Taking Profits in CenturyTel

The time has finally come to issue a SELL recommendation for CenturyTel (CTL). The stock has performed moderately since we issued the Stock Focus recommendation on March 31, 2008. This company may be poised to reach the $41 level or Valueline’s cashflow mean of 5x. However, the returns that this stock has provided in the last five months say that it is worthwhile considering alternatives.

CTL was recommended when it was trading at $33.47. As of the close of market on Monday September 8, 2008, CTL was quoted at $39.45. This equals a return of 17.87% in five months. Conservatively, on an annualized basis this would equal approximately 42.88% return. Selling this stock now also generates a return 2.5 times the amount of the dividend yield if the stock was held for a whole year.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers.

Disclosure: None