Blog Archives

August 2014 Investing Articles

8/31/2014

Sole Proprietorship

8/30/2014

An individual investor is simply a one person, self-directed,
entrepreneurial business.

The individual investor may even be considered a sole proprietor because a sole proprietorship is not a legal entity. It simply refers to an individual person who owns a business and is personally responsible for its debts. A sole proprietorship can operate under his own name or it can do business under a fictitious name. It is often the simplest and most common structure that can be chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and the owner. And the owner is entitled to all the profits and is responsible for all the business’s debts, losses and liabilities.

Until I truly began to understood this simple yet profound idea of investing as a business, I didn’t really understand or take investing seriously. Today I do. I've come do understand and I am simultaneously an investor as well as a business owner. I am the owner of a business that employs just one person - me.

All of the collateral that was needed to start my business was provided by just one person - me. All of the profits that my business generates are distributed to just one person - me. All of the wealth that is created remains in the account but at any time that wealth can be converted to cash and distributed to the only businesses owner - me. And there’s only one person responsible for all the business decisions, both good and bad, that are made each and every day - and that’s me.

Like any business, my business owns inventory and that inventory is my portfolio. That inventory can never be thought of as good or bad, right or wrong. It’s just inventory. When I add to that inventory, I have a certain expectation of what that inventory should do. I'm also responsible to make any decisions concerning any and all changes to that inventory from time to time. I can buy and hold inventory or I can buy and sell inventory. It’s simply and completely my own decision and responsibility.

That inventory itself has an inherent or intrinsic value. I try to buy stock (inventory) when it’s way below it’s intrinsic value, hold it as long as it performs as I expect, and then sell it when it exceeds it’s intrinsic value. I have no emotional connection to that inventory and I don't define myself by that inventory. It's just the means by which I enhance my wealth.

"The chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world."
-- Calvin Coolidge, 30th President of the United States.

If you don’t understand these ideas and manage your accounts correctly, then you’re not running your accounts as a business. You’re not making the necessary investing decisions as a businessman would. You're probably not analyzing your current business decisions on a daily basis to determine whether or not they are good or bad decisions. You're running your business poorly and poorly run businesses sooner or later fail. And often miserably.

So if you’re not operating your accounts like a business, what are you really doing? You're probably doing one of the following three things.

You think of yourself as the owner of a lot of great companies.

You’ve may have heard that “When you buy a share of stock in a company you're now a part owner of that company.” This may even seem to make sense in some bizarre way, but this couldn't be any farther from the truth. In fact, this is probably the biggest whopper told to shareholders by the Wall Street professionals. It’s true that if you’re rich enough and you could buy all of the available shares of a company, you would be the owner of that company. But if you’re not quite that rich and you could buy a very large portion of the outstanding shares of the company, you might be elected to the board of directors and be considered as one of the small group of individuals that own the company. But if you’re a small investor like most of us and can only buy a few hundred shares of a company, what exactly are you an owner or part owner of?

A true owner of a company directs the affairs of an organization and is responsible for it’s mistakes. Can a single shareholder do that? A part owner ends up being part of a group like the board of directors that makes group decisions on the future direction of the company. Can a single shareholder do that? What exactly does an investor who owns only a few hundred shares of a company really control or direct? Probably very little if anything other than to vote for the board of directors this year or vote for who this year’s auditors will be.

A single shareholder is simply along for the ride so that single shareholder had better be positioned for the "right ride”. His inventory had better contain those companies that match his investing strategy or he may end up on the "wrong side" of the trade.

Any single shareholder has the right to receive the same dividend as any other shareholder but that doesn’t mean he has the ability or capability to determine what that dividend will be. He has the same right to benefit from the business’s increases in revenues and earnings in terms of the company's stock appreciation, but he really doesn’t control the operation or direction of the business. He may think of himself as an owner but that kind of "ownership" is generally not much more than “in name only”.

You’re really a gambler at heart.

I like to think of this group of investors as short term traders. That’s because they usually trade for a very short time and then they're broke. They tend to lose all of their money rather quickly. The lucky ones will have their “day job” to fall back on so after a while they usually build up another “stake” and continue to gamble on the next hot tip or great idea.

Gamblers usually get their tips from all their smart friends or from those various financial websites that can be found everywhere on the internet these days. The gamblers think that although they may not have the true insider's information, they believe they have information early than others and more reliable than the typical rumor. Usually this is the furthest from the truth. Luckily for me and others, these individuals are the market's money donors. They keep the rest of the investors wealthy. I would never discourage anyone from becoming a gambler. The market needs their money.

You’re a stock chaser.

The Stock Chaser is the guy that’s found a stock that’s already gone up. Usually way up. He’s sometimes referred to as the momentum investor. This is the guy that always amazes me and often interferes with my plans. My plan is to buy stocks that increase their revenues, earnings and dividends over time and on a consistent basis. When that stops happening, it’s time for me to find another stock that increases its revenues, earnings and dividends. The Stock Chaser always seems to come in after the stock has moved significantly up in price. When I think it’s finally time to move on to another stock, the Stock Chaser continues to drive a stock upward whose revenues, earnings, and dividends are beginning to turn decline. I need to be reminded of these guys every so often. They'll always continue to push a stock higher when it's not justified by the fundamentals.

Conclusion.

I don’t know why investing is so hard for most people. I suspect it’s because they get way too close to their investments. They internalize their investments and take everything too personal. It’s really not personal, it’s just business. If an investor's portfolio was an actual brick and mortar business, he wouldn’t have any problem treating it and assessing it as a business. If the portfolio was rental property he wouldn’t have a problem treating it like a business and assessing a return on investment from the rental income. I’ve never been able to understand why investing in the stock of companies is any different.

If you want to be successful as an individual investor you need to run your accounts just like you would any other business. Your investments are your business. And you are their sole proprietor.

The above article includes many of the ideas originally published in the article "Individual Investor, Inc.", dated 9 January 2014. For that article and many other interesting articles, please click on the "MORE INFORMATION" button below.

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DineEquity, Inc.

8/29/2014

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Two of my favorite restaurants are Applebee's Neighborhood Grill and Bar and the International House of Pancakes (IHOP). Like most people I like Applebee's for lunch and dinner and IHOP for breakfast and late, late night. Between the two of these restaurants I can find just about everything I like to eat served in relaxing, comfortable surroundings.

Small and medium sized towns especially like Applebee's. As small towns start to grow they're usually initially invaded with fast food restaurants like McDonald's, Burger King and Taco Bell.

A town's first experience with "upscale" casual dining usually occurs when Applebee's Neighborhood Grill and Bar arrives because it usually the first casual dining restaurant to arrive. In most of those small towns that bond that develops between the Applebee's restaurant and the local population is a pretty strong bond that often lasts for years, despite other casual dining restaurants eventually moving into town.

IHOP has cornered the market for breakfast casual dining. It's closest competitor is the Waffle House and the experience is totally different and less satisfying. Fortunately the two brands that make up DineEquity are complementary and together they target the entire casual dining population.

DineEquity, Inc. (DIN), together with its subsidiaries, owns, franchises, and operates full-service restaurant chains in the United States and internationally. It owns and operates two restaurant concepts: Applebee's Neighborhood Grill and Bar in the bar and grill segment of the casual dining category and the International House of Pancakes (IHOP) in the family dining category of the restaurant industry.

The Applebee's Neighborhood Grill and Bars offer food, non-alcoholic and alcoholic beverage items and table service. The IHOP restaurants provide full table service, and food and beverage offerings. As of March 17, 2014, DinEquity operated 3,600 restaurants in 19 countries under the company's brands. The company was formerly known as IHOP Corp. and changed its name to DineEquity, Inc. in June 2008 with the acquisition of Applebee's. DineEquity, Inc. was founded in 1958 and is headquartered in Glendale, California. (Daily Chart) (Weekly Chart)

27 August 2014
Price $83.40
1yr Target $93.50
Analysts 6
1yr Cap Gain 12.11%
Dividend $3.00
Yield 3.60%
1yr Tot Return 15.71%

Market Cap $1.66 Bil
Payout Ratio 77.92%
Beta 2.07
EPS (ttm) $3.85
EPS next yr $5.47
P/E 21.66
PEG 1.97
Debt/Equity 4.32
ROA 3.90%
ROE 29.10%

Applebee’s® competes in the grill & bar segment of the casual dining category of the restaurant industry. In October 2012, the company completed its refranchising initiative successfully transitioning to a system that's 99% franchised. Applebee’s Neighborhood Grill & Bar restaurants are known for their fun and family-friendly neighborhood atmosphere and signature grill & bar menu items. (website)

IHOP competes in the family dining area of the restaurant industry. Today 99% of all IHOP restaurants franchised. For 50 years, IHOP family restaurants have served their world famous pancakes and a wide variety of breakfast, lunch and dinner items that are loved by people of all ages. IHOP offers its guests an affordable, everyday dining experience with warm and friendly service. (website)

The Fundamentals

In order to understand the fundamentals of this company an investor needs to understand the company's history. In its simplest form, the data below covers the basic fundamental information for a ten year period and two estimated out years. And at first glance it's almost impossible to understand. But what you're seeing is the fundamental results of a company in transition.

Prior to 2007, DineEquity was composed of only the IHOP chain of company owned and franchised IHOP restaurants. During that period revenues and earnings were erratic but generally moving upward (see below). In 2007 DineEquity acquired the Applebee's Neighborhood Grill and Bar chain of restaurants and saw their revenues soar and their earnings decline. In 2007 the company also made the decision to transition from a combined company owned and franchised organization to a primarily franchised organization.

The transition continued for the next five years and in October 2012 DineEquity announced that 99% of their restaurants, both IHOP and Applebee's, had completed the transition and were franchised restaurants. The year 2013 became the first year of this "new" company.

Depending upon an investor's faith in the brokerage house's analyst's opinions, it appears that going forward DineEquity is about to show some excellent increases in revenues and earnings. If the dividend paid and the payout ratio experienced in 2013 is any indication of future dividends, an investor in this company is likely to be greatly rewarded in the very near future.

Year (Dec)
2015 Est
2014 Est
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Revenues
$660.73 Mil
$643.38 Mil
$640.46 Mil
$849.92 Mil
$1.07 Bil
$1.33 Bil
$1.41 Bil
$1.61 Bil
$484.55 Mil
$349.56 Mil
$348.02 Mil
$359.00 Mil
$404.80 Mil

Earnings
$5.47
$4.59
$3.70
$6.63
$3.89
-$1.74
$0.55
-$10.09
-$0.13
$2.43
$2.24
$1.61
$1.70

Dividends
$
$
$3.00
N/A
N/A
N/A
N/A
$0.75
N/A
N/A
N/A
N/A
N/A

Payout Ratio
%
%
81.08%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Revenue Growth Rate
3 year = -21.43%
5 year = -16.84%
10 year = 4.69%

Earnings Growth Rate
3 year = N/A
5 year = N/A
10 year = 8.08%

Dividend Growth Rate
3 year = N/A
5 year = N/A
10 year = N/A

The Technicals

The technicals are inconclusive. The stock has simply been bouncing off its Bollinger Bands while drifting sideways. It's appears to be relatively more erratic than the average company because of its relatively high beta (2.07). This shouldn't confuse the average investor but the new investors may see something that isn't there.

Daily Chart

Weekly Chart

The Competition

DineEquity, Inc is part of the Restaurant Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They each pay at least a minimal dividend and they are listed in the order of their market capitalization.

McDonald's Corporation (MCD)
Yum Brands, Inc. (YUM)
Burger King Worldwide, Inc (BKW)
Darden Restaurants, Inc. (DRI)
Dunkin' Brands Group, Inc. (DNKN)
Domino's Pizza, Inc. (DPZ)
Brinker International, Inc. (EAT)
The Wendy's Company (WEN)
Cracker Barrel Old Country Store, Inc. (CBRL)
Jack in the Box, Inc. (JACK)
The Cheesecake Factory, Inc. (CAKE)
Texas Roadhouse, Inc. (TXRH)
DineEquity, Inc.
Sonic Corporation (SONC)
Bob Evans Farms, Inc. (BOBE)

Conclusion

A normal analyst would look at this data and conclude that there just isn't enough there to justify accumulating stock in this company. And logically I would agree. But I like Applebee's and IHOP and every time I'm there it's packed with customers (at all hours of the day or night!). I also like their food and their atmosphere. And I'm impressed how each Applebee's connects with the local schools and sporting activities when furnishing their restaurants.

Looking at the fundamentals I think their transition is working and if estimates are correct (a big if), there could be a really good future here for this stock. Finally I expect the economy to improve going forward so I see the customer base for casual dining expanding.

Obviously if an investor is looking for a company with more concrete fundamentals and a better technical chart, he should look closely at Brinker International, but I think DineEquity could very quickly become very similar to Brinker.

I would love to buy this stock at a P/E ratio of 20 or less which would put the stock at approximately $77.00 but the current dividend yield of 3.60 may keep this from happening. On the other hand, a beta of 2.07 may be just high enough to cause such a pullback to occur. It's the kind of volatility that makes investing so exciting. My intent is to put a buy order in for $80.00 per share and then add to the position on pullbacks below that amount. Wish me luck.

The Live Interactive Chart

Additional Articles of Interest

"The Restaurant Industry", published 24 July 2014
"Cracker Barrel Old Country Store", published 13 August 2014
"McDonald's Corp", published 16 August 2014
"Brinker International", published 25 August 2014

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Death and Taxes

8/28/2014

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Ben Franklin was correct when he mentioned that nothing in life is as certain as death and taxes. And few things are as expensive. Federal taxes can take as much as 25-35% of your income each year. Add in state and local taxes and you could be paying up to 50% of your income to some government agency somewhere.

If accounting is your chosen profession, you probably never needed any help understanding your tax liability, but the rest of us do. For the majority of taxpayers, that means a trip to a tax preparer. For me that's H&R Block.

The other certainty in life is death (ironic, huh?). If you haven't experienced the cost of dying in the US, hold on to your wallet. It's about equal to the cost of buying a family automobile. And I don't mean a small one at all. I mean a four door family sedan. It's that expensive, and some day our heirs are going to be given a bill for a funeral ceremony and a cemetery plot.

So since all of this is very, very expensive, I thought I'd look into four companies that are in the death and taxes business and see if there's any money to be made by investing in some of these companies.

Below is an initial look at their fundamentals.

"In this world nothing can be said to be certain, except death and taxes."
-- Benjamin Franklin, printer, politician, inventor, statesman and diplomat.

Service Corporation International

Service Corporation International (SCI) provides death care products and services in North America and Germany. The company operates through two segments: Funeral and Cemetery. Its funeral service and cemetery operations comprise funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. The company also provides various professional services relating to funerals and cremations, including the use of funeral facilities and motor vehicles, and preparation and embalming services. In addition, it offers funeral related merchandise, such as caskets, casket memorialization products, burial vaults, cremation receptacles, cremation memorial products, flowers, and other ancillary products and services at funeral service locations. Further, the company’s cemeteries provide cemetery property interment rights, including developed lots, lawn crypts, and mausoleum spaces; and sell cemetery related merchandise and services consisting of stone and bronze memorials, markers, merchandise installations, and burial openings and closings, as well as preneed funeral and cemetery products and services. As of March 31, 2014, it owned and operated 1,638 funeral homes and 515 cemeteries, of which 283 were combination locations in 43 states, 8 Canadian provinces, the District of Columbia, and Puerto Rico. The company was founded in 1962 and is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)

26 August 2014
Price $22.07
1yr Target $25.25
Analysts 4
1yr Cap Gain 14.40%
Dividend $0.32
Yield 1.45%
1yr Tot Return 15.85%

Market Cap $4.66 Bil
Payout Ratio 58.18%
Beta 1.17
EPS (ttm) $0.55
EPS next yr $1.26
P/E 40.13
PEG 4.01
Debt/Equity 2.22
ROA 1.00%
ROE 8.40%

Revenue Growth Rate
3 year = 5.23%
5 year = 3.86%
10 year = 0.93%

Earnings Growth Rate
3 year = 10.13%
5 year = 12.60%
10 year = 9.11%

Dividend Growth Rate
3 year = 18.84%
5 year = 12.60%
8 year = 26.84%

StoneMor Partners L.P. (STON), together with its subsidiaries, owns and operates cemeteries in the United States. It operates through Cemetery Operations—Southeast, Cemetery Operations—Northeast, Cemetery Operations—West, and Funeral Homes segments. The company’s cemetery products and services include interment rights, such as burial lots, lawn crypts, mausoleum crypts, cremation niches, and perpetual care rights; merchandise comprising burial vaults, caskets, grave markers and grave marker bases, and memorials; and installation services for burial vaults, caskets, and other cemetery merchandise, as well as other service items. It also provides receptacles for cremated remains, including urns, and the inurnment of cremated remains in niches or scattering gardens; and funeral home services, such as consultation, the removal and preparation of remains, and the use of funeral home facilities for visitation and prayer services. As of May 14, 2014, the company operated 278 cemeteries and 90 funeral homes in 28 states and Puerto Rico. StoneMor GP LLC serves as the general partner of StoneMor Partners L.P. The company was founded in 1999 and is based in Levittown, Pennsylvania. (Daily Chart) (Weekly Chart)

26 August 2014
Price $25.44
1yr Target $28.00
Analysts 1
1yr Cap Gain 10.06%
Dividend $2.44
Yield 9.59%
1yr Tot Return 19.65%

Market Cap $736.74 Mil
Payout Ratio N/A
Beta 0.63
EPS (ttm) $-0.22
EPS next yr $-0.13
P/E N/A
PEG N/A
Debt/Equity 1.01
ROA -0.30%
ROE -2.90%

Revenue Growth Rate
3 year = 7.64%
5 year = 6.09%
8 year = 11.98%

Earnings Growth Rate
3 year = N/A
5 year = N/A
8 year = N/A

Dividend Growth Rate
3 year = 2.01%
5 year = 2.04%
8 year = 3.18%

"The only difference between death and taxes is that death doesn't get worse every time Congress meets."
-- Will Rogers, Cowboy, Humorist, Social Commentator, and Motion Picture Actor

Carriage Services, Inc. (CSV) provides death care services and merchandise in the United States. The company operates in two segments, Funeral Home Operations and Cemetery Operations. The Funeral Home Operations segment offers burial and cremation services, as well as related merchandise to meet a family’s death care needs, including consultation; the removal and preparation of remains; sale of caskets and related funeral merchandise; use of funeral home facilities for visitation and services; and transportation services. The Cemetery Operations segment provides products and services, such as interment services; the rights to interment in cemetery sites comprising grave sites, mausoleum crypts, and niches; and related cemetery merchandise, including memorials and vaults. As of March 13, 2014, the company operated 161 funeral homes in 26 states; and 31 cemeteries in 10 states. Carriage Services, Inc. was founded in 1991 and is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)

26 August 2014
Price $18.56
1yr Target $24.67
Analysts 3
1yr Cap Gain 32.92%
Dividend $0.10
Yield 0.53%
1yr Tot Return 33.45%

Market Cap $343.36 Mil
Payout Ratio 17.24%
Beta 0.84
EPS (ttm) $0.58
EPS next yr $1.48
P/E 32.00
PEG 1.60
Debt/Equity 1.55
ROA 2.80%
ROE 13.70%

Revenue Growth Rate
3 year = 5.52%
5 year = 3.87%
10 year = 3.55%

Earnings Growth Rate
3 year = 30.14%
5 year = 151.18%
10 year = 10.45%

Dividend Growth Rate
3 year = N/A
5 year = N/A
10 year = N/A

H&R Block, Inc. (HRB), through its subsidiaries, provides tax preparation and related services to the general public primarily in the United States, Canada, and Australia. The company offers assisted income tax return preparation and related services through a system of retail offices operated directly by the company or by franchisees; and online tax services, such as tax advice, professional and do-it-yourself (DIY) tax return preparation, and electronic filing services through its Website hrblock.com. It also develops and markets DIY desktop income tax preparation software; and develops and provides applications for mobile devices, which offer tax and related services. In addition, the company provides refund anticipation checks, H&R Block Emerald Advance lines of credit and Prepaid Emerald MasterCard, and Peace of Mind guarantees, as well as Cash Back refund discount programs. Further, it offers traditional retail banking services primarily to its assisted and DIY tax clients. The company was founded in 1946 and is headquartered in Kansas City, Missouri. (Daily Chart) (Weekly Chart)

26 August 2014
Price $33.73
1yr Target $37.71
Analysts 7
1yr Cap Gain 11.79%
Dividend $0.80
Yield 2.37%
1yr Tot Return 14.16%

Market Cap $9.27 Bil
Payout Ratio 44.69%
Beta 1.01
EPS (ttm) $1.79
EPS next yr $2.21
P/E 18.84
PEG 1.71
Debt/Equity 0.58
ROA 12.40%
ROE 44.10%

Revenue Growth Rate
3 year = 0.57%
5 year = -5.73%
10 year = -3.57%

Earnings Growth Rate
3 year = 0.97%
5 year = 3.47%
10 year = -1.15%

Dividend Growth Rate
3 year = 20.90%
5 year = 5.92%
10 year = 8.31%

Additional Articles of Interest Related to this Topic.

"Dividends From the Grave" by DivHut, Dividend and Investing Inspiration, dated 18 June 2014. This is an excellent article on funeral products and services, cemeteries, and hospices. For this article and many other excellent articles, please visit the DivHut.

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Brinker International

8/25/2014

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Brinker International, Inc. is a multinational casual dining company that owns the Chili's Grill and Bar and Maggiano's Little Italy restaurant chains. The company currently owns, operates, or franchises a total of 1,602 restaurants under the names Chili's Grill & Bar (1,557 restaurants) and Maggiano's Little Italy (45 restaurants) worldwide.

Chili's Grill and Bar

Chili’s menu features Baby Back Ribs smoked in-house, Big Mouth Burgers, Sizzling Fajitas, hand-battered Chicken Crispers and house-made Chips and Salsa, as well as pizzas and flatbreads. Their menu also offers a generous selection of appetizers, entrees and desserts at affordable prices. Chili’s offers a full selection of alcoholic beverages available from the bar but they are known for their Margaritas and draft beer. For guests seeking convenience, the company offers a "To Go" service that can be ordered by calling the restaurant or on-line or via mobile app, and most Chili’s offer a separate To Go entrance for service.

During the year ending June 26, 2013, at company-owned restaurants, entrée selections ranged in menu price from $6.00 to $17.69. The average revenue per meal, including alcoholic beverages, was approximately $13.99 per person. Food and non-alcoholic beverage sales constituted approximately 86.1% of Chili’s total restaurant revenues and alcoholic beverage sales accounting for the remaining 13.9%. Our average annual sales volume per Chili’s restaurant during this same year was $3.0 million.

Maggiano's Little Italy

24 August 2014
Price $49.37
1yr Target $51.93
Analysts 14
1yr Cap Gain 5.18%
Dividend $0.96
Yield 1.94%
1yr Tot Return 7.12%

Market Cap $3.21 Bil
Payout Ratio 42.47%
Beta 0.97
EPS (ttm) $2.26
EPS next yr $3.50
P/E 21.85
PEG 1.66
Debt/Equity 13.63%
ROA 10.50%
ROE 156.10%

Maggiano’s is a full-service, casual dining Italian restaurant brand that, with it's interior ambience, transports its guests back to the classic Italian-American restaurant style found in of New York’s Little Italy in the 1940s. Their restaurants feature individual and family-style menus, and our restaurants also have extensive banquet facilities designed to host large party business or social events. They have a full lunch and dinner menu offering chef-prepared, classic Italian-American fare in the form of appetizers, entrées with bountiful portions of pasta, chicken, seafood, veal and prime steaks, and desserts. They also offer a full range of alcoholic beverages, including a selection of Handcrafted Classic Cocktails and premium wines. In addition, Maggiano’s offers a full carryout menu as well as local delivery services.

During the year ending June 26, 2013, entrée selections ranged in menu price from $12.95 to $42.50. The average revenue per meal, including alcoholic beverages, was approximately $26.72 per person. Food and non-alcoholic beverage sales constituted approximately 83.0% of restaurant revenues, with alcoholic beverage sales accounting for the remaining 17.0%. Sales from events at our banquet facilities made up 19.4% of our total restaurant revenues for the year. Our average annual sales volume per Maggiano’s restaurant during this same year was $8.81 million.

New Openings

Brinker plans on opening a number of additional company-owned and franchised restaurants in 2014. They expect to open 11-12 company-owned and 4-6 franchised Chili's restaurants in the North American market. In the International market they expect to open 2 company-owned and 31-35 franchised Chili's restaurants. They also expect to open 2-3 additional Maggiano's restaurants within the North American market. Currently there are no franchised Maggiano's restaurants and none of them are located outside North America. Of the Chili's restaurants, 35% of the domestic and 96% of the international restaurants are franchised.

Historical Highlights

1975: The first Chili's Grill & Bar opens in Dallas, Texas.
1983: The company goes public.
1988: The first Romano's Macaroni Grill opens in Leon Springs, Texas.
1991: Chili's, Inc. is renamed Brinker International, Inc.
1995: Brinker complete's the acquisition of Maggiano's and establishes a strategic partnership with Lettuce Entertain You Enterprises.
2005: Brinker sells off the Corner Bakery Cafe concept.
2008: Brinker sells the majority stake in Romano's Macaroni Grill to Mac Acquisition LLC. (Brinker still owns a minority interest in Mac Acquisition)
2010: Brinker sells On the Border Mexican Grill & Cantina to OTB Acquisition LLC.

The Fundamentals

The fundamentals below look somewhat uneven unless you view them in terms of the historical highlights above. The addition of Romano's Macaroni Grill increased the revenues of Brinker International while the loss of Romano's Macaroni Grill, the Corner Bakery Cafe concept, and On the Border Mexican Grill & Cantina decreased the company's revenues. Similar effects occurred to the company's earnings. Surprisingly dividends per share were actually increased each year from the initial dividend in 2006.

With the company finally focused on their two main restaurant concepts, revenues are estimated to grow 3.79% in 2015 and 7.30% in 2016. Earnings are estimated to increase 14.92% in 2015 and 13.63% in 2016. Dividends are estimated to increase 16.66% in 2015 and 14.28% in 2016. (Brinker announced on Thursday, Aug 21, a dividend increase to $0.28 from $0.24, a 16.66% increase).

Year (June)
2016 Est
2015 Est
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Revenues
$3.13 Bil
$3.01 Bil
$2.90 Bil
$2.84 Bil
$2.82 Bil
$2.76 Bil
$2.85 Bil
$3.27 Bil
$4.23 Bil
$4.37 Bil
$4.15 Bil
$3.91 Bil
$3.70 Bil
$3.28 Bil

Earnings
$3.50
$3.08
$2.68
$2.20
$1.87
$1.53
$1.34
$0.77
$0.49
$1.85
$1.62
$1.15
$1.02
$1.13

Dividends
$1.28
$1.12
$0.96
$0.80
$0.64
$0.56
$0.47
$0.44
$0.42
$0.33
$0.20
N/A
N/A
N/A

Payout Ratio
36.57%
36.36%
35.82%
36.36%
34.22%
36.60%
35.07%
57.14%
85.71%
17.83%
12.34%
%
%
%

Prior to 2010 Brinker consisted of multiple restaurant concepts which were fully developed and eventually sold. As a result, the 5 and 10 year growth rates below include entire restaurant chains that are no longer part of Brinker International. The 3 year growth rates more accurately represents the corporation as it exists today. While I like to see growth rates over multiple periods, I think for Brinker International it's best to see the 3 year growth rates as best representing the company and its organizational structure as it exists today.

Revenue Growth Rate
3 year = 1.64%
5 year = -2.38%
10 year = -2.41%

Earnings Growth Rate
3 year = 20.31%
5 year = 28.33%
10 year = 10.14%

Dividend Growth Rate
3 year = 19.46%
5 year = 16.88%
8 year = 21.66%

The Technicals

From a technical perspective it's pretty easy to see that the stock is overpriced on a daily basis but more appropriately priced on a weekly basis. It's also obvious that the stock was a steal 2-3 weeks ago when it was priced in the $44.00 area. Technically I would wait for a combination of a pullback to the lower Bollinger Band with the momentum indicators in oversold territory before I'd commit funds to this company.

Daily Chart

Weekly Chart

The Competition

Brinker International is part of the Restaurant Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They each pay at least a minimal dividend and they are listed in the order of their market capitalization.

McDonald's Corporation (MCD)
Yum Brands, Inc. (YUM)
Burger King Worldwide, Inc (BKW)
Darden Restaurants, Inc. (DRI)
Dunkin' Brands Group, Inc. (DNKN)
Domino's Pizza, Inc. (DPZ)
Brinker International, Inc.
The Wendy's Company (WEN)
Cracker Barrel Old Country Store, Inc. (CBRL)
Jack in the Box, Inc. (JACK)
The Cheesecake Factory, Inc. (CAKE)
Texas Roadhouse, Inc. (TXRH)
DineEquity, Inc. (DIN)
Sonic Corporation (SONC)
Bob Evans Farms, Inc. (BOBE)

Conclusion

I like the Restaurant Industry in General and Brinker International in particular. I believe that the fast food industry is currently facing headwinds due to the fact that the lower end of the economy is struggling. The casual dining portion of this industry, however, seems to be doing quite well. I think this segment of the industry is viewed more as an evening out with friends and family as opposed to the fast food restaurants which are viewed as simply getting a quick meal on the run. I think as the economy improves, the casual dining restaurants will continue to improve and the fast food restaurants will begin to see their customer base return.

But I like to buy companies that are on sale and based upon the technicals, this company currently is not. My intent is to wait for a pullback in the price of the stock to an area near $44-$45. By waiting, the P/E ratio will fall to a level at or below 20, the one year estimated capital gain will increase to above 16%, and the dividend yield will increase to near 2.50%. These are actually ideal numbers for a dividend growth investor and would signal to me that this is a great company at a great price.

The Live Interactive Chart

Additional Related Articles

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GATX

8/24/2014

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I've always been fascinated with the images and sounds of trains (and the old west). I've also always been interested in the companies in the leasing business. GATX Corporation is in both of these businesses so I thought I'd take a look at the company and see if there's any value there for an investor like me.

GATX Corporation is an equipment finance company founded in 1898 and based in Chicago, Illinois. It's primary activities consist of leasing tankers/railcars in North America and Europe and locomotives in America. It also has a significant investment in industrial equipment and marine assets, including the ownership of the American Steamship Company which operates steamships on the Great Lakes.

The Company

GATX Corporation (GMT) leases, operates, manages, and remarkets assets in the rail and marine markets in North America and internationally. The company operates in four segments: Rail North America, Rail International, American Steamship Company (ASC), and Portfolio Management. The Rail North America segment primarily leases railcars and locomotive, as well as offers pays ad valorem taxes and insurance, and other ancillary services; operates a network of service facilities that perform repair, maintenance, modification, and regulatory compliance services on the railcar fleet; and provides maintenance services, including interior cleaning of railcars, general repairs to the car body and safety appliances, regulatory compliance work, wheelset replacements, exterior blast and painting, and car stenciling. The Rail International segment is engaged in the railcar leasing business, as well as offers repairs, regulatory compliance, and modernization work for railcars. The ASC segment operates a fleet of vessels that provide waterborne transportation of dry bulk commodities, such as iron ore, coal, limestone aggregates, and metallurgical limestone for automobile manufacturing, electricity generation, and non-residential construction industries. The Portfolio Management segment invests in operating assets, finance lease assets, and secured loans, as well as manages portfolios of assets for third parties; and provides leasing, asset remarketing, and asset management services. As of December 31, 2013, it operated a fleet of 13 vessels, as well as approximately 136,172 railcars and 595 locomotives. GATX Corporation was founded in 1898 and is headquartered in Chicago, Illinois. (Daily Chart) (Weekly Chart)

24 August 2014
Price $65.99
1yr Target $73.40
Analysts 5
1yr Cap Gain 11.22%
Dividend $1.32
Yield 2.00%
1yr Tot Return 13.22%

Market Cap $2.96 Bil
Payout Ratio 30.41%
Beta 1.06
EPS (ttm) $4.34
EPS next yr $4.89
P/E 15.21
PEG 1.27
Debt/Equity 3.06
ROA 3.00%
ROE 14.70%

The General Rail Business

GATX maintains a diverse railcar fleet of approximately 131,000 railcars and is one of the largest privately owned railcar fleets in the world with over a century of rail industry experience. They also have an ownership interest in an additional 4,000 railcars through investments in affiliated companies and actively manage another 1,100 railcars for other third party owners. They lease these tank cars, freight cars and locomotives in North America, Europe and India and offer rail leasing as well as maintenance, financial, and management expertise to their customers. Finally they utilize their extensive rail asset knowledge and experience to remarker both wholly owned and managed rail assets.

Their rail customers operate in the petroleum, chemical, transportation, and food/agriculture industries and as a result GATX's worldwide railcar fleet consists of diverse railcar types that our customers use to ship approximately 550 different commodities.

The American Steamship Company (ASC)

ASC operates the largest fleet of US flagged vessels on the Great Lakes providing waterborne transportation of dry bulk commodities such as iron ore, coal, limestone aggregates and metallurgical limestone, which serve end markets that include domestic automobile manufacturing, electricity generation and non-residential construction. Customer service, primarily in the form of scheduling flexibility, reliability and operating safety, is the key to ASC’s success. ASC’s sailing season generally runs from April 1 through December 31 but depending on customer demand and weather conditions, certain vessels may commence operations during March and continue to operate into January of the following year.

At December 31, 2013, ASC’s fleet consisted of 17 vessels. Fourteen of the vessels are diesel powered, have an average age of 36 years and estimated useful lives of 65 years. Two steam powered vessels were built in the 1940s and 1950s and have estimated remaining useful lives of six years. The other vessel in ASC's fleet is an articulated tug-barge, which is leased by ASC under an operating lease that expires in 2017.

The Fundamentals

Year
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Revenues
$1.56 Bil
$1.45 Bil
$1.32 Bil
$1.24 Bil
$1.19 Bil
$1.11 Bil
$1.12 Bil
$1.44 Bil
$1.34 Bil
$1.22 Bil
$1.13 Bil
$1.23 Bil
$1.31 Bil

Earnings
$4.83
$4.33
$3.59
$2.88
$2.35
$1.72
$1.70
$3.89
$3.76
$2.00
$-0.29
$3.04
$1.56

Dividends
$1.40
$1.32
$1.24
$1.20
$1.16
$1.12
$1.12
$1.08
$0.96
$0.84
$0.80
$0.80
$1.28

Payout Ratio
28.98%
30.48%
34.54%
41.66%
49.36%
65.11%
65.88%
27.76%
25.53%
42.00%
-NA-
26.31%
82.05%

Revenue Growth Rate
3 year = 5.88%
5 year = -1.73%
10 year = 0.07%

Earnings Growth Rate
3 year = 27.48%
5 year = -1.60%
10 year = 8.69%

Dividend Growth Rate
3 year = 3.41%
5 year = 2.80%
10 year = -0.32%

The Technicals

Daily Chart

Weekly Chart

The Competition

GATX Corporation is part of the Rental and Leasing Services Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They are listed in the order of their market capitalization.

Ryder Systems, Inc (R)
Air Lease Corporation (AL)
GATX Corporation
Aaron's, Inc (AAN)
TAL Interational Group, Inc (TAL)
Aircastle LTD (AYR)

Conclusion

I love the Rail business and I love the Leasing business, but I just don't see where GATX improves from here. While the estimates are improving going forward, the last ten years worth of the fundamentals are not a very good predictor of those future estimates. The technical charts above don't predict any forward progress in the price of the stock either. I intend to include this company on my watch list but there's no indication that I'll doing any more than simply watching this stock. If things change in the future, I'll revisit this company and its fundamentals.

The Live Interactive Chart

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The Men's Wearhouse, Inc.

8/23/2014

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Founded in 1973, Men's Wearhouse is one of North America's largest specialty retailers of men's apparel with 1,766 stores. The Men's Wearhouse, Jos. A. Bank, Moores and K&G stores carry a full selection of suits, sport coats, furnishings and accessories in exclusive and non-exclusive merchandise brands. Additionally, Men's Wearhouse operates a global corporate apparel and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra and Yaffy in the United Kingdom.

The Company

The Men’s Wearhouse, Inc. (MW), together with its subsidiaries, operates as a specialty apparel retailer in the United States and Canada. The company operates through two segments, Retail and Corporate Apparel. It provides suits, suit separates, sport coats, slacks, sportswear, outerwear, dress shirts, shoes, and accessories for men, as well as offers tuxedo rentals. The company also provides ladies’ career apparel, sportswear, and accessories; and children’s apparel. The Men's Wearhouse also sells its products through the internet at menswearhouse.com.

In addition, it provides corporate clothing uniforms and workwear to workforces under the Dimensions, Alexandra, and Yaffy brands through managed corporate accounts, catalogs, and the Internet in the United Kingdom; and is involved in the retail dry cleaning, laundry, and heirlooming operations. The company was founded in 1973 and is based in Houston, Texas. (Daily Chart) (Weekly Chart)

23 August 2014
Price $54.20
1yr Target $65.25
Analysts 4
1yr Cap Gain 20.38%
Dividend $0.72
Yield 1.32%
1yr Tot Return 21.70%

Payout Ratio 51.06%
Beta 1.21
EPS (ttm) $1.41
EPS next yr $3.79
P/E 38.44
PEG 4.63
ROA 6.40%
ROE 9.80%

The company operates under the names Men's Wearhouse, K&G Superstores (an off-price retail chain featuring discontinued items), Moores Clothing for Men (a Canadian chain of men's clothing stores), Twin Hill Corporate clothing and MW Cleaners in the Houston Area.

The Fundamentals

Year
2016 Est
2015 Est
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004

Revenues
$3.69 Bil
$3.51 Bil
$2.47 Bil
$2.48 Bil
$2.38 Bil
$2.10 Bil
$1.90 Bil
$1.97 Bil
$2.11 Bil
$1.88 Bil
$1.72 Bil
$1.54 Bil
$1.39 Bil

Earnings
$3.79
$2.79
$1.70
$2.55
$2.30
$1.27
$0.88
$1.13
$2.73
$2.71
$1.88
$1.29
$0.84

Dividends
$1.14
$0.84
$0.72
$0.72
$0.54
$0.39
$0.30
$0.28
$0.19
$0.20
$0.05
N/A
N/A

Payout Ratio
30.07%
30.10%
42.35%
28.23%
23.47%
30.70%
34.09%
24.77%
6.95%
7.38%
2.65%
N/A
N/A

Revenue Growth Rate
3 year = 5.50%
5 year = 4.62%
10 year = 5.91%

Earnings Growth Rate
3 year = 10.10%
5 year = 8.51%
10 year = 7.30%

Dividend Growth Rate
3 year = 22.42%
5 year = 20.79%
8 year = 39.57%

The Technicals

Looking at the charts below it's fairly obvious that this stock is for those traders that look to buy and hold for a very long time or for those traders that are very short term oriented and very nimble. Most traders fall between these two extremes this stock may just have too much volatility for those traders. That said, this stock is rising on the daily chart and falling on the weekly chart, so an investor's trading horizon will dictate which side of the trade they are on. For most traders, the sidelines is the best place to be.

Daily Chart

Weekly Chart

The Competition

The Men's Wearhouse, Inc. is part of the Apparel Stores Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They are listed in the order of their market capitalization.

The Gap, Inc. (GPS)
L Brands, Inc.
Ross Stores, Inc. (ROST)
Nordstrom, Inc. (JWN)
Abercrombie & Fitch Company (ANF)
DSW Inc. (DSW)
The Men's Warehouse, Inc
Chico's FAS, Inc. (CHS)
The Buckle, Inc. (BKE)
Guess Inc. (GES)
American Eagle Outfitters, Inc. (AEO)
The Children's Place (PLCE)

Conclusion

I like this company more than I like the stock. As can be seen above, the entire industry contains a number of companies and some of them offer a more compelling story for an investor. The estimates look great but they're based on the average of only 4 analysts so their validity is suspect. I generally like to see twice that many analysts in order to have more confidence in their estimates. I'll probably continue to monitor this stock for some time and if the forward estimates are validated, I may begin to accumulate a position in this company. For now, I'm more interested in The Gap, L Brands, and Ross Stores.

The Live Interactive Chart

Additional Related Articles

The Gap - 4 May 2014
L Brands, Inc - 15 August 2-14

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An Initial Look at 26 Companies (Part 3)

8/22/2014

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A recent scan of the markets revealed twenty-six companies that met the following screening criteria:

Dividend Yield over 2%
Payout Ratio under 50%
PEG Ratio of under 3
Return on Equity of at least 15%
Debt to Equity Ratio of less than 50%
Positive EPS Growth this year, next year and the next 5 years.
(data from 20 August 2014)

I have sorted these companies in the order of their market capitalization and have listed them from largest to smallest. I have also segmented this list into three parts in order to keep each individual article within a reasonable length. The three parts will include the following companies.

Part 1
Microsoft Corporation
Johnson and Johnson
Qualcomm Incorporated
ConocoPhillips
3M Company
General Dynamics Corp
Raytheon Company
Marsh & McLennan Cos, Inc
Aflac Inc.

Part 2
T.Rowe Price Group, Inc
The Gap, Inc
Symantec Corporation
Helmerich & Payne, Inc
Murphy Oil Corporation
Best Buy Co, Inc
Alaska Air Group, Inc
GameStop Corp
Waddell & Reed Financial Inc

Part 3
Gentex Corp
DSW Inc
Cohen & Steers Inc
Western Refining Logistics, LP
Boston Private Financial Holdings
Capella Education Co
FutureFuel Corp
Intelliquent, Inc

19. Gentex Corporation (GNTX) is engaged in designing, developing, manufacturing, and marketing automatic-dimming rearview mirrors and electronics for the automotive industry; variable dimmable aircraft windows for the aviation industry; and commercial smoke alarms and signaling devices for the fire protection industry worldwide. The company offers automotive products, including interior and exterior electrochromic automatic-dimming rearview mirrors; automotive electronics; and interior and exterior non-automatic-dimming rearview mirrors with electronic features for automotive passenger cars, light trucks, pick-up trucks, sport utility vehicles, and vans for original equipment manufacturers, tier one automotive mirror manufacturers, and various aftermarket and accessory customers. It also provides photoelectric smoke detectors and alarms, photoelectric smoke detectors and visual signaling alarms, photoelectric smoke detectors and electrochemical carbon monoxide alarms, electrochemical carbon monoxide detectors and alarms, audible and visual signaling alarms, and bells and speakers for use in fire detection systems in office buildings, hotels, and other commercial establishments, as well as in residential applications. The company sells its fire protection products directly and through manufacturer representative organizations to fire protection and security product distributors, and electrical wholesale houses, as well as to the original equipment manufacturers of fire protection systems. Gentex Corporation was founded in 1974 and is headquartered in Zeeland, Michigan. (Daily Chart) (Weekly Chart)

Sector: Consumer Goods
Industry: Auto Parts
Market Cap $4.27 Bil
P/E 15.72
PEG 1.33
Payout Ratio 29.90%
3yr RevGR 12.65%
3yr EarnGR 16.33%
3yr DivGR 8.28%

Price $29.38
1yr Target $34.43
1yr Cap Gain 17.18%
Dividend $0.64
Yield 2.17%
1yr Tot Return 19.35%

EPS next year 4.91%
EPS next five years 11.83%

20. DSW Inc. (DSW) operates as a branded footwear and accessories retailer in the United States. The company operates in two segments, DSW and Affiliated Business Group. It offers a range of brand name dresses, casual and athletic footwear, and accessories for women and men through its DSW stores and dsw.com. The company also provides kids’ shoes on dsw.com; and handbags, hosiery, jewelry, and other accessories. As of July 10, 2014, it operated 410 DSW stores in 42 states, the District of Columbia, and Puerto Rico; dsw.com, an e-commerce site; and m.dsw.com, a mobile Website. DSW Inc. was founded in 1917 and is based in Columbus, Ohio. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Apparel Stores
Market Cap $2.57 Bil
P/E 16.76
PEG 1.62
Payout Ratio 40.00%
3yr RevGR 9.03%
3yr EarnGR 58.32%
3yr DivGR N/A

Price $28.21
1yr Target $29.64
1yr Cap Gain 5.06%
Dividend $0.75
Yield 2.65%
1yr Tot Return 7.71%

EPS next year 14.40%
EPS next five years 10.35%

21. Cohen & Steers, Inc. (CNS), together with its subsidiaries, operates as an investment manager in the United States, Japan, and internationally. The company focuses on global real estate securities, global listed infrastructure, real assets, large cap value stocks, and preferred securities. It primarily manages institutional accounts, open-end mutual funds, and closed-end mutual funds. The company also manages alternative investment strategies, such as hedged real estate securities portfolios for qualified investors. In addition, it provides distribution services for its funds; and advisory consulting services to model-based strategies accounts. The company serves its sponsored open-end and closed-end mutual funds, U.S. and non-U.S. pension plans, endowment funds, foundations, and subadvised funds for other financial institutions. Cohen & Steers, Inc. was founded in 1986 and is headquartered in New York, New York. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Asset Management
Market Cap $1.94 Bil
P/E 24.77
PEG 1.43
Payout Ratio 47.20%
3yr RevGR 17.26%
3yr EarnGR 12.03%
3yr DivGR 25.70%

Price $43.22
1yr Target $40.67
1yr Cap Gain -5.91%
Dividend $0.88
Yield 2.03%
1yr Tot Return -3.88%

EPS next year 13.54%
EPS next five years 17.30%

22. Western Refining Logistics, LP (WNRL) is engaged in the ownership, acquisition, development, and operation of terminals, storage tanks, pipelines, and other logistics assets in the Southwestern United States. It has pipeline and gathering assets, including approximately 300 miles of crude oil pipelines and gathering systems, and approximately 569,000 barrels of active crude oil storage located primarily in the Delaware Basin. The company also has terminalling, transportation, and storage assets comprising terminals and storage assets located at El Paso and Gallup refineries, and refined products terminals located in Bloomfield and Albuquerque, New Mexico that consists of approximately 6.9 million barrels of active shell storage capacity, which receive, store, and distribute crude oil, feedstock, and refined products; and asphalt plant and terminal that provides asphalt terminalling and processing services in El Paso. Its terminalling, transportation, and storage assets also consists of asphalt terminals that offer asphalt terminalling services located in Albuquerque, New Mexico; and Phoenix and Tucson, Arizona, which have a storage capacity of approximately 473,000 barrels. Western Refining Logistics GP, LLC operates as a general partner of Western Refining Logistics, LP. The company is headquartered in El Paso, Texas. (Daily Chart) (Weekly Chart)

Sector: Basic Materials
Industry: Oil and Gas Pipelines
Market Cap $1.50 Bil
P/E 20.65
PEG 1.38
Payout Ratio 33.80%
3yr RevGR N/A
3yr EarnGR N/A
3yr DivGR N/A

Price $34.87
1yr Target $36.75
1yr Cap Gain 5.39%
Dividend $1.19
Yield 3.41%
1yr Tot Return 8.80%

EPS next year 35.07%
EPS next five years 15.00%

23. Boston Private Financial Holdings, Inc. (BPFH) operates as the bank holding company for Boston Private Bank & Trust Company that offers a range of wealth management services in the United States. The company operates in three segments: Private Banking, Investment Management, and Wealth Advisory. Its deposit products include checking accounts, savings and NOW accounts, money market accounts, and certificates of deposits. The company also offers loans to individuals, such as residential mortgage loans, mortgage loans on investment or vacation properties, unsecured and secured personal lines of credit, home equity loans, and overdraft protection. In addition, it provides loans to businesses, including commercial and mortgage loans, revolving lines of credit, working capital loans, equipment financing, community lending programs, and construction and land loans. Further, the company offers wealth management and private banking services; investment management services; and wealth advisory services comprising financial planning, tax planning, tax preparation, estate and insurance planning, retirement planning, charitable planning, and intergenerational gifting and succession planning. It serves high net worth individuals, families, and businesses; real estate investors; and middle market businesses, including corporations, partnerships, associations, and nonprofit organizations primarily in the New England, San Francisco Bay, and Southern California. Boston Private Financial Holdings, Inc. was founded in 1988 and is headquartered in Boston, Massachusetts. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Regional - Northeast Banks
Market Cap $996.40 Mil
P/E 15.68
PEG 1.37
Payout Ratio 25.90%
3yr RevGR -1.52%
3yr EarnGR N/A
3yr DivGR 87.78%

Price $12.23
1yr Target $14.11
1yr Cap Gain 15.37%
Dividend $0.32
Yield 2.61%
1yr Tot Return 17.98%

EPS next year 11.44%
EPS next five years 12.35%

24. Capella Education Company (CPLA), through its subsidiaries, operates as an online postsecondary education services company primarily in the United States. It offers various doctoral, master’s, and bachelor’s programs primarily for the public service leadership, behavioral health and human services, business management and technology, and education markets; and online distance learning services, including degree-entry programs and doctoral level programs in various disciplines, including business, management, psychology, law, and computing, as well as provides a social teaching and learning platform that integrates education with technology. The company also provides online training solutions and services to corporate partners through its online learning platform. In addition, it also provides learner support services, such as academic services comprising new learner orientation, technical support, academic advising, research services, writing services, and online tutoring; and administrative services through the telephone and Internet. The company’s learner support services also include library services, such as access to the collection of online journals, eBooks, and interlibrary loan services; and career center services consisting of career counseling, job search advising, and career management support services to learners and alumni. As of December 31, 2013, it offered approximately 1,700 online courses and 43 academic programs with 143 specializations to approximately 35,000 learners. Capella Education Company was founded in 1991 and is headquartered in Minneapolis, Minnesota. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Education and Training Services
Market Cap $834.84 Mil
P/E 25.33
PEG 2.37
Payout Ratio 38.30%
3yr RevGR -0.82%
3yr EarnGR -8.30%
3yr DivGR N/A

Price $67.23
1yr Target $69.14
1yr Cap Gain 2.84%
Dividend $1.40
Yield 2.08%
1yr Tot Return 4.92%

EPS next year 10.16%
EPS next five years 10.71%

25. FutureFuel Corp. (FF), through its subsidiaries, manufactures and sells diversified chemical products, biofuels, and biobased specialty chemical products in the United States and internationally. The company operates in two segments, Biofuels and Chemicals. The Biofuels segment produces and sells biodiesel. It also sells petrodiesel in blends; ships refined petroleum products on a common carrier pipeline; and buys and sells petroleum products. This segment markets its biodiesel products directly to customers through trucks, rail, and barges in the United States. The Chemicals segment manufactures and sells custom manufacturing products, including nonanoyloxybenzene-sulfonate, a bleach activator used in household detergents; a proprietary herbicide and intermediates for life sciences companies; chlorinated polyolefin adhesion promoters and antioxidant precursors; and a biocide intermediate for chemical companies. Its custom manufacturing product portfolio also includes products that are used in the agricultural chemical, coatings, chemical intermediates, industrial and consumer cleaning, oil and gas, and specialty polymers. In addition, this segment offers performance chemicals, such as a family of polymer modifiers, and various small-volume specialty chemicals and solvents for various applications; and a family of acetal based solvents, including diethoxymethane, dimethoxymethane, dibutoxymethane, glycerol formal, and phenol sulfonic acid. Its chemical products are used in various markets and end uses comprising detergent, agrochemical, automotive, photographic imaging, coatings, nutrition, and polymer additives. The company was formerly known as Viceroy Acquisition Corporation and changed its name to FutureFuel Corp. in October 2006. FutureFuel Corp. was incorporated in 2005 and is headquartered in Clayton, Missouri. (Daily Chart) (Weekly Chart)

Sector: Basic Materials
Industry: Chemicals - Major Diversified
Market Cap $618.39 Mil
P/E 11.53
PEG 1.00
Payout Ratio 37.70%
3yr RevGR 26.31%
3yr EarnGR 39.76%
3yr DivGR 11.08%

Price $13.68
1yr Target $20.00
1yr Cap Gain 46.19%
Dividend $0.48
Yield 3.50%
1yr Tot Return 49.69%

EPS next year 40.54%
EPS next five years 11.50%

26. Inteliquent Inc. (IQNT) provides voice telecommunications services on a wholesale basis in the United States and internationally. The company offers its services using an all-IP network, which enables to deliver global connectivity for various media, including voice, data, and video. It provides voice services that allow carriers to exchange local and long distance traffic between their networks without using an incumbent local exchange carrier tandem or establishing direct connections. Inteliquent serves competitive carriers, including wireless, wireline, cable, and broadband telephony companies, as well as over-the-top providers. The company was formerly known as Neutral Tandem, Inc. and changed its name to Inteliquent Inc. in July 2013. Inteliquent Inc. was founded in 2001 and is headquartered in Chicago, Illinois. (Daily Chart) (Weekly Chart)

Sector: Technology
Industry: Wireless Communication
Market Cap $366.53 Mil
P/E 10.06
PEG 1.01
Payout Ratio 26.40%
3yr RevGR 1.91%
3yr EarnGR 23.14%
3yr DivGR N/A

Price $11.19
1yr Target $17.50
1yr Cap Gain 56.38%
Dividend $0.30
Yield 2.68%
1yr Tot Return 59.06%

EPS next year 3.46%
EPS next five years 10.00%

An Initial Look (Part 1)

An Initial Look (Part 2)

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An Initial Look at 26 Companies (Part 2)

8/21/2014

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A recent scan of the markets revealed twenty-six companies that met the following screening criteria:

Dividend Yield over 2%
Payout Ratio under 50%
PEG Ratio of under 3
Return on Equity of at least 15%
Debt to Equity Ratio of less than 50%
Positive EPS Growth this year, next year and the next 5 years.
(data from 20 August 2014)

Part 1
Microsoft Corporation
Johnson and Johnson
Qualcomm Incorporated
ConocoPhillips
3M Company
General Dynamics Corp
Raytheon Company
Marsh & McLennan Cos, Inc
Aflac Inc.

Part 2
T.Rowe Price Group, Inc
The Gap, Inc
Symantec Corporation
Helmerich & Payne, Inc
Murphy Oil Corporation
Best Buy Co, Inc
Alaska Air Group, Inc
GameStop Corp
Waddell & Reed Financial Inc

Part 3
Gentex Corp
DSW Inc
Cohen & Steers Inc
Western Refining Logistics, LP
Boston Private Financial Holdings
Capella Education Co
FutureFuel Corp
Intelliquent, Inc

10. T. Rowe Price Group, Inc. (TROW) is a publicly owned asset management holding company. The firm primarily provides its services to individual and institutional investors, retirement plans, and financial intermediaries. Through its subsidiaries, it manages separate client-focused equity, fixed income, and balanced portfolios. The firm also launches equity, fixed income, and balanced mutual funds for its clients. It invests in the public equity, fixed income, markets across the globe. It also invests in late-stage venture capital transactions with equity investments between $3 million and $5 million. The firm was previously known as T. Rowe Price Associates, Inc. T. Rowe Price Group was founded in 1937 and is based in Baltimore, Maryland with additional offices across North America, Europe, and Asia. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Asset Management
Market Cap $20.70 Bil
P/E 18.22
PEG 1.32
Payout Ratio 36.90%
3yr RevGR 13.60%
3yr EarnGR 15.35%
3yr DivGR 11.93%

Price $79.49
1yr Target $90.35
1yr Cap Gain 13.66%
Dividend $1.76
Yield 2.21%
1yr Tot Return 15.87%

EPS next year 10.28%
EPS next five years 13.83%

11. The Gap, Inc. (GPS) operates as an apparel retail company worldwide. It provides apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. Its products comprise maternity apparel; loungewear, sleepwear, intimates, and active apparel for women; handbags, shoes, jewelry, personal care products, and eyewear for men and women; women’s apparel, footwear, and accessories for sports and fitness activities, including crossover apparel and casualwear; and luxury and contemporary products. The company also has franchise agreements with unaffiliated franchisees to operate stores in Asia, Australia, Eastern Europe, Latin America, the Middle East, and Africa under the Gap, Banana Republic, and Old Navy brands. Gap, Inc. offers its products through company-operated stores, franchise stores, e-commerce sites, and catalogs. As of May 3, 2014, it had 3,565 store locations in 48 countries, including 3,179 company-operated stores and 386 franchise stores. The Gap, Inc. was founded in 1969 and is headquartered in San Francisco, California. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Apparel Stores
Market Cap $18.81 Bil
P/E 16.36
PEG 1.26
Payout Ratio 29.20%
3yr RevGR 3.23%
3yr EarnGR 13.23%
3yr DivGR 20.28%

Price $43.11
1yr Target $44.80
1yr Cap Gain 3.92%
Dividend $0.88
Yield 2.04%
1yr Tot Return 5.96%

EPS next year 12.72%
EPS next five years12.98 %

12. Symantec Corporation (SYMC), together with its subsidiaries, provides security, backup, and availability solutions worldwide. Its products and services protect people and information in any environment from mobile devices and enterprise data centers to cloud-based systems. The company operates in three segments: User Productivity & Protection; Information Security; and Information Management. The User Productivity & Protection segment provides Norton solutions, endpoint security and management, encryption, and mobile offerings. The Information Security segment offers secure socket layer certificates, authentication, mail and Web security, data center security, data loss prevention, and information security services offerings that help its customers ensure their confidential information is secure wherever it resides in the network path, from the user’s device to the data’s resting place. The Information Management segment focuses on backup and recovery, archiving and eDiscovery, storage, and high availability solutions helping to ensure that its customers’ IT infrastructure and mission-critical applications are protected, managed, and available. The company markets and sells its products and related services through its direct sales force and e-commerce platform, as well as through distributors, direct marketers, Internet-based resellers, system builders, Internet service providers, wireless carriers, retailers, original equipment manufacturers, national solution providers, regional solution providers, national account resellers, global/federal system integrators, managed service providers, and retail and online stores. Symantec Corporation was founded in 1982 and is headquartered in Mountain View, California. (Daily Chart) (Weekly Chart)

Sector: Technology
Industry: Security Software and Services
Market Cap $16.74 Bil
P/E 17.44
PEG 2.37
Payout Ratio 42.90%
3yr RevGR 2.52%
3yr EarnGR 18.77%
3yr DivGR N/A

Price $24.28
1yr Target $24.21
1yr Cap Gain -0.29%
Dividend $0.60
Yield 2.81%
1yr Tot Return 2.52%

EPS next year 8.70%
EPS next five years 7.35%

13. Helmerich & Payne, Inc. (HP) primarily operates as a contract drilling company in North and South America. It provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and fixed platforms, tension-leg platforms, and spars in offshore areas. As of November 14, 2013, the company’s fleet included 305 land rigs in the U.S., 29 international land rigs, and 9 offshore platform rigs. Its contract drilling business operates through three reportable segments: U.S. Land, Offshore, and International Land. The U.S. Land segment operates primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Pennsylvania, Ohio, Utah, Arkansas, New Mexico, Montana, North Dakota, West Virginia, and Nevada. The Offshore segment conducts operations in the Gulf of Mexico, and offshore of California and Equatorial Guinea. The International Land segment has operates in Ecuador, Colombia, Argentina, Tunisia, Bahrain, and the United Arab Emirates. The company, through its subsidiaries, is also involved in the ownership, development, and operation of commercial real estate; and the research and development of rotary steerable technology. Its real estate investments include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet, and approximately 210 acres of undeveloped real estate located within Tulsa, Oklahoma. Helmerich & Payne, Inc. was founded in 1920 and is headquartered in Tulsa, Oklahoma. (Daily Chart) (Weekly Chart)

Sector: Basic Materials
Industry: Oil & Gas Drilling and Exploration
Market Cap $10.75 Bil
P/E 15.54
PEG 0.99
Payout Ratio 30.30%
3yr RevGR 21.54%
3yr EarnGR 66.44%
3yr DivGR 78.72%

Price $101.05
1yr Target $115.20
1yr Cap Gain 14.00%
Dividend $2.75
Yield 2.72%
1yr Tot Return 16.72%

EPS next year 18.22%
EPS next five years 15.70%

14. Murphy Oil Corporation (MUR) is engaged in the exploration and production of oil and gas properties. The company explores for and produces crude oil, natural gas, and natural gas liquids. It produces oil and/or natural gas in the United States, Canada, and Malaysia; and conducts exploration activities worldwide. The company was formerly known as Murphy Corporation and changed its name to Murphy Oil Corporation in 1964. Murphy Oil Corporation was founded in 1950 and is headquartered in El Dorado, Arkansas. (Daily Chart) (Weekly Chart)

Sector: Basic Materials
Industry: Independent Oil and Gas
Market Cap $10.74 Bil
P/E 14.64
PEG 1.50
Payout Ratio 16.40%
3yr RevGR N/A
3yr EarnGR N/A
3yr DivGR N/A

Price $60.61
1yr Target $70.64
1yr Cap Gain 16.54%
Dividend $1.25
Yield 2.06%
1yr Tot Return 18.60%

EPS next year 9.72%
EPS next five years 9.77%

15. Best Buy Co., Inc. (BBY) operates as a multi-national, multi-channel retailer of technology products in the United States, Canada, China, and Mexico. Its stores offer consumer electronics consisting primarily of television and home theaters; digital cameras and camcorders; DVD and Blu-ray players; portable electronics, such as MP3 devices, headphones and speakers, car stereo, navigation and satellite radio; and all related accessories. The company's stores also provide computing and mobile phone products, including notebook and desktop computers, tablets and e-readers, mobile phones and related subscription service commissions, and related accessories; entertainment products, such as video gaming hardware and software, DVDs, Blu-rays, CDs, digital downloads, and computer software; and appliances, including large and small appliances, and kitchen and bath fixtures, including faucets, sinks, toilets, and bathtubs. It also offers extended warranty service contracts, technical support, product repair, delivery, and installation services, as well as offers snacks and beverages. The company operates e-commerce operations, retail stores, and call centers; and conducts operations under various names, such as Best Buy, including BestBuy.com and BestBuy.ca; Best Buy Mobile; Five Star; Future Shop, including FutureShop.ca; Geek Squad; Magnolia Audio Video; and Pacific Sales. The company was formerly known as Sound of Music, Inc. Best Buy Co., Inc. was founded in 1966 and is headquartered in Richfield, Minnesota. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Electronics Stores
Market Cap $10.73 Bil
P/E 10.28
PEG 0.68
Payout Ratio 18.60%
3yr RevGR N/A
3yr EarnGR N/A
3yr DivGR N/A

Price $31.34
1yr Target $33.05
1yr Cap Gain 5.45%
Dividend $0.76
Yield 2.42%
1yr Tot Return 7.87%

EPS next year 12.39%
EPS next five years 15.13%

16. Alaska Air Group, Inc. (ALK), through its subsidiaries, provides passengers and cargo air transportation services in the United States. The company operates through Alaska Mainline and Alaska Regional segments. It serves approximately 100 cities in Alaska, the Lower 48, Hawaii, Canada and Mexico. As of December 31, 2013, the company’s fleet consisted of 131 Boeing 737 jet aircraft and 51 Bombardier Q400 turboprop aircraft. The company was founded in 1932 and is based in Seattle, Washington. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Regional Airlines
Market Cap $6.31 Bil
P/E 10.49
PEG 0.55
Payout Ratio 12.70%
3yr RevGR 10.28%
3yr EarnGR 27.85%
3yr DivGR N/A

Price $47.14
1yr Target $55.93
1yr Cap Gain 18.57%
Dividend $1.00
Yield 2.12%
1yr Tot Return 20.69%

EPS next year 8.72%
EPS next five years 19.25%

17. GameStop Corp. (GME) operates as a multichannel video game, consumer electronics, and wireless services retailer. The company sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; personal computer (PC) entertainment software in various genres, including sports, action, strategy, adventure/role playing, and simulation; digital products, including downloadable content, network points cards, prepaid digital and online timecards, and digitally downloadable software; video game accessories, such as controllers, gaming headsets, memory cards, and other add-ons for use with video game hardware and software; strategy guides, magazines, and gaming-related toys; and mobile and consumer electronics, including new smartphones, tablets, headphones, and accessories, as well as pre-owned smartphones, tablets, and MP3 players. It also operates electronic commerce Websites comprising gamestop.com, ebgames.com.au, ebgames.co.nz, gamestop.ca, gamestop.it, gamestop.es, gamestop.ie, gamestop.de, gamestop.co.uk, and micromania.fr. In addition, the company operates kongregate.com, a browser-based game site; Game Informer magazine, a physical and digital video game publication; a digital PC distribution platform available at gamestop.com/pcgames; iOS and Android mobile applications; and an online consumer electronics marketplace available at buymytronics.com. Further, it operates Simply Mac, a certified Apple products reseller; Spring Mobile, an authorized AT&T reseller operating AT&T branded wireless retail stores in the United States; and pre-paid wireless stores under the name Aio Wireless. As of July 30, 2014, the company operated approximately 6,600 stores in 15 countries. It has strategic partnerships with Shelfbucks. The company, formerly known as GSC Holdings Corp., was founded in 1994 and is headquartered in Grapevine, Texas. (Daily Chart) (Weekly Chart)

Sector: Services
Industry: Electronics Stores
Market Cap $4.65 Bil
P/E 13.02
PEG 0.85
Payout Ratio 36.30%
3yr RevGR -1.54%
3yr EarnGR 4.06%
3yr DivGR N/A

Price $41.33
1yr Target $50.18
1yr Cap Gain 21.41%
Dividend $1.32
Yield 3.19%
1yr Tot Return 24.60%

EPS next year 18.14%
EPS next five years 15.30%

18. Waddell & Reed Financial, Inc. (WDR), through its subsidiaries, provides investment management, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. The company acts as an investment adviser for institutional and other private investors, and provides sub advisory services to other investment companies; underwrites and distributes registered open-end mutual fund portfolios; and offers fee-based asset allocation investment advisory products to advisors channel customers. It also distributes business partners’ variable annuity products, and retirement and life insurance products to advisors channel customers; and sells life insurance and disability products underwritten by various carriers. The company distributes investment products through its wholesale channel comprising other broker/dealers, registered investment advisors, and various retirement platforms, as well as through independent financial advisors; and markets investment advisory services to institutional investors directly or through consultants. Waddell & Reed Financial, Inc. was founded in 1937 and is based in Overland Park, Kansas. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Asset Management
Market Cap $4.65 Bil
P/E 15.36
PEG 0.95
Payout Ratio 36.30%
3yr RevGR 11.96%
3yr EarnGR 17.19%
3yr DivGR 15.12%

Price $54.85
1yr Target $65.00
1yr Cap Gain 18.50%
Dividend $1.36
Yield 2.47%
1yr Tot Return 20.97%

EPS next year 10.67%
EPS next five years 16.20%

An Initial Look (Part 1)

An Initial Look (Part 3)

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An Initial Look at 26 Companies (Part 1)

8/20/2014

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A recent scan of the markets revealed twenty-six companies that met the following screening criteria:

Dividend Yield over 2%
Payout Ratio under 50%
PEG Ratio of under 3
Return on Equity of at least 15%
Debt to Equity Ratio of less than 50%
Positive EPS Growth this year, next year and the next 5 years.
(data from 20 August 2014)

Part 1
Microsoft Corporation
Johnson and Johnson
Qualcomm Incorporated
ConocoPhillips
3M Company
General Dynamics Corp
Raytheon Company
Marsh & McLennan Cos, Inc
Aflac Inc.

Part 2
T.Rowe Price Group, Inc
The Gap, Inc
Symantec Corporation
Helmerich & Payne, Inc
Murphy Oil Corporation
Best Buy Co, Inc
Alaska Air Group, Inc
GameStop Corp
Waddell & Reed Financial Inc

Part 3
Gentex Corp
DSW Inc
Cohen & Steers Inc
Western Refining Logistics, LP
Boston Private Financial Holdings
Capella Education Co
FutureFuel Corp
Intelliquent, Inc

1. Microsoft Corporation (MSFT) develops, licenses, markets, and supports software, services, and devices worldwide. The company’s Devices and Consumer (D&C) Licensing segment licenses Windows operating system and related software; Microsoft Office for consumers; and Windows Phone operating system. Its Computing and Gaming Hardware segment provides Xbox gaming and entertainment consoles and accessories, second-party and third-party video games, and Xbox Live subscriptions; surface devices and accessories; and Microsoft PC accessories. The company’s Phone Hardware segment offers Lumia Smartphones and other non-Lumia phones. Its D&C Other segment provides Windows Store, Xbox Live transactions, and Windows Phone Store; search advertising; display advertising; Office 365 Home and Office 365 Personal; first-party video games; and other consumer products and services, as well as operates retail stores. The company’s Commercial Licensing segments licenses server products, including Windows Server, Microsoft SQL Server, Visual Studio, System Center, and related Client Access Licenses (CALs); Windows Embedded; Windows operating system; Microsoft Office for business, including Office, Exchange, SharePoint, Lync, and related CALs; Microsoft Dynamics business solutions; and Skype. Its Commercial Other segment offers enterprise services, including premier support services and Microsoft consulting services; commercial cloud comprising Office 365 Commercial, other Microsoft Office online offerings, Dynamics CRM Online, and Microsoft Azure; and other commercial products and online services. The company markets and distributes its products through original equipment manufacturers, distributors, and resellers, as well as online. Microsoft Corporation was founded in 1975 and is based in Redmond, Washington. (Daily Chart) (Weekly Chart)

Sector: Technology
Industry: Business Software and Services
Market Cap $373.51 Bil
P/E 17.24
PEG 2.30
Payout Ratio 42.10%
3yr RevGR 7.39%
3yr EarnGR -0.75%
3yr DivGR 18.48%

Price $44.95
1yr Target $47.00
1yr Cap Gain 4.56%
Dividend $1.12
Yield 2.43%
1yr Tot Return 6.99%

EPS next year 42.10%
EPS next five years 7.50%

2. Johnson & Johnson (JNJ), together with its subsidiaries, is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The Consumer segment offers a range of products used in the baby care, skin care, oral care, wound care, and women’s health fields, as well as nutritionals, over-the-counter pharmaceutical products, and wellness and prevention platforms under the JOHNSON’S, AVEENO, CLEAN & CLEAR, DABAO, JOHNSON’S Adult, LUBRIDERM, NEUTROGENA, RoC, VENDÔME, LISTERINE, BAND-AID, NEOSPORIN, STAYFREE, CAREFREE, o.b. tampon, SPLENDA, TYLENOL, SUDAFED, ZYRTEC, MOTRIN IB, and PEPCID brand names. This segment markets its products to the general public, as well as to retail outlets and distributors. The Pharmaceutical segment provides various products in the areas of anti-infective, antipsychotic, cardiovascular, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, metabolic, neurology, oncology, pain management, thrombosis, and vaccines. This segment distributes its products directly to retailers, wholesalers, and health care professionals for prescription use. The Medical Devices and Diagnostics segment offers various products to treat cardiovascular disease; orthopaedic and neurological products; general surgery, biosurgical, and energy products; professional diagnostic products; infection prevention products; and disposable contact lenses. This segment distributes its products to wholesalers, hospitals, and retailers, used principally in the professional fields by physicians, nurses, hospitals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey. (Daily Chart) (Weekly Chart)

Sector: Healthcare
Industry: Drug Manufacturers - Major
Market Cap $ 290.38 Bil
P/E 19.03
PEG 2.68
Payout Ratio 48.60%
3yr RevGR 4.95%
3yr EarnGR 0.20%
3yr DivGR 6.99%

Price $103.21
1yr Target $108.61
1yr Cap Gain 5.23%
Dividend $2.80
Yield 2.71%
1yr Tot Return 7.94%

EPS next year 7.11%
EPS next five years 7.10%

3. QUALCOMM Incorporated (QCOM) designs, develops, manufactures, and markets digital communications products and services based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies. It operates in four segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), Qualcomm Wireless & Internet (QWI), and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on CDMA, OFDMA, and other technologies for use in voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses to use portions of its intellectual property portfolio, which includes patent rights useful in the manufacture and sale of various wireless products, such as products implementing CDMA2000, WCDMA, CDMA TDD, GSM/GPRS/EDGE, and OFDMA standards, as well as their derivatives. The QWI segment provides fleet management, satellite- and terrestrial-based two-way wireless information and position reporting, and other services; software and hardware to transportation and logistics companies; content enablement services for the wireless industry; push-to-talk and other software products and services for wireless network operators; and development, and other services and related products of wireless communications technologies to government agencies and their contractors, as well as builds and manages software applications that enable certain mobile location-awareness and commerce services. The QSI segment invests in early-stage companies that support the design and introduction of new products and services, as well as holds a wireless spectrum license. The company operates primarily in China, South Korea, Taiwan, and the United States. QUALCOMM Incorporated was founded in 1985 and is headquartered in San Diego, California. (Daily Chart) (Weekly Chart)

Sector: Technology
Industry: Communication Equipment
Market Cap $125.92 Bil
P/E 18.10
PEG 1.21
Payout Ratio 32.80%
3yr RevGR 30.95%
3yr EarnGR 25.59%
3yr DivGR 18.36%

Price $76.44
1yr Target $84.85
1yr Cap Gain 11.00%
Dividend $1.68
Yield 2.19%
1yr Tot Return 13.19%

EPS next year 4.42%
EPS next five years 15.00%

4. ConocoPhillips (COP) explores for, develops, and produces crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. Its portfolio includes North American shale and oil sands assets; legacy assets in North America, Europe, Asia, and Australia; various international developments; and exploration prospects. ConocoPhillips was founded in 1917 and is headquartered in Houston, Texas. (Daily Chart) (Weekly Chart)

Sector: Basic Materials
Industry: Independent Oil and Gas
Market Cap $98.23 Bil
P/E 12.27
PEG 1.84
Payout Ratio 36.80%
3yr RevGR -26.40%
3yr EarnGR 5.86%
3yr DivGR 29.74%

Price $80.50
1yr Target $91.09
1yr Cap Gain 13.15%
Dividend $2.76
Yield 3.42%
1yr Tot Return 16.57%

EPS next year 1.13%
EPS next five years 6.66%

5. 3M Company (MMM) operates as a diversified technology company worldwide. Its Industrial segment offers tapes; coated, nonwoven, and bonded abrasives; adhesives; ceramics; sealants; specialty materials; filtration products; closure systems for personal hygiene products; acoustic systems; automotive components; abrasion-resistant films; structural adhesives; and paint finishing and detailing products. The company’s Safety and Graphics segment provides personal protection products; traffic safety and security products; commercial graphics systems; commercial cleaning and protection products; floor matting; and roofing granules. Its Electronics and Energy segment offers optical films for electronic displays; packaging and interconnection devices; insulating and splicing solutions; telecommunications and electrical industries; touch screens and touch monitors; renewable energy components; and infrastructure protection products. The company’s Health Care segment provides medical and surgical supplies; drug delivery and health information systems; and dental, orthodontic, and food safety products, as well as skin health and infection prevention products. Its Consumer segment offers sponges, scouring pads, cloths, consumer and office tapes, repositionable notes, indexing systems, construction and home improvement products, home care products, protective material products, and consumer and office tapes and adhesives. The company serves automotive, electronics and energy, appliance, paper and printing, packaging, food and beverage, construction, clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, food manufacturing and testing, retail, home improvement, building maintenance, and other markets. 3M Company sells its products through wholesalers, retailers, jobbers, distributors, and dealers, as well as directly to users. The company was founded in 1902 and is headquartered in St. Paul, Minnesota. (Daily Chart) (Weekly Chart)

Sector: Industrial Goods
Industry: Diversified Machinery
Market Cap $93.47 Bil
P/E 20.37
PEG 1.70
Payout Ratio 41.30%
3yr RevGR 4.95%
3yr EarnGR 6.01%
3yr DivGR 9.09%

Price $144.60
1yr Target $152.46
1yr Cap Gain 5.43%
Dividend $3.42
Yield 2.36%
1yr Tot Return 7.79%

EPS next year 10.53%
EPS next five years 11.97%

6. General Dynamics Corporation (GD) operates as aerospace and defense company worldwide. Its Aerospace group designs, manufactures, and outfits business-jet aircrafts; provides aircraft services, such as maintenance, repair work, fixed-based operations, and aircraft management services; and performs aircraft completions for aircraft. The company’s Combat Systems group is involved in the systems engineering, spanning design, development, manufacture, and support of tracked and wheeled military vehicles, weapons systems, and munitions. Its product lines include wheeled combat and tactical vehicles; main battle tanks and tracked combat vehicles; munitions and armaments; axle and drivetrain components, and aftermarket parts; and support and sustainment services. This group also manufactures aircraft and ground equipment components, engineered axles, suspensions, brakes, and aftermarket parts for various vehicles of military and commercial clients. The company’s Marine Systems group designs, builds, and supports submarines and surface ships. This group offers nuclear-powered submarines, surface combatants, auxiliary and combat-logistics ships, and commercial ships; and provides design and engineering support services, as well as overhaul, repair, and lifecycle support services. Its Information Systems and Technology group provides technologies, products, and services that support a range of military, federal/civilian, and commercial information-system needs. This group offers secure mobile communication systems; information technology solutions and mission support services; and intelligence, surveillance and reconnaissance, naval control systems, and cyber security solutions. The company was founded in 1899 and is headquartered in Falls Church, Virginia. (Daily Chart) (Weekly Chart)

Sector: Industrial Goods
Industry: Aerospace/Defense Products
Market Cap $40.72 Bil
P/E 16.87
PEG 2.09
Payout Ratio 34,60%
3yr RevGR -1.29%
3yr EarnGR -0.69%
3yr DivGR 9.95%

Price $123.48
1yr Target $133.56
1yr Cap Gain 8.16%
Dividend $2.48
Yield 2.00%
1yr Tot Return 10.16%

EPS next year 6.97%
EPS next five years 8.08%

7. Raytheon Company (RTN) develops integrated products, services, and solutions in the areas of sensing; effects; command, control, communications, and intelligence; mission support; and cyber and information security worldwide. It operates in four segments: Integrated Defense Systems; Intelligence, Information, and Services; Missile Systems; and Space and Airborne Systems. The Integrated Defense Systems segment provides integrated air and missile defense; radar solutions; naval combat and ship electronic systems; command, control, communications, computers, and intelligence solutions; and air traffic management systems. The Intelligence, Information, and Services segment offers a range of technical and professional services, as well as specializes in intelligence, surveillance and reconnaissance, navigation, DoD space and weather solutions, cybersecurity, analytics, training, logistics, mission support, and engineering and sustainment solutions. The Missile Systems segment develops and supports a range of weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors, and combat sensor solutions. The Space and Airborne Systems segment provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, communication systems, and space-qualified systems for civil and military applications. Raytheon Company serves the U.S. Department of Defense (DoD), the U.S. Intelligence Community, the Federal Aviation Administration, the U.S. Armed Forces, the National Oceanic and Atmospheric Administration, Department of Homeland Security, the National Aeronautics and Space Administration, and other international customers. The company was founded in 1922 and is based in Waltham, Massachusetts. (Daily Chart) (Weekly Chart)

Sector: Industrial Goods
Industry: Aerospace/Defense Products
Market Cap $29.54 Bil
P/E 14.78
PEG 1.35
Payout Ratio 33.80%
3yr RevGR -1.94%
3yr EarnGR 7.98%
3yr DivGR 13.47%

Price $96.66
1yr Target $107.00
1yr Cap Gain 10.69%
Dividend $2.42
Yield 2.50%
1yr Tot Return 13.19%

EPS next year 12.70%
EPS next five years 10.98%

8. Marsh & McLennan Companies, Inc. (MMC), a professional services firm, provides advice and solutions primarily in the areas of risk, strategy, and human capital worldwide. It operates in two segments, Risk and Insurance Services and Consulting. The Risk and Insurance Services segment offers risk management services, such as risk advice, risk transfer, risk control, and mitigation solutions, as well as insurance, reinsurance broking, catastrophe and financial modeling services, and related advisory services. This segment provides its services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Consulting segment offers health, retirement, talent, and investments consulting services and products, as well as specialized management and economic consulting services. This segment assists public and private sector employers in the design, management, and administration of employee health care programs; provides a range of strategic and compliance-related retirement services and solutions to corporate, governmental, and institutional clients; advises organizations on the engagement, management, and rewarding of employees; and offers investment consulting and other services to the sponsors of pension funds, foundations, endowments, other investors, and wealth management companies. Marsh & McLennan Companies, Inc. was founded in 1871 and is headquartered in New York, New York. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Insurance Brokers
Market Cap $28.39 Bil
P/E 20.21
PEG 1.63
Payout Ratio 38.30%
3yr RevGR 5.08%
3yr EarnGR 15.99%
3yr DivGR 6.05%

Price $52.16
1yr Target $55.04
1yr Cap Gain 5.52%
Dividend $1.12
Yield 2.15%
1yr Tot Return 7.67%

EPS next year 10.94%
EPS next five years 12.43%

9. Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance products. It operates through two segments, Aflac Japan and Aflac U.S. The company offers various voluntary supplemental insurance products, including cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans, and annuities in Japan. It also provides products designed to protect individuals from depletion of assets, which comprise accident, cancer, critical illness/critical care, hospital intensive care, hospital indemnity, fixed-benefit dental, and vision care plans; and loss-of-income products, such as life and short-term disability plans in the United States. The company sells its products through sales associates and brokers, independent corporate agencies, individual agencies, and affiliated corporate agencies. Aflac Incorporated was founded in 1955 and is headquartered in Columbus, Georgia. (Daily Chart) (Weekly Chart)

Sector: Financial
Industry: Accident and Health Insurance
Market Cap $27.58 Bil
P/E 9.62
PEG 2.17
Payout Ratio 22.90%
3yr RevGR 4.86%
3yr EarnGR 11.05%
3yr DivGR 7.39%

Price $60.93
1yr Target $68.59
1yr Cap Gain 12.57%
Dividend $1.48
Yield 2.15%
1yr Tot Return 14.72%

EPS next year 4.07%
EPS next five years 4.44%

An Initial Look (Part 2)

An Initial Look (Part 3)

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