JT’s DAILY (WEEKLY as of 12/9/2013) BLOG for Month Of December 2014

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

1st Posting for Week Beginning Monday 12/22/2014

Posted Sunday 12/21/2014 08:00 PM

Stocks continued the decline from the prior week on Monday and Tuesday of the week just ended, and it looked like the rout was on. But then, a funny thing happened. Stocks apparently found a bottom, and then rebounded spectacularly the following three days, gaining nearly 100 S&P 500 points in that time. For those still beholden to the outmoded Dow Jones Industrial Average, the rebound was nearly 800 Dow points. Assuming we don’t go right back down, it would appear that the downturn is over, and we are in for a “Santa Claus Rally”.

Back to more mundane matters, there are only four stocks on my lists going ex-dividend the week of Christmas, a showing that only Scrooge could appreciate:

Altria (MO), 12/22/2014, yield 4.11%.

Phillip Morris (PM), 12/22/2014, yield 4.82%.

BlackRock Kelso Capital (BKCC), 12/22/2014, yield 9.87%.

MFA Financial (MFA), 12/23/2014, yield 9.74%.

Upgrades / downgrades on my stocks last week were:

Memorial Production Partners LP (MEMP) was downgraded from OutPerform to Market Perform at Oppenheimer.

Exxon Mobil (XOM) was upgraded from UnderPerform to Market Perform at BMO Capital.

Linn Energy LLC (LINE) was downgraded from OutPerform to Neutral at R. W. Baird.

MicroSoft was downgraded from Neutral to UnderPerform at BAC.

Breitburn Energy Partners LP (BBEP) was downgraded from OutPerform to Sector Perform at RBC Capital. With a current yield of 26.59%, reflecting a huge drop in the share price, BBEP holders are bracing for bad news, re the dividend.

Verizon (VZ) was downgraded from Buy to Neutral at Goldman.

Ares Capital (ARCC) was upgraded from Equal Weight to OverWeight at Barclays.

Prospect Capital (PSEC) was downgraded from OverWeight to Equal Weight at Barclays.

Enerplus (ERF) was downgraded from OutPerform to Market Perform at BMO Capital.

Two of my stocks reported earnings last week:

General Mills (GIS) reported on Wednesday that FQ2 EPS was $0.80, beating by $0.03. Revenue of $4.71B, down 3.5% Y/Y, missed by $80M. The stock gained along with the rest of the market following the report, ending the week up more than two dollars.

ConAgra Foods (CAG) reported on Thursday that FQ2 EPS was $0.61, in-line. Revenue of $4.15B, down 1.7% Y/Y, missed by $50M. CAG basically ended the week where it started, as the disappointing report was apparently offset by the market rally, with the two canceling each other out.

As for this week, Walgreen (WAG) is the only stock on my lists scheduled to report, on Tuesday December 23rd.

Well, wouldn’t you know it – just as I was ready to commit some serious cash (for me, at least) to buy into Chevron (CVX), Exxon Mobil (XOM), and a couple of additional beaten-down energy firms, a monster rally ensues. They were still a bit above my ideal entry price, but I correctly suspected time might be running out. Correct in my supposition, but not quickly enough to have bought in already. Oh, well, the opportunity might return. Since I did buy in to a few others, it’s not like I missed out completely. I’m going to hold out for my bargain prices on the stocks I missed. I try to never chase a stock after missing a buy level. With the return of volatility, the price I want may yet show up soon. Meanwhile, as the wicked witch of the East proclaims in the Wizard of OZ (watching it for the 100th time with the grandkids), I’ll just “bide my time” before making my move regarding my evil intentions.

Speaking of my evil intentions, I plan to take a break from posting until after the holidays. I will, as always, keep up with the market and my stocks, and will catch up in my next posting with any significant developments on the stocks I’m watching.   


1st Posting for Week Beginning Monday 12/15/2014

Posted Sunday 12/14/2014 08:00 PM

Stocks declined four out of five days last week, led by energy stocks, as the oil price slide continued. While the economic news continues to be ok, the question is becoming whether the oil price decline will hurt the economy more than it helps. Certainly for regions dependent upon the oil industry, that will be the case.

One of my stocks announced a dividend last week after my posting, as Potlach (PCH) announced a dividend with an ex-dividend date of 12/12/2014. The stock yields 3.64% currently.

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

TICC Capital (TICC), 12/15/2014, yield 14.41%.

Solar Capital LTD (SLRC), 12/16/2014, yield 9.09%.

Greif (GEF, GEF.B), 12/17/2014, yield 3.69% (Class A, symbol GEF), or yield 5.37% (Class B, symbol GEF.B). Note that class B is very thinly traded.

PennantPark Investment (PNNT), 12/17/2014, yield 11.51%.

Gladstone Investment (GAIN), 12/17/2014, yield 10.34%.  GAIN pays monthly.

General Electric (GE), 12/18/2014, yield 3.70%.

Ventas (VTR), 12/18/2014, yield 4.25%. VTR just announced last week that the dividend will be increased 9%, effective with the next payout. The stock gained last week, defying the market consensus.

Several of my stocks received upgrades / downgrades last week:

McDonalds (MCD) was initiated at Neutral at Goldman.

Phillip Morris (PM) was downgraded from Neutral to Reduce at Nomura.

Verizon (VZ) was downgraded from OutPerform to Neutral at Robert W. Baird.

Walgreen (WAG) was downgraded from Buy to Neutral at Mizuho.

Cisco Systems (CSCO) was initiated at OutPerform at Wedbush.

Royal Dutch Shell (RDS.B) was downgraded from Buy to Hold at Deutsche Bank.

Norfolk Southern (NSC) was initiated at Neutral at Nomura.

Walgreen was initiated at Buy at Citigroup.

Breitburn Energy Partners LP (BBEP) was downgraded from Buy to Hold at Wunderlich.

MicroSoft (MSFT) was initiated at OverWeight at Piper Jaffrey.

After a two week drought, two of my stocks are scheduled to report earnings next week, both before the open. General Mills (GIS) will report on 12/17/2014, and ConAgra (CAG) will report on 12/18/2014.

Energy stocks represent the best opportunities for new money at the present time. I nibbled a bit last week, picking up additional shares of ConocoPhillips (COP) and ONEOK Partners LP (OKS), and initiating new positions in Statoil (STO) and Breitburn Energy Partners LP (BBEP). BBEP has to be one of my better trades – I sold at $23 and change several months ago, as the shares seemed really stretched, as far as valuation. At that time I planned to re-enter next year, at a reduced price, hopefully. When the shares got down under $9 last week, I couldn’t help but jump back in. If all my ins and outs were that well-timed, I would be in “tall cotton”, no doubt. Sometimes you make a good move in spite of yourself. I’m sticking mostly with dividend-paying majors for the most part, as far as energy stocks are concerned. I’m watching Exxon Mobil (XOM), Chevron (CVX), and Royal Dutch Shell (RDS.B). If they get just a little less expensive, I’ll be buying in.


1st Posting for Week Beginning Monday 12/08/2014

Posted Sunday 12/07/2014 08:00 PM

Stocks gained three days out of five last week, ending the week modestly higher than the prior week. The monthly Jobs Report on Friday was touted by the pundits as a “good” report, based on the raw numbers, but a closer look reveals the dismal truth, that the jobs are mostly low paying service jobs, many less than full time. The Obama administration continues the assault on the American worker at both the high and low spectrums of the market, authorizing millions of illegal immigrants to work, plus expanding opportunities for foreign technology workers. Oops, that last statement got in there by an oversight, this is supposed to be a politically neutral stock market blog. 

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

Public Service Enterprise Group (PEG), 12/08/2014, yield 3.62%.

SCANA (SCG), 12/08/2014, yield 3.67%.

Triangle Capital (TCAP), 12/08/2014, yield 10.15%.

Total S A (TOT), 12/10/2014, yield 5.71%, before 30% foreign tax withholding.

Frontier Communications (FTR), 12/10/2014, yield 5.80%.

Merck (MRK), 12/11/2014, yield 2.93%.

DrPepper Snapple (DPS), 12/11/2014, yield 2.28%.

Digital Realty (DLR), 12/11/2014, yield 4.84%.

Reynolds American (RAI), 12/11/2014, yield 4.01%.

Ares Capital (ARCC), 12/11/2014, yield 9.47%.

Fifth Street Finance (FSC), 12/11/2014, yield 12.86%. FSC pays monthly.

None of my stocks reported earnings last week, nor are any slated to report this week.

There were a few upgrades / downgrades of interest last week, as follows:

DrPepper Snapple (DPS) was downgraded from Sector Perform to UnderPerform at RBC Capital Markets.

ENI S p A (E) was downgraded from Equal Weight to UnderWeight at Barclays.

Statoil (STO) was downgraded from OverWeight to Equal Weight at Barclays. STO apparently did switch to a quarterly dividend. ETrade now shows the ex-dividend date as 11/13/2014, with a yield of 5.71%, before foreign tax withholding. To get the STO dividend, I guess one must buy a month or so before the next anticipated quarterly ex-dividend. If you wait for confirmation, you will have missed it.

Energy Transfer Partners L P (ETP) was upgraded from Neutral to OutPerform at Robert W. Baird. Baird is going against the grain here, upgrading an energy stock, an MLP, no less.

Wal-Mart (WMT) was downgraded from Buy to Neutral at UBS.

Pepsico (PEP) was initiated at Buy at Evercore ISI.

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

The next few weeks will likely be a slow time for stocks, barring some significant market-moving “black swan” event. A number of articles have come out recently postulating that the market is “tired” and due for a fall. Perhaps that is the majority view, as blue chips and pretenders continue to be (in my view) significantly over-priced, being deemed “safe”, while Mortgage REITs, BDCs, and other higher-risk firms continue to present high yields, double-digit in some cases, reflecting their depressed valuations. My approach is to hold onto a core of safe, but low-yielding blue chips, dabble in high-yielders here and there, tough it out on a few (now apparent) ill-timed value purchases of contract drillers and miners, and raise cash while waiting for better prices.