How can anyone not continue to be impressed, and impressed again, by the Freeport McMoran Copper & Gold Inc. (FCX) management team? They are probably the best allocators of free cash flow the world has ever seen. FCX announced a $1.00 supplemental dividend payable in December, which follows a move a few months ago to increase its annual dividend to $2.00 from $1.20. Given its high free cash flow and the cited lack of acquisition opportunities, supplemental dividends from FCX will likely be an ongoing affair. FCX also announced a 2-for-1 stock split, which goes in effect on February 1, 2011 to shareholders of record as of January 15, 2011.
We are almost as impressed with FCX as we are with ourselves for often providing stock ideas that subsequently obtain major, positive sell side ratings actions. As we mentioned earlier on Seeking Alpha, "Getting In Before Sell Side Institutions Follow", by focusing on four key factors we are able to generate some amazing stock ideas, many of which subsequently experience major positive sell side ratings actions. These factors include:
- Relative Value.
- Operating Momentum.
- Analyst Revision Momentum; and
- Fundamental Quality.
Thursday, three stocks that are found both in our model portfolio newsletter and a model portfolio based on real trade data experienced the Nostradamus Effect, bringing the total number of positive sell side actions for stocks that have been in our portfolio since at least the beginning of the month to seven:
1) United Continental Holdings (UAL) was named by Morgan Stanley a long Research Tactical Idea.
click on charts to enlarge
2) Freeport McMoRan (FCX) had its price target raised to a sell side high of $130 to $110 by Credit Suisse (in our opinion, that target is easily attainable).
3) Waddell & Reed (WDR) was upgraded to Overweight from Equal Weight by Barclays, which also raised its price target $41 from $30.