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  • Income Investing: 3 Undervalued High Yield Dividend Stocks

    On Monday, yields on 10-year US Treasury bonds dropped to 2.566%, the note's lowest level this year. Weak manufacturing data from China and ongoing concerns over Ukraine have pushed investors toward the safety of Treasury bonds. And last week's job report, which beat expectations with the addition of 288,800 jobs in April, also helped attract more investors.

    Bond prices and yields have an inverse relationship, so when the price of a bond rises - as is the case with the ongoing Treasury rally - the yields on the bonds fall. For income investors, this means that for the time being, Treasury bonds aren't generating the income they want. Enter: high yield dividend stocks.

    High yield dividend stocks can be a mixed bag. While they offer investors more money than stocks with smalleryields, the big payouts can be unsustainable for companies, leading them to cut or stop the payments entirely. So it's important to take a closer look at a company's fundamentals when considering such stocks.

    We decided to look for investment opportunities among high-yield dividend stocks for the following list. To begin, we constructed a universe of stocks with dividend yields between 5-10%.

    We then screened for potentially undervalued stocks as suggested by a price-earnings (P/E) ratio of 15 or lower. We used 15 as our upper limit because, as Investopedia notes, the market's average P/E ratio tends to fall between 15 and 25.

    Since companies use their earnings to pay dividends to shareholders, we wanted to narrow down our group to a list of stocks with a proven track record of EPS growth, which could indicate that the high dividend payouts are sustainable for the companies.

    So we screened for firms that have reported rising diluted normalized earnings per share (NYSEARCA:EPS) for the past three consecutive years. Typically, diluted normalized EPS is lower and more conservative than normalized EPS.

    We were left with three undervalued high yield dividend stocks on our list.

    Do you think rising profits will help these stocks with their high dividends? Use this list as a starting point for your own analysis.

    1. Alto Palermo S.A. (APSA, Earnings, Analysts, Financials): Engages in the ownership, acquisition, development, leasing, management, and operation of shopping centers, as well as residential and commercial complexes in Argentina. Market cap at $673.8M, most recent closing price at $18.67.

    Dividend yield is 9.61%. The company has consistently paid a semi annual dividend since 2011, when its dividend was $1.03. Its current dividend stands at $0.61.

    P/E ratio is 14.03.

    Diluted normalized EPS increased from 0.09 to 0.13 during the first time interval (12 months ending 2011-06-30 vs. 12 months ending 2010-06-30). For the second time interval, diluted normalized EPS increased from 0.13 to 0.13 (12 months ending 2012-06-30 vs. 12 months ending 2011-06-30). And for the last time interval, the EPS increased from 0.13 to 0.26 (12 months ending 2013-06-30 vs. 12 months ending 2012-06-30).

    2. Courier Corporation (CRRC, Earnings, Analysts, Financials): Engages in printing, publishing, and selling books. Market cap at $165.83M, most recent closing price at $14.37.

    Dividend yield is 5.91%. The company has consistently paid a quarterly dividend since 1989, when its dividend was $0.10. Its current dividend stands at $0.21.

    P/E ratio is 14.21.

    Diluted normalized EPS increased from 0.83 to 0.89 during the first time interval (52 weeks ending 2011-09-24 vs. 52 weeks ending 2010-09-25). For the second time interval, diluted normalized EPS increased from 0.89 to 0.94 (52 weeks ending 2012-09-29 vs. 52 weeks ending 2011-09-24). And for the last time interval, the EPS increased from 0.94 to 1 (52 weeks ending 2013-09-28 vs. 52 weeks ending 2012-09-29).

    3. Starwood Property Trust, Inc. (STWD, Earnings, Analysts, Financials): Focuses on originating, investing in, financing, and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments. Market cap at $4.71B, most recent closing price at $24.05.

    Dividend yield is 7.94%. The company has consistently paid a quarterly dividend since 2010, when its dividend was $0.22. Its current dividend stands at $0.48.

    P/E ratio is 13.36.

    Diluted normalized EPS increased from 1.11 to 1.44 during the first time interval (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). For the second time interval, diluted normalized EPS increased from 1.44 to 1.8 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31). And for the last time interval, the EPS increased from 1.8 to 1.93 (12 months ending 2013-12-31 vs. 12 months ending 2012-12-31).

    (List compiled by Mary-Lynn Cesar. Dividend data sourced from Nasdaq. EPS data sourced from Yahoo! Finance. Monthly return data sourced from Zacks Investment Research. All other data sourced from Finviz.)

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    ABOUT US

    © Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

    Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

    Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.

    Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: APSA, CRRC, STWD
    May 12 4:43 PM | Link | Comment!
  • These 4 Auto Parts Stocks All Posted Growing Profits Last Quarter

    This year hasn't been a very inspiring time for investors who like to play the automobile industry. General Motors (GM) massive recall quickly offset the good will generated over appointing the first ever woman to head a major manufacturer.

    Similarly, the particularly bad winter dampened demand for new cars. People usually like to head to the lot and try out their purchase before signing a lease. And those plans are hard to make when Mother Nature won't cooperate.

    Furthermore, Growing auto sales abroad haven't done much to benefit the major American auto companies. Europe and America have completely different sets of regulations - down to the correct size of windshield wipers - which makes producing cars for the global market nearly impossible.

    However a different part of the auto sector has benefitted from all these trends.

    Auto parts stocks like bad weather because it encourages consumers to buy more replacement parts. Auto stocks also like re-calls, because they sell parts to manufacturers. And they like varied regulations because it means they can sell a greater variety of parts to a greater variety of people.

    Sure enough, when I screened profitable consumer goods stocks for companies with encouraging inventory trends, more than a quarter of the companies that came through were auto parts manufacturers.

    So we included the list in its entirety: 4 auto parts stocks with growing profits and shrinking inventories.

    1. Dorman Products, Inc. (DORM, Earnings, Analysts, Financials): Supplies original equipment dealer automotive replacement parts, and fasteners and service line products primarily for the automotive aftermarket. Market cap at $2.07B, most recent closing price at $56.82.

    Revenue grew by 25.78% during the most recent quarter ($169.81M vs. $135.01M y/y).

    Inventory grew by 13.18% during the same time period ($164.42M vs. $145.27M y/y).

    Inventory, as a percentage of current assets, decreased from 43.23% to 38.02% during the most recent quarter (comparing 13 weeks ending 2013-12-28 to 13 weeks ending 2012-12-29).

    2. Gentex Corp. (GNTX, Earnings, Analysts, Financials): Designs, develops, manufactures, and markets electro-optical products to automotive, commercial building, and aircraft industries in the United States and internationally. Market cap at $4.54B, most recent closing price at $31.45.

    Revenue grew by 25.51% during the most recent quarter ($326.77M vs. $260.35M y/y).

    Inventory grew by -24.92% during the same time period ($120.07M vs. $159.93M y/y).

    Inventory, as a percentage of current assets, decreased from 21.48% to 19.97% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

    3. Motorcar Parts of America Inc. (MPAA, Earnings, Analysts, Financials): Together wit its subsidiaries, remanufactures and distributes alternators and starters for import and domestic cars, light trucks, heavy duty, agricultural, and industrial applications in the United States and Canada. Market cap at $363.87M, most recent closing price at $24.89.

    Revenue grew by 29.43% during the most recent quarter ($65.57M vs. $50.66M y/y).

    Inventory grew by -49.55% during the same time period ($50.42M vs. $99.95M y/y).

    Inventory, as a percentage of current assets, decreased from 70.71% to 48.88% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

    4. WABCO Holdings Inc. (WBC, Earnings, Analysts, Financials): Develops, manufactures, and sells braking, stability, suspension, and transmission control systems primarily for commercial vehicles. Market cap at $6.25B, most recent closing price at $100.08.

    Revenue grew by 20.75% during the most recent quarter ($720.4M vs. $596.6M y/y).

    Inventory grew by 8.03% during the same time period ($207.2M vs. $191.8M y/y).

    Inventory, as a percentage of current assets, decreased from 24.2% to 16.78% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

    (List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research.)

    Analyze These Ideas: Getting Started

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    ABOUT US

    © Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

    Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

    Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.

    Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: DORM, GNTX, MPAA, WBC
    May 07 12:58 PM | Link | Comment!
  • Deal Or No Deal: 8 Undervalued Stocks Under 10 Dollars With Rising EPS

    We've written a lot about how good economic news can often be bad for stocks. Particularly in periods of historically low interest rates, like we're in now, the stock market usually declines on good news.

    Good economic news usually signals that other assets classes will start to get more valuable.

    That's possibly why the market has been so confused in the last couple of days. GDP numbers were pretty bad, and suggested slowing growth. As a result stocks are moving without much of a discernible pattern.

    Read more about deals from this Kapitallist.

    However that was also expected to a certain extent as the winter slowed consumer spending. In addition, the lingering situation in Ukraine has made predicting the Fed's next move even more difficult than usual.

    Are things so bad that Janet Yellen could start to backtrack on the tapering program? Or will rates go up assuming the economy will start kicking over the summer?

    If you're bullish on stocks going forward now's a good time to take advantage of valuations that have come down since January. We decided to screen for undervalued stocks under $10 dollars by looking for EPS/Price mismatches.

    Mismatches happen when a company grows its earnings per share faster than its stock price. Since stocks trade heavily on earnings, a mis-match can often suggest that a stock might be undervalued. Starting with a universe of all the companies trading between $5-10, we screened for EPS/Price mismatches, and found 8.

    1. SeaChange International Inc. (SEAC, Earnings, Analysts, Financials): Develops, manufactures, and markets digital video systems, as well as provides related services to cable system operators, and telecommunications and broadcast television companies worldwide. Market cap at $402.62M, most recent closing price at $12.27.

    The EPS estimate for the company's current year increased from 0.32 to 0.35 over the last 30 days, an increase of 9.37%.

    This increase came during a time when the stock price changed by -3.19% (from 10.36 to 10.03 over the last 30 days).

    2. Skullcandy, Inc. (SKUL, Earnings, Analysts, Financials): Develops and distributes headphones and other audio accessories to retailers in the United States and to distributors in various countries worldwide. Market cap at $222.4M, most recent closing price at $8.01.

    The EPS estimate for the company's current year increased from 0.12 to 0.13 over the last 30 days, an increase of 8.33%.

    This increase came during a time when the stock price changed by -13.36% (from 9.73 to 8.43 over the last 30 days).

    3. Rite Aid Corp. (RAD, Earnings, Analysts, Financials): Operates retail drugstores in the United States. Market cap at $6.13B, most recent closing price at $6.53.

    The EPS estimate for the company's current year increased from 0.35 to 0.39 over the last 30 days, an increase of 11.43%.

    This increase came during a time when the stock price changed by 4.22% (from 6.87 to 7.16 over the last 30 days).

    4. Yamana Gold, Inc. (AUY, Earnings, Analysts, Financials): Engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. Market cap at $7.82B, most recent closing price at $10.38.

    The EPS estimate for the company's current year increased from 0.32 to 0.35 over the last 30 days, an increase of 9.37%.

    This increase came during a time when the stock price changed by -16.56% (from 9.54 to 7.96 over the last 30 days).

    5. Concord Medical Services Holdings Limited (CCM, Earnings, Analysts, Financials): Operates a network of radiotherapy and diagnostic imaging centers in the People's Republic of China. Market cap at $132.02M, most recent closing price at $8.80.

    The EPS estimate for the company's current year increased from 0.4 to 0.45 over the last 30 days, an increase of 12.5%.

    This increase came during a time when the stock price changed by -10.42% (from 8.25 to 7.39 over the last 30 days).

    6. Cumulus Media Inc. (CMLS, Earnings, Analysts, Financials): Engages in the acquisition, operation, and development of commercial radio stations in the United States. Market cap at $1.19B, most recent closing price at $6.62.

    The EPS estimate for the company's current year increased from 0.41 to 0.45 over the last 30 days, an increase of 9.76%.

    This increase came during a time when the stock price changed by 6.1% (from 6.23 to 6.61 over the last 30 days).

    7. Commercial Vehicle Group Inc. (CVGI, Earnings, Analysts, Financials): Designs and manufactures integrated system solutions for the commercial vehicle markets worldwide. Market cap at $254.15M, most recent closing price at $8.82.

    The EPS estimate for the company's current year increased from 0.31 to 0.34 over the last 30 days, an increase of 9.68%.

    This increase came during a time when the stock price changed by 2.21% (from 9.06 to 9.26 over the last 30 days).

    8. Covenant Transportation Group, Inc. (CVTI, Earnings, Analysts, Financials): Covenant Transportation Group, Inc., together with its subsidiaries, offers truckload transportation and brokerage services primarily in the continental United States. Market cap at $151.93M, most recent closing price at $10.22.

    The EPS estimate for the company's current year increased from 0.45 to 0.49 over the last 30 days, an increase of 8.89%.

    This increase came during a time when the stock price changed by -12.98% (from 11.25 to 9.79 over the last 30 days).

    (List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research.)

    Analyze These Ideas: Getting Started

    Dig Deeper: Access Company Snapshots, Charts, Filings

    ABOUT US

    © Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

    Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

    Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.

    Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

    Tags: SEAC, SKUL, RAD, AUY, CCM, CMLS, CVGI, CVTI
    May 07 12:44 PM | Link | Comment!
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