Saturday, February 26, 2011

ConAgra Foods Stock Analysis

ConAgra Foods Inc (CAG) is a very large consumer and commercial food manufacturer for products such as Hunt's, Slim Jim, Orville Redenbacher popcorn and many others.  This is another company I wanted to analyze as food prices begin to rise, along with oil and precious metals.  Now lets begin the analysis.

P/E Ratio: Their current share price is $23.00 flat with a $1.54 EPS according to Google Finance.  This brings us to a (23/1.54) 14.94 P/E ratio, which is under my 15 on average that I like.  Compared to the S&P 500, ConAgra is undervalued, according to this metric.  On Morning star's website, the industry average is 17 for the market they specifically operate in, thus ConAgra is currently undervalued against it's current competition.  Thumbs on this metric.

Capital Appreciation: Solely based on the prior 52 weeks, ConAgra's high is $26.32, which breaks down to ((26.32-23)/23) 14.4% upside possibility.  Again, this would just be an additive to the main focus of my blog = their divided.

Dividend Yield & Payout Ratio: Their dividend per year, currently stands at (.23*4) $0.92 per share.  The yield, therefore, is (0.92/23) exactly at 4%.  4% is extremely solid, much higher than what I like and is very attractive.  Their payout ratio is 0.92/1.54 = 59.74%.  Boom, just barely under my 60% ceiling on the average that I like to see.  Also, their annualized dividend growth (according to my sources) is 9.23% and they have been paying a dividend since 1985; over 25 years of dividends!  The yield, ratio and growth rate receive another thumbs up in my book.

Conclusion: For the long-term investor, this seems like a stock priced to buy at the moment.  With rising food prices, money flowing into the market and a track record of dividends - proves it could be a staple in a portfolio.  Their dividend yield is exceptionally attractive, they have potential upside with a very acceptable level of payout on their earnings, I see this being a stock to fit well in any portfolio.  I can see the price of ConAgra to hit above $26 range in 3-4 months.  I suggest you do your own analysis and consult an advisor or other sources before making a decision.  Thank you!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Image Documentation:

Wednesday, February 23, 2011

Monsanto Stock Analysis

Monsanto (MON) is involved the agricultural industry and was spoken to me by my good friend in Chicago.  He is very excited about this company, given the economic climate circumstances with food and agricultural products current and upcoming rise in price.

P/E Ratio: Current Price of $70.91 with earning per share of $2.05.  This P/E equates out to 70.91/2.05 = 34.59.  This looks extremely high, I know.  The market has brought this down a few dollars as well, hopefully it continues.  HOWEVER, the industry average according to Morning Star is 34.3.  Therefore, this industry may have a higher price relative to their earnings.  I would like to see the price tick down a bit more though : )

Price Appreciation Potential: Their 52 week high is 77.28, providing a ((77.28-70.91)/70.91) 9% potential capital appreciation.  Their low is $44.61, showing they have come from a loooong way.  It's tough to dictate this, as food prices are going up and this could push the price over their high.  However, I haven't done that thorough of an analysis to decide.  I will reiterate - I'd like to see this come down a bit.

Dividend Yield & Payout: Their dividend payout per year is $1.12 per share or (1.12/70.91) 1.58%.  This yield is under the S&P on average.  If the price came down, this would push the yield up. Their payout ratio is (1.12/2.05) 54.63%.  It is perfectly in the range that I like to see.  That yield could be a little higher, but that is me being selfish I assume.  They have paid dividends for 10 years and based on a few resources, they have increased dividends by 20% annually.  Not too shabby on that end.

Conclusion: Things I like: They are at their average for P/E.  The Industry is going in an upward direction.  Dividend Payout is nice.  They do pay a dividend yield with an annual increase of 20% on average.  Thins I dislike: Uneasy with an appropriate conclusion on that P/E.  It is still high for my taste and would like price to creep down.  With a price decrease, their yield would also be more attractive.  However, I haven't done an intense analysis on Monsanto and may do so in the upcoming hours/days.

-Lanny B

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Tuesday, February 22, 2011

PPL Corp Dividend Analysis

Today on my agenda is PPL Corporation (PPL), a Utility Company based in Pennsylvania and also is involved internationally.  One reason why I like the Utility Industry is that we always will be using some sort of energy to carry out our daily activities, I mean what is going to brew that coffee as you are reading my blog!?

To begin - P/E Ratio: Price currently as of market close is $25.02 and their earnings are $2.23 per share, according to my pals at Google Finance.  This equates out to a: $25.02/2.23 = 11.22, well under the S&P 500 average.  This tells me that this utility company may be undervalued.  Morning has shown that the industry average P/E is 11.1.  Therefore, they are right on with the industry.  There may be other companies that are more undervalued than others, which would need more analysis.

Appreciation from current price: Their 52 week high is $30.05.  Therefore, based on that historical fact and with them trading at $25.02, there is ((30.05-25.02)/25.02) = 20.1% appreciation possibility with the stock.

Dividend Yield & Payout Ratio:  Their dividend payout per year currently stands at (0.35*4) $1.40 annually per share.  $1.40/$25.02 = 5.60%.  This yield is very attractive and offers a great DRIP opportunity.  Most utility companies do offer a generous yield, and this one doesn't stray to far from the tree.  The payout ratio breaks down to 1.4/2.23 = another 63%er.  This isn't too alarming, just out of my 60% range.  Most utility companies pass on most of their earnings down to their investors, therefore this doesn't "turn me off" in the least bit, and they have been doing so for over 25 years.

Conclusion: If you don't own a utility company in your portfolio, this could be a great company to look at.  With usage of energy always being there and also an international protection, this could be a long-term stock one would hold.  They offer a great dividend yield and I believe they have room for appreciation.  Again, consult your own analysis and advisers to see if it fits your strategy.

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Oil and Food Companies

Intelligent Conversations...

I had a very intelligent conversation with an analyst at work yesterday and he proposed that we move into oil, food and precious metals over this time period.  I believe he is right.  I am making this post to see what all the viewers believe about this.  With money flooding into the market/economy, it is weakening the dollar and pushing up prices on our necessary items, such as food and oil.

What companies do you believe to be undervalued in the food and oil industry that have solid dividend yields (Preferably over 3 percent, with a good track record)?  Companies like Exxon, TOTAL, Chevron, Smuckers, Kellogg, PG and the like?  Also - Do you like SLV for silver or is there silver companies that investors are enjoying the benefits of currently?

Lastly - what do YOU all thing is happening with this market currently?  What strategies are you all implementing into your portfolios currently?  Do you believe in "active-trading"?  I will look forward to comments, emails and the like!


Lanny B.

Lance Update

Lance (LNCE) NOW! Up-Date: Lance is currently trading at $17.43 (down 88 cents or 4.78%) and has currently dropped to provide a yield now of 3.67%, up .07% since my post on Sunday.

Reason why I post this - yield is higher, making it a smidge more attractive.  I'd like it to still come down more before I again re-evaluate the dividend.  I wanted to just keep everyone "in-the-know" on this, as it is a giant decline.

Thank you. - Lanny B.

Sunday, February 20, 2011

Lance Dividend Analysis

Lance, Inc. (LNCE) is in the consumer industry, food staple manufacturer.  They make food snacks like the peanutbutter and honey crackers that I am eating right now, in fact.  They are working with over a $1B in market capitalization and go up against the big guns such as J&J Snack foods, Kraft, Kellogg and that sort.  Smuckers may also be a huge competitor.  During difficult times, this company would be a very good company to own, in my opinion due to the demand for cheaper snack foods and a solid dividend.  Let us begin the simple analysis.

P/E Ratio: Lance's earnings per share is $1.01 according to Google Finance.  To describe how this is derived, you take the Net Income and divide it by the number of shares outstanding.  The current share price of Lance, as of February 20, 2011, is $18.31.  Therefore, the P/E is - 18.31/1.01 = 18.13.  This is higher than what I like, typically under 15.  This shows that they are not undervalued when compared to the overall market as a whole.  If the share price came down and/or the earnings increased, the P/E would decrease, making this a more attractive stock.  Also, Morning star shows the Industry Average to be 17.4 P/E, therefore Lance is a tad higher than that as well; appearing that there may be more attractive companies/stocks within that industry.

Dividend Yield: Lance's Dividend per quarter stands at 16 cents per quarter or 64 cents for the year.  Thus, 0.64/18.31 = roughly 3.5%.  This is pretty good and much higher than the S&P 500 on average. What's good with stocks, is that they usually increase with inflation, therefore they tend to be more attractive than bonds given their fairly comparable yields.  Lance also paid a special cash distribution in December of 2010 for $3.75!

Dividend Payout Ratio and Growth Rates:  Since their dividend per year is 64 cents and their earnings per share is 1.01, this gives us .64/1.01 = 63.36% payout ratio.  This is just a smidge higher than my usual range of 40-60%, but doesn't alarm me too much as it is just a small amount.  According to my analysis and sources, their dividend growth rate is in negative terms of (1.3%); they used to pay a higher dividend in the pre-2000's but cut it down to 16 cents a share from 24.  This obviously doesn't attract investors.  They have paid dividends for roughly 21 years, which is a good sign.

Conclusion: Lance is a strong company, but there are red flags based on the analysis TODAY.  They have a higher P/E than their industry average and S&P 500 average, and they haven't increased their dividend in over 10 years.  They do, however, provide a solid 3.5% yield currently; higher than most companies.  As of now, I will not add or recommend a position.  If Lance drops in price, and/or increases dividend, and has a solid 2011 year - I will further evaluate.

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. Thank you for your understanding.

Wednesday, February 2, 2011

Merck Stock Analysis

Merck (MRK) has paid dividends, as crazy as it sounds, for over 40 years.  They are in a highly competitive industry - HealthCare and more specifically - Pharmaceuticals.  The industry can be very confusing with expiring patents, regulation issues, recalls on products etc.  The pipeline for a product to come to fruition also is very long.  However, I have noticed they all enjoy paying solid dividends.  

As always, lets start with price: as of the close on February 2nd 2011 they finished at $33.82.  Their 52 week high is $39.72, with a low of $30.70.  Therefore, based on their high - they are 14.9% away from it (39.72-33.82)/39.72 is what I used.  They are 3 bucks above their low, in a way showing there is more upside than downside currently.  However, that could be my opinion, which may be different from others. 

Price to Earnings Ratio: MRK has a current 12.1 P/E ratio, below the S&P average and according to Morning star is below the 14 average for the industry it is in.  Somewhat cheaper than the industry, Morningstar can also show you more ratios that it may be better or worse than the industry.  

Dividend Yield: Merck currently has a $1.52 annual dividend.  Thus, $1.52/$33.82 = roughly 4.5% yield.  Not too shabby.  Currently yields higher than Pfizer (PFE) and Abbot Lab. (ABT), their two big competitors.  One downside that I noticed - they did not raise their dividend last year.  One positive - they didn't slice/cut their dividend during the recession.  They still do have a track record of increasing their yield, I would lookout to see what they do with their dividend this year.  Their annual growth rate in their dividend is 10.37%, again this including a 0 increase for 2010.  I'm curious to see what they do this year. 

Payout Ratio: Their dividend is $1.52 per year and their EPS (Earnings Per Share) is $2.79.  Therefore, 1.52/2.79 = 54.5%, which is in my range of the 40-60% that I like.  It's almost smack dead in the middle, displaying they give more than half of their current earnings back to their shareholders and keep 45.5% for future growth in Research and Development (a typical large expense for pharmaceutical companies).  

Conclusion: Merck is one of the big players in the pharmaceutical industry, capturing more than 60Billion in market capitalization (Shares outstanding X Share price).  With solid earnings, solid dividend growth and a very median payout ratio - they seem very attractive, with a P/E ratio lower than the industry.  However, I want to see what Merck plans on doing with their dividend this year, as I do not want to see another 0 dividend increase.  I plan on waiting to see what they do with that issue. If you are looking for a pharmaceutical company or someone in the healthcare industry - you must include Merck in your analysis/options.  

I recommend doing your own due diligence before purchasing any investment, however, and I do not make a recommendation to anyone - I simply describe how I feel about the topic at hand.  Thanks for reading!

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.