Seeking Alpha
Value, contrarian, long-term horizon
Profile| Send Message|
( followers)  

We can use the updated Screener.co stock screener to find non-financial companies trading on US markets that have positive top-line growth, 3%+ yields, serviceable debt loads, and reasonable valuations. Specifically, we screen using the following criteria:

Field
op
Criteria
Exchange Country
=
"USA"
Exchange Traded On
!=
"Over The Counter"
Current year dividend per share estimate / Price-closing or last bid
>
0.03
Sector
!=
"Financial"
Revenue Change-TTM over TTM
>
0
Current EV/EBITDA
<
7
Total Debt(I)
<
EBITDA(A) * 2


Screener.co lets us use the formulaic conditions as part of our screens and can automatically execute each of the complete screens daily and send out the results as part of a alert.

As of 3/23/2011, this screen produces 29 results. Removing defense, energy, pharmaceutical, companies that have negative FY over FY growth, and AT&T (NYSE:T) (where the impact of the recent T-Mobile merger is not yet part of their reported financials) leaves 14 companies. We can quickly do this using the industry and growth criteria provided by Screener.co and clicking on AT&T and removing it from the screen.

Symbol
Company Name
ASM International N.V. (USA)
Intel Corporation
BCE Inc. (USA)
Delhaize Group (ADR)
The Dolan Company
P.H. Glatfelter Company
Mobile TeleSystems OJSC (ADR)
Minerals Technologies Inc
Nokia Corporation (ADR)
National Presto Industries Inc.
Koninklijke Philips Electronics NV (ADR)
Rogers Communications Inc. (USA)
Turkcell Iletisim Hizmetleri A.S. (ADR)
TELUS Corporation (USA)
Screener.co has excellent coverage of international companies and ADRs so we can effectively evaluate the companies produced by this screen even though other financial information resources do not yet have many of the updated financials.

ASM International (NASDAQ:ASMI) is a company that supplies equipment to semiconductor manufacturers and Intel (NASDAQ:INTC) is the world's leading semiconductor company. In a previous Seeking Alpha article, I discussed some of Intel's valuation multiples and mentioned that they looked low, even by semiconductor company standards. If you can cope with the cyclicality of the semiconductor industry and believe that Intel can improve its position in the mobile and tablet ecosystems, INTC looks interesting.

BCE Inc. (NYSE:BCE) is a Canadian fixed line and wireless communications company with a very attractive yield. It grew revenue more than 1.8% YoY. Even though it carries a substantial debt load of $12.2B, its EBITDA is sufficient to service that debt as our screen requires that debt is less than 2x annual EBITDA. If you are interested in BCE, you probably want to take a closer look at the detailed financial statements to see the mix of wireline vs. wireless business. Wireless is a growth industry while wireline is in decline and even this very manageable debt load can cause problems if the core business shrinks over time. Remember Frontier Communications...

Delhaize Group (NYSE:DEG) is a supermarket company. With its declining margins, the supermarket sector has been trading at relatively low valuations. DEG's growth is interesting, though, with >4.5% revenue growth YoY and positive TTM/TTM revenue growth. Also attractive is its 5x EV/EBITDA ratio. Delhaize definitely looks worthy of further analysis.

The Dolan Company (NYSE:DM) is a professional services firm that targets the legal, financial, and real estate sectors. All three of its target markets have been hit hard by the recession and that probably explains a large portion of why its trading at 6.1x EV/EBITDA ratio. Unless you believe in the long term prospects for its clients, I would probably be cautious about DM.

P.H. Glatfelter Company (NYSE:GLT) is a paper-products company, producing carbonless paper for handwritten forms, book paper, as well as targeting other segments that are less impacted by the increasing popularity of electronic records and eBooks. This could be an interesting value play, as GLT is also trading at a 6.1x Ev/EBITDA ratio, but it would depend on the mix of business between segments that are likely to continue to be viable over time and those that are becoming obsolete.

Mobile TeleSystems (NYSE:MBT) is a Russian and Eastern European company similar to the Canadian BCE in that it offers both wireless and wireline communication services. When evaluating these companies, the business mix is very important, as wireless services is a growing or stable market while wireline services is in decline.

Minerals Technologies (NYSE:MTX) is a synthetics products manufacturer that is trading at a 6.0x EV/EBITDA ratio and recorded 10% YoY revenue growth. It has a healthy balance sheet with ~$300M of current assets less total liabilities and more cash and equivalents than all of its liabilities. According to another Seeking Alpha article, it has attractive technical indicators as well.

Nokia (NYSE:NOK) is facing eroding market share from the double-threat of Apple iPhone and Android and is a bit risky for my taste.

National Presto Industries (NYSE:NPK) sells housewares and small appliances. While it had revenue growth YoY that was only slightly above flat, it has an attractive EV/EBITDA ratio of 5.8x, revenue per employee of >$450k, and a healthy balance sheet with strong positions in cash and short term investments. This is one that seems worthy of closer analysis.

Koninklijke Philips Electronics (NYSE:PHG) is a diversified electronics manufacturing company with an EV/EBITDA ratio of 6.1x. It also had >9% TTM/TTM revenue growth and meets our yield criteria. With diversified $30+B market cap conglomerates, it is difficult to analyze the business holistically and fully understanding the business would require analyzing their position in each of the markets that they serve. Historically, I have shied away from these companies unless the valuations were irresistably attractive.
Rogers Communications (NYSE:RCI) is a Canadian cable and wireless communications company. Its net tangible assets are negative and its balance sheet is more levered than the other communications companies discussed in this article. While low interest debt can be an effective way to boost return on equity for a stable subscription business like a cable and wireless communications company, I tend to be too risk averse to consider companies with these types of balance sheets, even when the debt meets our screen for serviceability.
Turkcell Iletisim Hizmetleri (NYSE:TKC) is a Turkish mobile communications company with over $3B of cash on its balance sheet. It has a >$5B net tangible asset value and, in my opinion, a much stronger balance sheet than RCI. While there is increased political risk in Turkey relative to Canada, this looks like one of the more interesting communications companies in this analysis.
Telus (NYSE:TU) is another Canadian communications company with a negative net tangible asset value and an EV/EBITDA ratio of 6.0x. Given the other results returned by the screen, I am inclined to pass on this one.
Using Screener.co, I can move the companies I am interested in researching further to my watchlist. This lets me analyze their financials separately from the rest of the companies in the screen.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: 14 Growing, High-Dividend-Yield Companies Trading at Attractive Valuations