Stock of the week

[Running_Man]

I believe one of the important items in making large gains in stock prices is being disciplined to know what would be the criteria to make you sell the stock in the first place. For me, the most likely scenario presently to make that happen would be a reduction in the timeliness to a "4", as VF corp was recently lowered to a "3". However there are a lot of stocks to fall beneath before it hits a "4" and I do not expect that anytime soon. As the dividend was raised as expected for the 4th quarter and earnings continue to grow year over year, the next most likely reason to sell will be an increase in share price to reduce yield beneath 1.5% as the rest of the indicators are really strong.

I would be more upset at myself for selling without having one of my selling rules implemented and watching the dividend extend to $1100 in 3 more years than I would be if the stock were to fall even 50% while my rules said hold. But I also believe each individual needs to develop their own rules of when to sell, and selling when a stock gains 80 percent in 18 months is not an unreasonable rule for selling a retail corp, though I myself would not follow such a rule.

 

[afntrn56]

Thanks for that. I could not agree more that one needs to set criteria to sell as well as buy. What you present makes sense. Where are you getting the timeliness data?

 

[Running_Man]

I subscribe to Value line, but it is available at most local libraries.

 

[Running_Man]

Update on VFC:

It has now been a little over 5 years since VFC was first recommended here. It continues to be my recommendation, despite the recent issues VFC is having with a weaker dollar and weaker overseas demand it is continuing to grow and is still an excellent stock that I would not sell. I think reviewing this is a good way to show how using reliable dividends and consistent dividend growth is a great way to fund an early retirement.

The original 248 shares from August 2010 have since been split 4:1 to 992 and now the dividend which originally in 2010 provided $595 per year is now up to $1,468 per year (7.3% of the original investment). The stock value has increased at a faster rate than dividend growth and a little more than tripled from $20,000 to $66,980 at the close Friday.

In 2012 I expected the dividend to increase by 15 percent for the foreseeable future, it has averaged 20 percent increase since and I would anticipate that 15 percent is still the forecast for the intermediate term (3-5 years).

The stock is still a good value for purchase today and there are no reasons to sell this stock yet.

 

[Running_Man]

Update on VFC:
I did sell my shares in VFC yesterday, after listening to the recent quarterly conference call the inventory issues from last year’s winter at VFC were a little concerning especially when they stated it was still good inventory and would be sold in the coming winter. This means they could not take a writedown on the inventory (most likely) and have no room in their accruals for any surprises. A company that is going better than expected would have written down the inventory in order to have the ability to overperform if the inventory could be sold at full price. So that combined with the recent drop to a “4” in timeliness by value line caused me to sell my shares yesterday. The replacement I purchased TGT Target which has a low PE a nice dividend 3.2 percent dividend for the next 12 months and consistent growth in earnings since 2008. Net profit margins have been increasing each of the last four years. Target has been purchasing shares with their cash flow while also reducing long term debt, a rarity in this investment cycle. I thought since I have been a big lover of VFC I should update.

 

[Sunset]

Thanks for the update on VFC.