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Arie Goren, Portfolio123 (475 clicks)
Long only, value, research analyst, dividend investing
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I have searched for profitable companies that pay dividends and that raise their payouts significantly each year. 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 are greater than 8%.

3. Forward P/E is less than 16.

4. Price to free cash flow is Positive.

5. Dividend yield is greater than 2.5%.

6. Annual rate of dividend growth over the past five years is greater than 10%.

7. The payout ratio is less than 60%.

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

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

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

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

After running this screen on January 03, 2013, before the market open, I obtained as results the 5 following stocks:


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Cardinal Health, Inc. (CAH)

Cardinal Health, Inc., a healthcare services company, provides pharmaceutical and medical products and services in the United States and internationally.

Cardinal Health has a low debt (total debt to equity is 0.46) and it has a low trailing P/E of 13.11 and even a lower forward P/E of 11.12; the PEG ratio is at 1.33. The price to free cash flow for the trailing 12 months is at 20.56 and the average annual earnings growth estimates for the next five years is at 9.86%. The forward annual dividend yield is at 2.64% and the payout ratio is only 27.5%. Analysts recommend the stock, among the sixteen analysts covering the stock, five rate it as a strong buy, seven rate it as a buy and four rate it as a hold. The stock is trading 4.06% below its 52-week high and has 13% upside potential based on the consensus mean target price of $47.13. The stock price is 1.06% above its 20-day simple moving average, 2.82% above its 50-day simple moving average and 2.91% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. On October 30, 2012, Cardinal Health reported its 1Q fiscal 2013 financial results (here), which beat EPS expectations by $0.01 and missed expectations on revenue. On that occasion, George Barrett, chairman and chief executive officer of Cardinal Health said:

We were pleased to report a solid beginning to our fiscal 2013. As we had expected, revenue was down, as a result of the pharmaceutical industry's wave of brand-to-generic conversions. Our margin expansion continued to be strong, led by our Pharmaceutical segment and fueled by excellent contribution from our generic programs. Our Medical segment started the year more slowly than we planned, largely due to lighter than expected procedure volumes and some continued operational cleanup of our major systems and process transformation. We continue to target double digit segment profit growth for our Medical segment for fiscal year 2013.

The cheap valuation, the analyst's recommendation, the fact that the stock is in an uptrend and the solid dividend; all these factors make the CAH stock quite attractive.


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Chart: finviz.com

Calavo Growers Inc. (CVGW)

Calavo Growers, Inc. markets and distributes avocados, prepared avocados, and other perishable commodities, as well as manufactures and distributes processed avocado products in the United States and internationally.

Calavo Growers has a low debt (total debt to equity is only 0.37) and it has a forward P/E of 15.69; the PEG ratio is at 1.72. The average annual earnings growth for the past 5 years was quite high at 13.80% and the average annual earnings growth estimates for the next 5 years is also quite high at 15%. The forward annual dividend yield is at 2.57% and the payout ratio is at 55.9%. Analysts recommend the stock, among the six analysts covering the stock, four rate it as a strong buy, one rates it as a buy and one rates it as a hold. The stock is trading 14.2% below its 52-week high and has 19.6% upside potential based on the consensus mean target price of $30.20. The stock price is 3.58% above its 20-day simple moving average, 6.81% above its 50-day simple moving average and 0.86% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Calavo Growers will report its latest quarterly financial results this week. CVGW is expected to post a profit of $0.42 a share (here), a 68% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the price in the short term.


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Chart: finviz.com

Corning Inc. (GLW)

Corning Incorporated produces specialty glasses, ceramics, and related materials worldwide.

Corning has a very low debt (total debt to equity is only 0.16) and it has a very low trailing P/E of 10.13 and even a lower forward P/E of 9.67; the PEG ratio is at 1.01. The forward annual dividend yield is quite high at 2.80% and the payout ratio is only 23.6%. Analysts recommend the stock, among the 23 analysts covering the stock, 16 rate it as a strong buy or as a buy. The stock is trading 9.97% below its 52-week high and has 13.1% upside potential based on the consensus mean target price of $14.55. The stock price is 2.11% above its 20-day simple moving average, 5.85% above its 50-day simple moving average and 2.53% above its 200-day simple moving average. Over the trailing six month period, Gordon Gund, Director at Corning, bought $1.8M of GLW shares (here).

All these factors -- the low multiples, the analyst's recommendation, the fact that a company director is buying GLW shares and the fact that the stock is in an uptrend -- make GLW stock quite attractive.


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Chart: finviz.com

Lakeland Financial Corp. (LKFN)

Lakeland Financial Corporation operates as the holding company for Lake City Bank that provides various commercial and retail banking, wealth advisory, and investment management services in Indiana.

Lakeland Financial has quite a low debt (total debt to equity is 0.51) and it has a low trailing P/E of 12.55 and even a lower forward P/E of 11.83; the PEG ratio is at 1.57. The price to free cash flow for the trailing 12 months is very low at 13.11 and the average annual earnings growth estimates for the next five years is at 8%. The forward annual dividend yield is at 2.54% and the payout ratio is only 30.2%. Analysts recommend the stock, among the five analysts covering the stock, three rate it as a strong buy, one rates it as a buy and one rates it as a hold. The stock price is 6.05% above its 20-day simple moving average, 6.02% above its 50-day simple moving average and 4.26% above its 200-day simple moving average. Lakeland Financial will report its latest quarterly financial results on January 23. LKFN is expected to post a profit of $0.56 a share (here), a 12% rise from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the price in the short term.


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Chart: finviz.com

United Technologies Corp. (UTX)

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide.

United Technologies has a low trailing P/E of 14.53 and even a lower forward P/E of 13.86; the PEG ratio is at 1.27. The price to free cash flow for the trailing 12 months is at 31.66 and the average annual earnings growth estimates for the next five years is at 11.45%. The forward annual dividend yield is at 2.55% and the payout ratio is only 32.5%. Analysts recommend the stock, among the 23 analysts covering the stock, six rate it as a strong buy, twelve rate it as a buy and five rate it as a hold. The stock price is 3.34% above its 20-day simple moving average, 6.38% above its 50-day simple moving average and 8.80% above its 200-day simple moving average. United Technologies will report its latest quarterly financial results on January 23. UTX is expected to post a profit of $1.03 a share (here), a 27.5% decline from the company's actual earnings for the same quarter a year ago. The reported results will probably affect the price in the short term.


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Chart: finviz.com

Source: 5 Analyst Recommended Stocks In Uptrend With Increasing Dividends