With the first half of 2013 in the books, it's time to evaluate what has been going on in the world of stocks. Year to date, the Dow Jones Industrials Index is up 13.78%, S&P 500 is up 12.63%, and the Nasdaq is up 12.71%, which are pretty good gains considering the selling that has been going on lately. Of the thirty stocks I follow, which I have labeled Abba's Aces, 22 of them are beating the S&P 500 with only one in the red; you guessed it, Apple (AAPL). All the stocks I follow are dividend paying stocks, and I know what you are thinking at this particular moment; "Dividend paying stocks are getting butchered because bond yields are increasing, therefore people are leaving dividend paying stocks for the safer asset class and depreciating the price of the stock." In my strategy, I don't just go for stocks with great yields, I go for stocks with okay yields but that can provide capital appreciation in terms of earnings growth. Let's take a look at some of the top performers and see if we can buy some more going into the future.
Cracker Barrel Old Country Store (CBRL)
On the yea,r Cracker Barrel is up 51.8%. I wrote about it right before the most recent earnings report predicting that it would move up about 5%, and it finished better than that. The company beat earnings, raised the dividend, and has moved up as high as 11% after reporting earnings. This is a mid-cap company that offers a 3.1% dividend yield that pays out 38% of earnings, has a 10% earnings growth rate for the next five years, but is fairly valued. I regret not picking up some more shares on the dip it had most recently and will wait a bit longer till I take a look at it to buy some more.
On the year, Hasbro is up 28.46%, and the last time I wrote about the toy companies, I said I would pick up some Hasbro because it has a bigger dividend yield. Hasbro is another mid-cap company which offers a 3.5% dividend yield that pays out 58.3% of earnings, has a 9.67% earnings growth rate for the next five years, and is inexpensively valued. There are a couple of items that trouble me about Hasbro for now; I generally like to see the earnings potential be in the double digits and the dividend payout less than 50%. If earnings estimates are raised, then that might solve each of the two problems I have with the stock, but in the meantime, I'm contemplating selling out of the stock towards the back end of the year.
Home Depot (HD)
Home Depot is up 25.58% for 2013 coming on the shoulders of the housing recovery taking place in the U.S. I bought a small batch of the stock right around the time I last wrote about it. This large cap home improvement company yields 2.03% with a payout ratio of 42.6%, has a 14.61% earnings growth rate for the next five years, and is fairly valued. Though there is great earnings growth potential, I'm going to keep adding small batches to this name because it is fairly valued, and I still believe that I can get it at a cheaper price.
The thing I've noticed about the thirty that I monitor is that the top four gainers on the year are mid-cap companies; Cracker Barrel, Dunkin Donuts (DNKN), Williams - Sonoma (WSM), and Hasbro. Not only are the top four gainers mid-cap stocks, but all my mid-cap stocks beat out the S&P 500. I believe the rest of the year is going to be choppy and would not be surprised if the year ends with this current 12% gain on the S&P 500. With the pattern I've picked up on for the mid-cap stocks, I will be looking at them more intently throughout the next six months and picking up some more of them on the dips. The current list of mid-caps include KLA-Tencor (KLAC), L-3 Communications (LLL), Cincinnati Financial (CINF), and the other four I mentioned at the top part of this conclusion.
Disclaimer: These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!