Watchlist update: May

In the middle of every month I will update my current stocks watchlist, and post a top 3. Below are my reasons for looking at these stocks, for current valuations and a list of 25 stocks please visit my ‘Watchlist’ page.

I will explain my top 3 watchlist stocks briefly based on sentiment, P/E ratio and ‘% off 52 week high’:

 

This month I have three candidates more than usual, as there is so many great companies at a fair price right now.

To see last months candidates click here.

 

  • Altria and Philip Morris: Altria made a previous appearance in March while at a price of $63,82. Their share price has continued going down as there are more worries of sales volume in the tobacco industry. However, these concerns about the industry have been going on for years now and to me current fears are a great opportunity to stock up on American Altria and/or internationally Philip Morris.

Here is what I wrote about Altria back in March:

Altria is the biggest cigarette company in the USA, it spun off from Philip Morris in 2008. It’s famous brands are L&M, Marlboro and Chesterfield to just name a few. Altria has around a 10% stake in Anheuser-Busch InBev SA/NV which is the biggest beer producer in the world. Cigarette companies have had to deal with a declining rate of smokers ever since midway last century yet they still are among the most profitable companies around. Altria has seen some weakness in their stockprice lately, I can only think about this as a stockholder friendly company trying to give investors more time to buy shares at a nice discount. It has provided returns in excess of 20% since 1970 until 2016. Just this year they raised the dividend with 6,1%, it was an extra increase as they normally increase their dividend around August, I just love surprises!
At a current share price of $63,82 and a yield of 4,39% this makes Altria a strong buy for me.”

1 year chart of Altria.

1 year chart of Philip Morris.

 

 

  • Pepsico and General Mills: General Mills got featured last month already and the share price kept dropping from $44,80 to a current $42,66. There is still so much great long term value to be found in this company.Pepsico however is a new feature to this series, I have been looking for a great price to enlarge my stake in Pepsico myself and this is the perfect time. Never has Pepsico’s dividend yield been higher than right now, this includes times of crisis. North American sales volume of their traditional soda’s have been weak(ish) yet their diversification into more healthy products and also snacks keeps them powering on through. Also their emerging markets are doing great. Currently PEP is at $97,43, offers 3,81% dividend yield (after raising their dividend by more than 15% earlier this year) and trades at a P/E ratio of 19.03. They have a great history of dividends as they have raised their dividend every year for 46 years.

Take a look what I wrote about GIS last month:

General Mills is a packaged foods company that has recently put their focus on healthy and fresh products. They are known from brands like Annie’s, Betty Crocker, Pillsbury, Old El Paso, Haagen-Dazs, Cheerios, Trix, Cocoa Puffs and Lucky Charms. Recently the company has been under fire on Wall Street because of their acquisition of Blue Buffalo Pet Products for $8 billion. It might be an expensive acquisition but by diversifying into another market with a company that produces of the best product lines for animals seems like a long term winner to me. The last few years there has been a lot of weakness in the stock price due to falling yoghurt and cereal sales, but the company is slowly turning around the ship and getting into more ‘hip’ products.
Currently at a price of $44,80 their yield is 4,38% at a payout ratio of 51,20% with a P/E ratio of 15,57, General Mills paid out a dividend since 1898 and has never cut it, their recent streak of increasing dividends sits at 14 years.”

1 year chart of Pepsico.

1 year chart of General Mills.

 

 

  • AT&T and Qualcomm: AT&T already got featured last month, and just like GIS their stock price continued to decline and it offers an even better opportunity to get in at a great price right now.
    Qualcomm is a new addition to this series and it has a lot going on right now. I myself purchased my shares of QCOM back when Apple first filed a suit for the excessively big royalties QCOM was charging them. I have seen a lot of ups and downs, a lot of ‘what ifs’ and what not, it has been a rollercoaster ride if I would have paid a lot of attention to the share price, luckily I did not.
    QCOM has some serious short term issues to resolve, the NXP acquisition has been going on forever and is still not finished, the Apple lawsuit still has to be resolved, and they have been under attack from Broadcom which attempted a ‘hostile takeover’ which was eventually shutdown by the White House for ‘national security reasons’. However long term this stock may be a winner, and today you have the chance to get in at a very fair price.  They have a very great position going into the transition to 5G, they have raised their dividend for 15 years straight and are offering a juicy yield aswell. At a current share price of $55,23 they offer a yield nothing short of 4,49%, also they just announced a 10 billion dollar share buyback. And management suspects to grow earnings significantly in the coming years. In short they are expected to resolve the Apple case this year, to acquire NXP, and to keep processing chips for existing needs and future needs like 5G, IoT and much more.

Below is what I wrote about AT&T last month:

AT&T (American Telephone & Telegraph) is a company that was founded in 1885, it’s currently worlds largest telecommunication company with a market capitalization of 219 billion dollars. The company is hard at work to add multiple streams of revenue to their sheets, in 2015 they bought DirecTV, and in 2016 it announced a merger deal with Time Warner to expand their media segment, this deal is still in the works as we speak, as the DoJ (Department of Justice) took AT&T to court. Furthermore they have large scale cable, satellite TV, wireless and broadband operations. AT&T qualifies as a dividend aristocrat, having raised their dividend 33 years in a row, it’s also the highest yielding aristocrat; at a price of $35,14 the yield is 5,69%, at a payout ratio of 41% (of predicted earnings) and their P/E ratio is 23,65 (due to tax implications in 2017, forward P/E comes in at 10,13). This deal to me is a no-brainer, a management focused on returning shareholder value as seen in their dividend increasing streak, and also an active management trying to better the company by acquisitions and opportunities like the upcoming 5G.”

1 year chart of Qualcomm.

1 year chart of AT&T.

 

I hope you enjoyed my watchlist and I’m curious to what stocks you are adding this month!

Happy investing!

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