TIMKEN - keeping the world in motion with its bearings, gears and power transmission products. A family business that runs smoothly and profitably.

Dow Jones Industrial Average  26, 599.96  (UP) Week ending 06/28/2019
S & P 500 - 2941.76

TIMKEN (Symbol TKR, $51.34) is a company we do not talk or think about much, but their products have a profound effect on everything around us. TIMKEN designs a growing portfolio of engineered bearings and power transmission
products. Agriculture, Automotive, Aerospace, Commercial vehicles, Construction, Defense, Energy, Food and Beverage, Industrial machinery, Metals, Mining, Outdoor Power Equipment, Rail and Wind Turbines all use TIMKEN products.

This company is ranked #1 in its area on IBD, (Investors Business Daily),  with a Rank 91 and A rating in their category. The company is very quietly up YTD 37.57% and pays a solid 2.18% dividend.

Current earning projections for the year are $5.25 with a PE of 9.58. Next years earnings for 2020 are projected at $5.62 and a Forward PE of 9.03, very reasonable in this market. 

2018 sales growth was 19.2%. Recent quarter over quarter sales were up 10.90%. (From one quarter to the next). The company did $3.58 Billion dollars in sales last year. 

On the financial side, the company has a Current Ratio of 2.53 and a very solid Return on Equity of 20.04.  I think even Warren Buffett and Charlie Munger would like this stock and its businesses, but probably would not be able to gain a large enough position in the stock with the market cap of only $4 Billion dollars. Good for us retail value investors.  

TIMKEN , buy it Monday to kick off the second half of your investing year.  The first half was sweet, with my 401K account being up 17.89% with a nice mix of stocks and bonds.

Enjoy your summer and 4th of July holiday in the USA.

Sincere regards,

Freewilly 

Gulfport Energy - Oppenheimer downgraded it with a target price of 14. The stock is at $6.67 and is trading at 0.34% of book value. The company has no debt and can buy back shares. I think I am getting the hang of this value investing thing.

Dow Jones Industrial Average 26,543.33   Week Ending 04-26-2019  (UP and very high)
S&P 500  2939.88


First good morning. I wanted to welcome value investors Mohnish Pabrai and Paul Lountzis to my side bar of important Value investors. They both should have been there long ago, and there are other folks that should also be added to this forum.

You have not heard from me much past my 2019 New year selections this year because these Value stock ideas are not plentiful at this time with the Dow at 26,543.33.

Let me first say that Natural Gas is a sector that wall street likes to ignore. It is not sexy.  Sometimes to the point where it becomes stupid. Gulfport Energy ( Symbol GPOR , (like "get poor") is trading at $6.67.  

What is it that I like?

In the last 12 months insiders have been buying the shares at a rate of approximately 10 to 1

The company did $1.36 Billion in sales last year and produce $430 in Income.

The current Book value of the company is $19.42 cents per share.

The company has very little debt, no leverage.

Sales the last five years are up 38.80%

Although earnings are coming down this year the company still has a forward PE of 5.13 in a stock market with a PE of 18. 

Management runs this company very well and is always looking to shareholder value.

Their assets are in the safe confines of the USA in Ohio and Oklahoma.

Someday LNG will take off with a vengeance!

So Freewilly says buy this one now and hold it for a couple years.

Hope you had a better April than me. It was all funerals for me and my favorite cat Bowie passed away. To all we lost, hope you are all now in heaven.

 My Bowie boy. a friend to all people and animals.

Well on to May we go. Will the traders sell in May and go away? Maybe not.


Best Regards,

Freewilly

Sometimes when you are Value investing you need to go ugly. United States Steel Corp. is my offering up in that category and is trading below current book value - Stock Symbol " X"

03-17-2019

So if you always wanted to be like Andrew Carnegie or J.P. Morgan and wanted to own U.S. Steel,  now is your chance. After years of slumbering and having foreign countries dumping steel in their markets, United States Steel Corporation, Symbol X, $19.66, now seems to be able to compete on a leveler playing field in their business again.

Many of the "Value guys" have owned this stock and lost patience and moved on, including David Einhorn and Leon Cooperman. Currently David Tepper and Joel Greenblatt hold some positions in the stock. David Tepper is very familiar with this area in Western PA with his college Alma mater located there. 

So here is what I like about the stock. The stock currently has a breakup value of $23.86 per share or trading at 0.82% of current book value. 

The company currently offers a Return on Equity of 29.40%.

The PEG Ratio on the stock is currently 0.24

The Price to Cash flow is 3.39

The price to Sales is 0.24. 

If you were looking at these numbers without knowing the name or business of this company you would be jumping in quickly.  

Current Ratio  1.5 to 1.

Sales Quarter over Quarter up 17.80 %

am I starting to get your attention??

The earnings will be dropping from a spike up year last year with the tariffs helping them out and the tax breaks. But they, (X), is still sporting a Forward PE of 7.89.

I think there is a lot of headroom in this stock and if a favorable trade deal comes through there could be better times ahead.

So be like Andrew Carnegie and own US Steel!  Remember when Carnegie had that elephant walk across the new steel bridge to prove that it wouldn't collapse? 

Here are some of Andrew's old shares. 

Sometimes you just need to go ugly. Yeah you could buy NUCOR , (NUE) and snooze yourself to sleep. But we are here to make some real money. So buy some X , and then just wait awhile.

Have a great St. Patty's Day!  

Freewilly

So what lies ahead for the new year 2019. I will present what I think are the best value stock purchase opportunities for the year. Good Luck.

Dow Jones Industrial Average 23,995.95 (UP) Week ending 1/11/2019
S & P 500 2596.26  

Well here we are again,  resisting the call of those swanky growth stocks and bringing to the table the best ideas in the Value stocks, that I think that will present the best chance for you to make a very good return on your invested money.  

I decided to put them in groups of four this year because there are 16 stock picks. We will start the clock on Jan. 1st and end 12-31-2019.

So here they are stating with Group A:


Group A:

Alibaba Group Holding Ltd (BABA:NYSE)

United Rentals Inc (URI:NYSE)

Citizens Financial Group Inc (CFG:NYSE)

Altria Group Inc (MO:NYSE)

Group B:

Alphabet Class A (GOOGL:NASDAQ)

Capital One Financial Corp (COF:NYSE)

Penn Virginia Corp (PVAC:NASDAQ)

AT&T Inc (T:NYSE)

Group C: 

Whirlpool Corp (WHR:NYSE)

Bristol-Myers Squibb Co (BMY:NYSE)/Celgene Corp (CELG:NASDAQ) (Merger)

FedEx Corp (FDX:NYSE)

Intel Corp (INTC:NASDAQ)

Group D:

Micron Technology Inc (MU:NASDAQ)

Oshkosh Corp (OSK:NYSE)

ZTO Express (Cayman) Inc (ZTO:NYSE)

Blackstone Group LP (BX:NYSE)

Some of these names I have mentioned during the year and continue to support them in 2019,  while others are totally new ideas. Some like Altria , are disrupting into other businesses of Juul Vape and Marijuana. Some are merging into powerhouses like BMY/CELG and will be dominant leader in the cancer medicine business. Others like Whirlpool are strongly focused on creating shareholder value.

There were lots of automotive stocks that look cheap here like FCAU, GM, and KMX,  but I steered away from them this year for now. My concern is revenue growth with them. 

Well the other thing going on this afternoon is the Saints/Eagles football game. I think my cat Bowie has placed his vote for the winner.

I hope that you have a healthy and prosperous new year.

Freewilly

Battered but still standing and holding value stocks, the 2018 trading year is mercifully over. Here are the results of last years picks as of 12/27/2018.

Dow Jones Industrial Average 23,327.46  (Down)  as of 12-27-2018
S & P 500 Index  - 2506.85  (Down)

Like Rocky Balboa the famous Philadelphia fighter we are battered and bloodied but refuse to go down and remain standing with our Value stock holdings. Some of them had been up during the year where you could have sold them off, two of them actually got bought out but if you continued to hold the stock of the purchasing company you ended up being down. 

Truth be told, if you had closed out your positions at the end of September you would have been up on most of the stocks.

So here are the results for better or worse:

Alaska Airlines- Symbol ALK   (-19.12%) add 2.12% dividend offset
J.P. Morgan - Symbol JPM        ( -10.17%)  add 3.13% dividend offset
Andeavor ANDV, bought by Marathon Petroleum Symbol MPC - (12.79%)  add 3.16% dividend.

InTEST Inc. - Symbol INTT    (-33.18%)  
Express Scripps-  Symbol ESRX , bought be CIGNA Symbol CI -( 7.11%)
Gilead Sciences-  Symbol GILD - (14.62% ) add 3.68% dividend offset

.... and now the three winners: Mastercard -Symbol MA - +22.66% plus 0.71% dividend add
                                              Square - Symbol SQ - +59.04% 
                                              Discovery Communications -Symbol DISCA - + 9.27%

and then there were three more losers..........

Manulife Insurance Symbol MFC (-33.43%) add 5.31% dividend offset

Jazz Pharmaceutical - Symbol JAZZ - (-10.89%)

Brown Forman B issue - Symbol BF.B - (-13.82%) 

If you wring that all out overall,  and count the dividends in,  you end up with a (-14.34% Loss for the year for the overall portfolio.  That is better than the 16 % YTD loss for the S &P 500 and the 21.5% loss for the NASDAQ, but if you add in the dividends they are about on par with the average losses in the market. (I.E. Value investing this year was no better at protecting you than what the Index averages would have given you.)

But remember Howard Marks said that the top performing value mutual fund managers are often in the lowest quarter percentile for some years, so some hope there.

Next week my Value Picks for 2019.

 "Good time to buy some Value stocks, but only in small increments."

Have a great 2019 investing year,

Freewilly

"The market correction has opened up some preliminary value bargains that are worth mentioning. With a long term perspective you can get some wonderful investments".

Dow Jones Industrial Average 25,339.94  (Down) 
Week ending 10/12/2018    S & P 500 - 2767.13

You are probably thinking I have been really lazy and kicking back on doing my blog , but I have been very busy in my business and personal life and just got back from a business trip in Houston, TX. The current and very normal correction has opened up some opportunities to purchase stocks at a bargain.  I will list them in no particular order.

United Rentals Inc. - (URI)  - $137.88   Plenty of earnings here going forward and a real bargain.

Capital One Financial Corp - (COF) - $90.79 Great entry point for long term investment. Still operated by the family founders of the company. 

Celgene -(CELG) - $82.58  Earnings rolling up well here. Need to check if affected by new generic products. Watch the revenue growth numbers with recent slowing.

ZTO Express - (ZTO) $16.25 - this transporter/ deliverer of Alibaba products in China through a woven delivery network. Great forward growth potential.

Whirpool - (WHR) - $103.83 - Buy this one after the earnings call on October 26th. Probably will take a hit on the tariffs, but will give you a great entry point then. This has most everything priced in already and tends to correct earlier then others.

Colfax Corp - $32.29   - This "baby" Danaher industrial fits perfect in your portfolio here and is a great value. 

You should do some extra homework on these just to make sure that you want to invest for a 2 to 3 year period.  URI and ZTO are probably the most timely buys right here of the group.

 "Freewilly has given us plenty to think about. Always keep some cash on hand also for future bargains."

         Fall is finally here in the Northeast USA.  Rain be gone!  Have a great October.

         Freewilly 

" When I watch the stock tape I see many overpriced stocks based on endless growth expectations. Give me a good solid company stock that should be trading much higher based on future earnings forecast. Give me a stock like Whirlpool, symbol WHR".

Dow Jones Industrial Average 25790.35 (UP) Week ending 08-24-2018
S & P 500 Average - 2874.69

There is nothing very exciting about washing machines , dishwashers, refrigerators and microwave ovens. (Unless you are building a new kitchen or house.)

            Whirlpool, (symbol NYSE:  WHR, Price $127.15) is very good at making money selling this consumer goods equipment. 

Whirlpool Corporation is the world's leading major home appliance company, with approximately $21 billion in annual sales, 92,000 employees and 70 manufacturing and technology research centers in 2017. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Jenn-Air, Indesit and other major brand names in nearly every country throughout the world. 

I believe that the stock of WHR should be trading much higher than its current price based on the earnings going forward. It is running into some short term turbulence here based on the cost rise created by the steel tariffs and because of a shortage of truck drivers. This has caused the stock price to be off by 24.62% YTD year to date. So the whole market capitalization of the company is only about $8.78 billion dollars right now with 69 million shares outstanding. The company bought back shares at a dutch auction in April at around $158.25 per share. I believe they are going to be buying back more shares but I could not find a source to confirm that. Sales have been rising by 3% a year, but in Asia sales rose by 14.5%. 

Here is what I am looking at. The earnings per share for this year are projected at $14.38 per share according to Barron's and CBS MarketWatch.  Next year earnings are projected at $16.63 per share. That is a forward PE of 7.66.  The company is also trading at a Price to Sales ratio of 0.41.  I feel these earnings give you a good margin of safety.

I believe that this stock should trade at between $180.00 to $230.00 per share. I am not sure how all the hotshot analyst are missing this, but they seem to be  blinded by their "Revenue Growth" glasses? WHR has some debt also,  but it seems very manageable.

This company also pays a $4.60 dividend each year, (3.62% dividend), which seems to be very safe.  

I say to buy into it in the next 45 days. ( I own it here).  September and October for many years have traded as down months, so you may be able to get it even cheaper is this time frame.

I consider this a 2 year to 3 year investment, so don't get impatient with it.

   I told my friend to sign up for her 401k at work and she said "there's no way I can run that far."

       (I saw the above on a twitter comment on Tobias Carlisle's - Greenbackd - Value investing website) .

Let's make some money on Whirlpool!  

Freewilly

"The summer moves on and growth stocks continue to gain momentum. I will still stick with my value picks though and reduce my downside risk. I like COF, T, and CCK here.

Dow Jones Industrial Average 25,463.55  (UP) Week ending 08-03-2018

I am still simmering about that CEO the other week that sold almost a Billion shares of his personal company shares of stock at an average of $210 dollars per share and then a week later announced bad news on his earnings call. It was all "legal" of course somehow because the shares had been pre-registered to sell ahead of time, but it was certainly shady. This CEO saved $38 Billion dollars when the stock dropped from the $210 range down to $174 on the earnings call and forward guidance.  Oh and >>>  It was the largest loss of market capitalization of a company in one day in the history of the stock market. 

It tells me that the CEO of this growth company does not have the best interest of his stockholders on his mind and is only out for himself. This also points out the hazard of owning growth stocks, where 4 times a year at the earnings call, you may hit a land mine and have your portfolio hit with a large sudden loss. (In my case it was a large long term paper gain that got erased.) 

All I will say is buyer beware and refer to Phillip Fisher's Point # 15  in his book "Common Stocks and Uncommon profits" : Point 15 -- "Does the company have a management of unquestionable integrity?"  I think we now have our answer to that. We learn greatly in life and investing from our mistakes.

Well, now on to more pleasant thoughts of low risk value stocks. 

AT&T  (Symbol T, $32.37) Insiders have just purchase $8 million dollars in shares. Time Warner coming into the fold makes this a cash generating powerhouse media and telecom company. 

  Capital One Financial Corp.  (Symbol COF, $96.68)  This family run financial powerhouse just won the Walmart credit card business from it's competitor. I like that as a catalyst for the stock to trade up from here. 

Crown Holdings Inc. (Symbol CCK, $45.40)
Earnings are gushing at this designer of packaging which sports a 66.80 Return of Equity. I always knew there had to be money in those bottle caps. Insiders at this one also love the stock. 

Back to the normal font.  I would buy all of the above companies right here in increments of  1/2 or two purchases in case the market takes an overall dip. 

I wish we got to see the stock certificates of the companies we own like in the old days instead of in street accounts. We never get to see the great lithography. I am a paper guy.

Hope you have a great week and that business is good for you.

Sincere regards,

Freewilly

Here is the quandary. How do we take advantage of the 2nd half growth spurt in earnings of 2018 without getting caught up in the 2019 stock market hangover. It is important question of timing.

Dow Jones Industrial Average 25,019.41 (UP) Week ending 07-13-2018
S + P 500 Stocks average - 2801.31
NASDAQ 7825.98

"Investors feeling a bit confined"

What is an investor to do?  There are some tempting gains sitting right out there in front of you. The earnings and buybacks will all be drawing you to buy in. The quants are just blindly pouring into mega growth stock names and riding a wave. Align Technology Inc. is at $363.45 a share. Stamps.com is at $217.10 per share. Lending Tree is at $232.95. It puts me in mind of the market phase when the optical electronics stocks were just heading to the moon. They shortly, (but not immediately), found their way to the ground instead.

But alas, I am a Value Investor. They tell me that I can't purchase bonds, because interest rates are going up and bonds will go down, so no margin of safety there. Do I just move to money market and wait outside the market until the rise and the swoon both are all done? 2020? Do I have the patience for that?  Or do I want do buy some somewhat reasonable , (less than full margin of safety),  Value stocks and ride them out through the storm next year as a long term investor?  Yes it is a quandary.

Well I can give you a couple of "now or later" or "keep an eye on"  Value Picks I like with good Returns on Equity for now.

Progressive Corp.  (Symbol PGR , price $58.44 , Return on Equity 20.20%).  Warren Buffett has GEICO to anchor his portfolio and kick into cash flow, you should have Progressive for your insurance company anchor.

 CBS Class B.  (Symbol CBS , price $59.01, Return on Equity 46.80%) Someday the Redstone's and National Amusement and Viacom and CBS will sort out this tangled mess to realize the value here. 

Mario Gabelli has been waiting on it for years now. (Did I mention patience before?) . I have ridden this trade in the distant past and it worked out very well. Buying Westinghouse shares at 13 and then later selling it in converted CBS Shares at $68.00 per share. ( My daughter bought a new Volkswagen Jetta on her own with this trade!)

This is not a value pick, but it is a name that has popped up as a long term investment idea. Again, not a call on the timing of the price of the stock right here (i.e. Speculative pick) , just bring it up as a "thought out loud". (Also FYI, Tom Gardner from Motley Fool had brought the name up on Consuelo Mack's Wealth Track Show this past week.) 

                                      Stitch Fix . (Symbol SFIX, price $32.96 each)

That's all for today. Happy Bastille Day. The French are in the FIFA World Championship tomorrow against a good Croatia team.  Good luck to both squads. 

 Le Tour De France heads to the brutal cobble stones in Stage 9 tomorrow, then 3 days in Stages in the Alps, (sounds brutal like traveling through our US stock markets with the tariff challenges).

Au revoir!    Freewilly

"Well I finally moved some money in my 401K into the Short term Treasury Bond Fund. I am OK with the FED interest rate raises to date, but I don't think we need another 1/2 percent raise by the end of the year." Still Buying ZTO Express and Mondelez International here.

The FED has done enough!   These minimum wage earners get a little raise on their pay and the FED wants to take it away with higher interest on their credit cards.  Just STOP already.  There is no inflation anywhere! The Russians and OPEC are going to pump more oil so those oil prices will come down naturally. GDP of 4% is not overheating for the USA.  It is and should be just NORMAL growth for this economy. Just leave the rates alone. The European Union is holding firm on their low rates. Don't increase our trade deficits with the dollar being too strong. ENOUGH already. 

( The only inflation I can find is on the price of Mayonnaise. I can live with that and just use Mustard instead to bring the price down).

There are two value stocks I like here even though one is near it highs for the year.

ZTO Express (Cayman) Inc. ADR (Symbol ZTO , $21.15)  

ZTO Express (Cayman) Inc. engages in the provision of express delivery and value-added logistics services through a nationwide network partner. The company was founded by Mei Song Lai in April 2015 and is headquartered in Shanghai, China. ( information from CBS Marketwatch) ZTO had $1.93 Billion in sales last year.  

Officially established in 2013, ZTO Express operates through about 7,700 network partners, according to the firm's prospectus. The company gets about three-fourths of its business from Alibaba and has 26,000 direct employees in China and more than 200,000 across its entire network. (CNBC reporting).

 Mondelez International (Symbol MDLZ, $40.82) can be purchased here with a good margin of safety. Oreo's, Triscuits's, and many other great snack products here. Earnings are growing at almost 9% a year and it has a forward PE of 16. Earnings Q/Q were up 53.3%. Also a 2.1% dividend payment to add to your total return.  

Have a great Sunday watching the FIFA 2018 Soccer games. Mexico upset Germany today. Great excitement here.

Invest wisely and carefully with these interest rates going up in the USA. 

Freewilly

Going shopping for Value in the very sleepy Healthcare area. Mallinckrodt Plc. - symbol MNK is priced to buy, with a good margin of safety.

 









The healthcare area seems to be ripe with value for investment right now after a kind of dormant period. I would invest in Mallinckrodt Plc. (symbol MNK) at $16.50 per share and Forward PE of 2.3 and a possible book value of as high $75.00 per share. 

The venom is still out there on Achtar, the $$ expensive drug after the 60 Minutes TV show, but that will be corrected and they will move forward.

On this Memorial Day we salute the veterans of all wars. Let us hope that some day all wars and violence against our fellow man will end.

Freewilly