Seeking Alpha
, Portfolio123 (1,995 clicks)
Long only, value, research analyst, dividend investing
Profile| Send Message|
( followers)  

I have searched for very profitable companies with strong growth prospects that pay very rich dividends. I also looked for companies where the average analysts' recommendation is a buy or better, and which are in a short-term uptrend, in a mid-term uptrend and in a long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.

I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

1. The stock is included in the Russell 3000 index. Russell Investment explanation:

The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

2. Average annual earnings growth estimates for the next 5 years is greater than 10%.

3. Forward P/E is less than 13.

4. Price to free cash flow is Positive.

5. Dividend yield is greater than 3.0%.

6. Average analyst recommendations are bullish (less than 2).

7. Stock price is above 20-day simple moving average (short-term uptrend).

8. Stock price is above 50-day simple moving average (mid-term uptrend).

9. Stock price is above 200-day simple moving average (long-term uptrend).

After running this screen on December 23, 2012, I obtained as results the 3 following stocks:

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

Ennis Inc. (NYSE:EBF)

Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products.

Ennis, Inc has a trailing P/E of 18.72 and a very low forward P/E of 7.13; the PEG ratio is quite low at 1.10. The price to free cash flow for the trailing 12 months is at 18.31 and the average annual earnings growth estimates for the next five years is quite high at 17%. The forward annual dividend yield is very high at 4.50% and the payout ratio is 79.3%. Only one analyst is covering the stock, rating it as a strong buy. The company is trading 7.32% below its 52-week high and has 38% upside potential based on the consensus mean target price of $21.50. The stock price is 4.80% above its 20-day simple moving average, 4.62% above its 50-day simple moving average and 6.29% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

On December 21, Ennis Inc. reported its 3Q financial results (here). Consolidated net sales were $129.0 million for the third quarter ended November 30, 2012 compared to $121.8 million for the third quarter ended November 30, 2011, or an increase of 5.9%. Net earnings for the period decreased from $28.0 million, or 7.1% of net sales, to $17.6 million, or 4.3% of net sales.

The cheap valuation, the strong growth prospects, the analysts' recommendation, the fact that the stock is in an uptrend and the rich dividend; all these factors make the EBF stock quite attractive.

(click to enlarge)

Chart: finviz.com

Kohlberg Kravis Roberts & Co. (NYSE:KKR)

Kohlberg Kravis Roberts & Co. is a private equity investment firm specializing in acquisitions, leveraged buyouts, management buyouts, special situations, growth equity, mature, and middle market investments.

Kohlberg Kravis Roberts has a very low trailing P/E of 7.04 and even a lower forward P/E of 6.59; the PEG ratio is extremely low at 0.15. The price to free cash flow for the trailing 12 months is very low at 1.02. The average annual earnings growth for the past 5 years was very high at 21.91% and the average annual earnings growth estimates for the next 5 years is even much higher at 46.50%. The forward annual dividend yield is very high at 5.77% and the payout ratio is only 38.5%. Analysts recommend the stock; among the thirteen analysts covering the stock, four rate it as a strong buy, six rate it as a buy and three rate it as a hold. The company is trading 5.7% below its 52-week high and has 26.5% upside potential based on the consensus mean target price of $18.43. The stock price is 3.95% above its 20-day simple moving average, 1.41% above its 50-day simple moving average and 7.08% above its 200-day simple moving average. On October 26, Kohlberg Kravis Roberts reported its 3Q financial results (here). On that occasion, Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR said:

We are pleased with the firm's performance for the nine months through September 30. Our private equity funds appreciated by 20% and our balance sheet investments appreciated by 22%, outperforming the MSCI World Index by over 600 and 800 basis points, respectively.

The very low multiples, the strong growth prospects, the analysts' recommendation, the fact that the stock is in an uptrend and the rich dividend; all these factors make the KKR stock quite attractive.

(click to enlarge)

Chart: finviz.com

Knoll Inc. (NYSE:KNL)

Knoll, Inc. and its subsidiaries design, manufacture, and sell office furniture products and accessories in the United States, Canada, and Europe.

Knoll has a low trailing P/E of 14.4 and even a lower forward P/E of 12.51; the PEG ratio is at 1.44. The forward annual dividend yield is quite high at 3.15% and the payout ratio is only 40.3%. Analysts recommend the stock; among the four analysts covering the stock, three rate it as a strong buy. The company is trading 10.21% below its 52-week high and has 22.3% upside potential based on the consensus mean target price of $18.67. The stock price is 5.98% above its 20-day simple moving average, 7.76% above its 50-day simple moving average and 8.30% above its 200-day simple moving average. On October 17, Knoll Inc. reported its 3Q financial results (here). Net sales were $219.8 million for the quarter, a decrease of 8.2% from the third quarter 2011. Operating profit was $23.5 million, a decrease of 6.0% from the third quarter 2011, but operating profit as a percent of sales was 10.7%, an increase of 30 basis points from the third quarter of 2011. Net income was $12.2 million during the third quarter of 2012 compared to $18.4 million during the third quarter 2011. Diluted earnings per share for the third quarter of 2012 was $0.26 compared to $0.39 in the prior year. On that occasion, Andrew Cogan CEO commented:

We are pleased with the strong gross and operating margins we reported in the quarter. In spite of the recent softening in industry demand, we expect to be back on a path of growth as we end 2012.

The low multiples, the analysts' recommendation, the fact that the stock is in an uptrend and the rich dividend; all these factors make the KNL stock quite attractive.

(click to enlarge)

Chart: finviz.com

Source: 3 High-Yield Dividend Stocks In Uptrend Analysts Recommend