Seeking Alpha

October 2019 Stock Watch

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Includes: BPY, CAT, DIS, JNJ, MMM, TU
by: PassiveCanadianIncome
Summary

My portfolio has changed quite a bit over the last couple years and I definitely can sleep pretty well at night, without thinking about my portfolio.

Ultimately, I just try to stay the course by buying every month and not trying to time the market; it's worked out pretty well so far.

One concern I have with 3M in particular is tax loss selling.

Another day, another dollar. It's time to put those dollars to work.

The market is starting to look pretty red, while that's horrible if you are in your draw-down phase, for people accumulating stocks this is great.

Will the market keep falling? Maybe. Will it rebound? Eventually. My portfolio has changed quite a bit over the last couple years and I definitely can sleep pretty well at night, without thinking about my portfolio. It has slowly evolved into a portfolio full of blue chip stocks that should be around for quite a while. (There's still a couple positions I could cut though)

Ultimately, I just try to stay the course by buying every month and not trying to time the market; it's worked out pretty well so far.

Now let's look at where I may possibly deploy this month's capital.

Canadian Stocks

Brookfield Property Partners - (NASDAQ:BPY) (NASDAQ:BPYPP) (BPY.UN)

This is an existing position of mine that has done pretty well, but recently has pulled back. The company owns some of the best real estate in the world, but the market continues to have mixed feelings about their acquisition of GGP. I don't feel that malls are dead. Maybe I'm old school but I still enjoy going to the mall to go shopping especially around Christmas time. BPY is also planning on adding residential units on top of select malls which will also be a huge improvement to their income and mall traffic.

For us Canadians, I think Brookfield Property Partners offers us some of the best diversification in real estate out there and they currently seem cheap.

At around $25 a share they seem pretty undervalued and BPY understands that, as they were trying to buy up shares left right and centre earlier this year at a higher price than today.

My real estate allocation will also be taking a hit after Dream Global REIT (OTC:DUNDF) gets acquired in December, so it's nice to add to a lagging sector.

  • P/E - 13.6
  • 52-Week High 28.49 - Current Price - 25.17 - $3.32 off 52-week high
  • Div Yield - 6.96
  • Div Streak - 6 years
  • 5-yr Div Growth Rate - 20.3
  • Moat - narrow

Telus (NYSE:TU)

One of my favourite stocks in the portfolio, although the price hasn't increased much. The wife loves Telus too, as she uses them for her cellphone provider. The recent acquisition of ADT is a great one in my books. This further diversifies them, adds to future growth and keeps them competitive against rivals who also acquired security companies to bundle their products.

The communication sector continues to be one of my most underfunded sectors and could use a cash infusion. Although once the government matches our last resp contribution, it will be put to bell (NYSE:BCE) to allow that position to drip.

  • P/E - 16.2
  • 52-Week High 51.22 - Current Price - 47.59 - $3.63 off 52-week high
  • Div Yield - 4.76
  • Div Streak - 15 years
  • 5-yr Div Growth Rate - 9.1
  • Moat - narrow

US Stocks

I continue to shop south of the border to better diversify our portfolio. While it is not optimal at current dollar values, sector as well as global diversification is key.

Disney (NYSE:DIS)

The stock that is on my watch list every month. I had it in my head this would be my go-to this month but the market is creating some great opportunities. Disney plus will be coming out next month. I'm excited for it. They should do very well but it is going to cost a lot and I wonder if the stock price will skyrocket or go sideways. Do I just kick the can down the road and eventually buy it, or stick to the plan and buy another tranche.

  • P/E - 16.6
  • 52-Week High 147.15 - Current Price - 128.95 - $18.20 off 52-week high
  • Div Yield - 1.36
  • Div Streak - 2 years (switched to bi-annual payments)
  • 5-yr Div Growth Rate - 21
  • Moat - Wide

Caterpillar (NYSE:CAT)

This is a stock I have wanted to add to the portfolio for a while. In my line of work I see these machines all the time and CAT is definitely the favourite out there. They have a very low payout ratio and are targeting high single-digit dividend growth moving forward. Bonus, they pay their dividend in my lowest payouts months. (While this isn't a massive factor, it's nice)

  • P/E - 11.7x
  • 52-Week High 159.37 - Current Price - 118.92 - $40.45 off 52-week high
  • Div Yield - 3.43
  • Div Streak - 25 years
  • 5-yr Div Growth Rate - 11.5%
  • Moat - Wide

Johnson & Johnson (NYSE:JNJ)

The watch list is pretty repetitive. JNJ is constantly on the list and after the recent 8 billion dollar deliberation (which they are fighting) the stock has pulled back once again. They are currently fighting so many lawsuits, it's actually a little shocking. Their lawyers are good though, I think JNJ will be around for a long time still.

  • P/E - 21.9x but I think the forward p/e is like 15 x
  • 52-Week High 148.99 - Current Price - 129.22 - $19.77 off 52-week high
  • Div Yield - 2.96%
  • Div Streak - 56 years
  • 5-yr Div Growth Rate - 6.40
  • Moat - Wide

3M (NYSE:MMM)

3M yet again… Is this a falling knife? The price keeps dropping and yet I keep trying to throw money at it. While they have some litigation issues as well, I think that's got to be priced in at these levels. We are almost under $150 a share for this king! Sure, earnings these days ain't stellar, the trade war is real. I wonder how long this will go on or if this is a ploy to spark the market once China and the US come to an agreement. I'd love to add more under 150 bucks, heck $144 a share is a 4% starting yield.

  • P/E ratio - 18.3x
  • 52-Week High 219.75 - Current Price - 150.99 - $68.76 off 52-week high
  • Dividend Yield - 3.82%
  • Dividend Growth Streak - 60 Years
  • 5-year Dividend Growth Rate - 14.8%
  • Moat - wide

Conclusion

Well that concludes my October 2019 Watch List. There seems to be more options out there for our money. Seems a lot of people are starting to hoard some cash and expecting a big crash. Who knows what will happen short term. Long term, I have confidence in these stocks and would like to start or grow our positions in them all.

One concern I have with 3M in particular is tax loss selling. With the end of the year approaching there could be more room to fall as people sell their losers of 2019.

What are your thoughts? Where are you putting your money to work? stocks or savings? Any stocks you have been buying?

Have a great day!

cheers and Go Leafs!

Original post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.