The government shutdown is almost coming to an end and has been creating quite a bit of volatility in the market. During the past week the Dow Jones Industrial Average Index posted a gain of 0.54% on the week, S&P500 was up at 0.32%, and the Nasdaq actually lost 0.82% for the week. The Senate has passed a bill onto the House and then the President. I don't doubt a solution will be passed relatively soon.
With earnings season kicking into high gear, I guarantee that we will hear at least a CEO or two use the shutdown as a scapegoat for future guidance purposes, guiding down. I maintain that it is still difficult to find good stocks these days, and that's why I'm highlighting a select set of excellent value companies which have had ex-dividend dates or paid out a dividend during this past week or early next week; people should place these on their radar.
Kraft Foods Group (KRFT)
Kraft Foods Group, Inc. (KRFT) operates food and beverage businesses in North America including convenient meals, refreshment beverages and coffee, cheese and other grocery products. On 01Aug13, Kraft reported second quarter 2013 earnings of $1.38 per share. This result beat the $0.66 consensus of the 16 analysts covering the company and beat last year's second quarter results by $0.80. Kraft's PE ratio is below the food processing industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate. The stock is up 12.65% in the past year compared to the S&P500's 20.51% gain.
The company went ex-dividend on 09Oct13 with a $0.525 per share dividend which will be paid on 25Oct13 for a yield of 4.03%. This dividend marks an increase of 5% over the prior $0.50 dividend. It was a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued. Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle ground territory with a current value of 52.54, while the MACD chart below shows the black line starting to cross over the red line, meaning there is upward pressure on the stock. I anticipate the stock to run upwards for now. I bought some shares recently and will be looking forward to add to my position. (click to enlarge)
Accenture Plc (NYSE:ACN)
Accenture is engaged in providing management consulting, technology and outsourcing services. On 26Sep13, Accenture reported fourth quarter 2013 earnings of $1.01 per share. This result was in-line with the consensus of the 20 analysts following the company and beat last year's 4 quarter results by 14.77%. Accenture's PE ratio is among the lowest of any stock in the business services industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story.
Additionally, during the past year, earnings growth has outpaced its historical five year growth rate. The stock is up 4.33% in the past year compared to the S&P500's 20.51% gain. The company went ex-dividend on 09Oct13 with a $0.93 per share dividend (semi-annual) which will be paid on 15Nov13 for a yield of 2.6%. This dividend marks an increase of 14.8% over the prior $0.81 dividend. The company has been increasing its dividend for the past nine years at a 5-yr dividend growth rate of 28.7%. It was a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued. Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle ground territory with a current value of 48.56, while the MACD chart below shows the black line about to cross over the red line, meaning there is upward pressure on the stock. I anticipate the stock to run upwards for now. (click to enlarge)
I've highlighted these names, because they have all raised their dividend within the past year and are poised to do so again in the coming years. It is important in this market to be able to hold onto companies which raise their dividend rates, because it is a sign that the underlying company is doing well financially. The importance of these stocks I've highlighted is that they are value plays while the broader market is getting choppy. I believe we are at a point in the market where we have to look for value.
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.
Disclosure: I am long KRFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.