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In the learning to fish series, we provide investors with suggested guidelines for choosing a potential candidate and one candidate is selected as our play of choice. We provide reasons for this choice and in doing so hope to impart some understanding to those who are new to the field of investing.

It is important that readers take the time to read and understand the selection process involved in coming up with these picks. This information can be obtained here: Our suggested guidelines when searching for new investment ideas.

Reasons to be bullish on Kraft foods (KFT):

  • A strong relative strength score of 79 out of a possible 100
  • Net income increased from $3.02 billion in 2009 to $3.5 billion in 2011
  • Cash flow per share increased from $2.66 in 2009 to $3.14 in 2011
  • Annual EPS before NRI increased from $1.82 in 2007 to $2.29 in 2011
  • A decent five year sales growth of 8.85%
  • A strong levered free cash flow of $2.6 billion
  • A decent yield of 3.00%
  • A manageable payout ratio of 50%
  • A retention rate of 50
  • A projected 3-5 EPS growth estimate of 8%
  • A free cash flow yield of 4.3%
  • A decent long term debt to equity ratio of 0.63
  • A decent interest coverage ratio of 3.7
  • Year over year projected growth rates of 10.04% and 10.38% for 2012 and 2013 respectively.

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Company: Kraft Foods Inc

Basic overview

  1. Percentage Held by Insiders = 0.36
  2. Five year sales growth rate= 8.85%
  3. Long term debt to equity ratio = 0.63
  4. Relative Strength 52 weeks = 79
  5. Dividend 5-year Growth = 2.07
  6. Cash Flow 5-year Average = 2.61
  7. Short ratio= 1.9%
  8. Operating cash flow = $4.66 billion
  9. Levered free cash flow = 2.62 billion

Growth

  1. Net Income ($mil) 12/2011 = 3527
  2. Net Income ($mil) 12/2010 = 4114
  3. Net Income ($mil) 12/2009 = 3021
  4. Net Income Reported Quarterly ($mil) = 813
  5. EBITDA ($mil) 12/2011 = 8142
  6. EBITDA ($mil) 12/2010 = 7106
  7. EBITDA ($mil) 12/2009 = 6114
  8. Cash Flow ($/share) 12/2011 = 3.14
  9. Cash Flow ($/share) 12/2010 = 2.81
  10. Cash Flow ($/share) 12/2009 = 2.66
  11. Sales ($mil) 12/2011 = 54365
  12. Sales ($mil) 12/2010 = 49207
  13. Sales ($mil) 12/2009 = 40386
  14. Annual EPS before NRI 12/2007 = 1.82
  15. Annual EPS before NRI 12/2008 = 1.81
  16. Annual EPS before NRI 12/2009 = 2.02
  17. Annual EPS before NRI 12/2010 = 2.02
  18. Annual EPS before NRI 12/2011 = 2.29

Dividend history

  1. Dividend Yield = 3.00
  2. Dividend Yield 5 Year Average = 3.71
  3. Dividend 5 year Growth = 3.58

Dividend sustainability

  1. Payout Ratio = 0.50
  2. Payout Ratio 5 Year Average = 0.57

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 8
  2. 5 Year History EPS Growth = 4.35
  3. ROE 5 Year Average = 10.91
  4. Current Ratio = 0.92
  5. Current Ratio 5 Year Average = 0.97
  6. Quick Ratio = 0.57
  7. Cash Ratio = 0.22
  8. Interest Coverage Quarterly = 3.06

Company: Lockheed Martin (NYSE:LMT)

Levered Free Cash Flow = 2.01B

Brief Overview

  1. Percentage Held by Insiders = 1.13
  2. Relative Strength 52 weeks = 73
  3. Cash Flow 5-year Average = 9.89
  4. Profit Margin = 5.9%
  5. Operating Margin = 8.33%
  6. Quarterly Revenue Growth = 6.3%
  7. Quarterly Earnings Growth = 26%
  8. Operating Cash Flow = 2.99B
  9. Beta = 0.92
  10. Percentage Held by Institutions = 90.2%
  11. Short Percentage of Float = 5.1%

Growth

  1. Net Income ($mil) 12/2011 = 2655
  2. Net Income ($mil) 12/2010 = 2878
  3. Net Income ($mil) 12/2009 = 2973
  4. Net Income Reported Quarterly ($mil) = 668
  5. EBITDA ($mil) 12/2011 = 4993
  6. EBITDA ($mil) 12/2010 = 5175
  7. EBITDA ($mil) 12/2009 = 5504
  1. Cash Flow ($/share) 12/2011 = 11.76
  2. Cash Flow ($/share) 12/2010 = 10.34
  3. Cash Flow ($/share) 12/2009 = 10.68
  1. Sales ($mil) 12/2011 = 46499
  2. Sales ($mil) 12/2010 = 45803
  3. Sales ($mil) 12/2009 = 45189
  1. Annual EPS before NRI 12/2007 = 6.84
  2. Annual EPS before NRI 12/2008 = 7.72
  3. Annual EPS before NRI 12/2009 = 7.78
  4. Annual EPS before NRI 12/2010 = 7.26
  5. Annual EPS before NRI 12/2011 = 8.23

Dividend history

  1. Dividend Yield = 4.6
  2. Dividend Yield 5 Year Average = 3.4
  3. Dividend 5 year Growth = 19.00

Dividend sustainability

  1. Payout Ratio = 0.42
  2. Payout Ratio 5 Year Average 03/2012 = 0.32

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 5.04
  2. 5 Year History EPS Growth 03/2012 = 3.83
  3. ROE 5 Year Average 03/2012 = 66.49
  4. ROE 5 Year Average 12/2012 = 61.55
  5. Return on Investment 03/2012 = 34.82
  6. Debt/Total Cap 5 Year Average 03/2012 = 52.62
  7. Current Ratio 03/2012 = 1.19
  8. Current Ratio 5 Year Average = 1.12
  9. Quick Ratio = 0.96
  10. Cash Ratio = 0.46
  11. Interest Coverage Quarterly = 10.88
  12. Retention ratio- =68%

Company: General Mills (NYSE:GIS)

Brief Overview

  1. Percentage Held by Insiders = 0.26
  2. Number of Institutional Sellers 12 Weeks = 2
  3. Relative Strength 52 weeks = 69
  4. Cash Flow 5-year Average = 2.84
  5. Profit Margin = 9.63
  6. Operating Margin = 15.78
  7. Quarterly Revenue Growth = 11%
  8. Quarterly Earnings Growth = 1.6%
  9. Operating Cash Flow = 2.4B
  10. Beta = 0.18
  11. Percentage Held by Institutions = 70%
  12. Short Percentage of Float = 1.4
  13. Levered Free Cash Flow = 1.74B

Growth

  1. Net Income ($mil) 12/2011 = 1798
  2. Net Income ($mil) 12/2010 = 1531
  3. EBITDA ($mil) 12/2011 = 3247
  4. EBITDA ($mil) 12/2010 = 3063
  5. Net Income Reported Quarterly ($mil) = 392
  6. Cash Flow ($/share) 12/2011 = 3.32
  7. Cash Flow ($/share) 12/2010 = 3.05
  8. Sales ($mil) 12/2011 = 14880
  9. Sales ($mil) 12/2010 = 14797
  10. Annual EPS before NRI 12/2008 = 1.76
  11. Annual EPS before NRI 12/2009 = 1.99
  12. Annual EPS before NRI 12/2010 = 2.3
  13. Annual EPS before NRI 12/2011 = 2.48

Dividend history

  1. Dividend Yield = 3.4
  2. Dividend Yield 5 Year Average =2.9
  3. Dividend 5 year Growth = 10.73

Dividend sustainability

  1. Payout Ratio = 0.52
  2. Payout Ratio 5 Year Average = 0.46

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 7.33
  2. ROE 5 Year Average 12/2011 = 24.71
  3. Current Ratio = 1.00
  4. Current Ratio 5 Year Average = 0.9
  5. Quick Ratio = 0.63
  6. Cash Ratio = 0.31
  7. Interest Coverage Quarterly = 6.97

Company: Bank Montreal (NYSE:BMO)

Brief Overview

  1. Relative Strength 52 weeks = 47
  2. Cash Flow 5-year Average = 5.13
  3. Profit Margin = 2.61
  4. Operating Margin = 3.6
  5. Quarterly Revenue Growth = 24
  6. Quarterly Earnings Growth = 27
  7. Operating Cash Flow = 13.44B
  8. Beta = 1.15

Growth

  1. Net Income ($mil) 12/2011 = 3312
  2. Net Income ($mil) 12/2010 = 2707
  3. Net Income ($mil) 12/2009 = 1534
  4. EBITDA ($mil) 12/2011 = 6070
  5. EBITDA ($mil) 12/2010 = 4547
  6. EBITDA ($mil) 12/2009 = 3017
  7. Net Income Reported Quarterly ($mil) = 994
  8. Cash Flow ($/share) 12/2011 = 5.91
  9. Cash Flow ($/share) 12/2010 = 5.4
  10. Cash Flow ($/share) 12/2009 = 3.75
  11. Sales ($mil) 12/2011 = 17294
  12. Sales ($mil) 12/2010 = 15371
  13. Sales ($mil) 12/2009 = 14982
  14. Annual EPS before NRI 12/2007 = 5.17
  15. Annual EPS before NRI 12/2008 = 4.37
  16. Annual EPS before NRI 12/2009 = 2.86
  17. Annual EPS before NRI 12/2010 = 4.73
  18. Annual EPS before NRI 12/2011 = 5.19

Dividend history

  1. Dividend Yield = 4.9
  2. Dividend Yield 5 Year Average = 5.2
  3. Dividend 5 year Growth = 5.74

Dividend sustainability

  1. Payout Ratio = 0.51
  2. Payout Ratio 5 Year Average = 0.59

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 10
  2. 5 Year History EPS Growth = 2.83
  3. ROE 5 Year Average = 14.46
  4. Return on Investment = 10.69
  5. Debt/Total Cap 5 Year Average = 19.24
  6. Current Ratio = 1.02
  7. Current Ratio 5 Year Average = 0.95
  8. Quick Ratio = 0.94
  9. Cash Ratio = 0.47
  10. Interest Coverage Quarterly = 3.14

Company: Talisman Energy (NYSE:TLM)

Brief Overview

  1. Percentage Held by Insiders = 6.01%
  2. Long term debt to equity ratio = 0.73
  3. Profit Margin = 16%
  4. Operating Margin = 21%
  5. Quarterly Revenue Growth = 5.8%
  6. Operating Cash Flow = 2.91 billion
  7. Beta = 1.60
  8. Levered Free Cash Flow = -$2.71B
  9. Percentage Held by Institutions = 72%
  10. Short ratio = 1.8%

Growth

  1. Net Income ($mil) 12/2011 = 776
  2. Net Income ($mil) 12/2010 = 629
  3. Net Income ($mil) 12/2009 = 385
  4. EBITDA ($mil) 12/2011 = 4569
  5. EBITDA ($mil) 12/2010 = 3521
  6. EBITDA ($mil) 12/2009 = -329
  7. Cash Flow ($/share) 12/2011 = 2.94
  8. Cash Flow ($/share) 12/2010 = 2.19
  9. Cash Flow ($/share) 12/2009 = 0.17
  10. Sales ($mil) 12/2011 = 8272
  11. Sales ($mil) 12/2010 = 6712
  12. Sales ($mil) 12/2009 = 7028
  13. Annual EPS before NRI 12/2007 = 0.93
  14. Annual EPS before NRI 12/2008 = 1.91
  15. Annual EPS before NRI 12/2009 = 0.17
  16. Annual EPS before NRI 12/2010 = 0.13
  17. Annual EPS before NRI 12/2011 = 0.51

Dividend history

  1. Dividend Yield = 2.2
  2. Dividend Yield 5 Year Average =1.4%
  3. Dividend 5 year Growth = 13.7%

Dividend sustainability

  1. Payout Ratio = 0.31
  2. Payout Ratio 5 Year Average = 0.4

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 8.5
  2. ROE 5 Year Average = 11.46
  3. Return on Investment = 5.48
  4. Debt/Total Cap 5 Year Average = 29.37
  5. Current Ratio = 0.65
  6. Current Ratio 5 Year Average = 0.95
  7. Quick Ratio = 0.6
  8. Cash Ratio = 0.16
  9. Interest Coverage Quarterly = 18.66
  10. Retention rate = 69%

Conclusion

Generally speaking if one is bullish on a stock, a great way to add to your position or even establish a position is through selling puts. If the stock trades below the strike price, the shares could be assigned to your account. If it does not trade below the strike price you at least get paid for trying. Investors looking for other ideas might find this article to be of interest: Qualcomm: Fetch An Extra 7.4% Or Get In At 48.60 In 7 months.

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.

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: An Assortment Of Dividend Plays For Your Portfolio