very little oxygen at that elevated level, in my opinion.
Two articles on MarketWatch presenting opposite points of view are “Time To Go Bargain Hunting”, by Charles Sizemore, and “Pullback Enters Sell-On Rally Phase”, by Tomi Kilgore. No wonder investors are confused, even the “experts” don’t agree. I have no idea what “phase” we are in. I have a set of rules that I follow, based on what happens. I have a list of stocks to buy, if the price declines to a certain level, and how many shares to buy at that level. I will buy more if the shares decline to a given level further down. I have a maximum exposure limit that I stop buying at, once achieved, no matter what. I have a selling strategy that I sell to cut my losses NOT based on price alone, but if I believe the company is in real trouble, and the averaging-down strategy was a mistake. This is rare for me, I might add. I also have a profit taking strategy, whereby I sell all or a part of my position upon a gain of 20% or more, or if attractive options are available, I consider selling a covered call as an alternative to selling the stock. So, I don’t have to agonize over the future, I just react to what events dictate.
I’m through traveling for the moment, and back on the job, getting ready for today’s action.
1st Posting Thursday, 4/12/2012 8:30 AM
Asian markets all finished with gains, while European markets look to do likewise, except for Spain, which is the only market trading in the red. U.S. futures are modestly positive at the moment. A batch of economic releases due out at 8:30 will doubtless affect the futures and the trading day. The weekly Unemployment Claims number will be scrutinized more than usual, following last week’s uninspiring Monthly Employment figures for March. Also, the Producer Price Indices for March, Regular and Core, will be out at 8:30 AM as well. Finally, the March Trade Balance will also be released at that hour. Only if the futures remain positive after digesting the data can we expect a positive open.
Natural gas hit new lows this week, going below $2.00 for the first time in a long time. This has hurt a couple of my utilities, Exelon (EXC) and Public Service Enterprise Group (PEG). As noted yesterday, Amerigas Partners (APU) has been in the doldrums because of the unseasonably warm winter. All are available at attractive prices, and with bargains few and far between, I have purchased all three recently. I believe that buying stocks of good companies when they are “on sale” and “out of favor” is the right choice, but it takes courage to buy when all is “doom and gloom”. Buying “overloved” stocks at sky-high prices, such as McDonalds (MCD), Coca Cola (KO), or Diageo (DEO) would be so much easier, with the approval of the “crowd”, i.e. all the analysts who have placed high ratings on these winners, but that is not the way to go if you are a value investor, which I am striving to be. At least when you buy low, you have a chance to make money. If you buy high during a late-stage bull market, you are betting that the bull run will continue and the stocks that have risen so much already will continue to do so. I prefer the odds of the former approach. But it isn’t easy to do.
Time to see what the day brings.
Note that I will be traveling today, and I may not get another posting out until tomorrow morning.
Final Posting Wednesday, 4/11/2012 7:30 PM
“Is the nasty old correction over already, Mommy”? “I don’t know, Johnny, we will just have to wait and see”. My dear old Mom is no longer on this earth, but if she were here and I had asked the question, I ‘m pretty sure that would have been the answer. What a difference a day makes. If anything, it underscores how much the market will be driven by earnings as reported over the next few weeks.
I had entered one buy order this morning before I left to go run some errands, and with the market staying up all day, I figured it would be “no go”. Wrong! The order was to add to my position of Amerigas Partners L P (APU), entered below the market at $39.25. Upon my return, I learned that APU turned down after I entered the order, trading below $39.00 at one point, before closing at $39.10. It’s probably going to get worse before it gets better for this propane distributor, which reports on April 26. I probably should have held off, the shares could be available at even better prices soon. If so, I will buy more. This is a long-term position, it will get cold again someday, I hope.
I have a new article published on Seeking Alpha, just about two hours ago. Continuing my “Yield, Value, Safety” series, this time I focus on consumer discretionary stocks, which are companies that produce products that aren’t good for you, but sure are popular. Examples are beer, soda, chips, fast food, and the worst of the bunch, tobacco. A link is available under the major selection “SA Articles”.
I can’t wait to see if the correction returns, or if good times are here again.
1st Posting Wednesday, 4/11/2012 9:00 AM
Asian markets mostly ended with losses, except Shanghai, which managed a tiny gain. European markets, however, are all staging strong rallies. The news is that Spanish and Italian bond yields have eased a bit, apparently contributing to the positive vibes. U.S. futures are indicating a sharp rebound is in store for us when the market opens today. A major factor in this change of mood was Alcoa’s surprising positive earnings results reported yesterday after the close. As I said yesterday, a couple of earnings surprises could be all that will be required to stop the correction before it really even gets started. The major economic release on tap for today is Import Prices and Export Prices, which just came out, slightly above estimates in both cases.
A couple of upgrades/downgrades of note have come out today:
Penn Virginia Resource Partners (PVR) was upgraded from Market Perform to OutPerform at Wells Fargo. PVR defied the market yesterday, closing up with a substantial gain, as investors reacted favorably to news that PVR had acquired a pipeline company. I happen to own PVR, purchasing my shares recently, as I found it to be one of the few MLPs in a reasonable price range.
Hercules Technology (HTGC) was initiated at RW Baird with an Outperform rating.
I was looking forward to picking up a few more shares at good prices in this correction, which may be only suspended for a day or two, or may even be over. Only time will tell, but it appears that today will not be presenting much in the way of buy opportunities, at least not early.
Final Posting Tuesday, 4/10/2012 5:30 PM
Today was a true, old-fashioned, all sectors participating, sell off. Unlike yesterday, which had a big drop at the open, but then just stayed there, today saw a drop at the open, plus the decline continued to gain steam throughout the day, with the close at the lows of the day. With today completing a run of five down days in a row, I believe that the long-predicted correction has arrived. It remains to be seen whether it will develop further into a true corrective decline of 10% to 15% or more, but whatever it develops into, this is the start, I do believe. For perspective, I note that the Dow30 average is still only down to where it was at the beginning of February, so let’s not get too carried away with the doom-and-gloom scenario just yet. We would have to drop another 700 Dow points to achieve, if that’s the word to use, a 10% correction from the highs reached in March.
Alcoa (AA) reported after the close, posting a surprise profit. A few more surprises like that could end the correction before it really gets going. Barring geopolitical developments, the earnings story, in the aggregate, will likely dictate where this correction goes, to become a roaring monster consuming the second quarter of 2012 or more, or dwindle away to a tiny blip on the radar that occurred in early April.
I added to my position in American Electric Power (AEP) that I started last month, buying more shares today at $37.40. AEP continued down with the rest of the market after I bought, closing at $37.22. Even though I bought a little too soon, I still achieved a better buy price than we have seen for AEP since 11/25/2011.
I started a new position today in Royal Dutch Shell (RDS.B), buying in at $67.65. I bought late in the day, getting in near the lows. RDS.B ranged from a high of $69.07 early this morning, to a low of just below $67.50 late in the day, closing at $67.58. So, as a day trader, which I’m not, I did better on RDS.B than on AEP, at least on the buy half of the trade. Unlike a pure trader, I plan to hold the shares for a long time, and will buy more if RDS.B declines further.
So to make a long story short, I took advantage of the sell off to add some shares to inventory today.
1st Posting Tuesday, 4/10/2012 9:30 AM
Asian markets finished mixed, with Shanghai and Sensex up, the rest down. European markets are all trading down at the moment. U.S. futures are modestly negative. There could be some spillover from yesterday, as the Dow30 closed below 13000, dealing a psychological blow to investors. The only economic news on tap is Wholesale Inventories, not usually a market mover, due out at 10:00 AM.
Only one of my stocks was tagged by the upgrade/downgrade bogeyman this morning, which in this case was only the coverage initiation bogeyman. MicroSoft (MSFT) was initiated at MKM Partners with a Neutral rating. YPF SA (YPF), the Argentine Oil firm, received a couple of downgrades today, one from Raymond James and one from Deutsche Bank. I reviewed YPF in my recent Seeking Alpha article on integrated oil companies, and concluded there was too much political risk to recommend the stock.
Final Posting Monday, 4/9/2012 6:30 PM
Today was a down day as advertised, with the Dow30 sustaining a triple-digit loss, and all of the other major averages sustaining comparable declines. The cited cause was the disappointing monthly Employment Report from Friday. Still, stocks did not move much during the day. Rather, they dropped at the open, and pretty much just stayed there all day, actually coming back up a bit during the day, compared to the lows of the first half hour or so. The average TICK reading was actually a positive number, reflecting the characteristics cited.
Annaly Capital (NLY) was upgraded during the day, from Neutral to Buy, by Compass Point. No other upgrades/downgrades occurred on my stocks today.
I took advantage of the decline to acquire more shares of Statoil (STO) and Public Service Enterprise Group (PEG). In the case of STO, the buy completed my position. I bought at $25.98, which was the low of the day, although it was the highest price I have paid, since all of my earlier shares were acquired quite some time ago, at lower prices. My rationale is that the annual dividend for STO is coming up in May, plus I wanted to get my holdings up to 100 shares, so I can sell a call later on against the shares. In the case of PEG, I am still building my position, and today was my second buy, at $29.45. This is $1.10 below where I bought my initial shares, and is a reasonable discount from that level to justify averaging down with another purchase.
1st Posting Monday, 4/9/2012 8:30 AM
Asian markets fell on Friday while we were hunting for Easter eggs. While a number of Asian markets were closed Monday for public holidays, two that were open, the Shanghai and the Nikkei, representing China and Japan, respectively, fell further. European markets likewise fell on Friday, and are closed today for the Easter holiday. U.S. futures indicate a significantly lower start is on tap for stocks today, as the disappointing Unemployment report from Friday is digested.
Earnings season will officially begin this week as Alcoa (AA) begins the parade on Tuesday, after the close. There have been more warnings than usual this quarter, and investors are braced for a potential letdown, if earnings disappoint in the aggregate. In fact, the mood is so gloomy that Schaeffer’s Research cites this as a cause for optimism, based on their contrarian sentiment approach. Other briefings I have read note that various indicators, such as the put/call ratio, are not yet at extremes seen at market tops, and like Schaeffers, although using slightly different logic, they argue for a continuation of the rally. Of course, there has to be some bitter medicine over the very short term, with a substantially disappointing monthly Unemployment report Friday from the Department of Labor, and it appears that dose will be administered today. So the conventional wisdom is a down day or two will result from the Unemployment report, but then the market will surprise many people by resuming the rally we have seen since October 2011. It will be interesting to see if this prediction holds. Earnings will have to surprise towards the upside, in my opinion, for it to play out as described.
The following stocks are the only stocks going ex-dividend this week, of the stocks I follow:
RPM International (RPM), ex-dividend date 04/11/2012, yield 3.30%.
Senior Housing Properties Trust (SNH), ex-dividend date 04/11/2012, yield 6.87%.
Fifth Street Finance (FSC), ex-dividend date 04/11/2012, yield 11.90%, pays monthly.
Consolidated Communications (CNSL), ex-dividend date 04/11/2012, yield 7.94%.
None of my stocks are scheduled to report this week, although the pace will certainly pick up as we move further into earnings season in the next couple of weeks.
While there are a fair number of upgrades/downgrades out this morning, as is usual for a Monday, none of the stocks I track have been tagged as yet.
Well, let’s get the pain over with. We may even get a buy opportunity or two today, if the dour outlook indicated by the futures materializes.
Final Posting Thursday, 4/5/2012 5:00 PM
Stocks flirted with both sides of the flat line today, eventually opting to go to the dark side, closing with losses across all of the major averages, with the exception of the NASDAQ, which ended up with a small gain. It was a slow-developing session, with very low volatility, possibly due to some participants electing to start the weekend early.
I missed an earnings date on one of my stocks, RPM International (RPM), which reported this morning. FQ3 EPS was $.05, which beat analysts’ estimates, and revenue came in at $773.6 M, up 13.9% Y/Y, also beating estimates. The stock was rewarded for its earnings out performance with a $.17 decline, closing at $26.10.
Total (TOT) stated that weather has slowed down efforts to plug the gas leak at the now-shutdown North Sea platform where the leak occurred. While it looks like a major explosion will be avoided, the daily cost of $2.5M a day is starting to add up.
I added to my position in Enerplus (ERF) today. ERF is not on my lists, but I plan to add it to my Tier3 list soon. This former Canadian trust reached a high of $59.45 in 2006, before the Canadian trust “Halloween Massacre”, dropped precipitously afterward with the rest of the trusts, recovered to go above $50 briefly in 2007 and again in 2008, dropped to a low of $12.85 during the financial crises, recovered to a high above $33 in early 2011, and has steadily declined since, hitting a new 52 week low today. All the while, ERF has been steadily pumping out monthly dividends. I bought more at $20.55. Earnings have been slammed hard by the low price of natural gas, which accounts for a significant portion of ERF’s production. Sporting a yield above 10% and a payout ratio of over 300%, the market appears to have already priced in a dividend cut, which indeed is a definite possibility. Ignoring the over 34 P/E ratio, inflated by depressed earnings, the remaining valuation metrics allow ERF to be classified as a value stock, with a book value of $18.16, and a P/B of 1.16. The book value in this case is real, consisting of producing oil and gas properties, and I am further comforted by the very manageable debt level, with a leverage ratio of only 1.7. This is a bet for the long run. Eventually, but hard to say when, the price of natural gas will rise again, and I am confident that ERF will remain afloat until it can shine again.
With the markets closed for the Easter holiday tomorrow, we will have to wait to Monday to see how they are affected by the monthly Unemployment data to be released tomorrow.
Since all the children are grown, I have no excuse to overdose on Easter candy, as in times past. But I will attempt to have a happy Easter weekend anyway.
1st Posting Thursday, 4/5/2012 9:25 AM
Asian markets fell, except for Shanghai, which had a gain. European markets are all trading down. U.S. futures indicate a downtick to start the day, but not as much as earlier, before the weekly unemployment numbers came out. New Initial Claims for unemployment benefits were 357K, in line with estimates.
Royal Dutch Shell (RDS.B) was upgraded from Accumulate to Buy at Tudor Pickering. What’s the difference, I wonder – you have to buy to accumulate shares, I would think.
Realty Income (O) was downgraded from Neutral to Sell at UBS. The only reason cited was valuation. I have to agree, with a price target of $33 and a current market price of $38.50, the shares of “the monthly dividend company” have gotten way ahead of themselves. I sold at $35 a long time ago on the basis of valuation. There certainly isn’t anything wrong with the business; it’s just that O has become too darned popular.
One of my commenters on my recent Seeking Alpha article asked me about Sasol Ltd ADS (SSL), the South African company probably best-known for synfuels, which the country greatly needed during the apartheid days. A quick check on the metrics did reveal SSL as a potential income stock, but as with many foreign firms, ratings of analysts are few. I see that today SSL was downgraded from OutPerform to Neutral at Credit Suisse, with no further explanation given.
Time to see what the day brings.
Final Posting Wednesday, 4/4/2012 6:00 PM
Well, the day unfolded as advertised; the Dow30 dropped over 100 points in the first five minutes of trading, and never recovered, closing down 125 points. All of the other averages followed suit. The news items I read reiterated the concern mentioned in the morning post, i.e. no further Fed easing expected, plus renewed concerns regarding the European financial crises also were thought to have contributed to the sell off.
I had another opportunity today to buy Total Petroleum (TOT) under $50, and this time I did not waste it, buying some additional shares for $49.95. While somewhat immaterial in the long term picture, it does feel good to have gotten in near the lows of the day, with TOT closing back up at $50.27. Of course, that temporary satisfaction could evaporate quickly tomorrow, if TOT turns back down.
Also, per my posting from yesterday, I exited my position in the MTB preferred series A. I accepted a small loss of $76.00 on the 100 shares I owned, offset by $212.42 in dividends received. With a holding period of almost exactly one year, the annualized return calculates out at 5.08%. This is actually sub-par, and disappointing, but still a lot better than money market rates would have returned. If the preferred is called in the next few months, which I believe is likely, I would have ended up with a loss overall, even with dividends. So, I’m happy to have achieved at least a positive return, with my capital intact.
I was pleasantly surprised a few minutes ago to see that my new article was published on Seeking Alpha only a couple of hours after I submitted it. Entitled “Yield, Value, Safety: Available With (Some) Integrated Oils”, I evaluated 13 major U.S. and foreign firms, and only came up with 4 recommendations where the stocks are within reach, and 2 more if their prices come down. The 6 recommendations are:
Royal Dutch Shell Class B (RDS.B) – Dividends paid on B shares are treated as United Kingdom-based for withholding tax purposes, and no withholding occurs for U.S. shareholders. Buy under $70.
Total S.A. (TOT) – Based in France, withholding of 25% applies. Buy under $50.
ENI S.p.A. (E) – Based in Italy, withholding of 27% applies. Buy under $45.
Statoil ASA (STO) – Based in Norway, withholding of 15% applies. Buy under $26.
Exxon Mobil (XOM) – U.S. based, Irving, Texas. Because of low yield, I would only recommend buying upon a price drop below $70.
Chevron (CVX) – U.S. based, San Ramon, California. Buy under $100.
I would usually say that you heard it here first, but since the article has already been published, I guess I can’t make that claim. A link to the article is available under the major selection “SA Articles”.
As per my action today on TOT, you can see that I took my own advice. If the recommendation turns out to be a bad one, I’ll suffer along with all who followed me. To me, that’s the best I can do as a financial commentator – perform as much due diligence as I’m capable of, and take on positions in my personal portfolio in accordance with my recommendations.
1st Posting Wednesday, 4/4/2012 9:25 AM
Asian markets ended mixed, with Shanghai and Hong Kong up, all the others down. Japan dropped over 2 %. European markets are all trading in the red, with renewed concerns over Spain. U.S. futures are pointing towards a dip at the open, with the headlines indicating the outlook has been dimmed by the Fed minutes released yesterday, which suggested that no further easing was anticipated, and a rather disappointing ADP jobs number that has just come out.
A couple of upgrades/downgrades that have come out this morning on stocks I track are:
Triangle Capital (TCAP) was upgraded from Neutral to Buy at Sterne Agee.
McDonalds (MCD) was downgraded from Conviction Buy to Buy at Goldman.
Sysco (SYY) had coverage resumed at Goldman with a Sell rating. Ouch! I own SYY, and I consider it a well-run dividend stalwart. No doubt SYY has been squeezed of late by commodity costs, but I disagree with the rating, I believe SYY has demonstrated the ability in the past to adapt to difficult conditions, and will do so again.
Time to get ready, there may be a buy opportunity or two turn up on the radar today.
Final Posting Tuesday, 4/3/2012 7:00 PM
The day started off on a down note, and continued on down until fairly late in the day, when a partial rebound kept the Dow30 from experiencing a triple digit loss. One damper on the situation was the release of the Fed minutes, which indicated the Fed believes GDP will improve going forward, and in the perverse logic of the market, triggered a sell off, as investor’s hopes for further easing were dashed.
One additional upgrade/downgrade of interest came out since this morning, as RPM International (RPM) was downgraded from Buy to Neutral at Sidoti.
Auto / truck sales continued to impress, as all of the major brands registered sales gains except Honda.
After some soul-searching, I have decided to sell my MBT preferred series A. The call date is January 2013, but under the terms of the preferred agreement, the Dodd-Frank rules change whereby the preferred can no longer be counted as Tier1 capital triggers a clause allowing the preferred to be called at any time. Since my buy price is over par, I would have an immediate loss of the preferred were called, so to avoid this risk, I will sell tomorrow. I had a limit order on today, but it did not get filled. I will adjust tomorrow as necessary until I get the shares sold.
I will be submitting the next article in my “Yield, Value, Safety” series to Seeking Alpha soon, this time focusing on the major U.S. and foreign integrated oil firms. Stay tuned.
1st Posting Tuesday, 4/3/2012 9:25 AM
Asian markets mostly posted gains, except for Japan, which lost .6%. European markets are all trading in negative territory, with the losses led by banks. U.S. futures are moderately negative, indicating a lower start to the trading day. The only economic release scheduled for today is Factory Orders, due out at 10:00 AM. Auto sales will be coming out throughout the day. It will be interesting to see if the surprising recovery in auto and truck sales continues.
John Mauldin’s latest email newsletter discusses the economic situation in Spain, which is truly dire. Portugal is just as bad. It is evident from the facts he cites that the European financial crises is not going away anytime soon.
A couple of upgrades/downgrades of interest this morning are:
Coca-Cola (KO) was downgraded from Buy to Hold at Stifel Nicolaus.
Vodafone (VOD) was downgraded from buy to Neutral at Davenport.
Philip Morris (PM) was downgraded from OutPerform to Neutral at Credit Suisse.
Time to see what the day will offer up.
Final Posting Monday, 4/2/2012 4:45 PM
After starting out on a down note, relatively decent economic releases out at 10:00 AM served to turn things around, with all of the major averages closing up with modest gains. Crude oil bounced back a bit from last week, holding comfortably above $105.
I really do not expect too much to happen until later in the week, until we get closer to the monthly Unemployment Report on Friday. With the U.S. Markets closed for Good Friday and the government open for business as usual on Friday, we will have to wait for Monday for the market reaction to the data release. Also, investors will likely be holding back until earnings start coming out, as they wait to see how the majority of companies will report the most recent quarterly results.
Penn Virginia LP (PVR), my most recent purchase, has bounced back nicely from the lows of last week, up a full $1.00 over my buy price. I never did find any news to account for the drop – I guess some large holder just decided to heck with dirty old coal, and sold, causing the price to drop. I did not attempt any trades today, nothing got my attention, at least not enough to trigger any action on my part. Even though there were quite a few upgrades/downgrades out today, as is typical for a Monday, none came out on any of the stocks I follow. Overall, a sleepy, non-committal session, but at least it was a positive one.
1st Posting Monday, 4/2/2012 9:15 AM
Asian markets finished mixed, with the Nikkei, Shanghai, and Sensex up, the Hang Seng and Australian markets posting small losses. European markets are all trading down. U.S. futures are flat to minimally negative. Economic releases on tap are the ISM Index and Construction Spending, both scheduled for release at 10:00 AM. None of the stocks I track received any upgrades/downgrades so far this morning.
A few of the stocks I follow have ex-dividend dates coming up this week:
MFA Financial (MFA), 4/2/2012, yield 12.85%. Unfortunately if you missed it, it is too late to buy it and get the dividend.
Medtronic Inc (MDT), 4/3/2012, yield 2.48%.
Sysco Corp (SYY) 4/3/2012, yield 3.62%.
Universal Corp (UVV), 4/4/2012, yield 4.21%.
Verizon Communications (VZ), 4/5/2012, yield 5.23%.
AT&T (T), 4/6/2012, yield 5.64%.
I have seen a couple of articles lately suggesting that the dividends of T and VZ are at risk, which would seem possible considering the current payout ratios of 260% and 233%, respectively. These are the payouts I get from my research using both MSN Money and E*Trade, so they should be accurate. Yet, both firms recently raised their dividends, T in January 2012, and VZ in September 2011. Something is wrong with this picture, but I cannot say just what it is. Dividend investing 101 says beware any time the payout ratio exceeds 100%, or is even close. If I can find out what I’m missing on this, I will post it here. For now, I would just say that an investor needs to be aware of this dichotomy.
None of my stocks are scheduled to report earnings this week. Earnings season will be upon us soon, as it begins in earnest towards the end of this month. This earnings reporting period will be “make or break” for the stock rally that we have seen going back to just after the October 2011 swoon. Some pundits are pontificating that stocks are undervalued, based on the earnings of the last few quarters, while others maintain that a hard fall is coming as earnings revert to the mean, having exhausted all of the tricks used to prop them up in recent quarters. No doubt huge job cuts and belt-tightening moves aided the earnings picture greatly since the financial crisis, and these moves cannot continue indefinitely, and in fact are probably exhausted. At any rate, the upcoming reporting season should reveal the truth of the matter, whether the pretty-darn-good earnings most firms have been reporting can continue, or whether the reversion to the mean will indeed descend upon us. I, for one, am eager to find out.
In perusing the news this morning , I see a news blurb that the Argentine government plans to take over the Argentine oil company YPF (forget the full name, it makes even less sense than YPF), either by outright expropriation or by purchase of a controlling interest. I am currently working on my next article in the “Yield, Value, Safety” series, focusing this time on integrated oil companies. YPF was eliminated at the outset because of political risk. Another firm, Repsol YPF SA (REPYF), the Spain-based oil company, was considered and evaluated, but also not recommended because of the fact that it owns 57% of YPF, and also has too much political risk. When there is significant political risk present, all the attractive metrics in the world are not enough to overcome that risk, in my opinion.
Time for action.
Final Posting Friday, 03/30/2012 6:55 PM
Today ended up being a quieter day than it appeared it was going to be at the outset. Volatility was minimal. The blue-chip indices, the Dow30, S & P 500, and the New York Composite all ended the day with decent, but not overwhelming, gains, while the NASDAQ Composite and the small cap index, the Russell 2000, both closed with small losses.
One of my stocks, Raytheon (RTN), was downgraded from OutPerform to Sector Perform during the day today, by RBC Capital.
I made one buy today, adding to a small position in Penn Virginia Resources LP (PVR), a Coal MLP. I originally bought into PVR because it was one of the few MLPs that was not extended in price. It has dropped over $3 this week on no news that I can find. A recent Barron’s article noted the start of the decline, stating that it presented a buying opportunity. I had to agree, putting money behind the conviction. Coal is unpopular with the environmental set, for probably good reasons, but it isn’t going away soon.
Total Petroleum (TOT) continued to recover a little more of the $5 and change price drop it has endured this week, as the latest news states that the company is planning to drill a relief well to end the leak. With natural gas in the air, an explosion is always a threat, but if it can be avoided, the occurrence of this problem will have offered a great opportunity to buy TOT at a discount.
Speaking of natural gas, the commodity is stuck at decade lows, barely holding above $2 per MMBTU. That is 1 million BTUs, for those unfamiliar with natural gas measurement acronyms. Not me, I led not one but two IT projects during my IT career to develop Gas Measurement systems. But I digress. The current depressed price is a classic demonstration of supply and demand at work. The low price is good news for consumers, but it is a threat to project economics for various gas industry projects. It just shows that for every silver lining, there is a dark cloud somewhere nearby.
I’m ready to call it a week.
1st Posting Friday, 03/30/2012 9:30 AM
Asian markets finished mixed, European markets are all trading up, and U.S. futures are indicating a positive start on this final trading day of the quarter. The Personal Income and Spending numbers for February came out at 8:30 AM, showing income was less than expected, while spending was more than expected. Same old same old, I guess.
None of my stocks have received any upgrades/downgrades so far today.
Today may be more lively than yesterday, as far as stocks are concerned. The best opportunity to pick up some shares of TOT at a bargain price under $50 may have passed, the shares are up another $.33 in the pre-market, approaching $51.
Time to get ready.
Final Posting Thursday, 03/29/2012 5:25 PM
Stocks pulled back from the depths reached early in the session, but only the venerable Dow30 index managed to close above the flatline, as all of the other averages posted minor declines.
It was a quiet trading day. Minimal news flow, and no real catalysts to drive stocks up or down.
One of my stocks, Total Petroleum (TOT), is available today for $5 and change less than at this time a week ago, compliments of a natural gas leak at a North Sea platform operated by TOT. The platform had to be abandoned and a quarantine has been imposed on the surrounding area, because of the risk of an explosion. Natural gas, assuming an explosion can be avoided, is not a disaster in the same league as the BP fiasco, and the news can be delivering a buy opportunity for investors wanting a stake in “big oil” but not finding anything available at a reasonable price. I had a bid in today for some additional shares at less than $50, but it did not get filled; I was too slow on the draw. If it should drop again, I will resubmit.
I’m ready for Friday.
1st Posting Thursday, 03/29/2012 9:25 AM
Asian markets all posted losses, and European markets, still open, appear slated to end the same way. U.S. futures are indicating a lower open for stocks here. The weekly unemployment numbers announced at 8:30 were pretty much in line, as was an update on 3rd quarter GDP. While the economic releases presented no shocks to the system, they also did not inspire much confidence.
Spain is rapidly becoming the new Greece, as it moves to center stage of the unfolding European debt crisis. Nationwide strikes are under way there as I write this.
A couple of upgrades/downgrades of interest that have come out this morning are:
Exelon (EXC) had coverage intiated with a Neutral rating from Goldman.
AT&T (T) was downgraded from OutPerform to Neutral at RW Baird.
Verizon (VZ) was also downgraded from OutPerform to Neutral at RW Baird.
At least R.W. isn’t showing any favoritism, treating both telecom giants the same.
Not much else to comment on, so in the immortal words of our former President, only this time applying to the market day, “bring it on”. Probably one of several comments that he wishes he had not made, or at least that his political “handlers” wished that he had not made.
Final Posting Wednesday, 03/28/2012 6:45 PM
U.S. markets sagged today, with the Dow30 avoiding a triple-digit loss only because of a late surge of buying. There were several suspects as to the cause of the swoon, but perhaps it was just time. There might have been some profit taking contributing to the selling pressure. Durable Orders, excluding transportation, actually came in better than expected, so pundits citing the headline Durable Orders number as the cause are mistaken, in my opinion.
One of my stocks, Total Petroleum (TOT), is in the news because of a natural gas leak at one of it’s North Sea platforms, forcing abandonment of the platform and an area quarantine. The risk is of an explosion. Not good, but at least it will clean itself up without human assistance, as the gas dissipates. While not good, this is certainly not comparable to the BP disaster. TOT has dropped over $5.00 since this all started a couple of days ago, but appears to have stabilized.
Intel (INTC) was reiterated as a Buy at Argus, with a price target of $34, citing INTC’s push into ultrabook laptops.
I see, upon scanning for any news on my stocks, that Paychex (PAYX) reported earnings after the bell today. Somehow this announced report had escaped my radar when I was checking to see if any of my stocks were scheduled to report this week. Anyway, PAYX reported FQ3 EPS of $.37 and $570M in revenue, both in-line with analysts’ estimates. PAYX shares are down .3% in after-hours trade, so apparently meeting expectations was not enough for some holders of the stock.
Finally, Annaly Capital (NLY) closed down 3.5% today, combining the usual ex-dividend adjustment (today is the ex-dividend date for the announced $.55 dividend) with an announcement that 772K of preferred shares will be converted into 2.4M shares of common, diluting shareholders.
I finished my taxes today, including the onerous new form 8949. I am ready to call it a day.
1st Posting Wednesday, 03/28/2012 9:00 AM
Chinese and Indian markets posted substantial declines Wednesday, while Japan and Australia finished in positive territory. The Shanghai Index dropped 2.65%. European stocks are trading down. U.S. futures are still negative, but have improved since earlier this morning. Economic releases of note today are Durable Orders and Petroleum Inventories.
Only two of my stocks have been tagged with upgrades/downgrades so far today:
Verizon (VZ) was downgraded from OutPerform to Sector Perform by RBC Capital.
Nestle SA (NSRGY) was downgraded from Buy to Neutral at UBS.
My struggle (where have I heard that phrase before?) continues with the new IRS Form 8949. I am getting the upper hand, but it hasn’t been easy. If there are a lot of errors in the data reported to the IRS by your brokerage, expect to spend a lot of time completing the form properly.
As the end of the quarter approaches, there may be an up tick in activity in stocks starting today, because of the phenomenon known as “window dressing”, whereby fund managers sell under performing stocks and buy perceived winners so the published list of stocks held as of the quarter-end looks better.
The answer to the question above, my struggle, was the title of the book (Mein Kampf) written by Adolf Hitler while imprisoned for attempting to overthrow the German government in 1923. Unfortunately for the world, he was released from prison and went on to experience a political comeback, which led to the establishment of his dictatorship and World War II.
Final Posting Tuesday, 03/27/2012 6:00 PM
Stocks took a breather today, as all of the major averages posted modest declines following the strong start registered Monday.
Several stocks I follow had coverage initiated today:
AT&T (T) was initiated at Hold by Canaccord Genuity.
Verizon (VZ) was initiated at Hold by Canaccord Genuity.
Digital Realty (DLR) was initiated at Hold by Canaccord Genuity.
I’ll never understand why an initiation of coverage would be with a Hold rating. If the rater has no opinion, why initiate coverage?
Not much happening today. I’m finally getting serious about taxes, getting into the depths of it, figuring out gains and losses and how to report them on the NEW form 8949 that must now be filled out along with Schedule D this year. It looks like the IRS is finally getting serious about reconciling taxpayer reported gains/losses with the data held by the brokerages. I expect this trend to intensify over the next few years as the government’s needs for ever more revenue will increase the pressure to avoid lost tax revenue from non-compliance.
1st Posting Tuesday, 03/27/2012 9:30 AM
Asian markets were up over 1% in most cases, except for the Shanghai Index, which had a small loss. European markets are trading in mixed fashion, some up, some down. U.S. futures are positive, but not by much, indicating there will not be much momentum left over from the big rally day yesterday. Economic releases to come out today are the Case-Shiller 20 City Housing Index and Consumer Confidence for March.
The only upgrade/downgrade action this morning affecting stocks I follow was for McDonalds (MCD), which had coverage initiated at Neutral at Atlantic Equities.
Today does not appear to be shaping up to be very exciting, but that could change. At any rate, it is here.
Final Posting Monday, 03/26/2012 4:15 PM
Stocks managed pretty significant gains across all of the major averages today, overlooking a rather tepid reading on Pending Home Sales. One catalyst, supposedly, was Bernanke’s rather dour outlook on the job market, as expressed in prepared remarks today. In the perverse logic of the market, this was interpreted as good news; it would mean the central bank would be likely to continue to hold interest rates at record lows.
Several upgrades/downgrades that have come out since this morning on stocks I track are:
Alliant Energy (LNT) was upgraded from Equal Weight to OverWeight at Barclays.
Westar Energy (WR) was upgraded from Equal Weight to Overweight at Barclays.
Philip Morris (PM) was upgraded from Neutral to Buy at Davenport.
All utilities and consumer staples stocks in my Tier1 and Tier2 lists have been updated to reflect my recent research. Further data on the changes is provided below.
Colgate Palmolive (CL) – Too much debt.
Clorox (CLX) – Too much debt, no equity.
Campbell Soup (CPB) – Too much debt.
Dominion Resources (D) – Too high a payout, yield low compared to other utilities.
DTE Energy (DTE) – Borderline case, dropped because of slow regional enonomy.
Duke Energy (DUK) – Mega-merger in progress, avoid.
First Energy (FE) – Payout too high.
Kellogg (K) – Too much debt.
McCormick (MCK) – Yield too low.
NSTAR (NST) – Yield too low for a utility.
Alliant Energy (LNT) – Utility with good all-around numbers & ratings.
Atmos Energy (ATO) – Borderline case, but deemed less attractive than alternatives.
Avista (AVA) – Dropped small-cap utilities.
Black Hills (BKH) – Dropped small caps, payout says N/A, not clear why.
Piedmont Natural Gas (PNY) – Yield too low.
Spectra Energy (SE) Yield too low.
Consolidated Edison (ED) - Solid but not spectacular, would be attractive upon a price pull-back.
Entergy Corp (ETR) – Higher risk, but a value play, price depressed.
ConAgra (CAG) – Solid staple stock with a decent yield.
Moved between Tiers:
Exelon (EXC) – Moved from Tier1 to Tier2, higher risk, near-term earnings and dividend growth predicted to be limited at best.
Southern Copper (SCCO) – Too much risk, even for Tier3.
Otelco (OTT)- Small rural telecom with big yieldseems to be holding up.
Counts: Tier1 – 62, Tier2 – 40, Tier3 – 28.
I expect these counts to be reduced by another 10 to 20 names after all is said and done.
1st Posting Monday, 03/26/2012 9:00 AM
Asian markets closed higher in Japan and China, lower in India and Australia. European markets are all trading in positive territory, except for Spain. U.S. futures are indicating a positive start for the trading week. The only economic data on tap is Pending Home Sales, due out at 10:00 AM.
None of the stocks I follow have received any upgrades/downgrades so far today. A few have ex-dividend dates coming up this week:
Philip Morris (PM), 3/27/2012, yield 3.55%.
Illinois Tool Works (ITW), 3/28/2012, yield 2.53%.
National Health Invs (NHI) 3/28/2012, yield 5.30%.
Windstream Corp (WIN) 3/28/2012, yield 8.40%.
Annaly Capital Management (NLY) 3/28/2012, yield 13.51%.
Realty Income (O) 3/29/2012, yield 4.59%. O pays a monthly dividend.
None of my stocks report earnings this week.
I have a new article out on Seeking Alpha (SA) just this morning, presenting a review of dividend-paying consumer staples stocks. A link is available under the major selection “SA Articles”.
I am reviewing all of my stocks by sector, to filter out less attractive stocks, and to get the number down to a more manageable level of around 100 to 110 stocks. For each group, I include all of my stocks in that group, plus I include a few other prominent stocks in the sector, as identified by a scanning process. So far I have completed reviews of two groups/sectors: utilities and consumer staples. For those stocks kept, I am updating my buy levels to reflect current conditions. My lists have already been updated to reflect the utilities review, and I will update the lists again later on today to reflect the consumer staples review. In tonight’s post I will provide a recap of stocks dropped/added. Only stocks on my lists with status dates of March 2012 or later should be considered to have been vetted by this process. I will present the results of each review in a Seeking Alpha article with the title beginning with the words “Yield, Value, Safety …etc”. I will stay at it until all stocks have been reviewed. My goal is to complete this process by June 1st.