Nasdaq 100 Watch List: Below are 5 of the 21 Nasdaq 100 companies that are within 21% of their respective 52-week low (full list here). The stock that fell the most from last week's Nasdaq 100 Watch List was Symantec (SYMC) which lost -8.75%. The stock that gained the most was Apollo Group (APOL) at 5.15%. In all, the Nasdaq 100 Watch List of last week lost -3.21% as compared to the Nasdaq 100 index which lost -4.42%.
One of my favorite stocks, Dentsply Intl. (XRAY), is appearing on our list for the first time in a very long time. According to Yahoo! Finance,
Dentsply International Inc. designs, develops, manufactures, and markets dental consumable products, dental laboratory products, and dental specialty products worldwide.
As a Dividend Achiever and a member of the Nasdaq 100, XRAY had a 15-year history of consecutive dividend increases until March 2010. The compounded annual growth rate [CAGR] of the dividend is in the low twenties. The lack of an increase in the last quarter is "acceptable" and probably prudent considering the state of our economy going forward. XRAY is definitely a company to research and accumulate, as the price gets closer to the March 2009 low.
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Dividend Achiever Watch List
At the end of the week, our Dividend Achiever Watch List contracted to 59 companies (full list here). Below are the top 5 companies from our list, which ranks current and former Dividend Achievers that are within 20% of the 52-week low as of May 21, 2010.
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Archer Daniels Midland
Lilly (Eli) & Co.
The best performing stock from last week's list was Monsanto, which rose 0.6% after a positive note from Barron's on 5/17/10. The worst performing stock was Shenandoah Telecommunication (SHEN), which fell -9%. Overall, the Dividend Achiever watch list lost -3.8% versus the Dow which lost -4%.
We ran a filter through through the Dividend Watch List using the Graham rule of the earnings yield being higher than twice the long-term rate (we used the 10 year T-bill rate.) The result is that 26 companies passed the test. That's 44% of the companies on the list! As a reminder, this is only one criterion out of ten. We’ll do an analysis on this issue in an upcoming article.
Although we track companies that are near their 52-week lows, the true benchmark for all stocks is the lowest point reached from the period of 2007 to the present. This means that in order to determine if the company of interest is of "value," you must contrast the current data with the lowest quarterly/annual earnings, P/E, P/B, P/S, share price during the last 3 to 4 years.
Do not accept the fact that these companies are undervalued unless compared to the worst period after the financial crisis began. If, as an investor, you cannot accept the potential of the stock of interest falling to, or below, the November 2008 or March 2009 lows, then your money should not be in the stock in question. Charles H. Dow emphasizes this concept in the quote in our posting titled "A Comprehensive View On Valuing Earnings."
Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting points for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence.
Disclosure: Long VIVO, MON