2/5/08

Economics

The latest figures on commercial loan growth (what recession?):

http://mjperry.blogspot.com/2008/02/commercial-lending-growth-shows-ongoing.html

Politics

Domestic

McCain on defense and the war against radical Islam:

http://article.nationalreview.com/?q=YjE5MDE4ZDA2OTIyYzA2NzJiNDkyNGQxNjA2YzNhYWI=

International War Against Radical Islam

Another look at W’s failed policy on North Korean nuclear disarmament:

http://www.slate.com/id/2183541

The Market

Technical

Fundamental

Stocks undervalued or earning estimates too high?

http://bigpicture.typepad.com/comments/2008/02/the-flawed-fed.html

Update on fourth quarter earnings reports:

http://bespokeinvest.typepad.com/bespoke/2008/02/sector-earnings.html

One of my focuses continues to be on consumer staple companies that should be able to navigate any economic difficulties with fewer problems than other sectors:

Reynolds American is the second largest producer of cigarettes in the US; its brands including Winston, Camel, Salem, Pall Mall, Kool, Vantage and Doral. The company has earned a 16-18% return on equity over the last five years on a capital structure with 38% debt. It has also grown profits and dividends in the 8-10% range which when coupled with a 5%+ yield on its stock provides an attractive total return. RAI should be able to continue to grow its earnings and dividends as a result of:

(1) a major restructuring plan that is forecast to reduce the company’s work force by 40%, eliminate expensive marketing programs and trim overhead,

(2) the merger with Brown & Williamson which not only raised market share [revenues] but also provided a major opportunity for continuing incremental cost savings [$500 million over the next 5 years],

(3) the merger with Conwood [Kodiak and Grizzly moist snuff] which provides an entry into smokeless tobacco, the fastest growing segment of the tobacco market,

(4) a more aggressive brand building strategy,

(5) resolution of two government lawsuits which reduces both litigation expenses and risks.

RAI is rated by B+ by Value Line, its stock yields 5%+, and management has been conscientious in distributing the benefits of the company’s improving cash flow to shareholders via a rising dividend.

http://finance.yahoo.com/q?s=RAI

News on Stocks in Our Portfolios

A positive write up on Mastercard (Aggressive Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=6871

Avon Products (Aggressive Growth Portfolio) reported fourth quarter and full year operating earnings per share of $.64 and $1.21 respectively versus $.54 and $1.06 in the comparable periods on 2006.

http://finance.yahoo.com/q?s=AVP

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