There are five new stocks and five stocks that I’m removing. The five new stocks are Ball Corp. ($BLL), Hormel Foods ($HRL), Signature Bank ($SBNY), Snap-on ($SNA) and Wabtec ($WAB).

The five deletions are CA Technologies ($CA), DirecTV ($DTV), IBM ($IBM), McDonald’s ($MCD) and Medtronic ($MDT).

The average market cap is $69 billion. That ranges from a high of $382 billion for Microsoft ($MSFT) to $3 billion for Moog ($MOG-A).

Thirteen of the twenty stocks pay dividends. The total yield of the Buy List is 1.06%.
Only three stocks have been on the Buy List all ten years: AFLAC ($AFL), Bed Bath & Beyond ($BBBY) and Fiserv ($FISV). Stryker ($SYK) and Moog ($MOG-A) are both making their eighth appearance.

Buy Below Prices for the New Buys

Now let me give you the Buy Below prices for our five new buys. Remember, these aren’t price targets. They’re guidelines for new entry.

I’m starting Ball Corp. ($BLL) out as a buy up to $72 per share. This is a good stock for conservative investors. Ball also pays a very small dividend. I’m going to initiate Hormel Foods ($HRL) with a Buy Below of $56. By the way, Hormel reports on a Jan-Apr-July-Oct Cycle, so its earnings will come a bit after most of our other stocks. Signature Bank ($SBNY) is a buy up to $133. I’d like to see SBNY start paying a dividend soon. Snap-on ($SNA) is a buy anytime you see it below $143 per share. Lastly, I rate Wabtec ($WAB) a buy up to $90 per share. This week, I’m also raising the Buy Below on Ross Stores ($ROST) to $96 per share.

On Thursday, January 8, Bed Bath & Beyond ($BBBY) will report earnings for its fiscal third quarter. This covers September, October and November. On the last earnings call, BBBY said they expect Q3 to range between $1.17 and $1.21 per share. Interestingly, they also gave guidance for Q4 which they see ranging between $1.78 and $1.83 per share. The fourth quarter is the biggie for Bed Bath. For the entire year, management said they see earnings coming in between $5.00 and $5.08 per share.

I was impressed with this guidance. Buybacks are helping out a lot. My numbers pretty much match up with what the company is saying. If they hit $5.08 for the year, that means the stock is going for 15 times earnings, which is hardly overpriced. Last week, Barron’s ran a feature on BBBY and noted that the company has ramped up its Internet presence. For now, I’m going to keep a fairly tight Buy Below on BBBY. Let’s see how Q4 is shaping up. Bed Bath & Beyond remains a buy up to $77 per share.

That’s all for now. The market is closed on Thursday for New Year’s Day, but Friday will be a full work day. At 10 a.m., the December ISM will come out. Next Friday, we’ll get some of the key turn-of-the-month econ reports like Trade Balance and Factory Orders. The latest Fed minutes come out on Wednesday. This all leads up to the big jobs report next Friday. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

There are five new stocks and five stocks that I’m removing. The five new stocks are Ball Corp. ($BLL), Hormel Foods ($HRL), Signature Bank ($SBNY), Snap-on ($SNA) and Wabtec ($WAB). Here’s a brief description of each.

Ball Corp. ($BLL) is the largest producer of recyclable beverage cans in the world. The company started out making mason jars. While they’re no longer in that business today, Ball makes billions of recyclable metal containers. Based in Broomfield, Colorado, Ball also has an aerospace unit that makes parts for NASA. If you like boring and profitable, you’ll like Ball.

I always think of Hormel Foods ($HRL) as the Spam company. Not as in unwanted emails, but Spam the lunch meat. But Hormel is so much more. They own a bunch of food brands including Dinty Moore stew and Country Crock. More than 30 Hormel bands are ranked #1 or #2 in their markets. Last month, Hormel raised their dividend by 25%. It was their 49th consecutive annual dividend increase. Not bad for lunch meat.

Signature Bank ($SBNY) may be the quietest success story in banking. Signature is never in the news and that’s how they like it. But their performance tells the story. Signature’s loan delinquency rate is about one-tenth of the industry average. They also keep a tight rein on overhead which runs about 40% below industry average. Without anyone noticing, Signature has shaken up traditional banking.

Snap-on ($SNA) is a maker of high-end hand tools and power tools. They also make lots of machines for car repair like hydraulic lifts and tire changers. Snap-on makes products for the marine, rail and aviation industries. Last month, Snap-on raised their dividend by 20.5%. The company is based in Kenosha, WI (birthplace of Orson Welles), and they employ 11,500 people.

Wabtec ($WAB) was formed by the merger of Westinghouse Air Brake and MotivePower in 1999. The company traces its roots back to 1869 when George Westinghouse invented the railway airbrake. (In last week’s issue, I listed the stock as Westinghouse Air Brake Technologies, but Wabtec is the official name.) Wabtec makes locomotives, brakes and other parts for the freight and passenger rail industries. Business is going well; Wabtec recently raised guidance and their backlog is at a record. Barron’s notes that Wabtec is the only stock on any U.S. exchange that’s risen in each of the last 13 years.

The five deletions are CA Technologies ($CA), DirecTV ($DTV), IBM ($IBM), McDonald’s ($MCD) and Medtronic ($MDT).

The average market cap is $69 billion. That ranges from a high of $382 billion for Microsoft ($MSFT) to $3 billion for Moog ($MOG-A).

Thirteen of the twenty stocks pay dividends. The total yield of the Buy List is 1.06%.

Only three stocks have been on the Buy List all ten years: AFLAC ($AFL), Bed Bath & Beyond ($BBBY) and Fiserv ($FISV). Stryker ($SYK) and Moog ($MOG-A) are both making their eighth appearance.