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"Nothing will ever be attempted if all possible objections must first be overcome."

Samuel Johnson

We have selected what we believe to be 10 top plays out of the stocks we have reviewed for the week. We review five stocks per article and in each article, we choose our favourite play; almost all the stocks listed below are from our "favourite play list."

Out of the great plays here Plains All American Pipelines (NYSE:PAA) is our favorite for the following reasons:

  • Management has stated that they are planning on increasing distributions by 8-9% in 2012
  • It has a strong levered free cash flow of $1. 3B
  • It has a good five year dividend average of 7%
  • A good quarterly revenue growth rate of 22%
  • It has a very good free cash flow yield of 14.6%
  • It has very strong earnings per share growth rate of 106%
  • Net income has been increasing for the past 3 years; in 2009 it stood at $580 million and in 2011 it came in at $994 million.
  • Cash flow per share surged from $5.81 in 2009 to $8.50 in 2011.
  • Annual EPS before NRI has increased from $2.89 in 2007 to $5.24 in 2011.
  • Sales have jumped in the past 3years from $18 billion in 2009 to $34 billion 2011.
  • Operating income moved from $778 million in 2009 to $1.29 billion in 2011.
  • A very strong quarterly earnings growth rate of 92%
  • A decent five year dividend growth rate of 6%
  • It has consecutively increased its dividend for 12 years. The last increase was from 99.5 cents to $1.02.
  • It has a strong 3 year total return of 162%
  • Even though the payout ratio is not important as it's an MLP, it is well below 100. The current figure is 76%
  • It has average current ratio of 1, a weak quick ratio of 0.7, but it has a good interest coverage ratio of 5.7 which more than makes up for this shortfall.
  • It ended the year with a strong balance sheet with over $3.5 billion in committed liquidity and $26 million in cash and cash equivalents.
  • Adjusted net income and adjusted EBITDA for the 4th quarter were $322 and $471 million respectively, as compared to the 4th quarter 2010 results of $187 million and $322 million.
  • It is positioning itself to continue delivering attractive results. In 2011, $1.9 billion was invested in expansion capital and acquisitions and management plans to invest in excess of $2.5 billion in 2012 through its $850 million expansion program and $1.7 billion on pending acquisitions of BP' Canadian NGL business.
  • $100K invested for 10 years would have grown to $590K.

Company : Plains All American Pipeline

Levered Free Cash Flow = 1.38B

Basic Key ratios

Percentage Held by Insiders = 1

Market Cap ($mil) = 12410

Number of Institutional Sellers 12 Weeks = 2

Growth

  1. Net Income ($mil) 12/2011 = 994
  2. Net Income ($mil) 12/2010 = 514
  3. Net Income ($mil) 12/2009 = 580
  4. 12mo Net Income this Q/ 12month Net Income 4Q's ago = 91.29
  5. Q Net Income this Q/ same qtr yr ago = 95.78
  1. EBITDA ($mil) 12/2011 = N/A
  2. EBITDA ($mil) 12/2010 = N/A
  3. EBITDA ($mil) 12/2009 = 1046
  4. Annual Net Income this Yr/ Net Income last Yr = 93.39
  5. Cash Flow ($/share) 12/2011 = 8.5
  6. Cash Flow ($/share) 12/2010 = 6.22
  7. Cash Flow ($/share) 12/2009 = 5.81
  1. Sales ($mil) 12/2011 = 34275
  2. Sales ($mil) 12/2010 = 25893
  3. Sales ($mil) 12/2009 = 18520

Dividend history

  1. Div Yield = 5.10
  2. Div Yield 5 Yr Average = 7.00%
  3. Annual Dividend 12/2011 = 3.91
  4. Annual Dividend 12/2010 = 3.76
  5. Forward Yield = 4.94
  6. Dividend 5yr Growth = 5.82%

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.76
  2. Payout Ratio 06/2011 = 0.86
  3. Payout Ratio 5 Yr Average 09/2011 = 1.15
  4. Change in Payout Ratio = -0.38

Performance

  1. Percentage change Price 52 Wks Relative to S&P 500 = 22.22
  2. Standard Deviation Target Price Estimate = 5.28
  3. Average EPS Surprise Last 4 Qtr = 23.88
  4. EPS percentage Change F2/F1 = 9.02
  5. EPS Growth Q(1)/Q(-3) = -166.67
  6. 5 Year Historical EPS Growth 09/2011 = 6.69
  7. ROE 5 Yr Average 09/2011 = 13.73
  8. Return on Investment 09/2011 = 9.84
  9. Return on Investment 06/2011 = 8.9
  10. Debt/Total Cap 5 Yr Average 09/2011 = 47.1
  1. Current Ratio 09/2011 = 1.00
  2. Current Ratio 06/2011 = 1.02
  3. Current Ratio 5 Yr Average = 1
  4. Quick Ratio = 0.75
  5. Interest Coverage 09/2011 = 10.7
  6. Interest Coverage 06/2011 = 5.74

Valuation

  1. Book Value Qtr ($/share) 12/2011 = N/A
  2. Book Value Qtr ($/share) 09/2011 = 39.99
  3. Book Value Qtr ($/share) 06/2011 = 36.72
  4. Annual EPS before NRI 12/2007 = 2.89
  5. Annual EPS before NRI 12/2008 = 2.96
  6. Annual EPS before NRI 12/2009 = 3.14
  7. Annual EPS before NRI 12/2010 = 3.04
  8. Annual EPS before NRI 12/2011 = 5.24
  1. Price/ Book = 2.08
  2. Price/ Cash Flow = 9.77
  3. Price/ Sales = 0.36
  4. Q1 Std Dev/ Consensus = 0.1
  5. R-squared EPS Growth 12/2011 = N/A
  6. R-squared EPS Growth 09/2011 = 0.3

Clarcor Inc. (NYSE: CLC)

Industry : Industrial Machinery & Equipment

Levered Free Cash Flow: 88.48M

Net income for the past three years

Net Income 2009 = $72 million

Net Income 2010 = $96 million

Net Income 2011 = $124 million

EBITDA 12/2011 = $214 million

EBITDA 12/2010 = $175 million

EBITDA 12/2009 = $139 million

Net income Reported Quarterly = $371 million

Total cash flow from operating activities

2009 = $113.7 million

2010 = $143.41 million

2011 = $119.45 million

Cash Flow 12/2011 = 3.11 $/share

Cash Flow 12/2010 = 2.52 $/share

Cash Flow 12/2009 = 2.04 $/share

Annual EPS before NRI 12/2011 = 2.42

Annual EPS before NRI 12/2010 = 1.88

Annual EPS before NRI 12/2009 = 1.4

Annual EPS before NRI 12/2008 = 1.91

Annual EPS before NRI 12/2007 = 1.78

ROE = 15.17%

Return on Assets = 11.24%

Quarterly Earnings Growth = 28.4%

Quarterly Revenue Growth = 11.6%

Key Ratios

Price to Sales = 2.3

Price to Book = 3.1

Price to Tangible Book = 5.18

Price to Cash Flow = 16.58

Price to Free Cash Flow = 44.8

Current Ratio 09/2011 = 3.75

Current Ratio 5 Year Average = 3.24

Quick Ratio = 2.5

Cash Ratio = 1.19

Interest Coverage 09/2011 = 460.08

Payout Ratio 09/2011 = 0.2

Payout Ratio 06/2011 = 0.19

Payout Ratio 5 Year Average 12/2011 = 0.21

Payout Ratio 5 Year Average 09/2011 = 0.21

Payout Ratio 5 Year Average 06/2011 = 0.21

Change in Payout Ratio = -0.01

Dividend yield 5 year average = 1%

Dividend growth rate 3 year average = 9.8%

Dividend growth rate 5 year average = 9.96%

Consecutive dividend increases = 45 years

Paying dividends since = 1921

Company : Atlas Pipeline Partneres (NYSE:APL)

Levered Free Cash Flow = -118.20M

Basic Key ratios

  1. Percentage Held by Insiders = 0.37
  2. Market Cap ($mil) = 1984

Growth

  1. Net Income ($mil) 12/2011 = 289
  2. Net Income ($mil) 12/2010 = 276
  3. Net Income ($mil) 12/2009 = 60
  1. EBITDA ($mil) 12/2011 = 409
  2. EBITDA ($mil) 12/2010 = 128
  3. EBITDA ($mil) 12/2009 = 171
  1. Cash Flow ($/share) 12/2011 = 3.01
  2. Cash Flow ($/share) 12/2010 = 0.87
  3. Cash Flow ($/share) 12/2009 = 1.79
  1. Sales ($mil) 12/2011 = 1303
  2. Sales ($mil) 12/2010 = 936
  3. Sales ($mil) 12/2009 = 904
  1. Anl EPS before NRI 12/2007 = 1.76
  2. Anl EPS before NRI 12/2008 = 2.41
  3. Anl EPS before NRI 12/2009 = -0.13
  4. Anl EPS before NRI 12/2010 = -0.65
  5. Anl EPS before NRI 12/2011 = 1.3

Dividend history

  1. Div Yield = 5.5%
  2. Div Yield 5 Yr Average 0909/2011 = 9.48%
  3. 5 year dividend growth rate= 7.26%
  4. Annual Dividend 12/2011 = 1.78
  5. Annual Dividend 12/2010 = 0.35
  6. Forward Yield = 5.95

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.77
  2. Payout Ratio 5 Yr Average 09 09/2011 = 1.79
  3. Change in Payout Ratio = -1.02

Performance

  1. Percentage Change Price 52 Wks Relative to S&P 500 = 23.43
  2. Standard Dev Target Price Estimate = 2.12
  3. Average EPS Surprise Last 4 Qtr = 168.66
  4. EPS % Change F2/F1 = 83.05
  5. EPS Growth Q (1)/Q(-3) = 10-100.00
  6. 5 Yr Historical EPS Growth 09/2011 = 5.98
  1. ROE 5 Yr Average 0909/2011 = 6.98
  2. Return on Investment 09/2011 = 9.37
  3. Return on Investment 06/2011 = 8.31
  4. Debt/Tot Cap 5 Yr Average 09/2011 = 49.19
  1. Current Ratio 09/2011 = 0.77
  2. Current Ratio 5 Yr Average = 0.73
  3. Quick Ratio = 0.77
  4. Interest Coverage =10.3

Valuation

  1. Book Value Qtr ($/share) 09/2011 = 23.06
  2. Book Value Qtr ($/share) 06/2011 = 23.71
  3. Price/ Book = 1.61
  4. Price/ Cash Flow = 12.28
  5. Price/ Sales = 1.52
  6. Enterprise value/EBITDA 12 Mo = 6.13
  7. Q1 Std Dev/ Consensus = 0.26
  8. R-squared EPS Growth 09/2011 = 0.01

Parker Hannifin Corp. (NYSE: PH)

Industry: Industrial Machinery & Equipment

Levered Free Cash Flow: 1.10B

Net income for the past three years

Net Income 2009 = $509 million

Net Income 2010 = $554 million

Net Income 2011 = $1049 million

EBITDA 12/2011 = $1853 million

EBITDA 12/2010 = $1221 million

EBITDA 12/2009 = $1153 million

Net income Reported Quarterly = $371 million

Total cash flow from operating activities

2009 = $1.13 billion

2010 = $1.22 billion

2011 = $1.17 billion

Cash Flow 12/2011 = 8.56 $/share

Cash Flow 12/2010 = 5.69 $/share

Cash Flow 12/2009 = 5.4 $/share

Annual EPS before NRI 12/2011 = 6.37

Annual EPS before NRI 12/2010 = 3.4

Annual EPS before NRI 12/2009 = 3.13

Annual EPS before NRI 12/2008 = 5.61

ROE = 20.7%

Return on Assets = 10.34%

Quarterly Earnings Growth = 4.6%

Quarterly Revenue Growth = 8.4%

Key Ratios

Price to Sales = 1.05

Price to Book = 2.61

Price to Tangible Book = 11.63

Price to Cash Flow = 10.6

Price to Free Cash Flow = 17.4

Current Ratio 09/2011 = 1.91

Current Ratio 5 Year Average = 1.7

Quick Ratio = 1.21

Cash Ratio = 0.38

Interest Coverage 09/2011 = 15.27

Payout Ratio 09/2011 = 0.21

Payout Ratio 06/2011 = 0.22

Payout Ratio 5 Year Average 09/2011 = 0.25

Payout Ratio 5 Year Average 06/2011 = 0.25

Change in Payout Ratio = -0.04

Dividend yield 5 year average = 1.8%

Dividend growth rate 3 year average = 16.58%

Dividend growth rate 5 year average = 17.71%

Consecutive dividend increases = 7 years

Paying dividends since = 1949

Total return last 3 years = 206.76%

Total return last 5 years = 75.27%

Hormel Foods Corp. (NYSE: HRL

Industry : Food

Levered Free Cash Flow : 393.43M

Growth

  1. Net income for the past three years
  2. Net Income 2009 = $343 million
  3. Net Income 2010 = $396 million
  4. Net Income 2011 = $474 million
  1. EBITDA 12/2011 = $866 million
  2. EBITDA 12/2010 = $777 million
  3. EBITDA 12/2009 = $683 million
  4. Net income Reported Quarterly = $371 million
  1. Total cash flow from operating activities
  2. 2009 = $558.77 million
  3. 2010 = $485.54 million
  4. 2011 = $490.48 million
  1. Cash Flow 12/2011 = 2.26 $/share
  2. Cash Flow 12/2010 = 2.01 $/share
  3. Cash Flow 12/2009 = 1.75 $/share
  1. Annual EPS before NRI 12/2011 = 1.74
  2. Annual EPS before NRI 12/2010 = 1.51
  3. Annual EPS before NRI 12/2009 = 1.27
  4. Annual EPS before NRI 12/2008 = 1.04
  5. Annual EPS before NRI 12/2007 = 1.07

Performance

  1. ROE = 16.95%
  2. Return on Assets = 10.61%
  3. Quarterly Earnings Growth = -13.7%
  4. Quarterly Revenue Growth = 6.1%
  1. Total return last 3 years = 105.32%
  2. Total return last 5 years = 65.98%
  1. Key Ratios
  2. Price to Sales = 0.95
  3. Price to Book = 2.77
  4. Price to Tangible Book = 3.83
  5. Price to Cash Flow = 12.72
  6. Price to Free Cash Flow = 34
  1. Current Ratio 03/2012 = 2.79
  2. Current Ratio 12/2011 = 2.79
  3. Current Ratio 09/2011 = 2.57
  4. Current Ratio 5 Year Average = 2.21
  5. Quick Ratio = 1.43
  6. Cash Ratio = 0.81
  7. Interest Coverage 03/2012 = 61.53
  8. Interest Coverage 12/2011 = 61.53
  9. Interest Coverage 09/2011 = 55.82

Dividend sustainability

  1. Payout Ratio 12/2011 = 0.36
  2. Payout Ratio 09/2011 = 0.29
  3. Payout Ratio 06/2011 = 0.29
  4. Payout Ratio 5 Year Average 12/2011 = 0.31
  5. Change in Payout Ratio = 0.05

Dividend history

  1. Dividend yield 5 year average = 1.9%
  2. Dividend growth rate 3 year average = 12.83%
  3. Dividend growth rate 5 year average = 13.44%
  4. Consecutive dividend increases = 45 years
  5. Paying dividends since = 1928
  6. Total return last 3 years = 97.21%
  7. Total return last 5 years = 67.1%

Notes

It would fall under the category of good-great.

Conclusion

Investing in dividend paying stocks makes sense for the following reasons

  1. A steady income without have to sell your position.
  2. Provides one with more financial flexibility.
  3. It's a good hedge against inflation.
  4. Cash Flow regardless of market direction.
  5. Quicker compounding provides one with the chance of meeting ones financial goals faster.
  6. Provides one with the two potential sources of income; one from capital gains and the other from the dividends paid out.
  7. Additional streams of income can be opened by selling covered calls.
  8. If you are bullish on a specific dividend stock you can open up an additional stream of income by selling puts. If the stock trades below your strike price you get into the stock at the price you wanted; actually the price is lower after you subtract the premium you received. If it does not trade below the strike price you get paid to wait and walk away with the premium.

EPS, EPS surprise, broker recommendations, and price and consensus charts sourced from zacks.com. Earning's estimates and growth rate charts sourced from dailyfinance.com. Free cash flow yield, income from cont operations, and revenue growth sourced from Ycharts.com.

Source: 10 Top Growth Plays Of The Week, Part I

Additional disclosure: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware