Saturday, January 25, 2014

"A 3% correction in the market on Thursday and Friday brings an opportunity to add the top biotech company in the world, AMGEN, (AMGN), to your long term stock portfolio."

Dow Jones Industrial Average 15,879 (Down Big!) Week ending 01-24-2014

Well now, that was one ugly end of the week!
I guess it would not really be a market if stocks only went up and never went down. I would say here that if you have stocks with a good long term growth potential that I would stick with them, and hold them. They will be the stocks that come back after the storm blows over.

With that said, the flip side is that with these sell-offs in stocks comes an opportunity to add some quality names to your IRA and long term investments. One name that I identified on Friday is AMGEN, (Symbol AMGN, $119.31) which was down 4 points on Friday. 

AMGN gets overshadowed in the media by its glitzy brethren Celgene, Gilead, Biogen-IDEC and Regeneron.  But make no mistake, this company which is a little more mature and pays a 2.05% dividend, had a 1 year trailing twelve months stock value change of 44.38% and that is AFTER the sell off on Friday, so it had been up around a 50% total return last year.

Besides, you know that a company that sponsors a world class bicycle race is not going to come in last place!

AMGEN by the numbers: Revenues last year were $18 Billion. The PEG ratio is currently 1.423 and the Return on Equity is 24.05%. 
These numbers fit well with Freewilly's investment criteria for PEG and ROE.

AMGEN Helix Pedestrian Bridge
AMGEN operates at a Gross Margin of 83.40%. The quarterly year over year diluted earnings growth is 26.95%. As of last quarter, the company had $22.56 Billion dollars in Cash and Investments. 

AMGEN is projecting $7.47 per share in earnings for 2014 and $8.17 per share looking ahead to 2015 with a Current PE ratio of 18.85 and a future PE projected at a reasonable 15.20. Year over year Revenue growth is 9.93%.

AMGEN had purchased ONYX Pharmaceuticals back in August 2013 to add to their developing pipeline of medicines. AMGEN is currently the world's largest Biotechnology company. AMGEN employs 18,000 people.

AMGEN as a company has total assets of 57.07 Billion dollars. In the last 12 twelve months more INSIDERS have been buying than selling (66/65).

It is my opinion that this stock can get to a price of 136 by the end of the year, a 15% gain. Add that to a 2% dividend and that gives you a 17% Total Return. I think that will reflect as a good return number at the end of 2014 and with very little inflation.

So don't get shook out of your boots!  Be smart and be a stock picker this year. Make sure to mix in some those quality stocks that pay a dividend to go along with your mega-growth stocks.  You'll sleep better at night.

Let's see what happens this week, with lots of companies reporting in their earnings.

Best Regards,


Saturday, January 18, 2014

"A couple of oil stock names to lubricate the gears of your financial wealth machine. Laying out a strategic energy deployment in your diversified portfolio"

Dow Jones Industrial Average 16,437.05 (Down) Week ending 01-10-2014
Dow Jones Industrial Average 16,459.00 (UP ) Week ending 01-17-2014

Good morning fellow amateur retail stock investors. This was an interesting and disturbing week in the stock market with Royal Dutch Shell reporting quarterly earnings down because of the rising cost to the major oil companies to find and deliver oil. The disturbing part was the volatility in stock names such as GE, BAC and ISRG as they reporting earnings. Some stocks that were at the top of the IBD rankings such as Nu Skin Enterprises (NUS) got blown up like stepping on a land mine on a single report from China, dropping from $140.00 down to $79.85 in 3 days. Fear not, you still need to be invested in 2014. 

I would start your energy investment strategy off by purchasing the stock of
Seadrill Ltd. (Symbol SDRL, $40.12). SDRL pays a dividend out of 9.47% for each share held. That equated to $2.67 Billion dollars last quarter to shareholders. The Return on Equity for the company is 36.91% and the PEG ratio is 0.0513. You can't ask for better numbers than that. At some point, that dividend rate will need to be lowered so that they can deploy that capital towards additional ships and rigs, but until then, enjoy the 9.47% dividend.

The Royal Dutch Shell news about the major oil companies' costs rising so much made me think that those companies may find it easier and less expensive to just buy other Oil companies. How about Continental Resources Inc. (Symbol CLR, $108.46) as an example?... America's pride in the US energy renaissance, who only has a current Market Capitalization of 20.15 Billion. Peanuts to a major oil company. And, this is a growth story. Revenue, YOY growth is 70.31%.  The PEG ratio is 0.74 and the Return on Equity is 27.03%.  I love this as a growth stock. Earnings per share for 2014 look like $5.67 per share and for 2015 is projecting at $7.23 per share. The 1 year twelve month trailing gain in the stock is 32.16%. I have current revenue at $3.324 Billion dollars. This should have probably been in my 14 for 2014 instead of Holly Frontier (HFC), an oil refiner out there in the interior USA. Did I mention that I like this stock (CLR)?!

One more for you, in case you just need to sleep at night and need a substitute for those floundering short term bond investments.  BP PLC ADS (Symbol BP, $48.20) is an investment the CFO, (Mark Panetta), of the company I work for likes. He is the best person in the world I know with numbers, so you can feel pretty safe with this one. The stock is still recovering from the big Gulf of Mexico oil spill and that has created the value pricing here on the stock.  Your dividend yield here, that is perfectly safe, is 4.73%.

BP has a Return on Equity of 19.57%.  The PEG Ratio is 0.68. The 1 year trailing twelve month gain in the stock is 9.45%. Add that to your 4.73% dividend and your safe return is 14.18%. Pretty simple. Any questions? The twelve month trailing Revenues for the company is $400.9 Billion dollars. THAT, (emphasis), is a major Oil company.

Below, some of the handy work of the editor, whose creativity and command of the English language help this blog venue immensely. Thank you, Molly Wilson.

Yours Faithfully,


Sunday, January 5, 2014

"I called a local radio show to try to win a hat for answering a stock trivia question. I got the question wrong, but the radio show triggered a lot of good investment ideas."

Dow Jones Industrial Average 16,469.99 (Down) Week ending 01-03-2014

I listen to the "BIG Money Show" on Saturday mornings on the AM radio station 1210 WPHT in Philadelphia, PA to hear stock talk conversation. The regular host, Steve Cordasco, was off and Joe Besecker from Emerald Asset Management was hosting the show this week.

Joe put a stock trivia question out there asking, "What Pennsylvania company stock with three letters, (NYSE stock), has had a positive stock return for the last 14 years?" He also gave a second clue that it was a Western Pennsylvania company.

        I decided to give a call over to the station. I was sure the company was symbol PPG, Pittsburgh Plate Glass Company.

Joe Besecker
The only problem was that the girl right before me guessed PPG, and the answer was wrong! So I was suddenly up next and had to scramble and the only thing I could think of was to throw out the name "Eaton", (symbol ETN). But alas, that was also wrong, (but not a bad guess). I did not even get a chance to give a shameless plug for my Freewilly's stockpicker blog! It turns out the answer was Wabtec, up 14 years.

Not all was lost, though, since the show brought to light many good investment names for buying in 2014. Here is a short list of good solid companies to invest in for the long term in 2014.

Wabtec Corporation - (Symbol WAB) Westinghouse Air Brake Technologies -
 PEG - 1.192   ROE - 20.98%

       B/E Aerospace - (Symbol BEAV)
       PEG - 0.418    ROE - 15.45%

   PPG Industries Inc. (Symbol PPG) - mentioned in this blog in January 2012 also.

 PEG - 0.0334    ROE  69.76%

These are the kinds of industrial names that are growing their businesses and are safe places for the long term investor to put money to work in this year.

 If you are a reader here at this blog, you remember that I like stocks with PEG ratios below 1.5 and that also have ROEs of 15% plus.

 "Metrolinx locomotive repowered by Wabtec new engines and propulsion systems"

 So, don't get "Twittered!"  Buy stocks in businesses that make sense and make money.


Thursday, January 2, 2014

"Everyone starts out the new year making resolutions to become more healthy. The Hain Celestial Group, Inc. (HAIN) has made a big business out of eating healthy, and the trends seem to be moving in their favor."

Dow Jones Industrial Average 16,478.41 (UP) Week ending 12-27-2013

 Happy New Year. Warren Buffett says that you should not invest in things that you do not know about. Well, I went to a brunch on New Year's day and there were extensive conversations about "organic" and "sustainable" foods to eat, and even discussions about "antibiotics" and "fertilizers." So, although I have no expertise in this area, evidently everyone else in the world has been studying this subject intensively. How does this shake out into an investment opportunity?

According to Clare O'Connor, Forbes magazine Staff, in her August 12th Forbes article,            "$3.5 Billion Organic Giant Hain Celestial is Whole Foods' Biggest Supplier".

Link to Clare's full Forbes article .

Clare also mentions in her article that "the company counts famed activist investor Carl Icahn as its largest single shareholder, who owns just under 15%."  (Icahn did move his position over to Jefferies LLC in September 2013).  OK, so now you have peaked my interest.

The Hain Celestial Group, Inc. (Symbol HAIN, $89.38) is a company that has a one year rise of 68.89% in stock price for the trailing 12 months. This would juice up any portfolio's health.
HAIN is one of my "14 for 2014" stock picks.

Earnings per share diluted year over year was 62.86%. The PEG ratio on the stock, that is the formula of "price/earnings to growth ratio", is 0.765. This is well under my top end threshold of 1.50 PEG ratio, so to me, this stock price is inexpensive compared to its growth.
The ROE or Return on Equity of the company is 11.02, which is a little below the 15% ROE that I like to see, but with Carl Icahn involved here, that number will likely improve.

The 2013 earnings per share are projected out at $3.02 per share and the 2014 earnings per share are looking like $3.48 per share. Revenues for the company for the year 2013 were 1.852 Billion so this stock is a "Baby" Mid Cap stock and should have plenty of growth ahead of it.

The Market Capitalization on the stock is $4.283 Billion, so it is sized correctly if a suitor like Whole Foods Inc. had an interest in acquiring it. The Enterprise Value of the company is $4.871 Billion. The current forward PE on the stock is 25.55.

Insider purchasing looks favorable with more purchases than sells. Analyst ratings are 15 BUY recommendations and 3 Hold recommendations. The Current Ratio for the stock is 2.10 to 1.

There are 47.79 Millions shares outstanding of this New York based stock.  

"Bjork hitch-hiking with Teddy bear"

So if you need to hitch a ride this year with a stock that is going to take you a long way, Hain Celestial Group is probably a good way to go. Wait until things settle out a little bit in these first two trading weeks of the market year.