An Interesting Speculative Play And 4 Dividend Plays To Look At

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 |  Includes: ANRZQ, BCE, ECA, PEP, UTX
by: Tactical Investor

This 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 scroll down the list and decide if the stock warrants further attention. If you find the stock interesting, you can dig deeper and see if it meets with your investment criteria. Investors should not base their decision on yield alone. There are many stocks that offer extremely high yields, but their performance over the years has been dismal. In fact, in some cases even with the yield the total rate of return has been negative for the past 3-5 years. One should look at the robustness of the company, the dividend growth rate, the sustainability of the dividend and finally one should take a look at the company's dividend history. Companies with stellar records will do everything possible to avoid cutting the dividend in order to maintain this record. Novice Investors can use "this guide" as a starting to point to help you determine which stocks you should get into and which ones to avoid. These are not absolute rules. They are just suggestions to help get you started and please note there are always exceptions to the rule. The goal is to try to satisfy as many of them as possible.

Company: BCE Inc (NYSE:BCE)

Levered Free Cash Flow = $2.25B

Brief Overview

  1. Percentage Held by Insiders = 0.15
  2. Short Ratio = 5.9
  3. Relative Strength 52 weeks = 71
  4. Cash Flow 5-year Average = 6.31
  5. Profit Margin = 12.12%
  6. Operating Margin = 22.33%
  7. Quarterly Revenue Growth = 9.9%
  8. Quarterly Earnings Growth = 14.5%
  9. Operating Cash Flow = $5.21B
  10. Beta = 0.55
  11. Percentage Held by Institutions = 50.9%

Growth

  1. Net Income ($mil) 12/2011 = 2605
  2. Net Income ($mil) 12/2010 = 2211
  3. Net Income ($mil) 12/2009 = 1530
  4. Net Income Reported Quarterly ($mil) = 616
  5. EBITDA ($mil) 12/2011 = 8482
  6. EBITDA ($mil) 12/2010 = 6882
  7. EBITDA ($mil) 12/2009 = 5761
  8. Cash Flow ($/share) 12/2011 = 7.52
  9. Cash Flow ($/share) 12/2010 = 7.1
  10. Cash Flow ($/share) 12/2009 = 6.24
  11. Sales ($mil) 12/2011 = 19608
  12. Sales ($mil) 12/2010 = 18169
  13. Sales ($mil) 12/2009 = 14194
  14. Annual EPS before NRI 12/2007 = 2.19
  15. Annual EPS before NRI 12/2008 = 2.25
  16. Annual EPS before NRI 12/2009 = 2.36
  17. Annual EPS before NRI 12/2010 = 2.86
  18. Annual EPS before NRI 12/2011 = 3.15

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Dividend history

  1. Dividend Yield = 5.00
  2. Dividend Yield 5 Year Average 03/2012 = 4.72
  3. Annual Dividend 12/2011 = 2.09
  4. Dividend 5 year Growth 03/2012 = 12.3

Dividend sustainability

  1. Payout Ratio = 0.71
  2. Payout Ratio 5 Year Average 03/2012 = 0.6
  3. Payout Ratio 5 Year Average 12/2011 = 0.61

Performance

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  1. Next 3-5 Year Estimate EPS Growth rate = 3.75
  2. ROE 5 Year Average 03/2012 = 16.91
  3. ROE 5 Year Average 12/2011 = 16.82
  4. Debt/Total Cap 5 Year Average 03/2012 = 40.54
  5. Current Ratio = 0.64
  6. Current Ratio 5 Year Average = 0.83
  7. Quick Ratio = 0.56
  8. Cash Ratio = 0.12
  9. Interest Coverage Quarterly = 5.33

Notes

The stock is overbought. Consider waiting for a pullback before committing new money to this play. A short term ideal entry point would be in the $39-$40 ranges.

Company: Encana Corp (NYSE:ECA)

Levered Free Cash Flow = -$1.72B

Brief Overview

  1. Short Ratio = 5.10
  2. Relative Strength 52 weeks = 29
  3. Cash Flow 5-year Average = 8.85
  4. Profit Margin = - 18.57%
  5. Operating Margin = - 6.3%
  6. Quarterly Revenue Growth = -63%
  7. Operating Cash Flow = $3.65B
  8. Beta = 1.13
  9. Short Percentage of Float = 6.00%

Growth

  1. Net Income ($mil) 12/2011 = 128
  2. Net Income ($mil) 12/2010 = 1499
  3. Net Income ($mil) 12/2009 = 1862
  4. Net Income Reported Quarterly ($mil) = 12
  5. EBITDA ($mil) 12/2011 = 3893
  6. EBITDA ($mil) 12/2010 = 5803
  7. EBITDA ($mil) 12/2009 = 6048
  8. Cash Flow ($/share) 12/2011 = 5.2
  9. Cash Flow ($/share) 12/2010 = 5.31
  10. Cash Flow ($/share) 12/2009 = 9.26
  11. Sales ($mil) 12/2011 = 8467
  12. Sales ($mil) 12/2010 = 8870
  13. Sales ($mil) 12/2009 = 11114
  14. Annual EPS before NRI 12/2007 = 5.08
  15. Annual EPS before NRI 12/2008 = 5.87
  16. Annual EPS before NRI 12/2009 = 4.32
  17. Annual EPS before NRI 12/2010 = 0.9
  18. Annual EPS before NRI 12/2011 = 0.54

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Dividend history

  1. Dividend Yield = 3.8%
  2. Dividend Yield 5 Year Average 03/2012 = 2.75
  3. Dividend Yield 5 Year Average 12/2011 = 2.62
  4. Annual Dividend 12/2011 = 0.8
  5. Dividend 5 year Growth 03/2012 = -12.31

Dividend sustainability

  1. Payout Ratio = 1.6
  2. Payout Ratio 5 Year Average 03/2012 = 0.53
  3. Payout Ratio 5 Year Average 12/2011 = 0.51

Performance

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  1. Next 3-5 Year Estimate EPS Growth rate = -10
  2. ROE 5 Year Average 03/2012 = 12.73
  3. ROE 5 Year Average 12/2011 = 13.13
  4. Debt/Total Cap 5 Year Average 03/2012 = 29.95
  5. Current Ratio 12/2011 = 1.93
  6. Current Ratio 5 Year Average = 1.21
  7. Quick Ratio = 1.75
  8. Cash Ratio = 1.37
  9. Interest Coverage Quarterly = 4.46

Company: United Technologies Corp (NYSE:UTX)

Levered Free Cash Flow = -$6.8B

Brief Overview

  1. Percentage Held by Insiders = 0.8
  2. Number of Institutional Sellers 12 Weeks = 1
  3. Short Ratio = 2.7
  4. Relative Strength 52 weeks = 44
  5. Cash Flow 5-year Average = 5.95
  6. Profit Margin = 7.5%
  7. Operating Margin = 14.47%
  8. Quarterly Revenue Growth = - 8.4%
  9. Quarterly Earnings Growth = 0.08%
  10. Operating Cash Flow = $7.00B
  11. Beta = 1.13
  12. Percentage Held by Institutions = 83.9%
  13. Short Percentage of Float = 1.4%

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Growth

  1. Net Income ($mil) 12/2011 = 4979
  2. Net Income ($mil) 12/2010 = 4373
  3. Net Income ($mil) 12/2009 = 3829
  4. Net Income Reported Quarterly ($mil) = 330
  5. EBITDA ($mil) 12/2011 = 9446
  6. EBITDA ($mil) 12/2010 = 8542
  7. EBITDA ($mil) 12/2009 = 7635
  8. Cash Flow ($/share) 12/2011 = 7.02
  9. Cash Flow ($/share) 12/2010 = 6.49
  10. Cash Flow ($/share) 12/2009 = 5.88
  11. Sales ($mil) 12/2011 = 58190
  12. Sales ($mil) 12/2010 = 54326
  13. Sales ($mil) 12/2009 = 52920
  14. Annual EPS before NRI 12/2007 = 4.23
  15. Annual EPS before NRI 12/2008 = 5.01
  16. Annual EPS before NRI 12/2009 = 4.58
  17. Annual EPS before NRI 12/2010 = 5.02
  18. Annual EPS before NRI 12/2011 = 5.53

Dividend history

  1. Dividend Yield = 2.9
  2. Dividend Yield 5 Year Average 03/2012 = 2.34
  3. Dividend Yield 5 Year Average 12/2011 = 2.3
  4. Annual Dividend 12/2011 = 1.87
  5. Dividend 5 year Growth 03/2012 = 10.4

Dividend sustainability

  1. Payout Ratio = 0.34
  2. Payout Ratio 5 Year Average 03/2012 = 0.33
  3. Payout Ratio 5 Year Average 12/2011 = 0.32

Performance

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  1. Next 3-5 Year Estimate EPS Growth rate = 11.98
  2. ROE 5 Year Average 03/2012 = 22.08
  3. ROE 5 Year Average 12/2011 = 22.01
  4. Debt/Total Cap 5 Year Average 03/2012 = 30.85
  5. Current Ratio = 1.52
  6. Current Ratio 5 Year Average = 1.29
  7. Quick Ratio = 0.97
  8. Cash Ratio = 0.45
  9. Interest Coverage Quarterly = 13.19

Notes

Quarterly earnings growth improved from -64% in the last quarter to positive 0.08% in the second quarter. Income has been trending up for the past three years, it has good interest ratio, a decent current ratio but a weak quick ratio. A weekly close above 77 should result in a test of the 82-84 ranges with a possible intraday spike to the 88 ranges.

Company: Pepsico Inc (NYSE:PEP)

Basic overview

  1. Levered free cash flow = $5.3B
  2. 5 year sales growth = 12.5%
  3. 5 year EPS growth = 3.23%
  4. 5 capital spending growth rate = 17%
  5. Sales vs 1 year ago = 15 %
  6. Operating margins = 15.4
  7. Quarterly earnings growth rate = -21%
  8. Profit margin = 9.05%
  9. Beta = 0.32
  10. Short ratio= 2.70
  11. Operating cash flow = $7.8B
  12. Quarterly revenue growth = 4.4%

Growth

  1. Net Income ($mil) 12/2011 = 6443
  2. Net Income ($mil) 12/2010 = 6320
  3. Net Income ($mil) 12/2009 = 5946
  4. EBITDA ($mil) 12/2011 = 12427
  5. EBITDA ($mil) 12/2010 = 11462
  6. EBITDA ($mil) 12/2009 = 10111
  7. Cash Flow ($/share) 12/2011 = 6.25
  8. Cash Flow ($/share) 12/2010 = 5.68
  9. Cash Flow ($/share) 12/2009 = 4.79
  10. Sales ($mil) 12/2011 = 66504
  11. Sales ($mil) 12/2010 = 57838
  12. Sales ($mil) 12/2009 = 43232
  13. Annual EPS before NRI 12/2007 = 3.38
  14. Annual EPS before NRI 12/2008 = 3.68
  15. Annual EPS before NRI 12/2009 = 3.71
  16. Annual EPS before NRI 12/2010 = 4.13
  17. Annual EPS before NRI 12/2011 = 4.4

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Dividend history

  1. Dividend Yield = 3.1
  2. Dividend Yield 5 Year Average = 2.8
  3. Dividend 5 year Growth = 10.37

Dividend sustainability

  1. Payout Ratio = 0.51
  2. Payout Ratio 5 Year Average = 0.47

Performance

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  1. Next 3-5 Year Estimate EPS Growth rate = 8
  2. ROE 5 Year Average = 34.67
  3. Return on Investment = 15.82
  4. Current Ratio = 1.00
  5. Current Ratio 5 Year Average = 1.21
  6. Quick Ratio = 0.6
  7. Cash Ratio = 0.37
  8. Interest Coverage = 11

Company: Alpha Natural Resources (ANR)

Basic overview

  1. Percentage held by Institutions = 79.9%
  2. Levered free cash flow = $454M
  3. Operating cash flow = $684M
  4. Operating margin= 6%
  5. Profit margin = - 9.7%
  6. Quarterly revenue growth rate = 71%
  7. Beta = 2.61
  8. Short percentage of float = 11.8%
  9. 5 year sales growth rate = 30.4%
  10. 5 year capital spending growth rate = 44.2%
  11. Sales vs 1 year ago = 81.5%
  12. Long term debt to equity ratio - 0.39

Growth

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  1. Net Income ($mil) 12/2011 = -677
  2. Net Income ($mil) 12/2010 = 96
  3. Net Income ($mil) 12/2009 = 58
  4. EBITDA ($mil) 12/2011 = 899
  5. EBITDA ($mil) 12/2010 = 809
  6. EBITDA ($mil) 12/2009 = 526
  7. Net Income Reported Quarterly ($mil) = -29
  8. Cash Flow ($/share) 12/2011 = 8.01
  9. Cash Flow ($/share) 12/2010 = 7.46
  10. Cash Flow ($/share) 12/2009 = 4.91
  11. Sales ($mil) 12/2011 = 7109
  12. Sales ($mil) 12/2010 = 3917
  13. Sales ($mil) 12/2009 = 2496
  14. Annual EPS before NRI 12/2007 = 0.45
  15. Annual EPS before NRI 12/2008 = 2.63
  16. Annual EPS before NRI 12/2009 = 1.98
  17. Annual EPS before NRI 12/2010 = 2.17
  18. Annual EPS before NRI 12/2011 = 1.57

Performance

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  1. Next 3-5 Year Estimate EPS Growth rate = 5
  2. 5 Year History EPS Growth 12/2011 = 23.94
  3. ROE 5 Year Average 12/2011 = 12.81
  4. Current Ratio 12/2011 = 1.47
  5. Current Ratio 5 Year Average = 2.38
  6. Quick Ratio = 1.13
  7. Cash Ratio = 0.76
  8. Book Value Quarterly = 33.72

Notes

It sports a strong quarterly revenue growth rate of 71% and is trading $26.70 below book value. Short percentage of float has increased from 9% in June to almost 12% in July. This play will fall under the "speculative category." It is trading at new 10 year lows currently. Investors should wait until it puts in a nice base formation before jumping in. One could nibble at the current prices but do not take huge bites until a base is in. A base is when the stock trends sideways for an extended period of time. For example, one could argue that it would have put in a base formation if it were to trade sideways without closing below $5.75 for several weeks. A weekly close above 9 would turn the outlook to bullish.

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. Consider taking some money off the table once the summer is behind us as the markets are likely to put in a multi month top that should lead to a much stronger correction. Investors looking for other ideas might find this article to be of interest - Southern Company: Get In At $38.30 Or Earn An Extra 8.8%.

Disclaimer

It is imperative that you do your due diligence and then determine if the above plays meets 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 and EPS surprise charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.