Economics
protectionism (Free trade is a major positive for world and
http://www.clubforgrowth.org/2007/11/why_we_trade.php
Politics
Domestic
International War Against Radical Islam
More on Iranian nukes:
http://www.captainsquartersblog.com/mt/archives/015995.php
More good news from
http://www.iraqthemodel.blogspot.com/
The Market
Technical
Fundamental
We got more good news** yesterday on the sub prime sector: Bear Stearns, GE, Barclay’s and HSBC Holdings reported the magnitude of their exposure to potential sub prime credit losses--none of which were devastating. In addition, FASB Rule 157 [full disclosure of the impact of sub prime paper on a company’s balance sheet] goes into effect today (click on link below for more detailed explanation). To be sure, these are only a baby steps but steps they are; and they continue the process of defining the depth and breadth of this problem. The risk is slowing leaking out of this crisis.
http://bigpicture.typepad.com/comments/2007/11/fasb-buncha-bit.html
(**This assumes my observation in yesterday’s Morning Call is valid : “I am going to make the assumption that the recent experience of Citigroup and Merrill’s CEOs [not initially reporting the total firm losses in sub prime loans and then losing their job because of it] was not lost on them.)
The High Yield Buy List
Company Close 11/14
USB $32.32 $29-33
KMP 52.44 51-58
DRE 28.05 28-35
RAI 62.30 58-66
PAA 51.34 51-58
Graco went back on the Dividend Growth Buy List yesterday and it fits very well the theme of investing in companies with a big international exposure. Graco is a rapidly growing participant in the fluid handling industry. It designs, manufactures and markets specialty pumps, air and airless spray guns, regulators, meters and valves for moving and applying fluids and semi-solids for the vehicular, construction, food, chemical and plastic industries.
Management emphasizes revenue and earnings growth through:
1. new product development--GGG spends 4-5% of revenue on research and development resulting in a rapidly growing pipeline of new products. Over one third of the company’s sales are generated from new products,
2. acquisitions--management expects approximately 25% of revenue growth will come from this source (it has acquired five companies in the last three years), and
3. expansion overseas especially in
4. continuing to focus on the importance of cost controls.
GGG has earned an astounding 30-40% return on equity with virtually no debt over the past 10 years. In addition, it has grown earnings and dividends 14-15% annually in that same time period. Management stresses the importance of a strong balance and is committed to returning capital to shareholders via stock repurchases (three million shares remain in its latest authorized buyback) and dividends (the dividend has been raised every year for the last eight years).
http://finance.yahoo.com/q?s=GGG
News on Stocks in Our Portfolios
UGI Corp (Dividend Growth Portfolio) reported its 2007 fiscal year earnings per share of $1.89 versus $1.65 recorded in its 2006 fiscal year.
EPS: 2006 $1.61, 2007 $1.78, 2008 $1.85; DVD: $.75 YLD 2.9%
http://finance.yahoo.com/q?s=UGI
3M (Dividend Growth Portfolio) is buying privately held Aearo Technologies, a maker of personal protection and energy absorbing products for $1.2 billion.
EPS: 2006 $5.06, 2007 $5.00, 2008 $5.20; DVD: $1.92 YLD 2.2%
http://finance.yahoo.com/q?s=MMM
More Cash in Investors’ Hands
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