About a month ago I started researching what I call "The Big 5." The Big 5 are the stocks in my portfolio that are meant to carry the weight and growth of my portfolio over the long term. I heavily invest and research 5 companies, go in large(-ish), sit back and watch what happens being confident in my research.
I developed a 10 point system for rating my long term stock purchases, it doesn't have a name quite yet (maybe the Tim Rating?). Here's how the system breaks down:
- Market Cap
- 1 year growth
- PE Ratio
- DE Ratio
- CAPS Rating
- Stock Scouter Rating
- Board of directors
- Company founder
In each step a stock can get 0, .5, or 1 point. Obviously the rating at the end is the... Tim Rating...
Every day I sit down after work to put a couple ticker symbols through my system and last week something interesting happened... a stock scored a 9.5 out of 10. The stock was Linn Energy (LINE). A few other companies have scored well in my system like Disney (NYSE:DIS) at 8/10, Intel (NASDAQ:INTC) at 9/10 Starbucks (NASDAQ:SBUX) at 8/10 and General Electric (NYSE:GE) at 7.5/10; but a 9.5 score with a yield over 7%, that merits a serious look at what's going on.
Linn Energy has been in the natural gas and oil industry since 2006 and is currently paying around 7% for their dividend. Of course we don't buy a stock for it's dividend alone, that's only 1 point in the rating system. I like Linn Energy for a lot of reasons. It fits well in my portfolio, which has a notable gap in the energy sector and although it has had a short history the business model is sound and primed for growth in either oil, natural gas, or both. I like companies who don't put all their eggs in one basket.
Linn Energy has a market cap over $1BIL, a good looking PE ratio hanging out around 8, solid growth over the past year and good daily volume around 1 MIL and a decent debt to equity just over 1. I know volume doesn't mean much to a lot of people but I have some spec stocks in my portfolio like Indentive (NASDAQ:INVE) that has a lower volume and they're not as fun to watch with lower potential for that quick jump.
I'm not a trader, I admit that; I don't even want to be. I like doing heavy research into a company and investing long term in them. It's a money game; I like growth, and I like dividends. If you're like me, I think it's worth taking a long look at this energy company that isn't in the news much but is primed for the long haul.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.