Bank Of America: You Ain't Seen Nothing Yet [View article]
For dividend and dividend growth investors BAC is interesting to consider. One has to believe that BAC will be paying a rapidly growing future dividend of $1.00 - $3.00.
Just roughly estimating a 2014 dividend of $0.10 per quarter would be $0.40 and a 3% return from current price.
2015 dividend of $0.60 would be approx 4.5% yield over current share price
2016 dividend of $0.80 would be approx 6.0% yield over current share price
Do your own research and come up with conservative reasonable dividend estimates!
Bank Of America: You Ain't Seen Nothing Yet [View article]
Enjoyed the article!
BAC is greatly undervalued and I am overweighted in it. The legal risks are rapidly declining with positive pressure on the stock price.
The earnings growth should be positive as BAC reduces an army of employees dealing with mortgage issues in addition to the settlements.
Most of all it is important to understand the earning power of the BAC franchises. In 2007 it was paying a $2.56 dividend and traded at a high of 55. Then add the value of Merrill Lynch and Countrywide assets.
Historically a bank like BAC gets to a point where they can declare an end to their unusual additional litigation exposure and finalize reserves. That point which is probably only months away should create a strong surge in the share price.
The Housing Rebound And Why The Fed Should Begin Tightening [View article]
Enjoyed the excellent article!
The Fed appears to be creating the discussion or climate for changing course. I suspect we have several months of this back and forth as the Fed prepares the market to receive the change. By the time they do change the trend in interest rates it will be almost anticlimatic. Also the Fed needs to cool the stock market down. Strong stock movements in one direction usually at some point create a similar opposite reaction less a baseline inflation rate. Finally one has to ask what the Fed can do to keep Real Income from falling when the interest rate does begin to rise.
General Electric Marches On Towards Core Growth [View article]
I do agree prospects for GE are great but think $40 in 12-18 months is on the high side. GE will have above average growth perhaps $35 in your time frame.
As for Immelt I must disagree. He took the highest rated company and borrowed daily thru commercial paper to meet cash needs in 2006 while buying 50 billion in RE and similar huge consumer debt exposure. GE was quickly bankrupt except for a government bailout.
Then he stated that the dividend was safe only days before having to eliminate the dividend. In my opinion he wasnt lying just clueless. PS My numbers may be off slightly as I am remembering research I did in 2008. But it all worked out, all of my GE was sold above $35 and bought back after the crash
7 Banking Stocks To Buy For Current Yield And Future Dividend Growth [View article]
Good article!
Banks are a great opportunity for gains. I wouldnt forget BAC and C either. Both have righted the ship and will increase dividends rapidly in the next 5 years.
BAC has the capital but needs to settle some legal matters before increasing its dividend. Just for review the BAC dividend was decreased from $2.56 to $.04 in 2008. I see at least $1.00 within 5 years and a $35 stock.
I need the growth in my portfolio that banks give. Investing over the last 4 crashes I watch banks rise at perhaps 30% above the market. Then after 8 years comes a financial freeze and coordinated cleansing which I find to be well telegraphed in advance.
Both BAC and C have returned 90%+ in the past year. Both will likely institute significant dividend increases as litigation gets cleared away in the next 12 months.
My last point is that Banks arent taking or building up risk. In some form or fashion they are taking government money and making loans which are then sold to government entities such as Sallie Mae and Fannie Mae with huge fees added in.
PS If you arent a bank shareholder you are just getting screwed by a bank!
Alan Abelson Died: Lives On Through A Generation He Defined [View article]
I enjoyed Alan Abelson and his writing as well. He was insightful and injected a great sense of humor into his articles.
A reader at least this one got both the opinion of the street and a cynical perspective of the value to assign to it. I got the sense that he enjoyed greatly writing his columns. Perhaps as much as I enjoyed reading them.
I do like BAC and believe it will do well and raise the dividend before year end.
However if you ever hear of a financial crisis coming and you get plenty of notice as in 2007, I doubt you will hold on to it and watch it drop from $55 to $2.
The lesson to have learned is that in a financial panic you dont want to be holding a banking stock.
Will The Real Unemployment Rate Please Stand Up? [View article]
I agree U6 is really more insightful and that the U3 is really a politically motivated target.
The Labor Force Participation Rate gives the best picture of what is going on. Jeff Gundlach says it is the only one that matters. He is not too far off !
How Rometty Will Get IBM's Groove Back [View article]
I was angry at the poor quarterly results. IBM has provided great returns over the past decade. As an example compare IBM returns to Berkshire returns. A 5% quarterly revenue decline is problematic and not to be easily dismissed.
Every so often I have to cut through everything and ask what is the value of a company. It gets easy to just think a company stock has risen and form an impression of value.
So before taking any action I looked up IBM and asked what is it worth? I assess IBM as a company that has been able and is projected to grow earnings at 10%+ for the next 5 years. Yet it is trading at a PE of 14 and a forward PE of 11.
On one hand IBM is a special collection of IT businesses that generate huge cash flow driving earnings. Yet on the other hand it trades with a PE that doesnt reflect that value.
So I have to suggest that a low beta double digit increase EPS company looking both forward and backwards should have a PE higher than 14. Perhaps 16 x $16.67 FY earnings = $266.72
The conundrum is my eyes have me asking if a 5% revenue decline signals the end of a decade long 10%+ earnings growth with great consistency. Or is the IBM train moving forward and the stock is undervalued by 30% (266.72/204).
Keep in mind IBM is not focused on growing revenue and its model is to grow cash flow, earnings, buy back stock and increase the dividend 10% annually. Still I have to wonder about 5% revenue losses and a new CEO.
The last decade has been a great one for IBM shareholders. IBM is a special collection of businesses that have a huge ROE and Cash Flow.
That said I am having concerns. A 5% revenue loss on a 100 billion revenue company is a lot. When a new unproven management explains that it was due to a few sales that failed to close that doesnt ring correct.
Johnson & Johnson: Should You Chase The Price Uptrend? [View article]
Long term investors will remember that JNJ has been a great winner for a long time trading at much higher PE's than the current level.
Newer investors have the experience of seeing the company run by an incompetent CEO and product failures. All that changed last year when a new CEO took over.
The result is that JNJ is a premier collection of cash generating products. This investors opinion is that JNJ represents fair value.
Historically (prior to the recent incompetent period) an investor who sold JNJ ended up buying it back at a higher price.
The Good News And Bad News For Long-Term General Electric Shareholders [View article]
GE remains an excellent investment. What many fail to remember was that back in 2006 era financial analysts would report on GE and fail to even mention the huge GE Capital segment.
Unfortunately at that time GE was borrowing daily to meet cash needs and was really caught with its pants down.
Today it a much different story with current assets nearly equalling GEs total debt obligations. As for GE Capital, they seem to be pulling $30 billion out per year for the past 3 years and still managing to have stable GE Capital revenues.
With a reasonable valuation (forward PE of 12.25), and huge cash flows, GE is able to grow, increase dividends at a 10%+ rate and buy back shares.
That is a compelling trifecta! One that should provide double digit returns for the next 5 years.
Why The Fed Doesn't Fear Inflation, But You Do [View article]
Good article! I enjoyed it.
The government understands well how to manage its obligations. Raising taxes overtly is difficult. A little continuous long term obligation reduction is much easier.
Most people are unable or unwilling to calculate it. However most do know that the money they spend on food, gas, health care and education rises much faster than their income.
Why I'm Bullish And We Are Not In A Bubble [View article]
I will try to check out the authors blog from time to time.
Still I remain a long term traditional bull rather than a New Paradigm bull.
Bank Of America: You Ain't Seen Nothing Yet [View article]
Just roughly estimating a 2014 dividend of $0.10 per quarter would be $0.40 and a 3% return from current price.
2015 dividend of $0.60 would be approx 4.5% yield over current share price
2016 dividend of $0.80 would be approx 6.0% yield over current share price
Do your own research and come up with conservative reasonable dividend estimates!
Bank Of America: You Ain't Seen Nothing Yet [View article]
BAC is greatly undervalued and I am overweighted in it. The legal risks are rapidly declining with positive pressure on the stock price.
The earnings growth should be positive as BAC reduces an army of employees dealing with mortgage issues in addition to the settlements.
Most of all it is important to understand the earning power of the BAC franchises. In 2007 it was paying a $2.56 dividend and traded at a high of 55. Then add the value of Merrill Lynch and Countrywide assets.
Historically a bank like BAC gets to a point where they can declare an end to their unusual additional litigation exposure and finalize reserves. That point which is probably only months away should create a strong surge in the share price.
PS C also has great prospects
The Housing Rebound And Why The Fed Should Begin Tightening [View article]
The Fed appears to be creating the discussion or climate for changing course. I suspect we have several months of this back and forth as the Fed prepares the market to receive the change. By the time they do change the trend in interest rates it will be almost anticlimatic.
Also the Fed needs to cool the stock market down. Strong stock movements in one direction usually at some point create a similar opposite reaction less a baseline inflation rate.
Finally one has to ask what the Fed can do to keep Real Income from falling when the interest rate does begin to rise.
Goes Down Double-Speed (Updated) [View article]
On one hand a 10% drop would seem overdue and appropriate.
When I began investing the S&P was at 100 and now it is at 1655. Along the way selling seemed smart many times yet was almost always a mistake.
Investors invest and generally are rewarded if the risks are prudent. Traders just trade... and by the way what happened to all of the day traders?
I remain as equally fearful of selling as I am of buying just now. If I had sold out during the past 1536 days I would really be losing wouldnt I?
General Electric Marches On Towards Core Growth [View article]
As for Immelt I must disagree. He took the highest rated company and borrowed daily thru commercial paper to meet cash needs in 2006 while buying 50 billion in RE and similar huge consumer debt exposure. GE was quickly bankrupt except for a government bailout.
Then he stated that the dividend was safe only days before having to eliminate the dividend. In my opinion he wasnt lying just clueless.
PS My numbers may be off slightly as I am remembering research I did in 2008. But it all worked out, all of my GE was sold above $35 and bought back after the crash
7 Banking Stocks To Buy For Current Yield And Future Dividend Growth [View article]
Banks are a great opportunity for gains. I wouldnt forget BAC and C either. Both have righted the ship and will increase dividends rapidly in the next 5 years.
BAC has the capital but needs to settle some legal matters before increasing its dividend. Just for review the BAC dividend was decreased from $2.56 to $.04 in 2008. I see at least $1.00 within 5 years and a $35 stock.
I need the growth in my portfolio that banks give. Investing over the last 4 crashes I watch banks rise at perhaps 30% above the market. Then after 8 years comes a financial freeze and coordinated cleansing which I find to be well telegraphed in advance.
Both BAC and C have returned 90%+ in the past year. Both will likely institute significant dividend increases as litigation gets cleared away in the next 12 months.
My last point is that Banks arent taking or building up risk. In some form or fashion they are taking government money and making loans which are then sold to government entities such as Sallie Mae and Fannie Mae with huge fees added in.
PS If you arent a bank shareholder you are just getting screwed by a bank!
Alan Abelson Died: Lives On Through A Generation He Defined [View article]
A reader at least this one got both the opinion of the street and a cynical perspective of the value to assign to it. I got the sense that he enjoyed greatly writing his columns. Perhaps as much as I enjoyed reading them.
Bank Of America Is Set To Grow [View article]
I do like BAC and believe it will do well and raise the dividend before year end.
However if you ever hear of a financial crisis coming and you get plenty of notice as in 2007, I doubt you will hold on to it and watch it drop from $55 to $2.
The lesson to have learned is that in a financial panic you dont want to be holding a banking stock.
Will The Real Unemployment Rate Please Stand Up? [View article]
The Labor Force Participation Rate gives the best picture of what is going on. Jeff Gundlach says it is the only one that matters. He is not too far off !
How Rometty Will Get IBM's Groove Back [View article]
Every so often I have to cut through everything and ask what is the value of a company. It gets easy to just think a company stock has risen and form an impression of value.
So before taking any action I looked up IBM and asked what is it worth? I assess IBM as a company that has been able and is projected to grow earnings at 10%+ for the next 5 years. Yet it is trading at a PE of 14 and a forward PE of 11.
On one hand IBM is a special collection of IT businesses that generate huge cash flow driving earnings. Yet on the other hand it trades with a PE that doesnt reflect that value.
So I have to suggest that a low beta double digit increase EPS company looking both forward and backwards should have a PE higher than 14. Perhaps 16 x $16.67 FY earnings = $266.72
The conundrum is my eyes have me asking if a 5% revenue decline signals the end of a decade long 10%+ earnings growth with great consistency. Or is the IBM train moving forward and the stock is undervalued by 30% (266.72/204).
Keep in mind IBM is not focused on growing revenue and its model is to grow cash flow, earnings, buy back stock and increase the dividend 10% annually. Still I have to wonder about 5% revenue losses and a new CEO.
A Weird Misconception About IBM [View article]
That said I am having concerns. A 5% revenue loss on a 100 billion revenue company is a lot. When a new unproven management explains that it was due to a few sales that failed to close that doesnt ring correct.
Hope I am wrong!
Johnson & Johnson: Should You Chase The Price Uptrend? [View article]
Newer investors have the experience of seeing the company run by an incompetent CEO and product failures. All that changed last year when a new CEO took over.
The result is that JNJ is a premier collection of cash generating products. This investors opinion is that JNJ represents fair value.
Historically (prior to the recent incompetent period) an investor who sold JNJ ended up buying it back at a higher price.
The Good News And Bad News For Long-Term General Electric Shareholders [View article]
Unfortunately at that time GE was borrowing daily to meet cash needs and was really caught with its pants down.
Today it a much different story with current assets nearly equalling GEs total debt obligations. As for GE Capital, they seem to be pulling $30 billion out per year for the past 3 years and still managing to have stable GE Capital revenues.
With a reasonable valuation (forward PE of 12.25), and huge cash flows, GE is able to grow, increase dividends at a 10%+ rate and buy back shares.
That is a compelling trifecta! One that should provide double digit returns for the next 5 years.
Why The Fed Doesn't Fear Inflation, But You Do [View article]
The government understands well how to manage its obligations. Raising taxes overtly is difficult. A little continuous long term obligation reduction is much easier.
Most people are unable or unwilling to calculate it. However most do know that the money they spend on food, gas, health care and education rises much faster than their income.