This regular end of month report tallied results from here as verified using Yahoo Finance data for basic materials sector stocks as of market closing prices December 3 compared with analyst mean target price results one year hence. Five stocks boasted 20% to 37% price upsides. Atlas Resource Partners, LP (NYSE:ARP) a Pittsburgh headquartered independent oil and gas firm at 19.7% showed the lowest upside of those five. Eagle Rock Energy Partners (NASDAQ:EROC), an oil & gas refining and marketing firm from Houston, posted 24.78%, the fourth best price upside projection. CVR Partners L.P. (NYSE:UAN) a Sugarland, TX agricultural chemicals firm, took the middle point of the five at 28.62%. Enduro Royalty Trust (NYSE:NDRO), an Austin, TX based independent oil and gas firm at 29.18%, showed the second best upside. Finally, Rentech Nitrogen Partners LP (NYSE:RNF), a Los Angeles based nitrogen fertilizer agricultural chemicals firm, exhibited a 36.62% price upside to lead the December 3 basic materials dogs. Five other firms back in the pack showed 14.13% to 19.47% upsides.
Since the fall of 2011, this report series applied dog dividend methodology to uncover possible buy opportunities in each of eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes).
Below, the Arnold Basic Materials Sector top dog selections for November were reported .
Dog Metrics Sorted Basic Materials Sector Stocks by Yield
Eight of the top ten basic materials stocks showing the biggest dividend yields per the Yahoo screen as of December 3 represented oil and/or gas (o&g) industries. These included the top dog, SandRidge Mississippian Trust II (NYSE:SDR) tops of two drillers the other of which, MV Oil Trust (NYSE:MVO) placed fifth. Four independent o&g firms were slotted two, six, eight, and ten: Sandridge Permian Trust (NYSE:PER); LRR Energy L.P. (NYSE:LRE); QR Energy LP (NYSE:QRE); Atlas Resource Partners, L.P. . The last two o&g refiners and marketers, Alon USA Partners LP (NYSE:ALDW), and BP Prudhoe Bay Royalty Trust (NYSE:BPT) placed third and ninth.
So, merely two of the top ten basic materials firms by yield did not mention oil or gas in their industry description. The highest of these placed fourth, PetroLogistics LP (NYSE:PDH), a major chemicals firm. An agricultural chemicals firm, Rentech Nitrogen Partners LP was seventh by yield.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of the relative strengths of the top ten basic materials dogs by yield was plotted as of market close 12/3/2013 compared to those of the Dow of 11/22. Historic projected annual dividend history from $1000 invested in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividends.
Actionable Conclusion (1): Basic Materials Top Ten Dogs & Dow Got Going
Dividend from $10k invested as $1k in each basic material top ten dog fell while the aggregate single share price of those ten hopped higher since October. Dividend dropped at a rate of 5.3% while total single share price increased 10% in that period. The market signal was fully bullish somewhat evoked by a migration to a stock screen that excluded microcap stocks for price and dividend data.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased over 2.5% since November 20, while aggregate single share price fell 1.4%. The Dow dogs' overbought condition, in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested in those ten (@$1k each), shrank again. The overhang was $161 or 43% for September; shrank down to $111 or 30% for October; expanded to $171 or 47'% November 11; backed off to $127 or 34% November 20; shrank again to $108 or 29% to end November. Much of this bear chase was triggered by Microsoft (NASDAQ:MSFT) replacing JPMorgan Chase (NYSE:JPM) in the top ten Dow dogs in mid-November.
To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to dig out bargains.
Actionable Conclusion (2): Wall Street Wizards Weighed A Near 23% Net Gain from Top 20 Basic Materials Dogs In 2014
Top twenty dogs for the basic materials sector were graphed below to show relative strengths by dividend and price as of December 3, 2013 and those projected by analyst mean price target estimates to the same date in 2014.
A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter, the analyst mean target price was used to gauge the stock upsides to 2014.
Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created the data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the twenty highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by 2 created the 2014 data points, green for price and blue for dividends.
Yahoo projected a 10.8% lower dividend from $10K invested in this group, while aggregate single share price was projected to increase by 10.6% in the coming year.
The number of analysts contributing to the mean target price estimate for each stock was noted in the next to the last column on the charts. Three to nine analysts were considered optimal for a valid projection estimate. Estimates provided by one analyst were not applied (n/a).
A beta (risk) ranking for each analyst rated stock was provided in the far right column on the above chart. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. A negative beta number indicated the degree of a stocks movement opposite of market direction.
Actionable Conclusion (3): Analysts Forecast 10 Basic Materials Sector Dogs to Net 27.5% to 46.56% By November 2014
Five of the ten top dividend yielding bas mat dogs were verified as being among the gainers for the coming year based on analyst 1 year target prices. So this month, the dog strategy for basic materials as graded by Wall St. wizards, was 50% accurate.
Nine probable profit generating trades revealed by Yahoo Finance for 2014 were:
Rentech Nitrogen Partners LP netted $465.61, based on dividend plus mean target price estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 208% more than the market as a whole.
Enduro Royalty Trust netted $383.50, based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.
CVR Partners LP. netted $369.71 based on a mean target price estimate from four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
Eagle Rock Energy Partners netted $334.72 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
PetroLogistics LP netted $316.68 based on a mean target price estimate from five analysts combined with projected annual dividend less broker fees. No Beta number was available for PDH.
Alon USA Partners LP netted $298.18 based on estimates from three analysts plus dividends less broker fees. No Beta number was available for ALDW.
QR Energy LP netted $191.35, based on dividends plus a mean target price estimate by eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.
Atlas Resource Partners, LP netted $289.27 based on estimates from eight analysts plus dividends less broker fees. No Beta number was available for ARP.
Memorial Production Partners LP (NASDAQ:MEMP) netted $277.73 based on dividends plus the mean of annual price estimates from nine analysts less broker fees. No Beta number was available for MEMP.
National Resource Partners (NYSE:NRP) netted $275.18 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 37% greater than the market as a whole.
The average net gain in dividend and price was over 33% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 35% greater than the market as a whole.
The stocks listed above were suggested only as decent starting points for your basic materials sector dog dividend stock purchase research process. These were not recommendations.
These gains as reported do not factor-in any tax problems resulting from distributions. Consult your tax advisor regarding the source of "dividends" from any investment.
Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.
Disclosure: I am long PGH, T, VZ, INTC, MCD, PFE, GE. 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.