Posts Tagged ‘dividend paying stocks’
Why the Stock Market’s Sticking with These Two Pharma
By Mitchell Clark, B.Comm. for Profit Confidential
One sector we haven’t looked at in quite some time is the big pharmaceutical stocks sector. Exposure to this sector is always welcome in a long-term stock market portfolio.
Like every company, big pharmaceutical companies experience their own business cycles, but dividend payments within the group are significant and worthy of attention.
Bristol-Myers Squibb Company (NYSE/BMY) was one of the higher dividend paying stocks within the group.
The company got a major Wall Street upgrade from Citigroup, based on its Phase 3 development program for “Nivolumab,” a new cancer treatment.
The company recently experienced renewed stock market momentum after a period of consolidation. Its dividend yield is approximately three percent now because of the run-up. It was closer to five percent not too long ago.
I’m still a fan of combo pharmaceutical companies for long-term portfolios. By this I mean companies with other business lines, rather than pure-play drug development stocks. I’m referring to companies like Johnson & Johnson (NYSE/JNJ), which has pharmaceuticals, consumer products, medical devices, and diagnostics business lines. There’s also Abbott Laboratories (NYSE/ABT), which sells drugs, eye-care products, nutritional products, and dog food.
This multifaceted business approach that includes the expensive, but also rewarding business of drug development creates a nice bit of diversification as the business cycle changes.
Like virtually everything else in the large-cap space, Abbott has done great on the stock market over the last couple of years. The company only experienced two long periods of flat performance since 1999. Abbott’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
In its latest quarterly report, the company’s earnings from continuing operations improved substantially to … Read More
Gold’s Decade-Long Reign Near an End?
By George Leong, B.Comm. for Profit Confidential
I have been a major supporter of gold for the past decade during the run-up in prices, but I can’t say I’m that confident at this moment.
Of course, there are still the issues in the eurozone, tension in the Middle East, and the crazy man running North Korea, but I sense the party may be coming to a halt for gold investors.
This is sad, but the shining yellow metal has made money for investors for a decade, so perhaps it’s time to take a siesta.
Here’s my thinking.
The U.S. economy is on the mend. The global economy is recovering; albeit, there are some concerns in China and Europe. The world’s central banks have created a low interest rate environment that has helped to drive global economic renewal and recovery in stocks. It’s all about risk and return at this juncture. While I feel the eurozone could still offer a surprise and America continues to tread on massive debt accumulation, gold is not seen as a viable investment opportunity at this time. Unless the stock market reverses course to the downside, the immediate outlook for the yellow metal looks dull in my view.
Even the recent rally back above $1,600 an ounce on the Cyprus concerns was short-lived and void of any major momentum. There was no reason for the metal to hold above $1,600.
While just recently there was talk of gold retracing back to the high-$1,600 level witnessed earlier in the year, I now feel it could be a challenge for the metal to hold $1,500.
Just take a glance at the chart below. Note the … Read More
Small-Cap Stocks at Record Highs: Uncle Ben Worked His Magic, but Soon It’s Going to End
By Mitchell Clark, B.Comm. for Profit Confidential
The Russell 2000 Index, which is generally considered to be the benchmark index for small-cap stocks, is doing well and has been doing well for some time now. The index is at an all-time record high, having recovered extremely well since the subprime mortgage–induced financial crisis. Its performance is quite amazing considering the weak gross domestic product (GDP) growth we’ve been experiencing.
Small-cap stocks, like the rest of the stock market, have been given a boost by the Federal Reserve’s easy money policies, but it’s not as if stock market investors have suddenly decided to jump on small-cap stocks because of further Treasury bond buying. Investors may be buying large-cap dividend paying stocks because they can’t get enough income to beat the rate of inflation; but small-cap stocks have been going up on their own fundamentals, and it’s especially due to their valuations.
There have been some spectacular stock market performances recently from the Russell 2000 component companies, and many are still trading for very reasonable valuations. These companies include: Eagle Materials Inc. (NYSE/EXP), Pharmacyclics, Inc. (NASDAQ/PCYC), athenaHealth, Inc. (NASDAQ/ATHN), Alaska Air Group, Inc. (NYSE/ALK), Brunswick Corporation (NYSE/BC), and Axiall Corporation (NYSE/AXLL), to name a few. Many of the small-cap stocks listed on the index are actually related to the housing industry.
The Dow Jones Industrials have now hit an all-time record high, and the rest of the stock market is right behind them. The S&P 500 is about three percent from its record high. All this, with weak or no GDP growth expected in the first quarter of 2013, spending austerity, and sovereign debt crises. (See “New … Read More
Beat the Street with Sweet Tea and Biscuits?
By Mitchell Clark, B.Comm. for Profit Confidential
Years ago, I used to spend a lot of money in restaurants. That was before I learned how to cook. Now, I particularly dislike going to fancy restaurants. The food is always way overpriced, and I don’t like playing the game. When I go out to eat, I feel much more at home in casual restaurants, and while I know it might not be appropriate, I love the food at chain restaurants.
One chain that is doing great, both operationally and on the stock market, is Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL). Cracker Barrel isn’t a franchise operation; it owns all of its 621 stores, which means that management can keep tight control over operations. Typically, the most profitable product that a restaurant sells is soda. For Cracker Barrel, its most recent quarter produced growth in comparable store sales of 3.3%, and its average check grew 3.1%.
Cracker Barrel is a dividend paying stock with a three percent yield. Recently, on the stock market, the shares soared 10% the day the company reported its latest earnings. According to the company, its revenues grew 4.4% to $702.7 million and Generally Accepted Accounting Principles (GAAP) diluted earnings per share grew to $1.47, way up from $1.10. The company beat the Street on revenues and earnings, and it raised its full-year outlook. Cracker Barrel’s stock market chart is below:
Chart courtesy of www.StockCharts.com
You know, there is a lot of doom and gloom out there, and investment risk is high. Times certainly aren’t as good as they used to be for a lot of people. But doom and gloom sells; … Read More
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