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I searched for profitable companies with strong earnings growth prospects that pay very rich dividends and that are in an uptrend. Stocks in an uptrend are performing well and are in a buying mode. Those stocks would also have to show a low PEG ratio.

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. All the data for this article were taken from Yahoo Finance and finviz.com. The screen's formula requires all stocks to comply with all following demands:

  1. The forward dividend yield is greater than 4.0%.
  2. The payout ratio is less than 100%.
  3. Average annual earnings growth estimates for the next five years is greater than 15%.
  4. The PEG ratio is less than 1.10.
  5. The price to free cash flow is less than 24.
  6. Forward P/E is less than 20.
  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 August 01, 2013, before the market open, I discovered the following three stocks:

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The Blackstone Group L.P. (NYSE:BX)

The Blackstone Group L.P., together with its subsidiaries, provides alternative asset management and financial advisory services worldwide.

The Blackstone Group has a trailing P/E of 23.01 and a very low forward P/E of 8.07. The PEG ratio is very low at 0.60, and the average annual earnings growth estimates for the next five years is very high at 16%. The price to free cash flow for the trailing 12 months is at 21. The forward annual dividend yield is very high at 4.08%, and the payout ratio is at 94%.

The BX stock price is 1.85% above its 20-day simple moving average, 4.28% above its 50-day simple moving average and 23.22% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

Analysts like the stock. Among the 15 analysts covering the stock, four rate it as a strong buy, eight rate it as a buy, and three rate it as a hold.

On July 18, Blackstone reported its second-quarter results, which beat EPS expectations by $0.13 and beat on revenues. In the report, Stephen A. Schwarzman, Chairman and Chief Executive Officer, said:

In the second quarter, Blackstone doubled revenues and tripled earnings compared to a year ago, as good returns in every one of our businesses drove higher performance fees. Robust realizations allowed us to generate significant returns for our fund investors and higher distributable earnings for our unitholders. These past three quarters have been the highest in distributable earnings since Blackstone went public six years ago.

The compelling valuation metrics, the very rich dividend, the good second quarter results, the very strong earnings growth prospects, and the fact that the stock is in an uptrend, are all factors that make BX stock quite attractive.

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Chart: finviz.com

Northern Tier Energy LP (NYSE:NTI)

Northern Tier Energy LP operates as an independent downstream energy company with refining, retail, and pipeline operations in the United States.

Northern Tier Energy has a low debt (total debt to equity is at 0.57), and it has a very low trailing P/E of 5.26 and a very low forward P/E of 6.27. The PEG ratio is extremely low at 0.16, and the average annual earnings growth estimates for the next five years is exceptionally high at 47%. The price to sales is very low at 0.48, and the price to free cash flow for the trailing 12 months is also very low at 7.70.The forward annual dividend yield is extremely high at 19.56%, and the payout ratio is at 83%.

The NTI stock price is 4.23% above its 20-day simple moving average, 1.87% above its 50-day simple moving average and 4.96% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

NTI will report its latest quarterly financial results on August 12. NTI is expected to post a profit of $0.47 a share.

The compelling valuation metrics, the extremely rich dividend, the very strong earnings growth prospects, and the fact that the stock is in an uptrend, are all factors that make NTI stock quite attractive.

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Chart: finviz.com

Rose Rock Midstream, L.P. (NYSE:RRMS)

Rose Rock Midstream, L.P. engages in the gathering, transportation, storage, distribution, and marketing of crude oil in Colorado, Kansas, Minnesota, Montana, North Dakota, Oklahoma, and Texas.

Rose Rock Midstream has a low debt (total debt to equity is at 0.69), and it has a trailing P/E of 17.79 and a forward P/E of 19.29. The PEG ratio is at 1.04, and the average annual earnings growth estimates for the next five years is very high at 18.57%. The price to sales is very low at 0.51, and the price to free cash flow for the trailing 12 months is at 23.17. The forward annual dividend yield is very high at 4.65%, and the payout ratio is at 83%.

The RRMS stock price is 0.82% above its 20-day simple moving average, 0.49% above its 50-day simple moving average and 7.65% above its 200-day simple moving average. That indicates a short-term, mid-term and long-term uptrend.

RRMS will report its latest quarterly financial results in August. RRMS is expected to post a profit of $0.43 a share, a 39% rise from the company's actual earnings for the same quarter a year ago.

All these factors - the very rich dividend, the strong earnings growth prospects, and the fact that the stock is in an uptrend -- make RRMS stock quite attractive.

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Chart: finviz.com

Source: 3 High-Yielding Stocks With Strong Growth Prospects