November 26, 2011 Pick: Intel Corporation (NASDAQ: INTC)

As technology advances over the years, electronic devices such as computers and cell phones are getting smaller, slicker, and faster. Semiconductor chips are the heart and brain of these new technologies, and Intel Corporation (NASDAQ: INTC)  is the one of the world’s largest chip producers.  Technology will never stop advancing, so Intel will never stop producing more chips.

Intel has had a consistently growing dividend since 2003. Intel began paying dividends in 1992, but the yearly yield was usually less than one percent until the mid-2000’s.  The large dividend growth began in 2003, when Intel started paying a $.02 quarterly dividend yielding about .5% for the year.  Over the last 8 years, the quarterly dividend has been raised every year to today’s value of $.21 per quarter.  That is a 950% increase in dividend payments since 2003.  Today, Intel’s dividend yields 3.7%.  Warren Buffet and Benjamin Graham, two of the world’s most successful investors, have written in their books and said to investors that one of the keys to investing in the correct company is that it pays a consistently growing dividend that does not stop growing.  The dividend growth makes up for inflation and brings in more income, especially in a volatile market.

Analysts like Intel’s financial statements and numbers.  The Street Ratings report gives Intel an A+ buy rating with a price target of $28.11.  Also, the Argus Company  report gives Intel a twelve month buy rating and five year buy rating.  The reason rating companies like Intel so much is because of their growth.  Revenue grew 28.2% in the last quarter and 20.67% in the last 12 months.  Also, net income grew 17.36% in the last quarter and 20.78% in the last 12 months.  With a shaky economy over the last few years, these growth numbers are outstanding compared to competitors.  Intel’s two main competitors, Advanced Micro Devices (AMD) and Texas Instruments (TXN), do not come close to the cash flows and revenues of Intel.  Intel’s yearly revenue grew by at least 23% more than both competitors.  Also, Intel makes at least $37 billion more in yearly revenues  than both competitors.

Intel is safe and not volatile.  With a Beta of only 1.08, Intel is not very risky compared to the rest of the market.  Also, Intel has a 52-week range of $19.16 to $25.50.  The stock price does not jump around too much and cause you to lose money quickly.  Finally, in a year where the DOW, S&P 500, and NASDAQ are all in the red, Intel’s stock price has grown 6.51%.

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November 20, 2011 Advice

I know this post is different than the past few weeks, but this is something that needs to be said.  The stock market has obviously been extremely volatile and weak lately especially with global debt crises, but my best advice is to stay invested.  If anything, these next few weeks will be a great time to buy in many positions I previously highlighted because the prices are so low and stocks will be undervalued.  The best way to beat a shaky market like today’s is to invest in stocks with a low Beta, high dividend, and small 52-week price range to avoid losses.  Philip Morris International and AstraZeneca are two stocks in this category.  Selling off is not the answer to fixing our economy and financial markets; buy more and stay invested.  Go Dawgs

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November 13, 2011 Pick: EZCorp, Inc. (NASDAQ: EZPW)

With today’s shaky economies and high unemployment rates in the last few years, U.S citizens and people all over the world seem to be short on cash.  EZCorp (NASDAQ: EZPW), the largest pawn shop operator in the world by market capitalization, offers specialty consumer financial services through their pawn shops to help people when they are in need of cash.  They offer pawn loans backed by tangible assets, signature loans, and payday loans to people in need of quick cash to pay bills, car payments, etc.  The short-term loan industry is growing rapidly and EZCorp is a great growth stock to invest in.

Outstanding fourth quarter and fiscal year earnings report puts confidence in stock. In an extremely tough quarter from July to September, EZCorp performed very well compared to its industry competitors and the whole financials sector.  EZCorp reported quarter net income of $36.4 million, a 31% increase since the same quarter in 2010.  Quarter net revenue up to $146.8 million, which is up 22% since same quarter in 2010 as well.  Also in fiscal 2011, EZCorp added 44 pawn stores across the United States to a total of 396 pawn stores, which is an 11% increase in footprint.  EZCorp also reported earnings of $0.72 per share, a 29% increase.

Analysts are confident in EZCorp and their current growth and future growth opportunities. Standard and Poor’s gave EZPW a B+ buy rating and a fair value rank of 4 (out of 5).  The Street Ratings graded EZPW as a B buy with a 12-month price target of $36.67.  The stock has a 52-week price range of $24.17 to $38.66 and is currently trading at a price of $29.78.  This shows the stock has a lot of room to grow by at least 10% in the next year.  With Thanksgiving and Christmas coming up soon, people are going to need a lot of cash quickly to pay for usual expenses and holiday related expenses as well.

EZCorp does not pay a dividend, but the stock price is almost guaranteed to appreciate in over the next year, especially on the way out of the recession.

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November 6, 2011 Pick: UnitedHealth Group Inc. (NYSE: UNH)

UnitedHealth Group Incorporated (NYSE: UNH) is a diversified health and well-being company.  You might recognize the name because it is the parent company of UnitedHealthcare, one of the largest health insurance companies in the United States.  After market close Friday, 11/4, UNH’s stock price is at $45.58.  The company’s market cap is 49.05 billion dollars and its 52-week range is $34.50 to $53.50.

Solid financial statements. UnitedHealth Group’s third quarter earnings were released a few weeks ago and the numbers were strong.  UNH reported third quarter revenues of $25.3 billion, which was an increase of $1.6 billion or 7% since 2010 third quarter.  Net earnings were $1.3 billion or $1.17 per share, which was an increase of 3 cents since 2010 third quarter.  Also, UNH repurchased 18 million shares for $839 million in the third quarter so the value of each stock should raise significantly by the end of 2011.  Finally, operating cash flows increased $210 million over the last year.  Consistent growth in these categories is a recipe for price appreciation over the next year.

UnitedHealthcare insurance segment keeps growing. The Medicaid segment gained 55,000 new members in the third quarter, which is an increase of 165,000 new members year-to-date.  UNH has been one of the strongest health companies throughout the recession and recovery process.  As the population keeps increasing in the United States and more people need healthcare, UNH will be a popular choice and keep growing along with its stock price.

Positive outlook for 2012 and future. With a P/E ratio of 10.13, the health company is undervalued and still has plenty of room to grow. UNH has a 12-month price target of $52.00 according to Standard and Poor’s.  Analysts expect yearly earnings to grow from $4.492 per share in 2011 to $4.796 per share in 2012.  Finally, UNH pays a consistent $.16 quarterly dividend, which gives a small but helpful 1.43% dividend yield for the year.

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October 31, 2011 Pick: AstraZeneca

AstraZeneca (NYSE: AZN) is a biopharmaceutical company that discovers, develops, and commercializes prescription medicines across the entire world.  They work in six different areas of healthcare including cardiovascular, gastrointestinal, infection, neuroscience, oncology, and respiratory/inflammation. The antibiotics and medicines created by AstraZeneca are popular all over the world and the company operates in over 100 countries.  People are always getting sick across the world and need medicine to get healthy.  Thus, I believe AstraZeneca’s superior products will be chosen over other competitors and help increase shareholder value.

AstraZeneca pays a high dividend.  After market close today, Monday 10/31/11,  AstraZeneca’s stock finished at $47.91.  The biopharmaceutical company pays a consistently high semi-annual dividend of $.85, which is a 5.64% dividend yield for the fiscal year.  In a volatile market, a company with a high dividend is a safe play and brings in return even without capital gains.

Healthcare is always a safe investment. Healthcare has historically been a safe and secure investment.  People will always be getting sick or need medical attention, thus medicine is necessary and consumers will buy medical products.  AstraZeneca makes medicine for heart problems and respiratory problems primarily.  These medical problems have been around forever and people need the medicine for a cure.

AstraZeneca is undervalued and still has room for price appreciation. Currently, their P/E ratio is at 6.5, which is fairly low compared to other competitors including Pfizer (P/E of 18.39), Abbott Laboratories (P/E of 18.29) and GlaxoSmithKline (P/E of 21.10).  As you can see, AstraZeneca is a very undervalued company in the healthcare sector and has room to grow.  Their 52-week price range is 40.89-52.54 and the price still has about 10% to grow until it hits a year high.

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October 24, 2011 Pick: Philip Morris International Inc. (NYSE: PM)

Philip Morris International Inc. (NYSE: PM) is one of the world’s most popular producers and sellers of tobacco products that only does business outside of the United States.  As a large holding company, you may have heard of many of their product brands which include Marlboro, Parliament, Virginia Slims and Chesterfield. Philip Morris International sells its products in over 180 countries that cover all seven continents. But what makes this company’s stock a smart buy?

Philip Morris has a consistently high dividend.  As of today, PM pays a quarterly dividend of $.77, which is a 4.4% dividend yield each year.  So even without capital appreciation, you make a safe 4.4% return on your investment in an extremely volatile market.  Their last dividend payment of the fiscal year is in December, so it is smart to buy now while their is still room for the price to grow.  Also, the quarterly dividend price has been consistently increasing since mid-2008.  The first payment in 2008 was $.46 per quarter, and has steadily increased by at least $.04 every four quarters to its current price of $.77.

Strong earnings and outperforms the DOW and S&P 500.  Philip Morris had its third quarter earnings report on October 20, 2011, and the numbers showed a successful quarter for the tobacco company.  The company posted high third quarter profits of $2.38 billion  ($1.35 per share) compared to a year ago when profits were $1.82 billion ($.99 per share), which is a 31% increase.  Much of this success is due to the emerging Asian markets whose demand for tobacco products has increased significantly in the last few years, especially in China and India.  Philip Morris is also enjoying a year-to-day price increase of $11.47, a 19.6% appreciation that beats both the DOW and S&P 500 who are just now breaking even in 2011.  Also, Morgan Stanley recently raised its price target for Philip Morris to $78 and investors are quick to buy when a price target is increased.

Emerging Asian markets.  World demand for cigarettes has not been increasing over the last few years, but the emerging Asian market’s demand has helped Philip Morris thrive lately.  There has been a 24.8% gain in the company’s cigarette shipments to Asia in the past year and data shows that Asian countries bring in 40% of Philip Morris’ total revenue.  With the rapidly growing economies of China and India, Philip Morris can only prosper more in Asia and continue growing shareholder value.

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October 17, 2011 Pick: The Coca-Cola Company (NYSE: KO)

My pick for this week is The Coca-Cola Company (NYSE: KO), which is one of the 30 companies featured on the DOW Jones Industrial Average Index. Coca-Cola is one of the largest beverage companies in the entire world and its products are consumed and enjoyed by millions of people in over 100 countries.  Coca-Cola currently owns over 500 different kinds of beverage brands that include sodas, waters, energy drinks, teas, and sport performance drinks.  Coca-Cola is ranked as the most popular and recognizable brand name in the entire world.  The popularity of its brands make Coca-Cola an extremely profitable company that is a safe and secure investment, but it is not the only reason.

3rd quarter earnings report to be released Tuesday (10/18) before market open.  Coca-Cola Company has had impressive financial statements over the past few months and years, which often leads to an appreciating price.  As earnings come out tomorrow, analysts predict Coca-Cola earnings will be at $1.02 per share for the quarter, versus $.92 per share the same quarter last year. The revenues for Coca-Cola have increased 46.79% since the last quarter and increased 32.89% over the past 12 months.  Also, net income has increased 18.06% since the last quarter and 68.72% over the past 12 months.  Coca-Cola’s 2nd quarter return on equity was 35.64%, which shows that the company is successfully gaining profit from equities shareholders own.  The company also has very little debt and an extremely low debt/equity ratio of .43, which tells us that Coca-Cola is not using a lot of debt to finance its assets and run the company.


Undervalued company with small growth potential.
Coca-Cola’s current P/E ratio is 12.52 after market close today.  Their P/E ratio is lower than both the beverage industry average P/E (15.92) and the average P/E of the S&P 500 (14.35).  These are signs of an extremely undervalued company whose earnings show their stock is worth a lot more than the current price of $67.00. Coca-Cola also has a Beta of .59, so they are not a very volatile company and are a safe investment.  When the stock price appreciates, it will be in small increments. This is not a bad quality because Coca-Cola has a historically consistent quarterly dividend.  The dividend pays $.47 quarterly and yields 2.81% per year.

Past consistent performance. The Coca-Cola Company has been an outperforming stock over the last few years.  Since October 2007, the DOW has decreased by 4.71%, while Coca-Cola has increased by 52.20%.  For the current year, Coca-Cola is one of only 12 stocks on the DOW 30 that are positive for year to the day. Before the housing bubble burst and recession from 2007-2009, Coca-Cola’s stock price was consistently rising. Then after the recession ended, their price consistently increased all the way up to today.
Overall, The Coca-Cola Company has been proven a prosperous corporation and a safe and smart investment.  Shareholders feel comfortable keeping their money in the market with Coca-Cola no matter the conditions.

 

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