• Coast to Coast
    Posted by on January 4th, 2012 at 8:33 pm

  • My Watch List
    Posted by on January 4th, 2012 at 2:10 pm

    I’m often asked how I go about picking stocks for my Buy List. The answer is really quite simple. I don’t have a magic formula and I hate stock screeners.

    Instead, I have a Watch List of about 100 stocks that I try to follow. These are what I would call “really good companies.” They’re in the top tier of Corporate America. It’s taken me years to build up this list and I change it often.

    The Watch List serves as the minor leagues for my Buy List. It’s from this list that almost all candidates for the Buy List come, and it’s where they return after they’ve been deleted.

    Let me make it clear that I’m not recommending any of these stocks listed below. That’s what the Buy List is for. I just wanted to show you which stocks make the first cut in the process. If a stock is a on this list, you can be pretty sure it’s a decent company (the price may not be).

    My secret formula is nothing more than watching really good companies and making a move when the price looks good.

    Company Symbol
    Abbott Laboratories ABT
    AmerisourceBergen ABC
    AT&T T
    AutoZone AZO
    Balchem BCPC
    Ball BLL
    Baxter International BAX
    Becton Dickinson BDX
    Biogen Idec BIIB
    C.H. Robinson Worldwide CHRW
    Cerner CERN
    Charles Schwab SCHW
    Church & Dwight CHD
    Clorox CLX
    Coach COH
    Coca-Cola KO
    Cognizant Technology Solutions CTSH
    Colgate-Palmolive CL
    Community Health Systems CYH
    Compuware CPWR
    Costco Wholesale COST
    Cummins CMI
    CVS Caremark CVS
    Danaher DHR
    Darden Restaurants DRI
    DaVita DVA
    Deluxe DLX
    Dentsply International XRAY
    Dolby Laboratories DLB
    Donaldson DCI
    Expeditors International EXPD
    Express Scripts ESRX
    FactSet Research Systems FDS
    Fair Isaac FICO
    Fastenal FAST
    FLIR Systems FLIR
    Flowers Foods FLO
    Flowers Foods FLO
    FMC Technologies FTI
    Forest Laboratories FRX
    General Dynamics GD
    Gilead Sciences GILD
    Graco GGG
    Hasbro HAS
    Hormel Foods HRL
    Hospira Inc HSP
    Humana HUM
    IBM IBM
    Infosys Limited INFY
    Intel INTC
    IntercontinentalExchange ICE
    Internationa Flavors & Fragrances IFF
    Intuit INTU
    Intuitive Surgical ISRG
    Iron Mountain IRM
    J.M. Smucker SJM
    L-3 LLL
    Lincare LNCR
    ManTech MANT
    McCormick MKC
    McDonald’s MCD
    Microsoft MSFT
    Nike NKE
    Progressive PGR
    Public Storage PSA
    Quest Diagnostics DGX
    Raven Industries RAVN
    RLI Corp. RLI
    Ross Stores ROST
    Seaboard SEB
    SEI Investments SEIC
    Seneca Foods SENEA
    Sigma-Aldrich SIAL
    Snap-On SNA
    St. Jude Medical STJ
    Starbucks SBUX
    State Street STT
    Stericycle SRCL
    Target TGT
    Teradata TDC
    Thermo Fisher TMO
    Tiffany TIF
    TJX TJX
    U.S. Bancorp USB
    United Technologies UTX
    V.F. Corporation VFC
    Varian Medical Systems VAR
    Visa V
    W.W. Grainger GWW
    Walgreen WAG
    Waters WAT
    WellPoint WLP
    Wells Fargo WFC
    Western Union WU
    Weyco WEYS
    Yum! Brands YUM
    Zimmer ZMH

  • Ford’s Impressive 2011
    Posted by on January 4th, 2012 at 1:30 pm

    Shares of Ford ($F) are doing well today on the news that the company reported very good sales for 2011. Here are some highlights from today’s press release:

    U.S. sales of the Ford brand totaled 2,062,915 vehicles in 2011, sealing its first three-point market share gain over three consecutive years since 1970

    Ford brand small car sales were up 25 percent in 2011, with 244,291 vehicles sold, while utilities increased 31 percent with 579,626 sales. Ford sold 584,917 F-Series pickups in 2011, making it the best-selling truck for 35 consecutive years and the best-selling vehicle for 30 years

    Ford posts best December retail sales month since 2005; total company sales in December were up 10 percent

    The company said it expects the U.S. economy to expand by 2% to 3% this year. The stock got as high as $11.53 today which is a two-month high.

  • Morning News: January 4, 2012
    Posted by on January 4th, 2012 at 6:49 am

    Euro-Area Inflation Slows, Giving ECB Room

    Italy’s UniCredit Offers Heavy Share Discount

    Turkish Lira Gains as Central Bank Sells Dollars for Fourth Day

    Macau Gambling Revenue Rose 42% Last Year

    Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply

    Against Euro and Yen, Dollar Defied Reality

    Fed Shows Rate Forecasts, Boosts Transparency

    Bank Earnings Jump 57% in Analyst Forecasts

    Online Sales Buoy U.P.S. and FedEx

    France’s Total in $2.3 billion U.S. Shale Gas Deal

    Swiss National Bank Chief’s Wife Defends Dollar Trades

    WJB Faced 25% Interest on Some Debt Ahead of Brokerage Shutdown

    Chinese Retailer Casts Doubt on TV Investigation

    Edward Harrison: Krugman, Tabarrok, Cowen and the Bond Vigilante Fallacy

    Joshua Brown: UBS: Fed’s New Interest Policy Will Increase Confusion, Not Clarity

    Be sure to follow me on Twitter.

  • Fourth-Quarter Earnings Guidance
    Posted by on January 3rd, 2012 at 10:44 pm

    Barron’s has a round-up of Q4 earnings guidance (h/t: Tadas). I counted them up: 27 positive, nine inline and 96 negative.

    This is hardly scientific but it tells us that earnings estimates may be coming down in the weeks ahead. Q4 earnings reports will start next week.

  • Ross Stores’ Amazing Record
    Posted by on January 3rd, 2012 at 4:08 pm

    I’m usually a bit wary of investing in retail although there are a few good names. One stock that deserves attention is Ross Stores ($ROST).

    I can’t fully stand behind these numbers, but I believe Ross has one of the most impressive dividend records around. The company has increased its dividend for 17 straight years, which is every year that it’s paid one. According to my numbers, the company has raised its dividend by at least 14% for 16 of the last 17 years. I can’t confirm that, but it appears to be correct.

    The stock just finished a blowout year and two weeks ago had a 2-for-1 split. In a few weeks, I expect to see another impressive dividend increase.

    I don’t believe that last dividend data point on the chart was adjusted for the stock split.

  • Me on Lehman Brothers
    Posted by on January 3rd, 2012 at 3:11 pm

    Every once in a while I get one right. Six years ago, I listed some thoughts for 2006. Here’s what I said about Lehman Brothers:

    There’s something about Lehman Brothers (LEH) that I just don’t get. Every quarter they put up great numbers. I can’t put my finger on it, but I don’t see where all the growth comes from. How can they consistently do what others can’t? Maybe the company really is that good. Maybe not.

    True, I didn’t exactly call them out, but I was questioning them when many others were not.

  • Starbucks Is Overpriced at $45
    Posted by on January 3rd, 2012 at 1:30 pm

    I like Starbucks ($SBUX) a lot but I’m afraid the stock has run well past a fair price. The shares closed the year at $46.01 which is 30 times trailing earnings and 25 times the estimate for future earnings. Starbucks is good, but not that good.

    The chart below shows SBUX over the last three years along with its P/E Ratio and trailing earnings. Right now, I’d say that a fair price is about $35. By that I mean $35 is fair, not a bargain.

    The company said today that it will be raising prices. Earlier, Starbucks had said that higher commodity prices will take 21 cents per share off its earnings for this fiscal year.

    (To be fair, I completely missed the great buying opportunity three years ago.)

  • A Look at the Long View
    Posted by on January 3rd, 2012 at 11:01 am

    Since the start of the century (and millennium), the stock market has been a disaster. Taking a step back to look at the numbers, it’s truly remarkable.

    From the end of 1999 to the end of 2011, the S&P 500 dropped 13.58%. Dividends added 23.59%. But over those 12 years inflation was 34.69%. That adds up to a real total return of -20.70%.

    You would often hear money managers say that the real long-term return of the stock market was 8%, and that’s what it was from 1925 to 1999. But the last 12 years have been so bad that it’s taken that 8% number down to 6.58%.

    This means that historically, the stock market more than doubles your money in real terms every 12 years, but over the last 12 years, it’s down 20%.

  • And…We’re Off!
    Posted by on January 3rd, 2012 at 10:28 am

    The 2012 trading year is underway and it looks to be a very good day. The S&P 500 has been as high as 1,284.41 today. We’re very close to our highest close since August 1st which was 1,285.09 from October 28th.

    The ISM Index report for December came out today at 53.9. It was 52.7 in November. This was the 29th-straight month that the ISM was over 50. Wall Street was expecting 53.2.

    Our Buy List is rocking it so far. AFLAC ($AFL) is above $45. JPMorgan Chase ($JPM) is up close to 5%. The whole list is up about 2% so far.