Monday, March 23, 2009

Added to UL at 18.05/Sysco & Dupont Mentioned in Barron's Online

I am comfortable buying Unilever (UL) or (UN) at around 18 so I went ahead and took my full position today at $18.05.

This is part of my plan to create a personalized world consumer products ETF. Most people are familiar with Unilever's products, and it is the European version of Proctor & Gamble. Its products are recognizable to most Americans and include Lipton tea, Ponds, Knorr, Vaseline, Slim Fast, Breyers, Ben & Jerrys, Hellmanns, Skippy peanut butter and Dove. The company is selling for less than 10 times 2008 earnings. More information is set forth in Unilever's recently filed annual report. 20-F The stock has been cut in half from its 2008 high. In 2008 the company generated about 2.8 billion euros in free cash flow. MarketWatch

The stock fell after the report when Unilever refused to give guidance for 2009, and Wall Street had a hissy fit. When a large, financially sound company is knocked down in price by 50%, sells for less than 10 times current earnings, and pays a dividend that exceeds 5%, a great deal of the risk has been pounded out of it, to say the least.

Gannett is going to do another unpaid furlough for its employees after it saved about 20 million doing a one week unpaid furlough.Reuters

Today was interesting due to the conflicts over the music choices to be played on ITUNES here at the HG HQ trading desk. Right Brain wanted to listen to Springsteen's Born to Run, over and over again, like 500 times, while Mr. Left Brain, firmly in control of the keyboard after two weeks, listened to Frank Sinatra and Michael Buble, spending the entire day buying bonds. Right Brain could barely stand it, would have left the premises if possible, and instead settled for a howl or two in the urinal.

The S & P did close at 822.91. A monthly close above 815 will satisfy a trading rule permitting investment of cash flow into common stocks while waiting for the formation of a stable VIX pattern to invest large chunks of the existing cash allocation. The rally today reminded me of a day back in August 1982 when there was a powerful rally in what was then an existing and ongoing bear market. I committed money to stocks thereafter, as well as some funds a few weeks prior to that day, which was fortunate since a long term secular bull market started that very day. The rally that day was dismissed as a bear market rally. It happened on August 17, 1982. The DJIA rallied from the prior day close of 792.43 to 831.24, almost a 5% gain. By early October, the DJIA had crossed back over the 1000 mark. I mark that day as the beginning of a long term secular bull market that ended in 1999, though others would disagree with my analysis. I know that a 40 point gain in one day does not seem like much to the young ones, but it was huge back then. Sometimes, you need a clear demarcation between the bear and the bull, and maybe today was it. As the Ed Hart use to say, we shall know in the fullness of time.

One of the stocks recently added, Sysco, was favorably mentioned in Barron's Weekday Trader column published today.

The analyst at BB & T, Brian Wolf, was quoted as saying Sysco is a best in class company that has a lot of free cash flow. In prior recessions, the company has taken share from weaker rivals according to Wolf. My purchased was made on 3/9 at 19.46 for the reasons discussed in this post. Buys of CPB LQD SYY XKK/Regressive Taxation-Cap & Trade

Although I was very familiar with this company before making this purchase, I reviewed the last earnings release and several analyst reports. Morningstar had it rated five stars. The last report from Value Line had a safety rank of 1 and a timeliness of 2. Return on total capital is consistently over 20%, and the return on equity is over 30%. When I bought the dividend yield was around 5% and the five year P.E.G. estimate was under 1. This is a link to the statistics page at Yahoo Finance. SYY: Key Statistics 

Steven Sears discusses an early cyclical play, DuPont, and suggests a strategy of selling puts. DuPont was recently bought at 16.68. The Most Abused Word: Reform/Buys of IR & DD/Santayana: An Inability to Remember History or Just Creating Your Own Reality to Fit an Ideology I am most interested in whether Dupont maintains its current dividend. The yield at a $16.7 cost is almost 10%. My last purchase of this major chemical company was at a price prevalent twenty years ago in 1989, and this is just one among many examples of what I was talking about in this post: Tribe on Impairment of Contracts/Alexander & Baldwin/Stock Rallies and Quantitative Easing

I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator. I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments. Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed. These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities. All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.

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