FeedPosted Jan 10th 2011 3:30PM by Sheldon Liber (RSS feed)
Filed under: Getting Started, BP p.l.c. ADS (BP), Bargain Stocks, Chasing Value™, Headline News, Intuitive Surgical Inc (ISRG), Southern Company (SO), Noble Corporation (NE)

In Part 1 of
this series I discussed starting with a good story and then examining the metrics, or first starting with the metrics via a stock screen and then look at the story behind the numbers.
A third possibility is to start with an idea that springs off the pages of a business journal. Some years ago, in the 25th anniversary edition of Money Magazine they listed a group of stocks that had gone up during this tenure. The one I liked the best that withstood closer scrutiny was Southern Company (
SO), the electric utility.
The story and the metrics were great. It was located in one of the most desirable growth areas of the country. There was a favorable business climate, cheap housing, cheap land, good weather and an abundance of labor. The numbers were strong as well.
Continue reading Chasing Value: How to Find Value Stocks -- Part 2
Posted Jan 10th 2011 11:00AM by Sheldon Liber (RSS feed)
Filed under: Getting Started, Bargain Stocks, Chasing Value™, Newcastle Investment (NCT), EZCORP (EZPW), Stock Picks
On Friday I had the opportunity to present an investment strategy I developed over the past few years to a major asset manager interested in learning the intricacies. Among the questions he asked, one that comes up often, is how do I go about finding particular stocks that I think might be of value.
The answer of course is not so simple, because like any other type of discovery they come about in a variety of ways. Sometimes it begins with a story, as it did in December 2008 when I included EZCorp (EZPW) among my 2009 stock picks (and 2010 and 2011). In this case I was pondering what was going to be safe, and perhaps even in growing demand during a year of financial turmoil and high unemployment. The answer was pawn shops and cash-advance stores.
Continue reading Chasing Value: How to Find Value Stocks -- Part 1
Posted Jan 10th 2011 9:00AM by Sheldon Liber (RSS feed)
Filed under: Management, General Electric (GE), Getting Started, Citigroup Inc. (C), Bank of America (BAC), Chevron Corp (CVX), Merck and Co (MRK), Bargain Stocks, Chasing Value™, S and P 500, Newcastle Investment (NCT), Raytheon Company (RTN), EZCORP (EZPW), Stock Picks, Telefonica SA (TEF), Noble Corporation (NE)
I have already gone on record this year saying that financial companies and insurance stocks are going to continue to rebound. In my previous two posts Chasing Value: 2011 Stock Picks -- 5 of 11 and Chasing Value: 2011 Stock Picks -- 6, 7, 8, 9, I included several financial institutions. Today I add an insurance company.
The industry got whacked hard for many reasons. For one, it makes a significant amount of profit by investing its float, and like every other investor, the industry lost a pile of money in the financial crisis. It was embroiled more directly than some industries, as several insurers are affiliated with banks. Finally the housing crisis meant disruption to payment streams by homeowners who were delinquent on more than their mortgages.
Continue reading Chasing Value: 2011 Stock Picks -- 10 and 11
Posted Jan 6th 2011 6:00PM by Sheldon Liber (RSS feed)
Filed under: International Markets, Good news, General Electric (GE), Brazil, Getting Started, Citigroup Inc. (C), Archer-Daniels-Midland (ADM), Bank of America (BAC), Chasing Value™, Oil, Eastern Europe, S and P 500, Housing, Financial Crisis, Brasil Telecom (BTM) , Telefonica SA (TEF), Noble Corporation (NE)
Here are the next four of my 2011 picks. I am behind schedule, after publishing the first 5 earlier in the week (see: Chasing Value: 2011 Stock Picks -- 5 of 11). This year instead of starting completely anew, I am adjusting my 2010 picks. There is no sense in abandoning good ideas just because the calendar turned a page.
You will actually find support of running themes I have been writing about over the past few months. One of these is the idea of making a contrarian investment in a basket of stocks that have been both scalded and scolded in the headlines. Six stocks were included in such a group that I called the "toxic stocks" (see: Chasing Value: Toxic Stock Update #3 -- BAC, BP, C, GE, GS, RIG).
Continue reading Chasing Value: 2011 Stock Picks -- 6, 7, 8, 9
Posted Nov 15th 2010 4:30PM by Sheldon Liber (RSS feed)
Filed under: International Markets, Competitive Strategy, General Electric (GE), China, Getting Started, Diageo plc (DEO), Johnson and Johnson (JNJ), Novartis AG ADS (NVS), Teva Pharm Indus ADR (TEVA), China Life Insurance ADS (LFC), Chasing Value™, Israel, Royal Dutch Shell (RDS.A), Telefonica SA (TEF)

It certainly is presumptuous, perhaps even self serving of me to assume the market is going higher in the face of so much
uncertainty.
The reason I hold this belief is that so much money is sitting on the sidelines and much of it is getting restless. It's one thing for those on a fixed income to suffer because the Federal Reserve is keeping interest rates so low, but it is quite another thing to expect $2 trillion dollars of corporate cash to want to live like senior citizens. That cash is a bigger drag on earnings with each passing day.
Continue reading Chasing Value: Bonds, Gold, Stocks and Capital Flight
Posted Aug 16th 2010 1:30PM by Sheldon Liber (RSS feed)
Filed under: Getting Started, McDonald's (MCD), International Business Machines (IBM), Diageo plc (DEO), Johnson and Johnson (JNJ), Altria Group (MO), Novartis AG ADS (NVS), Automatic Data Proc (ADP), Kellogg Co (K), Consolidated Edison (ED), General Mills (GIS), Procter and Gamble (PG), Merck and Co (MRK), Duke Energy (DUK), Chasing Value™, Stocks to Buy, Southern Company (SO), Annaly Capital Management (NLY)
Here is a common sentiment about the stock market: "No fun at all. As I have said before, I believe it has turned into one big casino largely divorced from its original goal of providing capital to companies who produce something of value."
There's a lot of truth to what "granny" recently said to me in an e-mail. Fortunately she also noted "FYI Granny's up 5.86% + dividends." That would give her a gain of about 10% in the past ten months since I posted Where should granny put $50,000, suggesting a very conservative portfolio for an uncertain time.
Not only has she earned a very nice return, surpassing her CD account by 9.5% (20 fold), but she was able to do so with a great deal less volatility than the overall market most of us have lived through.
Continue reading Chasing Value: Granny Said, 'It Has Turned into One Big Casino'
Posted Aug 16th 2010 12:00PM by Sheldon Liber (RSS feed)
Filed under: Time Warner (TWX), Getting Started, JPMorgan Chase (JPM), Reliance Steel and Aluminum (RS), Chasing Value™, Stock Picks, Transocean Ltd. (RIG), Prudential Financial (PRU), Ameren Corp (AEE)
In case you need to be reminded to look closely at the books, today's poster boy for erroneous ledgers, Bernie Maddoff, should be a constant reminder. Furthermore, when you are looking at the books, remember that Benjamin Graham, mentor to "my pal Warren," advised buying stocks for less than their intrinsic value. And book value is the starting point in attempting to establish that.
Two weeks ago, I posted an update on my toxic stock picks. These were six unloved stocks where I felt the stage was set for market beating returns. The same is true again for today's market-beating group, although it is not the headlines that tied this group together, but their standout bargain metrics.
Continue reading Chasing Value: Cheap Stocks by the Book
Posted Jun 14th 2010 3:00PM by Sheldon Liber (RSS feed)
Filed under: Getting Started, Archer-Daniels-Midland (ADM), Chevron Corp (CVX), Bargain Stocks, Chasing Value™, Raytheon Company (RTN), Molson Coors Brewing Co. (TAP)
If you're a stock trader, then this post is not for you because these stock picks are long-term bets for people looking to beat the traders using the best time-tested strategies. We have been in a very volatile market as of late. It has knocked down many quality companies creating opportunities.
Today I ran a stock screen using six value metrics to find big companies with low stock prices. I found a few dozen, but selected the household names.
Continue reading Chasing Value: ADM, CVX, RTN and TAP for Investors, Not Traders
Posted May 10th 2010 2:00PM by Sheldon Liber (RSS feed)
Filed under: Microsoft (MSFT), Exxon Mobil (XOM), Getting Started, Johnson and Johnson (JNJ), Automatic Data Proc (ADP), Stocks to Buy, Financial Crisis, Stock Picks

It does not come as a surprise that the government leaders and bankers of the European Union have put up what they hope will be a buttress against further erosion of the Euro, and the nightmare that is the Greek economy. Over the weekend with the
Sword of Damocles hanging over their heads, they
fabricated a $962 billion bailout package not unlike some of the wonders created last year by the United States.
I was surprised by the size of this economic band-aid and while the market has bounced back on the news, the best news might be for the maker of Band-Aids, Johnson and Johnson (
JNJ). Last week Barron's was talking it up, and I did not give it much thought because there are better opportunities for growth and/or dividends. However, I think it is time to reconsider it because the economic band-aids are not solutions. They do not heal anything they only help to prevent infection. If the illness is the cancer of deficit spending, then they do even less. For real protection, it may be time to compromise on some growth and settle for blue chip stocks and JNJ is among the bluest of the blue.
Continue reading Band-Aid Economics -- J&J Loving It
Posted Apr 28th 2010 2:00PM by Sheldon Liber (RSS feed)
Filed under: Consumer Experience, Getting Started, Johnson and Johnson (JNJ), Procter and Gamble (PG), Stocks to Buy, Southern Company (SO), Stock Picks, Molson Coors Brewing Co. (TAP)

Tuesday's good economic news on consumer spending followed good news on housing prices, and a majority of earnings reports beat consensus estimates. Nevertheless, it was not enough to sustain world stock markets from racking up
sizable losses as economic news about Greek debt being downgraded to junk statues made us all tremble in
crises proportions as the possibility of default looms.
The Greek government has finally asked that the European Union help by releasing funds committed just recently in a $45 billion Euro package. The EU, sending shivers around the globe, is balking until they see evidence that Greece has passed meaningful debt reduction legislation. In the mean time, Greek bonds have surged to 24%. This does not surprise me having recently
questioned why anyone would buy Greek bonds at market rates given so many better alternatives.
Continue reading World Markets Crumbling with Greek Ruins, So Add Low Beta Stocks
Posted Mar 22nd 2010 5:00PM by Sheldon Liber (RSS feed)
Filed under: International Markets, Other Issues, Getting Started, AT and T (T), Verizon Communications (VZ), Bargain Stocks, Chasing Value™, Brasil Telecom (BTM)

If you are looking for high yielding stocks you will find the telecommunications industry is quite obliging. AT&T, Inc. (
T) is currently paying a 6.4% yield and Verizon Communications Inc. (
VZ) is offering 6.25%. Given that these are such low beta stocks, I have a hard time rationalizing keeping much money in Certificates of Deposits or Treasuries for the peanuts they are doling out.
While these yields are very generous there is a stock that might have you extending your investment world "down under" to Telecom Corp New Zealand (
NZT), as they will reward your journey with a 10.99% yield. This is an outstanding return and allows you to diversify your portfolio outside the U.S. but still trade on the NYSE.
Continue reading Chasing Value: Over 10% Yield Down Under -- Telecom New Zealand
Posted Feb 28th 2010 3:00PM by Bryan Perry (RSS feed)
Filed under: Getting Started
Most high-yield income investors want an energy component within their portfolio as a long-term cornerstone against inflation. That makes perfect sense, but only if that income vehicle can stand the test of time. It does this by replenishing reserves at a rate higher than those energy assets to the marketplace at whatever the prevailing prices are.
This is the main drawback of owning domestic energy trusts.
Continue reading High-Yield Sin #7: Buying Domestic Energy Trusts
Posted Feb 28th 2010 1:00PM by Bryan Perry (RSS feed)
Filed under: Getting Started, Mutual Funds
A common method for paying dividends from funds that invest outside the U.S. is to pay special dividends composed of short-term and long-term capital gains. The dividend policies of such funds are predicated on the ability of the fund manger to pay out whatever gains can be garnered over the course of a year depending on short-term or long-term holding periods.
Closed-end funds based on China, India and other emerging markets had explosive returns from 2003 to 2007, chalking up greater than 50% returns. But a large portion of those returns were paid out in the form of huge capital gains-based dividends and are reflected in most screening software portals that suggest these funds are still paying out these gorilla-sized dividend yields.
They're not, and the data can be hugely misleading when investors are hunting for big yields through various screening tools.
Continue reading High-Yield Sin #6: Getting Paid in Special Dividends
Posted Feb 28th 2010 11:00AM by Bryan Perry (RSS feed)
Filed under: Getting Started, Mutual Funds
All common stocks, income trusts, master limited partnerships, REITS and other pass-through entities have what is called a payout ratio. It's a number that essentially says how much of the dividend is paid out from each dollar of net income.
A company like AT&T (T) has a payout ratio of 77%, meaning that the company retains 23 cents of every dollar after dividends are paid out to put back into the business. This is a decent ratio, but something around 50% to 60% is more ideal.
Continue reading High-Yield Sin #5: Owning Securities with High Payout Ratios
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