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Do you consider yourself a value investor? If so, we ran a screen for potentially undervalued dividend stocks you may be interested in.

To create the list below we started with a universe of stocks paying yields above 1% but below 5%, and sustainable payout ratios below 50%. By looking at companies with a dividend yield below 5%, we avoided the riskier high yield space. We then screened for those that have outperformed the market over the last quarter, with quarterly performance above 10%.

To find companies with longevity in top-line growth we focused on 2 statistics from the balance sheet, namely the growth in receivables, and inventories.

Specifically, we found candidates with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables, the healthier the company's revenue.

We looked for faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

Finally, we compared growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.

Our analysis left us with 3 stocks.

The List

For an interactive version of this chart, click on the image below.

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

1. Cosan Ltd. (NYSE:CZZ): Engages in the production and sale of sugar and ethanol products.

  • Market cap at $5.44B, most recent closing price at $19.66.
  • Dividend yield at 1.5%, payout ratio at 35%, and quarterly performance at 16%.
  • Revenue grew by 33.06% during the most recent quarter ($8,397.1M vs. $6,310.68M y/y). Accounts receivable grew by 29.25% during the same time period ($2,731.43M vs. $2,113.3M y/y). Receivables, as a percentage of current assets, decreased from 42.14% to 38.62% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).
  • Inventory grew by 26.01% during the same time period ($1,706.63M vs. $1,354.4M y/y). Inventory, as a percentage of current assets, decreased from 27.01% to 24.13% during the most recent quarter (comparing 3 months ending 2012-12-31 to 3 months ending 2011-12-31).

2. Brinker International Inc. (NYSE:EAT): Develops, operates, and franchises various restaurant brands primarily in the United States.

  • Market cap at $2.52B, most recent closing price at $36.69.
  • Dividend yield at 2.2%, payout ratio at 34%, and quarterly performance at 17%.
  • Revenue grew by 1.15% during the most recent quarter ($689.76M vs. $681.9M y/y). Accounts receivable grew by -8.16% during the same time period ($80.49M vs. $87.64M y/y). Receivables, as a percentage of current assets, decreased from 34.68% to 30.65% during the most recent quarter (comparing 13 weeks ending 2012-12-26 to 13 weeks ending 2011-12-28).
  • Inventory grew by -3.73% during the same time period ($26.34M vs. $27.36M y/y). Inventory, as a percentage of current assets, decreased from 10.83% to 10.03% during the most recent quarter (comparing 13 weeks ending 2012-12-26 to 13 weeks ending 2011-12-28).

3. Monsanto Co. (NYSE:MON): Provides agricultural products for farmers in the United States and internationally.

  • Market cap at $54.14B, most recent closing price at $101.32.
  • Dividend yield at 1.5%, payout ratio at 30%, and quarterly performance at 11%.
  • Revenue grew by 20.5% during the most recent quarter ($2,939M vs. $2,439M y/y). Accounts receivable grew by 8.97% during the same time period ($2,868M vs. $2,632M y/y). Receivables, as a percentage of current assets, decreased from 27.04% to 23.78% during the most recent quarter (comparing 3 months ending 2012-11-30 to 3 months ending 2011-11-30).
  • Inventory grew by 13.87% during the same time period ($3,571M vs. $3,136M y/y). Inventory, as a percentage of current assets, decreased from 32.22% to 29.61% during the most recent quarter (comparing 3 months ending 2012-11-30 to 3 months ending 2011-11-30).

*Accounting data sourced from Yahoo Finance, all other data sourced from Finviz.

Source: 3 Outperforming Dividend Stocks With Encouraging Accounting Trends