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Banks look fairly valued, but pose a lot of recession riskAlong with energy, the financial sector is one of the few sectors currently at an attractive valuation. With a P/E of 13.3 and a price-to-book ratio of 1.4, banks are quite reasonably priced. The dividend yield of 1.8% is low compared to bonds or energy, however. What worries me about banks is that I think they have a lot of bad debt on the books that will never get repaid, meaning that their assets are inflated and the price-to-book ratio isn't as good as it looks. This is especially true of the holders of student loans, but we've also seen risky mortgages skyrocket in the last few years. With private debt now far above its 2007 pre-recession levels, any significant downturn in the labor market could trigger a wave of defaults and a crash in both the banking and real estate sectors. So however attractive this sector looks on paper, it poses a lot of recession risk. I'd say add this to your portfolio if it pulls back to the "buy" zone on the reverse RSI, but keep it underweight. Exit if we see a series of bad job reports.
AMEX:RSPFLong
by ChristopherCarrollSmith
Groupe S.E.B. SA (SK.PA) of France: EPS rising.S.E.B. SA (SEB) (Symbol SK.PA), is a global supplier of Kitchen and household equipment. (White goods) Brand names include include All-Clad, Krups, Moulinex, Rowenta, Tefal and WMF Group. They make non-stick cookware, bakeware, stainless roasters, coffee machines, tea machines, juice squeezers, meat cutters, food vacuum packs, bar-tender equipment, beer servers, blenders, bar-b-q equipment, food warming plates, cookers, bread-making machines, crepe and waffle machines, ovens, microwaves, boilers, kettles, coffee pots and servers, chip machines, electric cooking pots, toasters, vacuum cleaners, air filters, robotic cleaners, steam irons, electric razors, head, ear, and nose hair trimmers, soy-milk makers, air purifiers, pressure cookers, pans, saucepans, frying pans, table cookers snd warmers, cutlery, knives, cutters and slicing devices, weighing machines, scales, and hundreds of other practical household goods. Whilst the chart of the share price is not giving off any particular buy or sell signal, the shares do look attractive on fundamentals. Here are the things which I like: SEB has a Track-record of increasing turnover: organic sales growth in the three years to 31 Dec 2018 was +6.1%, +9.2%, +7.8%. In the Q3 2019 results the company said: “ Organic sales growth now expected between +6% and +7% vs. over 7% as announced at end-July” Rising dividends: the dividend has risen by 9% p.a. over the last 10 years. The 2018 dividend was EUR 2.14, vs 2017 of 2.00, an increase of 7%. Given the forecast of increased earnings for 2019, I am expecting the dividend will continue to be increased. Whilst the dividend of 1.57% is not high, it seems both secure and growing. Certainly it is attractive compared to the interest on cash deposits or bonds. The Dividend is well covered by earnings: the 2018 EPS were EUR 8.38, nearly four times the dividend of EUR 2.14. This leaves plenty of scope to keep increasing the dividend. SEB is Increasing its earnings per share (EPS): Reported EPS over the last 5 years have been as follows: EUR 3.45, 4.14, 5.15, 7.50, and 8.38. Given SEB’s own recent forecast of a 6% to 7% rise in sales for 2019, I think profits and EPS should increase again this year. The company said in its Q3 2019 report, Outlook section, that it expects an increase in “Operating Result from Activity” of around +6% for the full year. SEB has a Modest Price/Earnings (p/e) ratio: The share price (at the time of writing on Monday 30th December 2019) is EUR 133.50. With 2018 EPS of EUR 8.38, this gives us a trailing p/e ratio of 15.93, in line with the market and relatively cheap for a company with prospects of above average growth. That’s equivalent to an earnings yield of over 6%. Not bad considering alternatives like cash deposits in EUR. SEB is a Mid-size company. The market cap is EUR 6.8 billion. Mid cap stocks are often over-looked by analysts, until they suddenly have a spurt, and become large-cap. Despite the rises in EPS, the shares have not participated in the 2019 rise in share prices. The share price stands at around the same level as two-and-a-half years ago. In my opinion this means the shares are over-looked. Trading the shares is relatively easy. The average daily trading volume represents around EUR 8 million. SEB has hundreds, if not thousands, of products. I prefer companies with multiple products or services. If one goes out of fashion, then another may be coming into favour. It’s kind of a safety net, so you know that you are not going to find that a large competitor has suddenly made something better than its only product. It won’t turn out to be the next MySpace or AltaVista. The kind of products being sold by SEB are not going to go out of fashion. Housewives are not going to suddenly stop cooking their food or vacuuming the floor. We will always use toasters and coffee machines, ovens, trays and blenders. We will always need pots, pans, fryers, and so on. It’s relatively low tech stuff, but the demand is growing as the world becomes more affluent. Once you have used a Teflon non-stick frying pan, it’s hard to go back to the old style pan. Conclusion: SEB has a lot of attractive features for investors. If this was a larger company, the multiple would probably be over 20X. With growing sales and EPS, it has the potential to become much larger. You may need to be patient, but for long term investors it has the kind of features you should be seeking.
EURONEXT:SKLong
by Clive_Thompson
AGNC to $20 second quarter 2020AGNC has a great Dividend at around 10%, used to be 20% though when money was near free as they make their money on (long-term/short-term) credit swaps. Loose monetary policy fed AGNC coffers and loose monetary policy has been returning. After seeing 3 rounds of QE along with 3 rate cuts in 2019 and a presidential push for negative interest rates from the feds, there is a lot of room not only for AGNC to return to 20% dividends but also see quite a bit of price growth. To be fair, AGNC has been in a massive descending channel since 2012 and overall the trend is bearish on the charts and we are currently mid channel. It is because of the information above that I suspect AGNC may break out of this multi-year descending channel in 2020. Even without breaking out of channel, just remaining within the constructs of the current trend, AGNC should see a little over $20 by mid 2020 along with increased distributions. There is always the chance that we see another real-estate market crash and AGNC's books will be full of junk but absent that, this is a great play for 10% gains and 5% dividends over the next 6 months and with a break out of channel and reversal of trend, this could be a great multi-year hold. I am holding AGNC long, I have held them off and on for many years. This is not investment advice, just some observations I have made in my evaluation. DYOR, invest with care. S
NASDAQ:AGNCLong
by EncryptShawn
DAI buy set upInverted Head and Shoulder is here, D chart. One of the most precise reversal signals. But, does BREXIT is responsible for these price movements?? I dont know, but I know next: If you already hold a buy, put positive S/L and protect your s. If you are thinking t go in, wait. MA200 is, beside of neckline, reliable resistance level so some price opposite move is expected. On top of that, RSI... If you like to hold stocks this one is good, the dividend is great! My play is exit form my buy, and monitor what will happen next week.
DLong
by DejanDjekic
Lexington Property Trust a defensive growth stock for OctoberLXP blew away analyst expectations on its last earnings report, beating by 200%. It got a nice pop after earnings, then collapsed when it announced a $10 million share offering. It started to recover after it announced what it was doing with the money raised from investors: purchasing new properties to accelerate its growth. If LXP is as good a steward of the new properties as it has been so far, I'm not worried about the share offering; it should propel the company's expansion rather than dilute my shares. LXP has a 9.5/10 Equity StarMine Summary Score and is rated "undervalued" by the fundamental analysts at S&P Capital IQ. Amidst the coming "earnings recession" this quarter, real estate is expected to be one of the few sectors that outperform. The sector as a whole is overbought, but LXP is a better value than most real estate stocks, having dipped to mid-RSI channel ahead of its ex-dividend date tomorrow. LXP pays a dividend of 10 cents per share, down from 18 cents per share last fiscal year. (I actually like a lower dividend, because it gives the company more capital to reinvest.) Unlike many dividend stocks, which take a big hit after the ex-dividend date, LXP's price usually takes its hit before the dividend and then recovers after. In my opinion this is a pretty good bet to buy ahead of the dividend and hold as value/growth stock for October.
NYSE:LXPLong
by ChristopherCarrollSmith
Amazing Dividend Aristocrat (7%) yield with huge supportShell is at 2 year support that it does not often break The current dividend yield is 7%.. Shell has not missed a dividend payment since the second world war >> The current cash flow is huge and enough to cover yield (pay-out 75%) The price is at the bottom of its trading cycle. Best price to historically buy at... Oil has started trending up supporting an increase The last time the stock hit this RSI it had retrace up until it 200-day average at 10%. So huge upside beside its great dividend yield
RLong
by TurkishBearCapital
4
When to Buy Stocks - S&P 500 Dividend Yield CurveBefore start reading on; this chart is inverted. More on that later Interpretation According to Mike Maloney, the S&P 500 dividend yield curve is the second best way to measure a stocks value (after the Shiller S&P500 PE Ratio -made a post on this, go check it out). The ratio indicates how much a company pays out in dividends each year relative to its share price. In other words, it measures how much "bang for your buck" you are getting from dividends. In the absence of any capital gains, the dividend yield is effectively the return on investment for a stock. The lower the dividend yield, the less you get for your investment and hence the more overvalued a stock. The historic S&P 500 Dividend Yields were deducted by Robert Shiller and published in his book Irrational Exuberance. Why is the chart inverted? Two reasons 1. This allows you to see, bubbles are up instead of down, and undervalued is down instead of up 2. The higher the yield the more undervalued the stock is, the lower the yield the more overvalued the stock is Areas of S&P 500 Dividend Yield Curve Stocks are undervalued: 1% - 4% Stocks are undervalued: 4% - 5% Stocks are fair value: 4% - 6% Stocks are undervalued: 6% + Keeping an eye on... The alarming thing when looking at this chart is it has only once ever been this high and that was at the beginning of the millennia and this chart goes all the way back to 1872. As of the time of this writing it is at 1.94. The highest it’s ever been is 1.11. This goes to show the size of the bubble we are currently is. Note: This "indicator" is used to find the best time to purchase stocks, not to pick or find the market top/bottom How to “rebalance the dividend yield curve” Going back to Mike Maloney and his analysis...to bring down this dividend yield he sees two ways the market can seek equilibrium. 1. The market goes sideways for a decade while we have raging inflation that will balance this out and then bring dividend yields and PE’s ratios back into line 2. It crashes, the markets go down The currency supply collapses, therefore this has to be a deflationary collapse, this cant be an inflation in what they call an invisible crash. Note that the source of the material here is from 2011 Source: www.youtube.com (58:22)
MShort
by Muncher
TERRAFORM POWER INC. - NASDAQ: $TERP FlaggingAfter breaking-out in early Spring (March), TerraForm Power Inc. NASDAQ: TERP has found itself digesting/consolidating in a Flag pattern as we can observe from the Daily chart above. While the action has been fairly benign with-out much fanfare, TERP continues to display solid technical characteristics and remains in decent shape despite trading slightly below both its 20 and 50 DMA's, yet comfortably above its rising 200 DMA. In addition, when one extends out to both the Weekly and Monthly duration, TERP finds itself in a healthy technical posture as well. Thus, we have a stock trading in a favorable technical posture across multiple time-frames, which bodes well. Moving forward, 'When and If' TERP is capable of going top-side of the $14.25 and perhaps more importantly the $14.50 levels, such development, should it occur, would like trigger its next advance into greener pastures. In the meantime, TERP yields nearly 6% via dividend and for those seeking a bit of income while waiting for its next move, you're being handsomely paid to wait. Nonetheless, both investors/traders may want to continue to monitor the action closely for a potential break into higher ground.
T
by InsiderFinancial
1
EDUCATION: EMULATING YIELD VIA SHORT PUTOver time, my basic approach to my IRA has been to acquire shares at substantial discounts over time and to take advantage of "the three legs": (1) short call premium; (2) dividends; and (3) growth, with the eventual goal to be able to solely or predominantly rely on dividends post-retirement, since "growth" can periodically be elusive and short call premium collection on covered calls can vary widely, depending on movement of the underlying, implied volatility, and one's degree of "aggression."* Typically, this has involved selling puts as an "acquire lower" strategy, followed by share assignment, and then covering. However, as we all know, getting into stock at a particular price results in a less than agile setup. After all -- and regardless of whether you buy stocks outright or are assigned them -- once you're in stock, you're in at the price you bought or were assigned, and there's no amount of magic wand waving that will change the price at which you acquired, even if you shed tears and get buyer's remorse later. In comparison, staying in options as long as possible affords you greater flexibility as to potential acquisition price since you can roll for credit and therefore cost basis reduction before your getting full on into the shares. Relatedly, you can essentially "manipulate" the potential share price at which you're assigned by rolling the short puts down and out if you become unhappy with the strike at which you sold originally. All that having been said, what if I want to emulate dividend yield in the shares while I wait to get assigned at a discount? Well, there's a way to do that -- with short puts. Pictured here is an EEM June 19th '20 36 short put, paying .97 at the mid, with delta/theta metrics of 18/.36. 328 days out in time, it's the expiry nearest 365 days 'til expiry, and the delta'd strike (~18) that will pay something approximating the annualized dividend of $90.** In other words, this isn't the actual trade you'd put on to emulate dividend yield (although absolutely nothing prevents you from doing that), but rather a guide to tell you what delta and/or theta you'd need to sell in shorter duration to emulate the amount of annualized dividend. In this particular case, selling the September 20th 40 short put*** would potentially fit that bill. Paying a .30 credit, it has delta/theta metrics of 17.29/.69 with a theta burn nearly twice that of the longer-dated 36, with the downside being that the strike is obviously much closer to current price than the 18 delta sold out in time. However, the theta metric makes it conceivable that you could collect what amounts to the annual premium of .90 in three to four expiry cycles as compared to 12, assuming that the underlying goes sideways, up, or even down to a certain degree during your credit collection/divvy generation emulation process. Post fill, look to roll at extrinsic approaching worthless from the ~18 delta to an ~18 delta strike in an expiry that will pay a credit, aiming to collect at least .25 with any given roll. If you're not able to get at least .25 on a roll to a similarly delta'd strike without going out an absurd amount of time, consider rolling down and out more incrementally. Naturally, this begs the question of whether and under what circumstances it's worth being in stock versus short puts since you can emulate not only dividends, but also growth with short puts ... . But I'll leave that discussion for another day. * -- By "aggression," I mean what delta you're willing to sell as cover (i.e., 20 versus 30 versus 40 versus at-the-monied or even monied). ** -- The annual yield in EEM isn't great -- 2.08%, so I'm primarily using it as an example due to its excellent liquidity and market tightness in the off hours. *** -- Naturally, this is best done on weakness or in a higher implied volatility environment. EEM's at 7/16 here, so you're consequently not getting a ton of juice out of the 18 delta.
AMEX:EEMEducation
by NaughtyPines
Japan REITs: Hidden Gem to Diversify Your PortfolioJapan has long lost its charm to the international trading community. It has been a boring place to trade in for the past two decades, pretty much. In a mature market like Japan, you can't expect explosive growth like you can find in China. However, this market offers a great source of diversification and income potential, if you know where you are looking. The answer lies in Japan REITs. Properties in Japan, be it commercial, industrial, retail, hospitality, or residential, are coveted by mom-and-pop as well as institutional investors from the country and across the APAC region for their stable and (slowly) growing rental income. The chart shows the largest REIT ETF listed in Japan (blue line) versus JPY and SP500 trendlines. You can clearly see the low correlation between JREIT and SPX. In times of volatility in the US, and for those with international brokerage capabilities, why not consider this diversifier across the Ocean? Disclaimers: GMAS is long a few select names within the captioned ETF. Investment carries risk. Investment in foreign dividend stocks is subject to withholding tax. You may be able to claim better withholding tax rate based on your country's double taxation treaty status.
TSE:1343Education
by WhatsTrading
Mastering the dividend cycleECA Marcellus Trust is an example of an extremely high-dividend stock. Because of its high dividend that comes every three months, the stock moves in predictable cycles. The stock gets bought by dividend miners during the lead-up to a dividend, and then it sells off afterward. There are about 61 trading days between ex-dividends. The low typically comes sometime between day 21 and day 41 after the ex-dividend date, and the high comes on day 60. This cycle offers an excellent opportunity to make a fairly predictable profit. Even this last, relatively small upswing was worth nearly 35% if you bought at the halfway point between dividend dates and sold the day before ex-dividend. It's usually a good idea not to actually take the dividend, because the stock will lose more share price overnight than the dividend is worth. (To take the dividend, you have to own the stock at the start of pre-market trading on the ex-dividend date.) It's worth pointing out that ECA Marcellus Trust is a risky stock. Its dividend distributions vary depending on the price of natural gas and the output of the wells. The output of the wells declines about 8% per year, and the Trust itself expires in July 2021, at which point the stock becomes worthless. So you can expect the swings to get smaller over time, and the stock's average share price to decline at an accelerating rate. Still, there's an opportunity here for a well-timed play, and its predictability makes it pretty attractive.
E
by ChristopherCarrollSmith