Tag Archives: AA

Crumbling Dividend Stocks Give You Warnings

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author name submits:

As an income investor, one of my priorities is to satisfy two simultaneous desires: the protection of current income as well as the organic growth of an income stream over time at a rate greater than inflation. To state the obvious, the implication is that I do not want a portfolio stuffed with companies that could cut their dividends after I spend years putting together a nice position in them. When I review the histories of the fallen dividend darlings, there are usually strong signals ahead of time that may warn you that a dividend company is falling apart.

Let’s look at something like Eastman Kodak. The company basically spent 20+ years saying, "We’re not a dividend growth company anymore!" From 1989 to 1993, Kodak froze its dividend. From 1994 through 1996, the company froze its dividend. From 1997 to 2000, Kodak froze its dividend. Yes, during the most prosperous


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The Dow Weekly: 5 Cheapest Price-to-Book Stocks

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ByMichael Fu:

This is the second edition of the weekly series called The Weekly Dow (for last week’s article on the Top 5 Dividend Plays, click here). This week, we will look at the 5 cheapest Price-to-Book multiple stocks in the Dow Index Industrials Index (DIA). By the way, please reference my prior article on the pros and cons of looking at book value, specifically as it applies to bank and insurance stocks.

The 5 Cheapest P/B Stocks

As of April 9, 2013, the 5 cheapest P/B stocks in the Dow are Alcoa (AA) at 0.7x, Bank of America (BAC) at 0.9x, JP Morgan (JPM) at 1.2x, Travelers (TRV) at 1.3x and Verizon (VZ) at 1.7x.

Note that 3 of these stocks (BAC, JPM and TRV) are bank and insurance stocks. Note that bank stocks and insurance stocks are levered, and the financial assets that are held on their balance


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Alcoa Should Be A Hot Stock In 2014

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By John Mylant:

Why Isn’t Alcoa Doing Better

It is amazing how Alcoa (AA) gets all the attention it does because it is the first company to give earnings reports every quarter. Being a member of the Dow Jones Industrial Average is a big help I, but the stock continues to lag and seems to be a source of divergence for companies that would be interested in using the metal it manufactures: automotive and construction are two simple examples. Is it really a bellwether for the economy as a whole? Alcoa stock is down almost 4% from the start of the year while the S&P 500 has grown more than 10%. While the company is well below its record high of $48.77 from 2007, )the S&P 500 is pushing on through its 2007 levels. So why is it considered a leading indicator?

Notice the diversity in these figures: Alcoa recently beat


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Wall Street Breakfast: Must-Know News

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Wall Street Breakfast Editors submit:

Top Stories
JCP ousts Johnson as CEO and brings back Ullman. J.C. Penney (JCP) has fired CEO Ron Johnson following a disastrous 17 months in which sales plummeted and the retailer made big losses. JCP has upset the market, though, by bringing back former CEO Mike Ullman, who was forced out himself, to replace Johnson. Ullman’s task could be to “help to put lipstick on the pig and get it sold,” says one observer. Shares were -6% premarket.

Chinese inflation falls sharply. Chinese CPI slowed to +2.1% on year in March from +3.2% in February – when New Year holiday demand affected prices – and came in below consensus of +2.4%. A softening of rises in food costs helped offset an increase in fuel expenses to bring overall inflation lower and give China’s central bank more flexibility over monetary policy. The news helped boost equity markets across


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Wall Street Breakfast: Must-Know News

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Wall Street Breakfast Editors submit:

Top Stories
Nikkei soars anew as BOJ gets busy. The Nikkei (NKY) jumped 2.8% to 13,192.59, its highest close since August 2008, while the yen dropped below 99 to the dollar for the first time in four years, as the Bank of Japan began its grand stimulus experiment in its attempt to pull the country out of deflation. The BOJ said it would acquire ¥1T ($10.3B) of Japanese government bonds with maturities of 5-10 years and ¥200B of bonds with maturities exceeding 10 years. At the time of writing, the yen was -1.1% at 98.53 to the dollar.

GE to buy Lufkin Industries in $3.3B deal. General Electric (GE) has agreed to acquire Lufkin Industries (LUFK), a provider of pumps and other equipment to the oil and gas industry, for $88.50 a share in a $3.3B deal. The price represents a 38% premium to Lufkin’s close


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Why Price/Sales Is A Dangerous Valuation Metric

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ab analytical servicesBy Alan Brochstein, CFA:

When it comes to predicting stock prices, we all want convenient, easy-to-use metrics that will give us the answer to our question: Can I make money in this stock? Unfortunately, like many things in life, simple and quick short-cuts can lead us to the wrong conclusions. It’s been a little over a year since I attempted to debunk one such valuation tool, the PEG Ratio, which I called “silly” (perhaps a bit too sensational!). That article, as old as it is, still gets hundreds of views a week, suggesting to me that these discussions of how to value stocks are of interest.

Today, I want to tackle another popular metric, known as "Price/Sales" (P/S). To calculate the value, and here is the simple part, all you need to do is divide the market cap (price of stock times number of shares outstanding) by the trailing sales (typically the last


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