Albemarle Top Pick Among 5 Interesting Plays

Apr.19.12 | About: Albemarle Corporation (ALB)

"An arch never sleeps."

Indian Proverb

Before we discuss our favorite play, we would like to warn long-term investors that the markets are still extremely overbought, and that it would be wise to wait for a strong pullback before jumping in. Sometimes one has to be patient for an extended period of time before one is rewarded. Remember the story of the tortoise and the rabbit. The rabbit got off to a hot start, but the tortoise plodded on patiently and eventually won the race.

Investing is not about simply jumping into the markets at any given point in time. Blindly jumping into the markets is a recipe for disaster. Successful investors have one factor in common - they usually buy when there is blood in the streets and sell when the crowd is jumping up in joy. Remember that markets climb a wall of worry and fall down a cliff of joy. In the mean time one could sell covered calls and or if one is bullish on a stock naked puts to open up additional streams of income. A pullback in the 7-12% ranges would qualify as a strong pullback.

Reasons to consider Albemarle Corp. (NYSE:ALB)

  • Five-year dividend growth rate of 13.67.
  • A good long term debt to equity 0.47.
  • Net income has more than doubled from $178 million in 2009 to $436 million in 2011.
  • EBITDA has increased from $285 million in 2009 to $685 million in 2011.
  • A positive levered free cash flow of $241 million.
  • A good quarterly earnings growth rate of 17%.
  • A strong beta of 2.04 which makes it a good candidate for covered calls as the higher the volatility the higher the premium the call commands.
  • Total cash flow from operating activities has increased from $358.3 million in 2009 to $487 million in 2011.
  • Cash flow per share has more than doubled from $2.96 per share in 2009 to $6.01 per share in 2011.
  • Annual EPS before NRI has increased from 2.40 in 2007 to $4.77 in 2011.
  • It sports a good ROE of 29.44%.
  • A decent quarterly revenue growth rate of 16.9%.
  • It sports a very good current and quick ratio of 3.38 and 2.3 respectively.
  • An excellent interest coverage ratio of 15.
  • A great 3 year total return of 147%.
  • Consecutive dividend increases for 17 years.
  • Strong institutional support; percentage held by institutions is 76.5%.
  • $100K invested for 10 years would have grown to $477K.

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Albemarle Corp.

Levered Free Cash Flow: 241.08M

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Growth

  1. Net income for the past three years
  2. Net Income 2009 = $178 million
  3. Net Income 2010 = $324 million
  4. Net Income 2011 = $436 million
  1. EBITDA 12/2011 = $685 million
  2. EBITDA 12/2010 = $513 million
  3. EBITDA 12/2009 = $285 million
  4. Net income Reported Quarterly = $8 million
  1. Total cash flow from operating activities
  2. 2009 = $358.53 million
  3. 2010 = $331.31 million
  4. 2011 = $487.36 million
  1. Cash Flow 12/2011 = 6.01 $/share
  2. Cash Flow 12/2010 = 4.63 $/share
  3. Cash Flow 12/2009 = 2.96 $/share
  1. Annual EPS before NRI 12/2011 = 4.77
  2. Annual EPS before NRI 12/2010 = 3.56
  3. Annual EPS before NRI 12/2009 = 1.86
  4. Annual EPS before NRI 12/2008 = 2.39
  5. Annual EPS before NRI 12/2007 = 2.4

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Performance

  1. ROE = 29.44%
  2. Return on Assets = 13.52%
  3. Quarterly Earnings Growth = 17%
  4. Quarterly Revenue Growth = 16.9%
  5. Total return last 3 years = 147%
  6. Total return last 5 years = 51%
  1. Price to Sales = 1.94
  2. Price to Book = 3.31
  3. Price to Tangible Book = 4.69
  4. Price to Cash Flow = 10.44
  5. Price to Free Cash Flow = 24.7
  1. Current Ratio 09/2011 = 3.38
  2. Current Ratio 5 Year Average = 3.11
  3. Quick Ratio = 2.3
  4. Cash Ratio = 1.33
  5. Interest Coverage 09/2011 = 15.1

Dividend sustainability and history

  1. Payout Ratio 09/2011 = 0.15
  2. Payout Ratio 06/2011 = 0.14
  3. Payout Ratio 5 Year Average 09/2011 = 0.2
  4. Payout Ratio 5 Year Average 06/2011 = 0.2
  5. Change in Payout Ratio = -0.05
  6. Dividend yield 5 year average = 1.4%
  7. Dividend growth rate 3 year Average = 13.43%
  8. Dividend growth rate 5 year average = 13.67%
  9. Consecutive dividend increases = 17 years
  10. Paying dividends since = 1994

Novartis AG Common Stock (NYSE:NVS)

Levered Free Cash Flow: 11.52B

Growth

  1. Net income for the past three years
  2. Net Income 2009 = $8400 million
  3. Net Income 2010 = $9794 million
  4. Net Income 2011 = $9113 million
  1. EBITDA 12/2011 = $11524 million
  2. EBITDA 12/2010 = $12394 million
  3. EBITDA 12/2009 = $10473 million
  4. Net income Reported Quarterly = $1175 million
  1. Total cash flow from operating activities
  2. 2008 = $9.67 billion
  3. 2009 = $12.2 billion
  4. 2010 = $14.07 billion
  1. Cash Flow 12/2011 = 5.52 $/share
  2. Cash Flow 12/2010 = 5.25 $/share
  3. Cash Flow 12/2009 = 3.72 $/share
  1. Annual EPS before NRI 12/2011 = 5.57
  2. Annual EPS before NRI 12/2010 = 5.13
  3. Annual EPS before NRI 12/2009 = 3.7
  4. Annual EPS before NRI 12/2008 = 3.59
  5. Annual EPS before NRI 12/2007 = 2.81

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Performance

  1. ROE = 20.1%
  2. Return on Assets = 10.81%
  3. Quarterly Earnings Growth = -45.8%
  4. Quarterly Revenue Growth = 3.7%
  1. Price to Sales = 2.27
  2. Price to Book = 2.02
  3. Price to Tangible Book = 33.82
  4. Price to Cash Flow = 10.02
  5. Price to Free Cash Flow = 23
  1. Current Ratio 09/2011 = 1.04
  2. Current Ratio 5 Year Average = 1.41
  3. Quick Ratio = 0.78
  4. Cash Ratio = 0.34
  5. Interest Coverage 09/2011 = 8.25
  6. Total return last 3 years = 61.29%
  7. Total return last 5 years = 14.29%

Dividend sustainability and history

  1. Payout Ratio 09/2011 = 0.36
  2. Payout Ratio 06/2011 = 0.37
  3. Payout Ratio 5 Year average 09/2011 = 0.34
  4. Payout Ratio 5 Year average 06/2011 = 0.33
  5. Change in Payout Ratio = 0.02
  1. Dividend yield 5 year average = 4%
  2. Current yield= 4.5%
  3. Dividend growth rate 3 year average = 13.01%
  4. Dividend growth rate 5 year average = 18.15%
  5. Consecutive dividend increases = 5 years
  6. Paying dividends since = 1992

Company: Pepco Holdings (POM)

Levered Free Cash Flow = $-58 million

Basic Key ratios

  1. Percentage Held by Insiders = 0.28
  2. Relative Strength 52 weeks = 64
  3. Dividend 5-year Growth = 0.58
  4. Cash Flow 5 -ear Average = 3.11
  5. Dividend Yield 5-Year Average = 5.63

Growth

  1. Net Income ($mil) 12/2011 = 257
  2. Net Income ($mil) 12/2010 = 32
  3. Net Income ($mil) 12/2009 = 235
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = 703.13
  5. Quarterly Net Income this Quarterly/same Quarter year ago = -42.42
  1. EBITDA ($mil) 12/2011 = 1089
  2. EBITDA ($mil) 12/2010 = 849
  3. EBITDA ($mil) 12/2009 = 1016
  4. Net Income Reported Quarterlytr ($mil) = 19
  5. Annual Net Income this Yr/ Net Income last Yr = 703.13
  6. Cash Flow ($/share) 12/2011 = 3.12
  7. Cash Flow ($/share) 12/2010 = 2.98
  8. Cash Flow ($/share) 12/2009 = 2.49
  1. Sales ($mil) 12/2011 = 5920
  2. Sales ($mil) 12/2010 = 7039
  3. Sales ($mil) 12/2009 = 9259
  1. Annual EPS before NRI 12/2007 = 1.53
  2. Annual EPS before NRI 12/2008 = 1.93
  3. Annual EPS before NRI 12/2009 = 0.91
  4. Annual EPS before NRI 12/2010 = 1.24
  5. Annual EPS before NRI 12/2011 = 1.25

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Dividend history

  1. Dividend Yield = 5.8
  2. Dividend Yield 5 Year Average 12/2011 = 5.63
  3. Dividend Yield 5 Year Average 09/2011 = 5.63
  4. Annual Dividend 12/2011 = 1.08
  5. Annual Dividend 12/2010 = 1.08
  6. Forward Yield = 5.85
  7. Dividend 5 year Growth 12/2011 = 0.58

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.91
  2. Payout Ratio 5 Year Average 12/2011 = 0.81
  3. Payout Ratio 5 Year Average 09/2011 = 0.81
  4. Payout Ratio 5 Year Average 06/2011 = 0.81
  5. Change in Payout Ratio = 0.09

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -4.7
  2. Next 3-5 Year Estimate EPS Growth rate = 4
  3. EPS Growth Quarterly(1)/Q(-3) = 144.44
  4. ROE 5 Year Average 12/2011 = 7.13
  5. ROE 5 Year Average 09/2011 = 7.13
  6. ROE 5 Year Average 06/2011 = 7.13
  7. Return on Investment 06/2011 = 3.2
  8. Debt/Total Cap 5 Year Average 12/2011 = 52.54
  9. Debt/Total Cap 5 Year Average 09/2011 = 52.54
  10. Debt/Total Cap 5 Year Average 06/2011 = 52.61
  1. Current Ratio 06/2011 = 0.77
  2. Current Ratio 5 Year Average = 0.95
  3. Quick Ratio = 0.7
  4. Cash Ratio = 0.2
  5. Interest Coverage Quarterly = 1.45

Valuation

  1. Book Value Quarterly = 19.11
  2. Price/ Book = 0.97
  3. Price/ Cash Flow = 5.91
  4. Price/ Sales = 0.71
  5. EV/EBITDA 12 Mo = 7.59

Company: MFA Financial (MFA)

Free Cash Flow = $- 5.3 million

Growth

  1. Net Income ($mil) 12/2011 = 316
  2. Net Income ($mil) 12/2010 = 270
  3. Net Income ($mil) 12/2009 = 268
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = 17.31
  5. Quarterly Net Income this Quarterly/same Quarter year ago = 14.59
  1. EBITDA ($mil) 12/2011 = 507
  2. EBITDA ($mil) 12/2010 = 456
  3. EBITDA ($mil) 12/2009 = 522
  4. Net Income Reported Quarterlytr ($mil) = 71
  5. Annual Net Income this Yr/ Net Income last Yr = 17.29
  6. Cash Flow ($/share) 12/2011 = 1.07
  7. Cash Flow ($/share) 12/2010 = 1.01
  8. Cash Flow ($/share) 12/2009 = 1
  1. Sales ($mil) 12/2011 = 508
  2. Sales ($mil) 12/2010 = 453
  3. Sales ($mil) 12/2009 = 539
  1. Annual EPS before NRI 12/2007 = 0.24
  2. Annual EPS before NRI 12/2008 = 0.21
  3. Annual EPS before NRI 12/2009 = 0.94
  4. Annual EPS before NRI 12/2010 = 0.86
  5. Annual EPS before NRI 12/2011 = 0.97

Dividend history

  1. Dividend Yield = 13.2
  2. Dividend Yield 5 Year Average 12/2011 = 11.41
  3. Dividend Yield 5 Year Average 09/2011 = 11.41
  4. Annual Dividend 12/2011 = 0.99
  5. Annual Dividend 12/2010 = 0.89
  6. Forward Yield = 13.39
  7. Dividend 5 year Growth 12/2011 = 19.24

Dividend sustainability

  1. Payout Ratio 06/2011 = 1.03
  2. Payout Ratio 5 Year Average 12/2011 = 2.48
  3. Payout Ratio 5 Year Average 09/2011 = 2.48
  4. Payout Ratio 5 Year Average 06/2011 = 2.48
  5. Change in Payout Ratio = -1.45

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -11.88
  2. Next 3-5 Year Estimate EPS Growth rate = 4
  3. EPS Growth Quarterly(1)/Q(-3) = 112
  4. ROE 5 Year Average 12/2011 = 8.31
  5. ROE 5 Year Average 09/2011 = 8.31
  6. ROE 5 Year Average 06/2011 = 7.93
  7. Return on Investment 06/2011 = 9.42
  8. Debt/Total Cap 5 Year Average 12/2011 = 19.89
  9. Debt/Total Cap 5 Year Average 09/2011 = 19.89
  10. Debt/Total Cap 5 Year Average 06/2011 = 18.96
  1. Current Ratio 06/2011 = 9.83
  2. Current Ratio 5 Year Average = 21.76
  3. Quick Ratio = 9.83
  4. Cash Ratio = 8.9
  5. Interest Coverage Quarterly = 2.82

Valuation

  1. Book Value Quarterly = 7.01
  2. Price/ Book = 1.02
  3. Price/ Cash Flow = 6.7
  4. Price/ Sales = 5.04
  5. EV/EBITDA 12 Mo = 5.97

Company: Exelon Corp (EXC)

Levered Free Cash Flow = $1.38B

Basic Key ratios

  1. Percentage Held by Insiders = 0.09
  2. Relative Strength 52 weeks = 54
  3. Dividend 5-year Growth = 3.25
  4. Cash Flow 5 -ear Average = 7.72
  5. Dividend Yield 5-Year Average = 4.03

Growth

  1. Net Income ($mil) 12/2011 = 2495
  2. Net Income ($mil) 12/2010 = 2563
  3. Net Income ($mil) 12/2009 = 2707
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = -2.65
  5. Quarterly Net Income this Quarterly/same Quarter year ago = 15.65
  1. EBITDA ($mil) 12/2011 = 6982
  2. EBITDA ($mil) 12/2010 = 7981
  3. EBITDA ($mil) 12/2009 = 7751
  4. Net Income Reported Quarterlytr ($mil) = 606
  5. Annual Net Income this Yr/ Net Income last Yr = -2.65
  6. Cash Flow ($/share) 12/2011 = 7.64
  7. Cash Flow ($/share) 12/2010 = 8.42
  8. Cash Flow ($/share) 12/2009 = 8.07
  1. Sales ($mil) 12/2011 = 19184
  2. Sales ($mil) 12/2010 = 18644
  3. Sales ($mil) 12/2009 = 17318
  1. Annual EPS before NRI 12/2007 = 4.31
  2. Annual EPS before NRI 12/2008 = 4.17
  3. Annual EPS before NRI 12/2009 = 4.12
  4. Annual EPS before NRI 12/2010 = 3.95
  5. Annual EPS before NRI 12/2011 = 4.16

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Dividend history

  1. Dividend Yield = 4.00
  2. Dividend Yield 5 Year Average 12/2011 = 4.03
  3. Dividend Yield 5 Year Average 09/2011 = 4.03
  4. Annual Dividend 12/2011 = 2.1
  5. Annual Dividend 12/2010 = 2.1
  6. Forward Yield = 5.54
  7. Dividend 5 year Growth 12/2011 = 3.25

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.51
  2. Payout Ratio 5 Year Average 12/2011 = 0.49
  3. Payout Ratio 5 Year Average 09/2011 = 0.49
  4. Payout Ratio 5 Year Average 06/2011 = 0.49
  5. Change in Payout Ratio = 0.01

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -10.71
  2. Next 3-5 Year Estimate EPS Growth rate = 0
  3. EPS Growth Quarterly(1)/Q(-3) = 129.92
  4. ROE 5 Year Average 09/2011 = 23.37
  5. Return on Investment 06/2011 = 10.4
  6. Debt/Total Cap 5 Year Average 12/2011 = 49.63
  7. Current Ratio 06/2011 = 1.1
  8. Current Ratio 5 Year Average = 1.2
  9. Quick Ratio = 0.93
  10. Cash Ratio = 0.4
  11. Interest Coverage Quarterly = 159

Disclaimer

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.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: EPS, Price, EPS surprise charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Earnings estimates and growth rate charts sourced from dailyfinance.com. Consensus estimate analysis table sourced from reuters.com.