Early Retirement & Financial Independence Community - Stock Picking (Individual Security Analysis)

Any dividend growth investors out there?

mef623 — Mon, 16 Nov 2009 20:54:55 GMT

For a portion of my overall portfolio, I'm investing in stocks that not only pay a decent yield but also grow their dividends. Eventually, I expect that portion of my portfolio to become a source of income for me (Obviously, it's a portion of my equity, not fixed-income, portfolio.). Let's face it: dividends are fun.

Any other divvie growth investors out there?

Mike

Seasonality System by Norm Fosback

DouglasRThompson — Fri, 06 Nov 2009 15:27:05 GMT

Has anyone ever tried the Seasonality System by Norm Fosback? The basic principle is you move your money from your money market account to no-load mutual funds on the last trading day of the month, and back into your money market account on the second trading day of the next month. Your money is only in stocks for a few days each month, but it usually goes up during these days. It's more complicated than that, but that is the general idea.

I did some research via Google, and couldn't find much bad about it. I'm thinking of trying it, but would like some comments from people that have done it, or are still doing it.

Thanks,
Douglas

Financial News as Noise

growing_older — Tue, 03 Nov 2009 20:36:55 GMT

So even though I'm not usually following financial news, I read an article today "US Stocks up Briskly on News" and at the bottom of the article are links:

PEOPLE WHO READ THIS ALSO READ

Stocks Start Lower On Concern About Financials
U.S. Stocks Begin Higher As Ford Profit Lifts Mood
U.S. Stocks Trim Gains; Nasdaq Turns Lower
U.S. Stocks Losses Accelerate, Led By Financials

So I guess the news today is that stocks are up, stocks are down, and stocks are turning both up and down.

Why did I bother tuning in this noise?

Buffett buys new train set

HFWR — Tue, 03 Nov 2009 14:50:07 GMT

Berkshire buying Burlington Northern railroad - Yahoo! Finance

Quote:

"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.

Quote:

...Berkshire's board also approved a 50-for-1 split of its Class B common stock...

Buffett said on CNBC this morning that BH will still have about $20B in cash left after the deal...

Foreign Stocks Pct in Portfolio

nwsteve — Sat, 31 Oct 2009 17:02:38 GMT

Here is a worthwhile overview of the current thinking of using foreign stocks to bring diversification to your portfolio.
Significant to note the increase percentages from what used to be 5-10% are nowup to 40-50%. The "sweet spot" seems to be in the 30% area.

"But while an allocation to foreign stocks generally reduces a portfolio's risk over the long term, it can also increase risk, especially over shorter periods. Our research showed that the possibility of greater risk, especially for short investment horizons, jumped when allocations to developed market foreign stocks exceeded 30% of the total stock portfolio.
As a result, we believe devoting 30% of your overall stock exposure to international makes the most sense. This level provided nearly all (94%) of the diversification benefits that a 40% international allocation did, with a lower chance of increasing risk over shorter time periods."

It is on the home page of Fidelity and does not require log-in Fidelity Investments:.

I found the results particularly interesting since my Fido adviser a couple of months ago suggested my near 20% allocation to International was a bit "risky".
One other thought to pass along. Note to get the full benefit of International investing you want to check to be sure the funds you choose do not include US. Many of the "global" funds have a significant share of their portfolios in US stocks.

Nwsteve

Any thoughts on Free Cash Flow Analysis for stock picking

Eladio — Wed, 28 Oct 2009 14:06:05 GMT

Most of our money is indexed, but I have a small "testosterone induced trading account" that I mess around with sometimes.

Anyway, I came across this on seeking alpha, about using Free Cash Flow Analysis as a way to identify stocks that "might" generate a positive return on an individual basis.

Link: Invest Using Stocks' Price to Free Cash Flow -- Seeking Alpha

Here are a few formulas:

PFCF = Market Price/ (Cash flow per share -Capital Spending per share)

This ratio should be below 15 for best results.

FROIC = FCF per share / (long term debt per share + shareholders equity per share) x 100

This should be 20% or greater.

I was trying to figure some of this out this morning, but I am having trouble finding the numbers that I need to use. I tried using the key statistics on Yahoo finance for KO and this is what I came up with:

PFCF = Market Price/ (Cash flow per share(3.42 )-Capital Spending per share(.22))
FROIC = FCF per share (3.42)/ (long term debt per share (11.95) + shareholders equity per share(10.13))

KO
PFCF: 53.51 / 3.20 = 16.7
FROIC: 3.42 / 22.08 = 15.48%

So KO does not meet the criteria of less than 15 and more than 20%, but then again I am not sure if I am using the right numbers to begin with. ???

Has anyone tried to analyze stocks this way? Where do you get the most up to date and accurate statistics for each stock?

Tell me what you guys think.

Eladio

Wells Fargo Preferred

ruby — Mon, 26 Oct 2009 21:49:33 GMT

I have "WSF". I like the dividend BUT .... is this a good investment for a retiree who can't afford to loose it all?