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About Me: I reside in New Jersey with my wife and my two dogs. I have a B.S. degree in Accounting with a minor in Finance, as well as an MBA in Accounting. Currently, I am employed as a forensic accountant, and am pursuing my CPA designation. I love the stock market, and picking stocks. I spend... More
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  • DOW Dogs For 2011 0 comments
    Dec 19, 2010 11:41 PM | about stocks: QQQ, SPY, BAC, VZ, GE, INTC, BA, AA

    I have been using the Dow Dogs strategy to invest for the past five years.  The Dow Dogs strategy is easy enough to follow, basically, it seeks to invest in Dow stocks (generally large-cap value) that are thought to be undervalued by insiders in the company, and with low price-to-cash flow ratios.  I have written at length about this strategy in my blog here.

    In order to locate these names it is simple enough to use a stock screen commonly found on E-Trade or Yahoo!  The stock screen looks like this:
    1) Component of - "DJIA"
    2) Price/Cash Flow - "Below Industry Average"
    3) Insider Activity Over The Last Month - "Net Accumulation"

    The screen as of today returns six results:
    1) Alcoa ($AA), currently trading at 11.5x price/cash flow.
    2) Bank of America ($BAC).
    3) General Electric ($GE), currently trading at 8.5x price/cash flow.
    4) Intel ($INTC), currently trading at 7.8x price/cash flow.
    5) Boeing ($BA), currently trading at 9.2x price/cash flow.
    and
    6) Verizon ($VZ), currently trading at 4.1x price/cash flow.

    It is worth noting that you may want to beta-weight your portfolio when putting these names into your portfolio.  While a stock like Verizon currently yields 5.63%, it's beta is .7 and will move a lot less than the overall market,  While the yield will produce a good return, if you feel the market will be up strongly in the next 6-12 months, as I do, a stock like this may actually underperform.  Instead, you may find it beneficial to weight your Dow Dogs portfolio a little more heavily toward a name such as Bank of America with a 2.2 beta, and a .36% yield.




    Disclosure: I am long BAC, VZ.

    Stocks: QQQ, SPY, BAC, VZ, GE, INTC, BA, AA
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