Stock Selection Analysis for 2013

Here are the stocks I am considering for the 2013 selections. I will get this list down to six stocks for the beneficiaries to choose from. The best and simplest way to get updated statistics and simplified financial ratios on these stocks is to go to Yahoo! Finance at this link or and type in the ticker symbol, then hit “key statistics” on the left under company information.

I have 8 here instead of 6 because some portfolios might need more than 2 stocks because we have some other sales on companies that we’ve given up or sold previously and / or cash accrued from dividends.

US companies are very hard to pick from right now because in general there has been a run-up in the market and valuations are very high. As a result we are focusing on stocks that have not gone up a lot recently or even may have declined but have the potential to rise in value.

Foreign Companies:

SSW (Seaspan) – $21 / share, $1B market cap, 5.8% dividend yield (52 week range $14-$23) Hong Kong Exchange, $4B of debt. Seaspan charts container ships and owns a fleet mainly moving goods from China through to North America. They have a very high dividend and appear to be reasonably well run, with a newer fleet.

YNDX (Yandex) – $33 / share, $11B market cap, no dividend (52 week range $20-$34) Russian Exchange, little or no debt. Yandex runs most of the Russian internet search, advertising and email businesses. The Russian internet sector is surprisingly modern and well run and (relatively) free of government interference (so far). The price has come up recently.

INFY (Infosys) – $47 / share, $27B market cap, 2% dividend yield (52 week range $38-$55) Indian Exchange, no debt. Infosys is a major outsourcer and international company, who stand to benefit from the falling Indian currency since they mainly earn their revenues in dollars and Euros but pay out the majority of their costs in local Indian currency to staff. More information – Here is a summary of their business from their corporate web site.

IBA (Industrias Bachoco) – $40 / share, $2B market cap, 1.4% dividend yield (52 week range $21-$43) Mexican Exchange, $180M debt. Mexican poultry processor, one of the largest chicken companies in the world.

US Companies:

CLF (Cliffs Natural Resources) – $22 / share, $3B market cap, 2.6% dividend yield (52 week range $15-$46), $3B debt. Cliffs is an iron ore and coal mining company with operations in the US, Canada and Australia. The company has been hit hard with the recent decrease in steel production and this has been incorporated into the stock price and it is a good entry point to get into this market. Competitors have also been hit hard and have other operating and country specific difficulties.

DVN (Devon Energy) – $58 / share, $23B market cap, 1.5% dividend yield (52 week range $50-$63), $10B debt. Devon has US and Canadian resources for drilling oil and natural gas. Their stock has come down recently but they seem disciplined as far as investments and have a focus on raising their enterprise value

GRPN (Groupon)- $10 / share, $7B market cap, no dividend (52 week range $3-$11), no debt. Groupon is an internet shopping company with discounts that rose immensely but then fell and their CEO departed. They made a big run up in 2013 already.

YHOO (Yahoo!) – $27 / share, $27B market cap, no dividend (52 week range $14-$29), no debt. Yahoo! is one of the most trafficked web sites in the world and owns significant stakes in valuable overseas web companies in Asia. I am optimistic about their new CEO Meyer from Google. Their stock has had a big run up but still seems to be a solid company for the long term if aggressively managed.

PM (Philip Morris International) $85 / share, $138B market cap, 4% dividend yield (52 week range $82-$96), $25B debt. PMI sells cigarettes world-wide (non US). There are less headwinds selling cigarettes world wide then there are in the USA.


    1. I am recommending these stocks for my nieces and nephews and it is hard to have them select a product that solely exists to kill their fellow citizens. However, PMI does the same thing for people outside the US so I try to get the same effect that way. I think PMI has had a similar stock price / dividend growth story to MO and the like or at least not too different. PMI has been a good stock in our universe for those who selected it.

      But agree if it was just for me MO would be big and perhaps the other guys too.


      1. I think that you should MAKE them take PMI or MO or RJR or whatever and have this conversation with them as a learning experience. They need to decide early on if they care more about the yield in their portfolio, or if they care about “society”. I don’t want to get into that discussion, as you already know which way I lean, but I think this is a good thing to talk to them about as it may shape their future investment activities.


      2. Also, MO yielding 5.7% right now. Might be an opportunity to also talk to them about relative performance re stocks/bonds and/or the place of the smokes manufacturers as relates to the coming wave of pot legalization laws.


    1. I have been thinking hard about GroupOn and am switching over to Yahoo instead.

      Their new CEO is an ass kicker and even if they fail she will not go down quietly.

      Plus they own parts of Chinese web companies that have their own potential.


  1. Ha ha I can’t make them select anything. That takes away from the whole point of them selecting stocks. But it clearly is a stock I recommend (PM) and it has characteristics very close to the ones you mention (except for not killing US citizens, just foreign ones).


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