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This is list is meant to serve as a starting point for investors. A lot of data has been provided so it should be relatively easy for an investor to decide if the stock merits further attention or not. If you decide that you like the stock, you can dig deeper and see if it is something you want consider deploying money into. To help the novice investor we have put out this guideline which could help the novice investor in the selection process. "Our suggested guidelines when searching for new investment ideas."

Company: Terra Nitrogen (NYSE:TNH)

Levered free cash flow = $324 Million

Basic Key ratios

  1. Quarterly earnings growth = 5%
  2. Percentage held by insiders = 75%
  3. Short percentage of float= 6%
  4. Dividend 5-year Growth = 2.59
  5. Cash Flow 5 -year Average = 13.26
  6. Dividend Yield 5-Year Average = 8.55

Growth

  1. Net Income ($mil) 12/2011 = 508
  2. Net Income ($mil) 12/2010 = 202
  3. Net Income ($mil) 12/2009 = 144
  1. EBITDA ($mil) 12/2011 = 528
  2. EBITDA ($mil) 12/2010 = 219
  3. EBITDA ($mil) 12/2009 = 161
  4. Cash Flow ($/share) 12/2011 = 29.1
  5. Cash Flow ($/share) 12/2010 = 11.83
  6. Cash Flow ($/share) 12/2009 = 8.69
  1. Sales ($mil) 12/2011 = 799
  2. Sales ($mil) 12/2010 = 565
  3. Sales ($mil) 12/2009 = 508
  1. Annual EPS before NRI 12/2007 = 10.9
  2. Annual EPS before NRI 12/2008 = 14.9
  3. Annual EPS before NRI 12/2009 = 5.4
  4. Annual EPS before NRI 12/2010 = 8.02
  5. Annual EPS before NRI 12/2011 = 15.9


(Click to enlarge)

Dividend history

  1. Dividend Yield = 8.70
  2. Dividend Yield 5 Year Average = 8.55
  3. Dividend 5 year Growth = 2.59

Dividend sustainability

  1. Payout Ratio = 1.08
  2. Payout Ratio 5 Year Average 12/2011 = 0.99

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = N/A
  2. EPS Growth Quarterly(1)/Q(-3) = -124.01
  3. 5 Year History EPS Growth 12/2011 = 3.21
  4. ROE 5 Year Average 12/2011 = 132.33
  1. Current Ratio 12/2011 = 4.63
  2. Current Ratio 5 Year Average = 3.44
  3. Quick Ratio = 6.22
  4. Cash Ratio = 6.2
  5. Interest Coverage Quarterly = N/A

Notes

This play would fall under the category of great. $100K invested for 10 years would have grown to $4.34 million. It has pulled back nicely and could make for a good long term play. Consider opening positions on a re test of the 173-175 ranges. One other option would be to sell puts at strikes you would not mind owning this stock at.

Important facts investors should be aware in regards to investing in MLP's

Payout ratios are not that important when it comes to MLPS generally pay a majority of their cash flow as distributions. Payout ratios are calculated by dividing the dividend/distribution rate by the net income per share, and this is why the payout ratio for MLPs is often higher than 100%. The more important ratio to focus on is the cash flow per unit. If one focuses on the cash flow per unit, one will see that in most cases, it exceeds the distribution declared per unit.

MLPs are not taxed like regular corporations because they pay out a large portion of their income to partners (as an investor you are basically a partner and are allocated units instead of shares) usually through quarterly distributions. The burden is thus shifted to the partners who are taxed at their ordinary income rates. As ordinary income tax rates of investors are typically lower than the income tax assessed on corporations, this arrangement is advantageous to the MLPs and generally most investors.

MLPs issue a Schedule K-1 to their investors. Unrelated business income (UBI) above $1,000 is taxable in an IRA. This information will appear Box 20 in the schedule K-1. UBI is typically a very small number usually well below $1000 and in some cases negative. If the MLP pays out distributions in excess of the income it generates, the distribution is classified as a "return of capital" and tax deferred until you sell your units. For more information, on this topic investors can visit the National Association of Publicly Traded Partnerships.

Company: Ameren Corp (NYSE:AEE)

Levered Free Cash Flow = 472.88M

Brief Overview

  1. Percentage Held by Insiders = 0.16
  2. Relative Strength 52 weeks = 81
  3. Cash Flow 5-year Average = 6.32
  4. Profit Margin = 0.63%
  5. Operating Margin = 19.73%
  6. Quarterly Revenue Growth = -13%
  7. Quarterly Earnings Growth
  8. Operating Cash Flow = 1.71B
  9. Beta = 0.29
  10. Percentage Held by Institutions = 1.5%
  11. Short Percentage of Float = 1.8%

Growth

  1. Net Income ($mil) 12/2011 = 519
  2. Net Income ($mil) 12/2010 = 139
  3. Net Income ($mil) 12/2009 = 612
  4. Net Income Reported Quarterly ($mil) = -403
  5. EBITDA ($mil) 12/2011 = 2116
  6. EBITDA ($mil) 12/2010 = 1796
  7. EBITDA ($mil) 12/2009 = 2250
  8. Cash Flow ($/share) 12/2011 = 5.98
  9. Cash Flow ($/share) 12/2010 = 6.17
  10. Cash Flow ($/share) 12/2009 = 5.91
  11. Sales ($mil) 12/2011 = 7531
  12. Sales ($mil) 12/2010 = 7638
  13. Sales ($mil) 12/2009 = 7090
  14. Annual EPS before NRI 12/2007 = 3.25
  15. Annual EPS before NRI 12/2008 = 2.95
  16. Annual EPS before NRI 12/2009 = 2.79
  17. Annual EPS before NRI 12/2010 = 2.75
  18. Annual EPS before NRI 12/2011 = 2.56


(Click to enlarge)

Dividend history

  1. Dividend Yield = 4.70
  2. Dividend Yield 5 Year Average = 5.78
  3. Dividend 5 year Growth = -11.36

Dividend sustainability

  1. Payout Ratio = N/A
  2. Payout Ratio 5 Year Average = 0.66

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 0.3
  2. ROE 5 Year Average 12/2011 = 8.65
  3. Current Ratio 12/2011 = 1.32
  4. Current Ratio 5 Year Average = 1.23
  5. Quick Ratio = 0.89
  6. Cash Ratio = 0.58
  7. Interest Coverage Quarterly = 1.37

Notes

This play would fall under the category of "good." It has a decent interest coverage ratio of 1.37, a decent yield of 4.7% and good current ratio of 1.32. Net income took a big hit in 2010 but recouped most of those losses by 2011. It is in a strong two year up trend and has a very low beta which makes it a good candidate for investors seeking a play that is not very volatile in nature.

Company: Raytheon Co (NYSE:RTN)

Levered Free Cash Flow = 2.10B

Brief Overview

  1. Percentage Held by Insiders = 0.66
  2. Number of Institutional Sellers 12 Weeks = 6
  3. 3 Month Percentage Chg Short Interest = n/a
  4. Relative Strength 52 weeks = 72
  5. Cash Flow 5-year Average = 5.43
  6. Profit Margin = 7.8%
  7. Operating Margin = 12.27%
  8. Quarterly Revenue Growth = -1.9%
  9. Quarterly Earnings Growth = 16.7%
  10. Operating Cash Flow = 2.21B
  11. Beta = 75%
  12. Percentage Held by Institutions = 77.8%
  13. Short Percentage of Float = 2.4%

Growth

  1. Net Income ($mil) 12/2011 = 1866
  2. Net Income ($mil) 12/2010 = 1840
  3. Net Income ($mil) 12/2009 = 1935
  4. Net Income Reported Quarterly ($mil) = 448
  5. EBITDA ($mil) 12/2011 = 3309
  6. EBITDA ($mil) 12/2010 = 2978
  7. EBITDA ($mil) 12/2009 = 3455
  8. Cash Flow ($/share) 12/2011 = 7.32
  9. Cash Flow ($/share) 12/2010 = 6.93
  10. Cash Flow ($/share) 12/2009 = 6.05
  11. Sales ($mil) 12/2011 = 24857
  12. Sales ($mil) 12/2010 = 25183
  13. Sales ($mil) 12/2009 = 24881
  14. Annual EPS before NRI 12/2007 = 3.31
  15. Annual EPS before NRI 12/2008 = 4.06
  16. Annual EPS before NRI 12/2009 = 4.85
  17. Annual EPS before NRI 12/2010 = 5.58
  18. Annual EPS before NRI 12/2011 = 5.9


(Click to enlarge)

Dividend history

  1. Dividend Yield = 3.70
  2. Dividend Yield 5 Year Average = 2.63
  3. Dividend 5 year Growth = 13.12

Dividend sustainability

  1. Payout Ratio = 0.31
  2. Payout Ratio 5 Year Average = 0.29

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 7.76
  2. ROE 5 Year Average = 17.23
  3. Current Ratio = 1.6
  4. Current Ratio 5 Year Average = 1.51
  5. Quick Ratio = 1.46
  6. Cash Ratio = 1.46
  7. Interest Coverage Quarterly = 14.32
  8. Retention rate= 69%

Notes

It would fall under the category of "good." It has a great interest coverage ratio, a good retention rate of 69%, a very low payout ratio of 31% and a decent yield of 3.7%. Cash flow per share, EPS, and sales have been trending up for the past three years. It also sports a good relative strength score of 72 out of a possible 100. This sign of strength is clearly seen by the fact that it is already trading at new 52 week highs.

Company : Navios Maritime Partners LP (NYSE:NMM)

Levered Free Cash Flow = -5.89M

Brief Overview

  1. Percentage Held by Insiders = 9.23%
  2. 5. Relative Strength 52 weeks = 38
  3. 6. Cash Flow 5-year Average = 2.4
  4. 7. Profit Margin = 34.18%
  5. 8. Operating Margin = 40.94%
  6. 9. Quarterly Revenue Growth = 12.1%
  7. 10. Quarterly Earnings Growth = 2%
  8. 11. Operating Cash Flow = 133.98M
  9. 12. Beta = 1.50
  10. 13. Percentage Held by Institutions = 24.6%

Growth

  1. Net Income ($mil) 12/2011 = 65
  2. Net Income ($mil) 12/2010 = 61
  3. Net Income ($mil) 12/2009 = 34
  4. Net Income Reported Quarterly ($mil) = 17
  5. EBITDA ($mil) 12/2011 = 139
  6. EBITDA ($mil) 12/2010 = 109
  7. EBITDA ($mil) 12/2009 = 59
  8. Cash Flow ($/share) 12/2011 = 2.86
  9. Cash Flow ($/share) 12/2010 = 2.49
  10. Cash Flow ($/share) 12/2009 = 2.24
  11. Sales ($mil) 12/2011 = 187
  12. Sales ($mil) 12/2010 = 143
  13. Sales ($mil) 12/2009 = 93
  14. Annual EPS before NRI 12/2007 = 0.15
  15. Annual EPS before NRI 12/2008 = 1.56
  16. Annual EPS before NRI 12/2009 = 1.66
  17. Annual EPS before NRI 12/2010 = 1.51
  18. Annual EPS before NRI 12/2011 = 1.4


(Click to enlarge)

Dividend history

  1. Dividend Yield = 13.3
  2. Dividend Yield 5 Year Average = 11.33
  3. Annual Dividend = 1.74
  4. Dividend 5 year Growth = N/A

Dividend sustainability

  1. Payout Ratio 5 Year Average = 4.3
  2. Payout Ratio 5 Year Average = 1.08

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 5
  2. ROE 5 Year Average 12/2012 = 24.89
  3. Current Ratio = 1.19
  4. Current Ratio 5 Year Average = 2.26
  5. Quick Ratio = 1.12
  6. Cash Ratio = 1.04
  7. Interest Coverage Quarterly = 7.03

Notes

This play would fall under the "run of the mill category" as it's a volatile stock and in a sector that is completely disliked. Shipping rates are at multi year lows and this plays a tremendous role in the future profitability of companies in this sector. Having said this stock appears to be putting in a bottom and risk takers could end up being rewarded well in the future. From a contrarian angle, this is a good play for the following reasons:

  1. The stock has taken a massive beating and the worst news might already be priced in
  2. And this sector is hated. Contrarians usually prefer to open positions in a stock or sector before the general public jumps in.

Conclusion

In general, a great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at.

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: 4 Candidates: 1 Great, 2 Good And 1 Run Of The Mill