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We have to keep in mind that the screening process really involves two distinct phases.
First is deciding on the principles we want to look for in a stock. This should, IMO, be done without reference to specific values or parameters. Broader philosophical issues first. For example, will be we looking for growth stocks, value stocks, or a combination? How important are stability of earnings and sales growth? Are we looking for short-term turnaround situations, or long-term growth prospects? Are we going to limit the horizon of stocks -- for example, do we want to include REITS, banks, restaurants, or any other catagories for whatever reason, do we want to limit ourselves to industries which we think are likely to show the highest growth or are cylical so they give us a good chance for a ride when they are in the down part of thier cycles, do we care about the market cap or will we take anything, and lots more questions like that.
Only when we have broad agreement on what we will be looking for can we start discussing the specific screening factors and values. And that will depend in part on what screening tools are available to us. (For example, I use Stock Investor Pro for screening, which has a very extensive set of potential screening factors, and allows you to define your own factors such as sales per share, which most screens don't have but which I like to use as a growth evaluator. But not everybody has that tool, so we may want to agree on a screening site we can all access, at least initially.)
The temptation, IME, is to start right out saying "we want to screen for earnings growth of such-and-such, market cap of such-and-such, etc." without starting out thinking what we're really looking for in our stocks. We will just, I suspect, find ourselves arguing over minutia without realizing that we're really applying different broad principles.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
But there's more quality in our 1,000 posts than in 10,000 posts on some other boards i could name, but won't. <g>
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Keep us posted on your progress. An extended discussion of screening strategies may be a good topic for us to discuss here at some point, but as for me, it won't happen for a few weeks.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
LOL!!
A week is a long time to wait for a $2 a share gain on a $20 stock?
You and I don't even live on the same planet!!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
And you wouldn't have made it if I hadn't provoked JM into all those attack posts!
Yes, you're welcome. <g>
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Well, there are my comments.
Overall, there's one stock there I want to look at further. NSEC.
But don't think that's bad. For me to find one stock of interest in a screen of 9 is excellent. I ofen run screens that yield me 100 tickers and may find nothing to buy. So I really do appreciate finding one of possible interest.
While it may be a bit late, better late than never to make crystal clear that these are only my opinions, based on a cursory look, and everybody should do their own DD. This advice is worth every penny you paid me for it. And not a penny more,
Good night to all.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Okay. BRT, KIM, KE, and AML are all REITs.
I don't know much if anything about REITs. You really have to know real estate as much as stocks to evaluate them.
A few very quick notes:
BRT just started paying a dividend in 2001. No dividend history. Not smart as a dividend investment, IMO.
KIM, quarter-over-quarter sales and earnings have really leveled off. This is a red flag in my system. Double digit Q-Q growth up to 9/00, then single digit, as low as 1.8%, with the sole exception being 9/01 over 9/00, 11.8%. Sales growth qtr-over-qtr has declined the past two quarters. Not good.
KE earnings growth has been erratic but overall not exciting the past several years, and sales growth has been dismal recently. ttm sales growth for last four quarters has been only 1.6%, and you have to go back to 3/00 to get a ttm over prior ttm sales growth of higher than 10%, and trending steadily downward. Plus,dividend payout ratio has been over 100% each of the past four years, Yes, the current dividend yield of nearly 17% is spectacular, but I'm betting there's a dividend cut in their future, and soon.
AML. Dividend payout ratios have been over 120% every year for the past five years. Sales are flat to lower, earnings have been sharply down for two years. ttm sales growth hasn't been over 5% since 3/00. And has been negative for the past three quarters.
On my model, this is a sell.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
PVD
Oh my god. Extraordinary.
First, another foreign company, Chile in this case.
But, look at this.
According to one set of data I have, from the AAII data disk, earnings and dividends are:
1996 eps .07, dividend .88
1997 eps .07, dividend .80
1998 eps .07, dividend .83
1999 eps .09, dividend .92
2000 eps .09, dividend .67
Oh, and the average high PE for the past five years? 313.0.
Payout ratios of over 1,000% every year except 2000, where it was "only" 728%.
Something is VERY weird here.
BUT, another set of data shows earnings of 1.00, .99, 1.10, 1.321, and 1.38.
Now that makes a LOT more sense.
But let's go to the S&P data from NAIC. They report earnings for 96, 97, and 98 as n/a. Huh?? Then net income for 1999 is shown as 0.00, but eps is shown as 1.74.
I don't even pretend to understand the financial reporting on this company, but I want no part of it.
Oh. One further note: Cash at the end of 2000 (last year for which I have figures) was only 500K, short term investments 1.3 mil, according to AAII data. With 22 million shares out and a dividend of .67, they need 14.7 mil to pay the dividend.
No thanks.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
BDL
This is a pretty small cap stock. And in the restaurant business, which is notoriously problematic unless you're McDonalds.
market cap ony 13.9 mil. 54% of the stock held by insiders.
Steady sales growth, but not rapid -- 4.5% annual for the past 10 years, no reason to expect that to change that I can see on an intial look. Since 1997, with one exception, earnings have grown about the same rate. So use that for a projection.
PEs have been VERY modest -- average high PE over 5 years is only 8.5. Dividend, paid starting 3 years ago, is 3-4%, okay but not spectacular. Not worth buying the stock for unless there's meaningful growth potential, too.
On my model, using 5% earnings growth, it's a hold, and high in the hold zone. I would have to make some pretty aggressive assumptions to move it into the buy zone. Even with the dividend, it only shows a 7.5% projected average annual return, half what I'm looking for.
I would skip this one unless there's some reason to think the fundamentals are going to change dramatically from what they've been for the past ten years.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
SXC.
You are going for the foreign companies, aren't you? UK in this case.
Is that a coincidence, or is it the case that foreign companies tend to pay higher dividends than US companies? I have no idea, have never even considered the idea.
As to the stock, sales have been totally flat for the past 10 years. Annual growth rate of only 0.5%. Earnings have ranged widely, seem to be a real zig-zag -- 96-97 down, 97-98 up, 98-99 down, 99-00 up, 00-01 down. Very hard to predict. Trend is generally up, but again, if sales don't grow, earnings must stop growing sometime.
Because the 2001 high stock price was the lowest high in five years, and they've been increasing the dividend, the yield is quitre high -- nearly 9%. But can this offset a stock price that has been steadily falling for five years?
The payout ratios also scare me -- nearly 200% in two of the past five years, and 80% in 2001.
Maybe the yield is worth grabbing if you think the stock price has gone so low it can't go much lower (though it's close to its year high right now, at 11.39, up from a low for the year of 7.75) so there's apparently some room for it to fall.
For me, I wouldn't look at it seriously.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
AEG.
Dividend is 3.45% at today's stock price, but they've increased dividends every year, so that could easily go up.
Nice solid sales growth through 2000. Almost flat 2000-2001, and earnings plunged. One time situation, or more serious problem? Needs further research to know. Earnings may well have plunged because of setting aside reserves for 9/11, but why the sales problem?
Free cash flow has been all over the map, from $13.88 per share in 1999 to negative in 2000 and 2001. Not a good thing for a high dividend paying company.
It's a foreign company, in the Netherlands, and I don't know much about their accounting principles for insurance companies, so I personally wouldn't feel comfortable doing any substantive research on it. It's also very hard to evaluate in a model that's based on historial PEs since their high PEs for the past five years have been 19, 56, 56, 28, and 100. What can one do with that??? Average high PE is 52, which is unsustainable, period. So it's not a good stock for me to study with much attention.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
A really quick look at your ideas. Just a cursory once-over, but maybe helpful to some degree. I'll respond to each one in a separate message so I don't risk getting an hour into this and losing the whole message!
NSEC.
Yield is good, it's increasing its dividend almost every year. Dividend coverage is a bit soft, IMO -- they're paying out about 40% of net income. Free cash flow has been negative five of the past seven years. Earanings have been generally increasing the past five years, which is good, but sales have not. Sales have been flat to down. IMO that is a warning sign for earnings down the road -- you can't keep increasing earnings indefinitely if sales aren't also increasing. The stock price is near its high for the year, and in fact near its high for the past three years.
Overall, the dividend looks safe for a year or two, but if they can't get their sales up, their earnings are going to level out and they're either going to have to stop increasing the dividend, which likely will drop the price, or they're going have to be increasing their payout rate, which can't continue forever. Also, their sales per share has been trending down while their dividends per share has been moving up. At some point, that's a formula for a train wreck.
Could be a good short-term dividend play. But I sure wouldn't look for any stock price growth on top of the dividend unless they can increase their sales.
On my model, if I project an earnings growtn rate of 5%, which is generous considering that their 10 year sales growth is only 1%, and disregard the very hign 1998 PEs, which were not representative, it's in my hold zone, though with some retreat in the stock price could get into my buy zone. But it's more interesting that I had initially expected it to be, so I do want to take a closer look at it.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
You're so cute when you wave your cubby little fists like that.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
for the most part people here don't seem to be
interested in discussing fundamentals and long term investing.
There are some of us who are.
Would love to see you more active on The Big Board thread. Keep the faith -- the time is coming!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
I did not purposely take that shot at Bob. It was meant to be a insult.
From the mouth of babes.
Freudian slip, anyone? LOLOLOL!!!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
I know what you mean.
Sometimes when I'm home during the day I'll watch the noon news on TV. Then I occasionally get sucked into the soap operas following.
No excuses -- it's just slumming. But fun on occasion.
Same here -- but no commercials!!!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
<thinking to self>
Should I listen to him and hit the eject button? How temping Mr. Bigglesworth.
</thinking to self>
Hey, be a Nike guy.
Just do it!!!
.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Was my message addressed to you?
No.
It was addressed to Matt.
You always complain when I respond to messages not to me.
If you don't approve of that practice, don't do it.
Furthermore, you told me you were done with me. So why do you jump in and attack me on the basis of a post not even made to you?
You're a liar and a hypocrite.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
So when does the great Matt/Hollen Jailhouse Rock start? And where do we get tickets?
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Well when I have a profit I normally sell.
Aren't you VERY short term? Say you bought a stock for $20.00 on Monday and it went to $22 by Friday, would you take your 10% gain and get out after only five days?
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Those are fair points. I'm still concerned about why strong companies with good growth potential and excellent dividend coverage would be paying dividends in the 5-8% range, but let me take a look at your list.
And I don't agree that the market is down, down, down. I think for the most part it's fairly priced -- i'm having to work hard to find good opportunities. the Average PE is still way above historical levels. A 5,000 Nasdaq was just plain silly -- irrational exhuberance indeed. There are still some bargains out there, but the market itself is not, IMO, a bargain.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Interesting.
Hadn't heard that, but not surprised.
Or course, in my days as a corporate VP Finance, I NEVER did that sort of manipulation, but I know that some less ethical CFOs did.
But we didn't have Andersen as our accountants.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
LOL!!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
That's nothing to do with your attacking me.
It has to do with Matt keeping his commitments to the thread.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
LOL!!
I have NO need to complain to Matt about you attacking me.
One doesn't employ a cannon to squash a slug.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
In the midst of a fairly boring day at work, one gets one's amusements where one can.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Matt --
Time for a little remedial education?
JM's posting stats:
5/30 to present: stock postings: 1 Non-stock postings: 7
5/29: stock postings: 9 Non-stock postings: 23
Not quite the ratio he promised you.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Thanks.
I'll take a look at them when I get home tonight.
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Well, it took it with the double '.
Now let's see how it turned out!
Edit: Perfecto. Thanks!
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Be who you are and say what you feel, because those who mind don't matter and
those who matter don't mind. -- Dr. Seuss
Keep in mind, I don't have a clue to what I am talking about.
Every now and then you say something that is so true, so accurate, that it deserves to be memoralized.
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To ignore the truth does not change the truth.
Okay, thanks.
I'll try it.
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To ignore the truth does not change the truth.
I'm partial to t-shirts that make me say "Hold still a sec. I
want to read your shirt."
Yeah, we know.
What a coincidence that you only say that for t-shirts worn by well endowed females under age 30.
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To ignore the truth does not change the truth.
I LIKE that one.
Way to go, Rene!
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To ignore the truth does not change the truth.
How about:
Krispy Kreme Donuts, Pepsi, and I-Hub. It doesn't get any better than this.
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To ignore the truth does not change the truth.
I just bought a lazy boy sofa.
Well, I signed the sales slip, but really my wife bought it. <g>
Anyhow, maybe I should have bought the stock instead! It's as Peter Lynch said, look for companies that you like to buy from, because it's likely lots of others will like to buy from them, too.
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To ignore the truth does not change the truth.
I think the thing is, that with money market rates generally under 2%, and CDs usually under 5%, a stock that pays an 8% dividend, if investors thought itwere stable and would reatain its value and keep paying that dividend, would be far more attractive than bonds or CDs, and would be attracting a lot of attention. So in general, the fact that it pays that high a dividend means that "the market" thinks it's likely either to cut its dividend or to drop in value.
of course, "the market" is not always right, which is how we who are individualistic in our investing make money. But you have to ask, if this is paying four times money market rates, and if people thought the dividend and price were safe, why hasn't it been bought to pieces??
As to what to look for specifically, yes, all of the things you mentioned.
Are they generating enough cash flow to keep paying those dividends (and don't forget to look to see whether they have preferred stock that gets dividends before the common stock). Do they have enough free cash to pay the dividend for at least one and preferably two years if they hit a rough patch? Are their sales, profits, and earnings at least stable and preferably growing?
For myself, I screen for stocks paying nice dividends, then I do a full evaluation of the company based on my standard parameters to see whether, even if it didn't pay a dividend, it would be a stock I would be willing to buy. If the answer is yes, except that the return isn't quite up to my expectations, then I ask, well, does adding in the dividend bring it up to my expectations? (Which is a minimum 15% average return per year for the next five years.) If that comes out yes, then I'll look to make sure I think it can sustain the dividend, or even increase it. if the answer to that is yes, then it's a likely buy.
For example, say it pays a 4% dividend. If my projections for it are 13% average annual growth, then the dividend would push it into the buy zone. But if my projections are 9%, then the dividend isn't enough.
Certainly screening for high dividends is a viable starting point. But then I think you want to look at the stock itself really carefully to see whether the high dividends are a market anomoly or overreaction that you can take advantage of because you're faster and smarter than "the market," or whether this is a stock on which it's smart to listen to what "the market" is saying about it and stay away no matter how attractive the dividend looks today.
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To ignore the truth does not change the truth.
Bob -- when are you going to fix that the Signature quote can't contain quotation marks? I'm unable to put in some of my favorite quotes because of that glitch!
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To ignore the truth does not change the truth.
Ah, such an elegantly witty riposte.
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Often wrong, never in doubt.
Or is talking about Dyer in JAIL acceptable?
Talking about ANYTHING in Jail is acceptable.
Just like in the real thing.
You want to try to censor people who kill people for a living and spend most of their days lifting weights and hitting the bags?
I didn't think so.
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Often wrong, never in doubt.
Not until you've matured enough to stop the gratuitous profanity.
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Often wrong, never in doubt.