Thursday, December 17, 2015

McDonalds vs. Stag Industrial

MCD has been on a nice run the past several months, its time to sell the entire position.  I bought MCD a couple of years back, and while the dividend is still decent, the price is severely overvalued for their earnings and projections.  Here is a FastGraph for MCD:

Today's price of around $117 and a PE of 24.1 are just too high.  Based on company forecasts for next year, and analyst projections beyond that, you can estimate the annual return of the stock for next few it is graphically, and it sucks:

If they hit their growth projections, fair value for the stock is lower than today, returning -2.19% annually.  Forget it.

I'm booking a 45% gain in the stock since my purchase, and redeploying the $15k or so elsewhere. It's only $15k because I trimmed MCD several months ago....

I've decided to start a position with 1/2 the proceeds in STAG Industrial, an industrial REIT.  STAG is undervalued today, and it's yielding 7.4%!

Here is a graph for STAG:

STAG will be my 4th REIT holding in the portfolio joining O, OHI, and DLR.  I consider this a good swap for MCD, better valuation and better yield.  Here is the projected returns for STAG:

Fair value estimates give an annual return of 22.76% to the end of 2017, and an aggregate return of 52%.  And due to the undervaluation today, this investment gives a reasonable margin of safety.



Friday, November 6, 2015

November 6, 2015 Update: VRX, OHI, CMI, WAG

I haven't posted since 9-22-15, when I sold HAL, and added VRX, AMGN.  While I haven't posted, I have made a few trades from overseas while traveling.  Just a side note, it's hard to stay on top of your portfolio while working full time/traveling.  Who knew?

Anyway, after reading several articles about VRX, I closed my modest 1/3 position a few days after I started the position for a loss of around $500.  Good move, as the stock has been pummeled down into the $75 range with a continuing stream of bad news.  Lesson learned (again), stop buying "growth" stocks with no dividend track record....

The AMGN purchase (long, growing dividend) was good, and I made add a bit more.  Today, there is a positive employment report, so high yield stocks are getting beat up pretty good...which is most of my stocks in the Chump IRA....why?  Because this means the fed will finally raise interest rates.  Doubtful.

I added some OHI and CMI today, both are down quite a bit.  I also closed WAG the other day on the news that they would be buying Rite Aid.  The stock was up to over $94/share, was already pretty pricey, and I figured it would correct once the news was digested...and it did, down over 10% since I closed the position.

Now I have some extra cash, a bit more than normal, so I'm looking for buys.....  stay tuned.


Tuesday, September 22, 2015

Selling HAL, Buying AMGN, VRX

The market (S&P 500) is down over 1.5% today as I write this....

Looking at the portfolio, I tend to be underweight life science, medical, healthcare, biotech...all areas that will benefit from an aging population (me included).  I'm also heavy in energy and industrial, so I decided to sell HAL today.  Nothing against HAL, except of course really low oil prices, which will prevent capital spending on oil exploration, which really hurts Halliburton for awhile.  That coupled with a pretty small dividend, I might as well move to something with more growth potential, heh? Anyway, believe it or not, I was up around 13% on my HAL investment (over 3 years, ugh).

Here is a breakdown of my "sectors" from Fidelity (before my trades today) :

So selling HAL (energy) and adding healthcare makes some sense... as would reducing the industrial exposure a bit, but they are just so well priced right now I can't resist, especially CMI....

In the health sector, I've been watching GILD, AMGN, ANTM, MCK, and VRX.  I already own all of these except VRX, GILD, ANTM, and MCK in my taxable stock account, and I've been waiting for a good entry point.  Hillary tweated today that she would like to punish drug companies, and even named VRX (Valeant), which sent the stock down over 5.5% today....hah, a good entry point is born.  Thank you Hillary (wow, did I really just say that?)

Started a position 1/3 at $116 ish.  I know, no dividend, but I really like the growth:

I also added a little to my AMGN position, which is now almost a full one.  Adding VRX to the Chump IRA is not ideal, I don't tend to like no-dividend stocks, but in this case, it's where the cash was, and I could use some growth.....

That's all for today.


Wednesday, August 26, 2015


I like MCK at these price levels...however the dividend is very small at around 0.6% yield, and not very stable.  That said, I'm starting a position in my taxable account, where I hold stocks that are perhaps a bit more speculative, and tend to have higher growth, lower dividend profiles.

Here is a FASTGraph:

Friday, August 21, 2015

Shopping Today...UNP, CMI, selling GE

Adding some UNP to earlier position...nice pricing today.  Also started a position in Cummins (CMI).  I've been watching CMI for several weeks, and I really like it at these levels.  I'm pretty heavy in industrials, so I sold my position in GE and replaced it with the CMI purchase.  I lose a little yield (3.7% down to 3.1%), but I gain diversification.   I added UTX awhile back, and I like that stock better than GE.....

More to follow...


Tuesday, August 4, 2015

Valuation Check of the Portfolio

Comparing normal PE ratios for the past 5 years, with current PE ratio for each holding gives a sense of valuation.  If a holding is well above it's normal 5 year PE, it's likely to revert to that average in the coming months/years.  Further, these stocks are usually more susceptible to a correction, and get hit harder when the overall market drops.  With this in mind, I mapped my holdings here:

Per these valuations, I recently trimmed MDT and WBA, which were larger holdings in the portfolio.  I will likely also trim MO and ALK in the coming days, which have also grown large in the portfolio.

On the buy side, I've added to UNP, UTX, and TUP recently....all in the green.

That's all for now,


Friday, July 31, 2015

Tweaking the Portfolio....DLR, XOM, TUP, UNP, WBA, MDT

Busy at work lately, but looking at the Chump IRA this week a little more closely.  First, I trimmed a couple of strong performers that are trading at 52 week highs, which is NOT a reason to trim, but are also looking very overvalued, which IS a reason to trim.  WBA and MDT, both of which have been great performers the past several years.  I trimmed both back to a full position in the portfolio, around $18k each.

On the buy side, I started a position in XOM in the low eighties, then added a bit more today around $ the company and dividend for the long haul.

I also added to technology REIT DLR.  I love DLR right now at these prices, and a 5.3% yield. Strong buy recommendation.

I'm also looking at TUP again.  I've suffered a huge 27% loss on the stock, but am going to add some shares at $58.50.  It has a nice dividend of 4.7%, which is flat this year, but wasn't cut.  I just read a good interview with the CEO, Rick Goings.... here it is:

I like his comments, his commitment to the dividend, and I think the company is a long term hold.  They are suffering this year from the strong dollar, but that should normalize and improve going forward.

UNP, another railroad, is looking attractive at recent depressed prices, and like in Monopoly, I want to own ALL the railroads, wide moats, great businesses.  With a new position in UNP, I now own three, CSX, NSC, and UNP.  Cool!

That's all for now,