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Ray Merola

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  • An Assorted List Of Mojo, Catalyst, Overhang And Contrarian Stocks For 2015 [View article]

    Thanks for reading.

    What makes you so bullish on T-Mobile? Why is TMUS better than either VZ or T?
    Jan 10, 2015. 09:34 AM | 1 Like Like |Link to Comment
  • Intel Earnings: Beat Or Beaten [View article]

    I am likewise bullish on Intel. However, I look forward to your downside risks to the rosy models and projections. Euphoria and Despair are impostors.
    Jan 9, 2015. 09:19 PM | 3 Likes Like |Link to Comment
  • Why Nucor No Longer Deserves Its Reputation As A Premier Dividend Growth Stock [View article]

    The concepts of yield and dividend growth are weighed differently by different investors. Some simply chase high yield, without much attention of dividend growth. Others advocate dividend growth, but even here, that means different things to different people. Each investor must have their own "style." Copying others just doesn't work well.

    My view is to seek diversification, not only among stock sectors, but among market caps, and growth v. income tickers. This doesn't preclude equal weighting for each category.

    For me, high yield is AT&T (T) or Royal Dutch (RDS). Strong dividend growth looks like United Health Group (UNH). Straight growth stories include bio-pharms like Celgene (CELG)

    Cyclical stocks with a reliable income kickers include Caterpillar (CAT), and of course, Nucor. The current 3% yield is just paying us to wait. At such time the cyclical steel industry shifts gears, I suggest NUE shareholders will experience remarkable capital appreciation. When this will happen, I cannot determine for sure. However, the North American seeds have been sown.
    Jan 7, 2015. 05:06 PM | 1 Like Like |Link to Comment
  • 2014 Review And Plan For 2015 [View article]
    Thank for the reply, Tom

    I like the 2 funds since these have sound, long-term management and track records. They don't stretch for yield. I'll do this selectively with a HY bond or 2, but it's limited. However, as you point out, the alternative cash yields almost nothing.

    I likewise hold considerable cash in my account, too.
    Jan 7, 2015. 09:17 AM | Likes Like |Link to Comment
  • Why Nucor No Longer Deserves Its Reputation As A Premier Dividend Growth Stock [View article]

    If the investment thesis revolved around dividend growth, I would have to agree with the thinking. However, Nucor management is the best in the business. The business model is excellent. The balance sheet and cash flows are solid.

    Not mentioned were several key initiatives that will provide considerable upside as the non-res markets recover:

    1. Nucor/Encana joint effort to own and develop gas wells
    2. World-class Louisiana DRI facility
    3. Purchase of Gallatin Steel company

    Nucor is contending with a sluggish non-res/construction recovery and import steel dumping. The first issue will eventually subside, the second can be managed.

    I've owned NUE shares since 2010. My plan is to hold them through the business cycle. I believe patient investors will be rewarded by this most cyclical of companies. The dividend is safe, and pays us while waiting.

    I see dividend growth as a component of a complete ownership thesis. It may be wise to go deeper. Indeed, considering NUE is a cyclical steel company, comparison with secular consumer staples companies JNJ or PG is a bit of apples-for-oranges.
    Jan 7, 2015. 08:49 AM | 3 Likes Like |Link to Comment
  • Intel: A Crash Course On Reasonable Assumptions [View article]
    Intel combines sound fundamentals (balance sheet, margins, returns, cash flow) with a unique investment thesis. In my estimation, this is what makes it an attractive stock purchase.

    When researching and monitoring the company, I look for mention / insight on the following:

    1. IoT potential and leadership
    2. third-party fab work
    3. move into SSDs
    4. stiff-arm threats to overwhelming position in PC or server chips
    5. forward path of handset device contra-revenue

    If these items develop positively, I contend Intel is in the early innings of a long-term uptrend. My view is that many investors, unless engaged in actively researching INTC, may not fully appreciate the dynamics of the aforementioned.

    That doesn't mean these will all work to Intel's betterment, nor does it preclude other threats may slow the company. However, it's a pretty good place to start a full analysis.
    Jan 7, 2015. 08:38 AM | 5 Likes Like |Link to Comment
  • 2014 Review And Plan For 2015 [View article]
    Thanks for sharing your thoughts, Tom

    I always enjoy your articles and will stay tuned into 2015.

    I've always maintained at least some exposure to fixed income (bonds). Given the low rates and concerns of interest rate increases (that never seem to materialize), this has been a challenging proposition.

    I've settled on investing in a few select individual bonds, typically 1) high-grade munis or high-yield bonds of companies of which, though analysis, I'm confident will not default. In addition, I've held shares of the Vanguard Convertible Securities Fund and Templeton Global Bond Fund. These 2 have been outliers in the bond universe that have not been linked so tightly with U.S. rates. I have had positions in these funds for many years, just adding or trimming a little based upon some underlying measures I track.
    Jan 7, 2015. 08:00 AM | 1 Like Like |Link to Comment
  • Intel: 2015 And Beyond [View article]
    Always a great read, Russ

    I believe Intel management indicated that contra-revenues will not exit the stage until 2016. However, your model noted this and the numbers are well-taken. Maybe a little optimistic, but well-taken.

    Long INTC.
    Jan 5, 2015. 03:00 PM | 1 Like Like |Link to Comment
  • AT&T: A Junk Bond Fooling Investors Who Expect More [View article]
    Interesting article, but some of the thesis may be a bit thin.

    AT&T is a Dividend Aristocrat, meaning its raised the dividend for at least 25 consecutive years. In this specific case, T has improved the payout for 31 years in a row. Whenever a commentator reflects upon the AT&T dividend, this should be mentioned.

    A review of free cash flow may likewise be helpful. The payout appears safe. Furthermore, AT&T management has stated that large infrastructure projects have come in ahead of schedule. Indeed, the capex for this work will now wind down, thereby offering some capital reduction. I do not believe the current credit ratings can be dismissed so easily. An A- designation isn't an accident.

    While I agree disruptive technologies and competition are some of the risks to the T business model, one could reasonably project that AT&T, via new forays into Central and South America, has a response of its own. There are both puts and takes.

    I contend it may be argued AT&T is a bond equivalent, not a junk bond equivalent.
    Jan 5, 2015. 12:41 PM | 25 Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 1 [View article]
    Thank you, angry1234

    Be happy. Good luck on all your 2015 investments!
    Jan 4, 2015. 08:40 AM | 1 Like Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 2 [View article]
    Happy New Year, Tom

    Thanks for stopping by. I am quite bullish on Intel, though my time horizon runs out to 2016. There's just so many good things ongoing; some which reside in the Internet of Things segment, excess fab space utilization / farm out, and the potential to enter the SS memory business.

    CAT is tricky. As an investor, I don't try to get too fine with it: if it gets above $105, and ahead of FV, I start looking at covered calls higher or just trimming straight. I like to accumulate below $90.
    Jan 2, 2015. 01:20 PM | 3 Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 2 [View article]
    Thank you Henry

    I truly appreciate your kind remarks. Wishing you all the best in 2015, too.
    Jan 2, 2015. 12:35 PM | 1 Like Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 2 [View article]

    If you bought AAPL shares at $116, it appears you've held them less than 2 months at most. Expecting a quick turn upward after buying near all-time highs is tough business; swing trading is difficult.

    As an investor, I seek to purchase securities below fair value and hold them until they become overvalued or the investment thesis changes.

    I may add to my Apple position if I can purchase shares ~$105 or below, thereby suggesting a 10% FV upside.

    Good luck on all your 2015 investments.
    Jan 2, 2015. 10:03 AM | 5 Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 2 [View article]
    Thanks raising rusty

    KMI is another best-of-breed mid-stream MLP. However, I like ETE more right here, right now. Linn is not in the same business. Boardwalk is not in the same class.
    Jan 1, 2015. 08:21 PM | 2 Likes Like |Link to Comment
  • 2014 Strategies And Stocks: Year-End Recap, Part 2 [View article]

    During most of 2013, the media and many stock pickers had given up on Apple. By year-end, some of the pall had lifted, but mainstream investors were far from buoyant:

    A 2013 excerpt: In 2013, Apple (NASDAQ: AAPL ) stock underperformed the S&P 500, gaining just 5% compared to the S&P 500's gain of 29% to all-time highs. Although a few major concerns worrying Apple investors were addressed during the year, several other factors continue to leave the market uncertain of whether or not Apple can continue to grow its bottom line over the long haul.

    Another 2013 excerpt: Being the most profitable technology company in the world with the best-selling smartphone on the planet just isn’t enough for Apple (AAPL) anymore. The company’s stock is down more than 35% over the past six months as investors continue to worry that the company can’t possibly maintain the unprecedented growth rate it has seen in recent years.

    One more: Apple Inc. shares haven’t been this cheap in at least 10 years.
    Investors don’t care. The steep plunge in Apple’s stock price over the past seven months got us wondering: When it will become attractive enough for bargain hunters to start scooping up more shares and bump the price higher? Worries about slowing growth and increasing competition have sent the stock down by more than 40% since it peaked above $700 in September. Shares are now trading at 9.08 times projected earnings for the next 12 months, according to FactSet, the lowest level in at least 10 years. Price-to-earnings ratios are calculated by taking a stock’s price and dividing it by the company’s earnings per share. But even Apple’s inexpensive P/E ratio hasn’t been enough to turn the tide on its swooning stock price.

    Perhaps the best answer to the query is S.A. published my underlying article about Apple in February 2014. At the time, no readers questioned the "contrarian" pick label.

    In any event (and bottom line), after lagging the market significantly in 2013, the shares blew out in 2014, vindicating patient investors.

    Good luck with all your 2015 investments.
    Jan 1, 2015. 06:13 PM | 2 Likes Like |Link to Comment