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Investors should generally seek stocks where net income, cash flow, annual EPS before NRI and sales are trending upwards for the past three years. In addition, investors would do well to seek out stocks with good interest coverage ratios, low payout ratios and positive levered free cash flows. Bonus points can be assigned if the stock can meet these additional requirements - 3-5 year EPS projected growth rate of 7% or higher, year over year projected growth rates of 10% or higher and a current ratio of 1.2 or higher. AFLAC Inc satisfies and in most cases exceeds the suggested criteria.

Reasons to be bullish on AFLAC Inc. (AFL):

  • A massive levered free cash flow of $4.03 billion
  • Net income increases from $1.4 billion in 2009 to $1.96 billion in 2011
  • Cash flow from operating activities increased from $61.7 billion in 2009 to $10.8 billion in 2011
  • Cash flow per share increased from $4.87 in 2009 to $6.37 in 2011
  • Annual EPS before NRI increased from $3.27 in 2007 to $6.33 in 2011
  • Operating margins of 16%
  • A good quarterly revenue growth rate of 20.3%
  • A very strong quarterly earnings growth rate of 101%
  • A high beta of 1.87 makes it a good candidate for covered writes or to sell puts if one is bullish on the stock
  • A five-year sales growth rate of 9%
  • A total three-year return of 40%
  • A yield of 3%
  • A strong five year dividend growth rate of 16%
  • A low payout ratio of 21%
  • A very strong free cash flow yield of 61%
  • A great interest coverage ratio of 16.7
  • A good ROE of 19.14%
  • $100K invested for 10 years would have grown to $167K. If the dividends were reinvested the rate of return would be much higher.

AFLAC Inc. (AFL)

Levered Free Cash Flow: $4.03B

Growth

  1. Net income for the past three years
  2. Net Income 2009 = $1497 million
  3. Net Income 2010 = $2344 million
  4. Net Income 2011 = $1964 million
  1. EBITDA 12/2011 = $3188 million
  2. EBITDA 12/2010 = $3734 million
  3. EBITDA 12/2009 = $2307 million
  1. Total cash flow from operating activities
  2. 2009 = $6.17 billion
  3. 2010 = $6.99 billion
  4. 2011 = $10.85 billion
  1. Cash Flow 12/2011 = 6.37 $/share
  2. Cash Flow 12/2010 = 5.55 $/share
  3. Cash Flow 12/2009 = 4.87 $/share
  1. Annual EPS before NRI 12/2011 = 6.33
  2. Annual EPS before NRI 12/2010 = 5.53
  3. Annual EPS before NRI 12/2009 = 4.85
  4. Annual EPS before NRI 12/2008 = 3.99
  5. Annual EPS before NRI 12/2007 = 3.27

Performance

  1. ROE = 19.14%
  2. Return on Assets = 2.71%
  3. Quarterly Earnings Growth = 20.3%
  4. Quarterly Revenue Growth = 101%
  1. Current Ratio 09/2011 = 0.04
  2. Current Ratio 5 Year Average = 0.17
  3. Quick Ratio = 0.04
  4. Cash Ratio = 0.02
  5. Interest Coverage 09/2011 = 16.74

Dividend history and sustainability

  1. Payout Ratio 09/2011 = 0.21
  2. Payout Ratio 5 Year Average 09/2011 = 0.24
  1. Dividend yield 5 year average = 3.00
  2. Dividend growth rate 5 year average = 16%
  3. Consecutive dividend increases = 29 years
  4. Paying dividends since = 1973

Company: MFA Financial (MFA)

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. Cash Flow ($/share) 12/2011 = 1.07
  5. Cash Flow ($/share) 12/2010 = 1.01
  6. 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 = 12.6
  2. Dividend Yield 5 Year Average 12/2011 = 12.09
  3. 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

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. Current Ratio 06/2011 = 9.83
  6. Current Ratio 5 Year Average = 21.76
  7. Quick Ratio = 9.83
  8. Cash Ratio = 8.9
  9. Interest Coverage Quarterly = 2.82

ATP Oil & Gas Corp (ATPG)

Growth

  1. Net income for the past three years
  2. Net Income 2009 = $-49 million
  3. Net Income 2010 = $-338 million
  4. Net Income 2011 = $-192 million
  1. EBITDA 12/2011 = $493 million
  2. EBITDA 12/2010 = $79 million
  3. EBITDA 12/2009 = $107 million
  4. Net income Reported Quarterly = $8 million
  1. Total cash flow from operating activities
  2. 2008 = $546.97 million
  3. 2009 = $159.83 million
  4. 2010 = $-37.28 million
  5. 2011=$197.09 million
  1. Cash Flow 12/2011 = 3.54 $/share
  2. Cash Flow 12/2010 = 3.23 $/share
  3. Cash Flow 12/2009 = 2.3 $/share
  1. Annual EPS before NRI 12/2011 = -2.93
  2. Annual EPS before NRI 12/2010 = -1.21
  3. Annual EPS before NRI 12/2009 = -0.16
  4. Annual EPS before NRI 12/2008 = 2.98
  5. Annual EPS before NRI 12/2007 = 2.97

Performance

  1. Return on Assets = -3.61%
  2. Quarterly Revenue Growth = 25.4%
  3. Price to Sales = 0.50
  4. Price to Tangible Book = -2.60
  5. Price to Cash Flow = 3.90
  6. Price to Free Cash Flow = -1.10
  1. Current Ratio 09/2011 = 0.35
  2. Current Ratio 5 Year Average = 0.96
  3. Quick Ratio = 0.35
  4. Cash Ratio = 0.22
  5. Interest Coverage 09/2011 = 0.57

Company: Exelon Corp (EXC)

Basic Key ratios

  1. Relative Strength 52 weeks = 54
  2. Cash Flow 5 -ear Average = 7.72

Growth

  1. Net Income ($mil) 12/2011 = 2495
  2. Net Income ($mil) 12/2010 = 2563
  3. Net Income ($mil) 12/2009 = 2707
  1. EBITDA ($mil) 12/2011 = 6982
  2. EBITDA ($mil) 12/2010 = 7981
  3. EBITDA ($mil) 12/2009 = 7751
  4. Cash Flow ($/share) 12/2011 = 7.64
  5. Cash Flow ($/share) 12/2010 = 8.42
  6. 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

Dividend history

  1. Dividend Yield = 3.9
  2. Dividend Yield 5 Year Average = 4.03
  3. Dividend 5 year Growth = 23%

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.51
  2. Payout Ratio 5 Year Average 12/2011 = 0.49

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 0
  2. EPS Growth Quarterly(1)/Q(-3) = 129.92
  3. ROE 5 Year Average 09/2011 = 23.37
  4. Current Ratio 06/2011 = 1.1
  5. Current Ratio 5 Year Average = 1.2
  6. Quick Ratio = 0.93
  7. Cash Ratio = 0.4
  8. Interest Coverage Quarterly = 159

Company: Vmware Inc (VMW)

Growth

  1. Net Income ($mil) 12/2011 = 724
  2. Net Income ($mil) 12/2010 = 357
  3. Net Income ($mil) 12/2009 = 197
  1. EBITDA ($mil) 12/2011 = 1114
  2. EBITDA ($mil) 12/2010 = 681
  3. EBITDA ($mil) 12/2009 = 429
  4. Cash Flow ($/share) 12/2011 = 2.32
  5. Cash Flow ($/share) 12/2010 = 1.45
  6. Cash Flow ($/share) 12/2009 = 0.99
  1. Sales ($mil) 12/2011 = 3767
  2. Sales ($mil) 12/2010 = 2857
  3. Sales ($mil) 12/2009 = 2024
  1. Annual EPS before NRI 12/2007 = 0.61
  2. Annual EPS before NRI 12/2008 = 0.69
  3. Annual EPS before NRI 12/2009 = 0.5
  4. Annual EPS before NRI 12/2010 = 0.8
  5. Annual EPS before NRI 12/2011 = 1.54

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 24.4
  2. EPS Growth Quarterly(1)/Q(-3) = -192.59
  3. ROE 5 Year Average 12/2011 = 13.08
  4. Current Ratio 06/2011 = 2.36
  5. Current Ratio 5 Year Average = 2.47
  6. Quick Ratio = 2.36
  7. Cash Ratio = 1.97
  8. Interest Coverage Quarterly = 196.22

Conclusion

The markets are still in a corrective phase and will most likely remain volatile for the better part of the second quarter. Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments.

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.

Source: Aflac 1 Of 5 Interesting Growth Plays To Consider

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Data for Y charts sourced from ycharts.com. Earnings and growth estimate charts sourced from dailyfinance.com.