Running_Man
Thinks s/he gets paid by the post
- Joined
- Sep 25, 2006
- Messages
- 2,844
After years of only touting dividend stocks, I put myself to the task of contemplating what a portfolio should be if I were to ever desire a portfolio of non-dividend paying stocks. Thereby in a Buffet-like manner shield a large income growth totally from the grasp of the tax man.
After some research I believe it is possible to develop a nice 10 stock $250,000 portfolio with all of the same investment criteria as my dividend stocks excepting no dividend payments are allowed in this portfolio, indeed declaring a dividend will require the sale of the security.
The universe I will be using to cull these selections from are all members of the 1700 stock family of the Value Line Index, for I need their unbiased analyticals for sell indications. To restate some of the investing rules: All stocks must be rated B+ or better for financial strength by Value Line and 2 or more in the Safety category. This ensures the selection is a company that will endure for a long time. Additionally upon purchase the Timeliness needs to be 3 or more for purchase and Price Stability Price Growth and Earnings Predicability all need to be 75 or higher. Companies subject to poor ability to judge earnings or wild swings in stock prices are not the kind of companies I want to hold for the long run. These are merely initial screens for review of purchase, after the initial screen a review of current business, future prospects the management team and a review of financial statements for items that would disqualify investment are also done.
Selling will happen immediately if a dividend is declared, if a stock falls to 5 in Timeliness if the Safety Rating or Financial Strength Rating is dropped. Further review is needed to see if a sale is warranted if Timeliness falls to a 4 or if one of the Price Stability — Growth Persistence or Earnings Predictability falls to 65 or lower. I am looking for companies growing at faster than the market and as such these companies should be holding their marks not dropping them. A drop in these rankings indicates other companies are doing better the company I am investing in and I need to determine a satisfactory explanation or else sell the stock.
There will be no FANG stocks in this portfolio. Google had their safety rating lowered in November 2016 and that disqualifies them from my investing screen. They were the best though of the FANG stocks for possible inclusion, the other 3 are not even stocks that I would consider Amazon has earnings predictability of 5 which means they are among the worst 5 percent of companies in terms of the earnings meeting expectations, and therefore your entire investing hopes are pinned on the CEO and the CEO alone. That is bad investing that leads you to investing in companies like Theranos, companies should be able to clearly spell out their expectations to investors. Netflix has a safety rating of 3 and a Price Stability of 5 meaning they are only average in the safety of the stock and just about the worst company in terms of it’s stock price being stable, it is subject to wild swings. FACEBOOK has a price stability of 20 which disqualifies them.
So the first stock of this portfolio is WATERS CORP - WAT who specialized in chromatography and spectrometry devices and supplies, you know the instrumentation they use on the show Bones to determine what elements are in the crevices of the bones so they can determine where the victim was murdered and by what type of weapon. Sales of slightly over 2 billion and growing at 7.5% per year. With interest coverage of 23 times and a PE of 25 long term growth of this company should be two to three times the growth in the economy at 7-8 percent per year over the next 5 years. At the recent quote of 154.26 I will take 162 shares for the portfolio.
The second stock ANSYS Inc, ANSS which is in the Computer Software industry developing and marketing software to engineers and designers in a multitude of industries including the rockets and wearable technology. It spends 18% of it’s revenue on R&D, revenues are nearing one billion dollars has no debt, no defined pension plans, no preferred stock and nearly a year’s sales in cash at 800 million. It is growing at a rate of eight percent per year, much the same as Waters. They have a new CEO Ajei Gopal from India originally who holds 23 patents and appears to be highly intelligent, the former CEO is now Chairman of ANSYS. At a current price of 92.06 the portfolio obtains 271 shares.
There will be no distributions from this portfolio and comparisons will be to VTI on a dividend reinvestment basis with implied holding inside a 401K so no tax implications. This is only to give the portfolio the toughest possible comparison as the best place to hold this portfolio would actually be in a aftertax account.
Stay tuned here for the remainder of the portfolio.
After some research I believe it is possible to develop a nice 10 stock $250,000 portfolio with all of the same investment criteria as my dividend stocks excepting no dividend payments are allowed in this portfolio, indeed declaring a dividend will require the sale of the security.
The universe I will be using to cull these selections from are all members of the 1700 stock family of the Value Line Index, for I need their unbiased analyticals for sell indications. To restate some of the investing rules: All stocks must be rated B+ or better for financial strength by Value Line and 2 or more in the Safety category. This ensures the selection is a company that will endure for a long time. Additionally upon purchase the Timeliness needs to be 3 or more for purchase and Price Stability Price Growth and Earnings Predicability all need to be 75 or higher. Companies subject to poor ability to judge earnings or wild swings in stock prices are not the kind of companies I want to hold for the long run. These are merely initial screens for review of purchase, after the initial screen a review of current business, future prospects the management team and a review of financial statements for items that would disqualify investment are also done.
Selling will happen immediately if a dividend is declared, if a stock falls to 5 in Timeliness if the Safety Rating or Financial Strength Rating is dropped. Further review is needed to see if a sale is warranted if Timeliness falls to a 4 or if one of the Price Stability — Growth Persistence or Earnings Predictability falls to 65 or lower. I am looking for companies growing at faster than the market and as such these companies should be holding their marks not dropping them. A drop in these rankings indicates other companies are doing better the company I am investing in and I need to determine a satisfactory explanation or else sell the stock.
There will be no FANG stocks in this portfolio. Google had their safety rating lowered in November 2016 and that disqualifies them from my investing screen. They were the best though of the FANG stocks for possible inclusion, the other 3 are not even stocks that I would consider Amazon has earnings predictability of 5 which means they are among the worst 5 percent of companies in terms of the earnings meeting expectations, and therefore your entire investing hopes are pinned on the CEO and the CEO alone. That is bad investing that leads you to investing in companies like Theranos, companies should be able to clearly spell out their expectations to investors. Netflix has a safety rating of 3 and a Price Stability of 5 meaning they are only average in the safety of the stock and just about the worst company in terms of it’s stock price being stable, it is subject to wild swings. FACEBOOK has a price stability of 20 which disqualifies them.
So the first stock of this portfolio is WATERS CORP - WAT who specialized in chromatography and spectrometry devices and supplies, you know the instrumentation they use on the show Bones to determine what elements are in the crevices of the bones so they can determine where the victim was murdered and by what type of weapon. Sales of slightly over 2 billion and growing at 7.5% per year. With interest coverage of 23 times and a PE of 25 long term growth of this company should be two to three times the growth in the economy at 7-8 percent per year over the next 5 years. At the recent quote of 154.26 I will take 162 shares for the portfolio.
The second stock ANSYS Inc, ANSS which is in the Computer Software industry developing and marketing software to engineers and designers in a multitude of industries including the rockets and wearable technology. It spends 18% of it’s revenue on R&D, revenues are nearing one billion dollars has no debt, no defined pension plans, no preferred stock and nearly a year’s sales in cash at 800 million. It is growing at a rate of eight percent per year, much the same as Waters. They have a new CEO Ajei Gopal from India originally who holds 23 patents and appears to be highly intelligent, the former CEO is now Chairman of ANSYS. At a current price of 92.06 the portfolio obtains 271 shares.
There will be no distributions from this portfolio and comparisons will be to VTI on a dividend reinvestment basis with implied holding inside a 401K so no tax implications. This is only to give the portfolio the toughest possible comparison as the best place to hold this portfolio would actually be in a aftertax account.
Stay tuned here for the remainder of the portfolio.
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