ConAgra Foods Stock Analysis

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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: http://www.wisynco.com/conagra

Merck Stock Analysis

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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.

Intel Corporation Analysis

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Intel Corporation (INTC) has paid dividends now for 18+ years.  They have had at least 5 years of consecutive dividend increases and are a truly ruler in their area of the technology sector.

To start the analysis, I would like to look at their price: as of January 15th 2011 they are trading at $21.08. Their 52 week high is $24.37, giving a 13.5% chance of appreciation on the pricing giving its most recent high. Their low is just at $17.60 over the prior 52 weeks. Therefore, it is somewhere in between. Again, with Intel price is not necessarily the most important thing as you invest for cash flow, and their cash flow always grows every year.

Price to Earnings Ratio: INTC has a current 11.34 P/E ratio, well below the S&P average and according to Morning star is far below the 18 P/E for the industry average. Therefore, INT's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: My favorite part. Their current dividend yield when trading at $21.08 is 2.99%. It may be a smaller dividend yields than those analyzed in the past but I think with increases in their dividend and their strong performance and strength in their sector, which companies RARELY offer a yield, that this is more than good.   Also, their dividend yield growth rate is an absolute amazing 24.29% since their first issuance back in October of 1992! Therefore, you get (on average) a 24.29% increase yearly to your dividend cash flow from INTC. I also ask - how many jobs have you had that give you a 24.29% increase every year on average?

Payout Ratio: Their dividend is $0.63 per year and their EPS is $1.86. Therefore, 0.63/1.86 = 34%, actual a somewhat low ratio. Since it is in the technology sector which grows at an astounding rate, they tend to retain more earnings to grow, but obviously they have enough earnings to consistently raise that dividend, which is exactly what we want!

Conclusion: Intel is a great pick in your portfolio. They have a strength-hold on the technology division that they are in (Market Cap is over 117 Billion!).  They are a great stock to own for its cash flow as they have recorded past history of amazing returns on their stock price and once placed into a Dividend Reinvestment Plan account, you can increase your cash flow dramatically year after year. At the given price, I would start a position in Intel based on their dividend growth alone and it doesn't hurt how dominant they are!

-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.

My Dividend Portfolio as of 12/31/2010

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My Dividend Portfolio:

Symbol	Yield	Current ShP	Annual Income
PFE	4.57%	$17.51	42.70
CIM	16.79%	$4.11	31.15
NGG	6.31%	$44.38	49.66
V	0.85%	$70.38	3.35
HRB	5.04%	$11.91	9.60
ANH	13.86%	$7.00	7.76
HIMX	10.59%	$2.36	8.25
PRGN	5.83%	$3.43	2.00
SHMR	5.85%	$13.75	8.04
LMT	4.29%	$69.91	87.00
TOTAL	5.17%		249.51

This marks a 45.12% increase in my annual divided cash flow from my November 27th posting regarding my holdings.  This is due to a few reinvestments from stocks that I own and also a new addition of Lockheed Martin Corporation (LMT), which I purchased Thursday, December 30th.  I have set many goals for this year, to which I will use my recent action on Thursday as one for the new year.  I set goals with my friend who is an auditor in Chicago, who was in town and we decided to really set goals and strategize on how to accomplish these.

My goals for 2011:
Invest $7,500.00 (minimum) into DRIP (Dividend Reinvesting) stocks (Update: I have done $2,000)
Maximize my Roth IRA contributions of $5,000.00 for year 2011
Create other Passive Income Streams (which one can see from my Passive Income Online blog)
Start Positions in Speculative/Micro Cap stocks
Accomplish my education and certification goals for 2011 (MBA-Finance graduating May 2011 and CPA exam August 2011)

With these goals, more specifically the investment goals, I hope to add to my dividend income stream.  I will continue to reinvest my dividends from my holdings, which will thus provide me more shares of that stock, thus increasing my dividends annually (all else held constant such as a stable dividend etc).

Disclosure: I do not recommend any particular company. I am therefore Long on all stocks above, but do not provide this chart as a recommendation of any sort. Do your due diligence and find what is suitable for you. Thank You : )

You Can Always Upgrade

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Another great benefit to being a dividend investor is the ability to upgrade your cash flow from your holdings.  How does one "upgrade your cash flow"?  I will begin my lecture...

First, when I purchase a stock for its dividend cash flow, I will typically buy it when it is undervalued/cheap compared to its historical share prices, its industry and top competitors.  Therefore, I hope to get the prime time for the dividend cash flow.  As we know, dividend yield is calculated as this: Dividend Per Share/ Price Per Share.  Therefore, if you get $1.00 per year in Dividends and the price is $10 per share, you are yielding 10% off your stock.  If the stock jumps to $20 per share, you only yield 5%.  This segways into my next step.

So you have bought that great, consistently paying dividend-stock at a special undervalued price.  Now when that price per share starts to rise, the yield/interest is in reverse - it lowers (all else remaining constant, such as dividend payment).  In the meantime, you have noticed another great/sound company that has always paid a strong, consistent dividend that has had their stock hit due to an external factor the company couldn't control.  Therefore, their share price drops and their yield rises.  In fact, their yield now is higher than your price-appreciated stock you currently hold.


Therefore, you have a few options when it comes to dividend investing.  If you have extra cash to invest, you can obviously place it into that new company that you do not current own yet.  If you do not have access to extra funds, you therefore can do this: Sell your stock that you held, which had risen in share price thus has a lower yield.  Then, you can purchase the new company who has had their stock hit and now has a higher dividend yield, thus would provide you more cash flow.  This, in my book, is upgrading your cash flow.  An explanation of the benefits...

The benefits:  You have taken advantage of the stock appreciation from your first purchase.  Therefore, say the stock price you bought in with $1000 was at $10 per share, owning 100 shares that each produce $1 in dividends per year; thus giving you a $100 per year cash flow.  Then, the price jumped to $20, displaying a $2000 market value investment, still owning 100 shares, still having that $100 cash flow.  In the meantime XYZ corporation has had their stock plummet from $20 per share to $10 per share, with each share providing a $1 per year cash dividend.  Therefore, you sell your 100 shares for $2,000.00 (of course brokerage fees and either LT/ST capital gain taxes play in effect) and simultaneously buy XYZ Corporation stock for $10 per share.  This gives you 200 shares at $10 per share and increases your cash flow to $200 per year.  That is a 100 percent return/increase to your cash flow.

Now that is called Upgrading Your Cash Flow.  It does take guts, timing and investor preference to take these actions.  Please consult yourself, your advisers and any other sources of information before making a decision to do such an action as stated above.  I hope that this article has helped explain some techniques that are used in the market that one can possibly take advantage of.  Thanks for your attention and feel free to comment or message if you have any questions.

-Lanny B.


Disclosure: I do not recommend anything that you do not feel comfortable with, as this is your sole decision.  This is actual data, analysis, however I base no investor recommendation.  My direction is different from anyone else's.  Thank you for your understanding.


Picture Source: http://two.leasingnews.org/Placards/index.htm