As more news validates the possibility of a global economic slowdown my focus has turned to identifying stocks that could be a good defensive play. Recently I looked at Automated Data Processing, Inc. (ADP).

Automated Data Processing, Inc. is a global leader of business outsourcing solutions. They are the largest payroll processing company in the United States with a market capitalization of $29.11B and a 17% market share. ADP pays 1-in-6 employees in the United States and approximately 33 million worldwide. Its size is a competitive advantage for two reasons. They are one of a few companies that can handle the human resource outsourcing for large organizations while the services they provide come with high switching costs. The success of ADP's products along with the high switching costs are two reasons for its 8% revenue growth year-over-year, 90% revenue retention and an average client tenure of approximately 10 years.

A value investor spends time unearthing companies with strong financials and an undervalued share price. The following four ratios help identify equities that could be attractive to the value investor:

1. Price-to-book ratio (P/B) is a great way to find a low valued stock that the market has disregarded. It is calculated by dividing the total market capitalization by the difference in the total book value of assets and total book value of liabilities. A low P/B can indicate there is value that has not been realized in a stock while it can also be a warning sign that the company is having issues.
2. Long-term debt-to-equity (LTD/EQ) ratio is used to determine a company's leverage. A company that has a higher ratio would be considered more risky. The ratio is calculated by dividing total long-term debt by the total preferred stock and common stock.
3. Price to earnings ratio (P/E) is another

A Mortgage Real Estate Investment Trust (mREIT) is a great vehicle for an investor who wants exposure to real estate assets, while earning a significant dividend. Unlike traditional REITs, mREITs own mortgages and/or mortgage backed securities in real estate. There are many different kinds of mREITs with varying risk levels. When you are looking for a high yield dividend mREIT, it is important to ask two questions regarding your prospects:

1. What additional risks am I accepting to earn a higher yield?
2. Am I comfortable with the risks that accompany the higher yield?

Below is a process to help answer the first question. The second question can only be answered by the investor.

Analyzing an mREIT starts with asking the following questions about its ongoing investment strategy and its current portfolio.

1. What type of securities are being purchased by the mREIT? If the mREIT only invests in Agency debt then default

Stocks that are oversold can provide an opportunity to buy an asset at a bargain price. Some of these stocks are not worth your time, while others can provide an attractive investment opportunity. These price moves can happen for a variety of reasons like missed earnings, the departure of key personnel, lawsuits, or other material events.

One way an investor can filter oversold stocks is based on institutional ownership. Stocks with high institutional ownership are attractive because financial institutions tend to be long-term investors that do not turnover their investments often. This is due to the large amount of resources needed to research and accumulate a position in a company. It is also common for institutions to support their investment when the company is maneuvering through "rough waters."

The short interest of a stock is also important in evaluating an equity that could be oversold. The percentage is calculated by

In my opinion, Chesapeake Granite Wash Trust (CHKR) is overpriced based on the likely horizontal well production and cash flows the Royalty Trust Units can claim. If past horizontal well production is indicative of what Chesapeake Granite Wash Trust can experience then post Q2 2017 revenues will not likely be substantial enough for a total return of capital and there is an even lower probability of a return on capital.

Chesapeake Granite Wash Trust is overpriced at $20 a share

It appears Chesapeake Granite Wash Trust is over priced at $20 per share. The distributions have been closer to the subordinate threshold because its product is being sold at lower prices then original estimates. Prices are not likely to rebound in the near-term so the distribution level is not likely to be much higher then the bottom band. There are a record number of horizontal rigs drilling in the Texas