4/24/08

Economics

How dire is the current ‘crisis’?

http://www.realclearpolitics.com/articles/2008/04/the_skys_not_falling.html

protectionism (Free trade is a major positive for world and US economic growth.)

http://online.wsj.com/article/SB120891112269636667.html?mod=opinion_main_commentaries

Politics

Domestic

International War Against Radical Islam

Another step towards reconciliation in Iraq:

http://hotair.com/archives/2008/04/22/iraq-continues-towards-reconciliation/

Do Sunnis and Shias cooperate?

http://media.nationalreview.com/post/?q=YTk1MjZjNzdkMjE5YjNlNTM3MWZkOGEwNTI2NWJjYWQ=

The Market

Technical

S&P sector P/E ratios:

http://bespokeinvest.typepad.com/bespoke/2008/04/us-sector-pe-ra.html

Fundamental

The Dividend Growth Buy List

Company Close 4/23 Buy Value Range

Avery Dennison $48.70 $45-52

Brown Forman 69.42 65-75

Canadian Nat’l RR 50.12 45-52

Chevron 94.48 84-96

Emerson Electric 53.26 46-53

Federated Investors 32.81 32-37

Ingersoll Rand 43.59 42-48

Johnson Controls 34.00 31-36

Johnson & Johnson 67.17 60-69

Manulife Financial 37.26 34-39

Proctor & Gamble 67.17 66-75

Sherwin Williams 54.98 53-61

State Street Corp 66.54 66-76 T Rowe Price 53.88 52-60

UGI 26.27 24-28

UPS 71.67 67-77

VF Corp 75.23 72-83

Wells Fargo 28.92 27-33

Company Highlight

Chevron is the world’s fourth largest oil company based on proven reserves. The company has grown its profits at a 15% annual rate over the last 10 years while earning a 20%+ return on equity. While it has increased dividends at a much lower pace, the payout ratio should rise over the near term. CVX should maintain an attractive growth rate because:

(1) oil prices are expected to remain high thereby insuring record free cash flow which will fund an aggressive capital expenditure program, an increased dividend payout and large stock buybacks [CVX is currently in a $15 billion stock repurchase program],

(2) management has initiated an ambitious restructuring program involving a greater level of capital discipline and divesting non-core and high-cost assets,

(3) its current oil and gas development project pipeline is among the best in the industry, with major projects in Kazakhstan, West Africa, Australia and the deepwater Gulf of Mexico,

(4) improvements in its downstream business including the upgrading of a current US refinery and the recently commissioning of a major new refinery.

Chevron is rated A++ by Value Line, has a low 6% debt to equity ratio and its stock yields approximately 2.7%.

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

Subscriber Alert

The stock price of Northern Trust (NTRS-$75) has risen above the upper boundary of its Buy Value Range. Accordingly, it is being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold this stock.

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

News on Stocks in Our Portfolios

Praxair (Dividend Growth Portfolio) reported first quarter operating earnings per share of $.99 versus expectations of $.95 and $.81 recorded in the first quarter of 2007.

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

General Dynamics (Dividend Growth Portfolio) reported first quarter earnings per share of $1.42 versus expectations of $1.29 and $1.06 reported in the comparable 2007 quarter.

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

Graco (Aggressive Growth Buy List) reported first quarter earnings per share of $.57 versus $.50 recorded in 2007’s first quarter.

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

Phillip Morris (Dividend Growth Portfolio) reported first quarter earnings per share of $.89 versus expectations of $.77 and $.69 recorded in the first quarter of 2007.

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

A positive write up on Reliance Steel (Aggressive Growth Portfolio):

http://www.thestreet.com/p/rmoney/industrials/10413424.html

Positive comments on Abbott Labs (Dividend Growth Portfolio):

http://www.zacks.com/rank/zcommentary/?id=7471

T Rowe Price (Dividend Growth Portfolio) reported first quarter earnings per share of $.55 versus expectations of $.56 and $.51 reported in the comparable quarter last year.

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

3M (Dividend Growth Portfolio) reported first quarter earnings per share of $1.38 versus expectations of $1.35 and $1.85 recorded in the prior year’s first quarter.

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

UPS (Dividend Growth Portfolio) reported first quarter earnings per share of $.87 versus expectations of $.86 and $.96 reported in the first quarter of 2007.

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

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As of the Market close last night, 35% of the S&P companies have reported first quarter profits; ex financials, total earnings are up 8.5%.

More Cash in Investors’ Hands

Liberty Mutual is buying Safeco for $6.2 billion in cash.

GlaxoSmithKline PLC is buying Sirtris Pharmaceuticals for $720 million in cash.