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Jared Hilburn's  Instablog

I am a graduate of the Sam. M. Walton College of Business with a bachelors degree in Financial Management/Investments. I have been researching markets and trading for more that 8 years and absolutely love it.
  • Has Your Portfolio Had its Wheaties
     
    The makers of “The Breakfast of Champions” have recently become the Champions of Breakfast. General Mills reported earnings of $1.25 per share on September 23rd that blew out analyst expectations of $1.02. Part of the beat was the 11% decrease in the costs of sales, which is attributed to lower commodity costs. But unlike the majority of earnings reports lately, there was a quarterly increase in the top line of around 1% and a yearly increase of 21%.
    The U.S. Sales division was the main contributor to the top line increase with a 5.8% increase in sales that was led by demand in Multi-Grain Cheerios, Totino’s Pizza Rolls and Fiber One snack bars. There was an increase in 6 out of the 7 divisions with the largest coming from Pillsbury at 12%. This demand increase shows diversity in their product line which will be very beneficial with the increase in competition from Post and Kellogg Co. in the Breakfast Cereal market.
    General Mills increased their advertising and media spending by 16% in the most recent quarter and with the 21% increase in operating profits, they plan to bump it up quite a bit more over the next 12 months.
    A large focus for General Mills has been their yogurt division which was up 4% in the recent quarter. They have increased advertising in Yoplait, General Mills yogurt brand, and also introduced a new weight management ad that targets Hispanic consumers. According to COO Ian R. Friendly the “U.S. yogurt market is young… and we see lots of opportunity to drive growth.”
    Things were not totally sunny for General Mills. This quarter’s dark cloud is coming from international sales, which was down 4%, mainly due to an unfavorable currency exchange. Sales in Europe were off 12% driven mainly by the currency exchange, but were partially offset by the performance of Nature Valley in the U.K. and by France’s new found love for south of the border food with a good performance coming from Old El Paso.
    Looking forward for General Mills is even better than hindsight. This is a company in which management has been not only effective in implementing cost cutting measures, but has also managed to have a diversified increase in sales in a very tough market. Even after all the great things I have told you above, there is even more good news. 2010 full year earnings were revised at $4.40 to $4.45, up from the previous estimate of $4.20 to $4.25 with the main risk to this being in commodity cost. With a current P/E at 14.89 and an estimated fair P/E ranging from 16-17, there is plenty of room to grow. With all of these combined factors, GIS should allow you to see a Green Giant in your portfolio returns.

    Disclosure: Long GIS
    Tags: GIS
    Oct 05 03:52 pm | Link | Comment!
  • High Dividends and Low Betas Will Keep You Safe in Volatile Markets

    The more you hear about a pullback and a double dip recession, you can't help but think that we are in for some wild swings in the near future. With the majority of money chasing returns on high beta equities, we could be looking for a snowball effect on the way down. So what is your best play to survive the volatile times? You can look to sectors such as the telecommunications sector, that have not quite had the run up, as say the technology sector, to stabilize your portfolio. If you are looking for the best of breed in this sector then you will be drawn to AT&T (T). T is the second largest wireless carrier with 79.6 million subscribers, up 19% since last year, and stands to gain even more with the exclusive contracts for the Apple I Phone. T stands to gain share in the video and broadband service with the introduction of U-Verse, T's fiber optic network. T currently has around 17million U-Verse customers and its goal is to have 30 million households by 2011. The outlook for the telecom industry is positive and the majority of the growth will be in the broadband sector. As of today, T is paying a 6.08% dividend and has the cash flow to back it up. It also has a 0.67 Beta which should make it less volatile in the near future. Another good play in this sector is Iowa Telecom (IWA). IWA is the largest independently owned telecom company in Iowa and it provides customers in Iowa and Minnesota with local phone, long distance, internet, and broadband. It has recently purchased ownership in En-Tel Communications, LLC and SHAL,LLC. "SHAL owns and leases a 2,500-mile fiber-optic network throughout Minnesota that provides access to low cost, high quality transport facilities." (Iowa Telecommunications Services, Inc.) This acquisition should help IWA increase their share of the broadband market in Minnesota. IWA pays a 12.9% yield and has a beta of 0.40. A Risk to IWA is the fact that it is highly leveraged with a 2.78 Debt to equity ratio. IWA declared a $0.41 dividend on September 15th and has paid a $0.41 dividend since March 2005. If you are looking for high yield an can afford to take a little risk then I would go for IWA with the high yield, but if you are looking for a long term relatively safe position, T will probably be more suitable. Either way, you have a little protection from market volatility and a good yield to help you hold on.

     
    Disclosure: No Positions
    Tags: IWA, T
    Sep 24 05:57 pm | Link | Comment!
  • Rogers Corp. (ROG) could be your next great pick.

    On September 15, 2009 Rogers Corp. boosted its Q3 sales forecast from a range of $68mln – $73mln to a range of $74mln-$77mln and raised its earnings forecast from $0.05-$0.15 to $0.22-$0.28. Since then, the stock has rallied $4 or approximately 17% but has recently flattened. It looks like it could be setting up a double top around the $31.30 level and could start to pull back. With a 1.5 Beta, a market pull back will be over exaggerated in the stock but so will upswings. Below you will find a 30day 30minute chart of Rogers Corp. with the resistance level around $31.30 and the support level around 27.50. Rogers corp. is as Electronic Component manufacturer and S&P has a neutral outlook on the electronic component sub-industry. Rogers Corp. was the first of two companies in the industry to boost forecasts in the past month. Littelfuse Inc. boosted its sales forecast from $104 -$108mln to $113-116mln. This is an industry that the top-line numbers are the reason for the increase in the bottom-line, instead of cost cutting measures.  ROG will be a good long going into the October 26th earnings date. I would recommend waiting for a pullback towards the 38.2% retracements level, around the $28.60 price level.


    Disclosure: No Positions

    Tags: ROG
    Sep 22 08:01 pm | Link | Comment!
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GIS, IWA, ROG, T
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