I’ve always been pretty open with my investment moves, for better or worse. I always let you know what I’ve recently purchased, usually within just a few days of buying. Doing so is part of my overall mission with Dividend Mantra, and that is to provide a live journal on the road to early financial independence.
I’ve telegraphed a few of my purchases before, usually listing what’s on my short list of stocks to buy before I purchase. I’m going to do that again today. I’m likely going to deploy some fresh capital later this week, as I will receive my monthly commission check from my employer this Thursday. I’ve put a few stocks on my watch list this month and I’ve narrowed down my options to just a few.
The DOW took a small dive yesterday, and was down as much as 300 points in early trading before rebounding significantly for a 100-point loss. I was actually hoping the markets would have stayed down significantly, as I prefer a drop before I make a purchase. Nothing like buying my favorite equities on sale!
I’m listing the equities I have my eye on for a couple different reasons. First, I like to show my readers everything I’m doing. Second, I’d like to know what you are interested in? Perhaps there is a great buy out there I haven’t noticed. As I usually make just one purchase per month, I like to make sure I’m doing the right thing.
Here’s my short watch list:
Aflac has been hammered lately. Over the last month, this stock has dropped 18.7%! Is Aflac really worth almost 20% less than it was just one month ago? Has the fundamentals of the business changed that much, that fast? I don’t think so, which is why this equity has caught my eye. I’m a fan of the insurance business, as I’ve written about several times. It’s trading for a P/E ratio of 8.9. The company carries no debt, earnings and revenue growth have both been strong. Dividend growth is very strong, with a payout ratio of just 31%. It has an entry yield of 3.54%, which is historically high for this company. It does face some headwinds, as most companies in the current economy do, and some of the investments in European sovereign debt give me pause…but I think the price is almost too good to pass up. According to Morningstar, it’s trading for a forward P/E ratio of just 5. Yes, 5.
Intel Corporation (INTC)
Intel is one of the largest tech companies in the world, and THE largest chipmaker on the planet. I’m generally not a huge fan of tech companies, but Intel has caught my eye a number of times, and I do have a position with this company. I purchased a lot of shares at a price over what it’s currently trading for, so this is an opportunity for me to average down on this position. Intel has, disappointingly, not transitioned to the mobile market, but that leaves a lot of room for growth. In the meantime it’s a solid value play as the dominant producer of chips for the PC market. It has a rock-solid entry yield of 4.3%, and it’s trading at a P/E ratio of 8.95. That’s a fairly low valuation for a company that is as dominant in its industry as Intel. Another huge company with no debt. That’s a positive in the economic climate we’re in where debt is 4-letter word literally and figuratively.
AT&T Inc. (T)
I’ve gone back and forth on AT&T. There is a little uncertainty around this company right now with lawsuits currently swirling around regarding the proposed acquisition of T-Mobile. You get what you see with it. It’s a dominant player in the telecom space and owns 100% of its mobile operations, which is something that can’t be said for Verizon (VZ). It’s trading for a P/E ratio of 8.42 and has a high entry yield of 6.18%. My concerns with investing in AT&T are the lack of growth catalysts. The mobile market here in the U.S. is pretty saturated, and the landline market is declining. I generally like telecoms abroad like Telefonica (TEF) and Vodafone (VOD) that have better potential for growth. Speaking of which, Vodafone wouldn’t make a bad investment! Is it too late to switch this pick? I’m just kidding! 🙂
PepsiCo, Inc. (PEP)
What can I say about this company that hasn’t already been said? A dominant snack food company that has a rock-solid beverage brand as well. It may not be trading at the low valuations some of the other picks are, but it’s a solid defensive move in this uncertain market. I’m confident that this Pepsi will continue to provide shareholders solid returns for many years into the future. It’s trading at a P/E ratio of 15.9 with an entry yield of 3.3%. I’ve purchased PEP in a couple different lots, and I believe my cost basis is somewhere around $64. It’s trading slightly below my cost basis, which would give me an opportunity to buy at a cheaper price relative to my own determined value. I really love this company long-term.
That’s my list. All four stocks are currently listed as 4-star valuations on Morningstar. This list is in order of what I’m most likely to buy on top.
What I’m most interested in is what’s on your list? The market has been very interesting lately, and it has provided plenty of opportunity. I love few things better than a wonderful opportunity!
Full disclosure: I’m long INTC, PEP, TEF.
So…what are you buying?
Thanks for reading.