cizastro (21.52)

cizastro's CAPS Blog

Looking at stocks while the bears run amok

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August 10, 2011 – Comments (4) | RELATED TICKERS: HON , E , Y

As the bears continue to maul anybody who steps out of their cabin, I remain in my cabin looking at stocks that I feel will be higher one year from now than they are today. Of those stocks, here are a few picks that I like:

1) TGT/WMT - Target has a better profit margin than WMT, but I think both companies are available at good prices right now. Target continues their expansion into the grocery market and will be converting even more stores to carry fresh produce. Soon local grocery stores are going to be having to fight the might TGT's and WMT's for market share on products they used to have a monopoly on. I can only see this as being a good thing for TGT and WMT. I knwo the economy is bad, but their higher margin products are actually their lower priced products to consumers so I don't see them hurting at all for any legit reasons. Dollar Tree and other dollar store types might be a good play too.

2) USG - A Buffett stock that's been hammered down pretty hard as of late. I'm not going to pretend that I'm smarter than the greatest investor of all time. I like USG's chances of being higher a year from now.

3) WFC - Another Buffett stock. If I'm going to get involved in a financial, this is my pick. BAC has too many concerns for me to feel comfortable jumping in (lawsuits and a balance sheet that may not be accurate due to their assumption of what all of their foreclosed properties are worth; it's probably much lower). WFC avoided most of the sub-prime mess and I think the stock will go a lot higher in the future. Their caution seems to have paid off big for them.

4) HTGC - Hercules, Hercules! Okay, maybe I'm the only one that pictures that scene from the Nutty Professor when I see this stock. This company pays near a 10% divided at these prices and has been a steady company for quite a while now. While their executive pay is a little higher than I'd like to see a small company, I still think they're going in the right direction. This is the company that I'd most likely buy if it cotinued to drop. That dividend is quite nice...way better than any savings account could produce! A year from now, I could see this trading back in the 10-11 range and if the company keeps improving their core business perhaps a higher dividend would be in order going forward?

There are so many more stocks at attractive prices, but I'd hate to make your eyes bleed. This is enough for now. Please feel free to discuss any of the stocks mentioned above or list out your own candidates that you feel will be looking pretty a year from now.

4 Comments – Post Your Own

#1) On August 10, 2011 at 5:49 PM, truthisntstupid (83.48) wrote:

I search for companies that pay a decent dividend that I consider secure, safe, and growing. I really don't care if the price is higher a year from now. As long as the company's financial strength, profitability, and competitive advantages remain unchanged, I'd prefer the price to either stay flat or decline while I acquire enough shares to build a decent positionthat will put a decent check in my mailbox every 3 months.

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#2) On August 10, 2011 at 5:56 PM, cizastro (21.52) wrote:

I think HTGC fits that bill. They've been growing YOY and I see them as a secure company going forward. I really like the CEO and the decisions he's made. He managed to survive the 2008 collapse just fine and while the company's stock price got trashed, nothing within the company actually changed. I see this as a repeat of the early 2008 scenario where the stock is being beaten down but nothing drastic has changed within the company. As long as they continue to grow as a company I feel this is a good place to collect some divvys.

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#3) On August 10, 2011 at 6:35 PM, truthisntstupid (83.48) wrote:

I'll have to look at HTGC. I am a hardcore dividend investor, and always looking for a good new dividend pick, although I don't make new picks very often.

Dividend investing is also my strategy in CAPS, just as in real life. (see my pitch for DRI - it isn't hard to find).

Bears create opportunities for us when they as a group manage to create enough downward pressure on prices. I think there are some smart ones, but I also think there are far more that possess no exceptional insight at all. They maintain their redthumb on fine companies in total defiance and obvious ignorance of the actual economic realities of a company's long-term prospects. They have no clue - they're just hoping lightning will strike and make them appear smarter than they actually are (again - DRI).

But they are sometimes handy to have around, when their dismal outlook creates opportunities to buy at low levels.

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#4) On August 10, 2011 at 7:14 PM, truthisntstupid (83.48) wrote:

cizastro

HTGC looks mighty interesting, just at a quick glance. I went to Morningstar.com to look at it and its PE was something like 13 with a forward PE of around 7. According to Morningstar.com, the consensus analysts' rating of 11 analysts that followed HTGC was "1.4" - which is pretty good.

I was disappointed by the dividend/dividend growth history I found at DividendInvestor.com, though - its dividend history over the last 5 years is quite erratic, having moved up, down, and now appears to be moving upward again. The good news is that most of that time the dividend was higher than it is now, so perhaps it will at least keep moving upward for some time without dropping again.

I prefer more stability.

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