2/13/08

Economics

The cost of universal healthcare:

http://mjperry.blogspot.com/2008/02/spending-someone-elses-money-is-real.html

Politics

Domestic

Obama on foreign policy:

http://www.powerlineblog.com/archives2/2008/02/019763.php

International War Against Radical Islam

The Market

Technical

A technical look at the Market:

http://www.thestreet.com/p/_htmlrmd/rmoney/technicalanalysis/10403128.html

Fundamental

Street estimates for S&P 2008 closing value:

http://bespokeinvest.typepad.com/bespoke/2008/02/bear-blinks.html

Subscriber Alert

This morning at the Market open, our Portfolios will continue to make small additions to some holdings: the Dividend Growth Portfolio will Buy a 1/4 position in Johnson Controls (JCI-$35), the High Yield Portfolio will buy a 1/5 position in Reynolds American (RAI-$64), and the Aggressive Growth Portfolio will buy a 1/5 position in Amphenol (APH-$38).

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

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

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

Aggressive Growth Buy List

Company Close 2/124 Buy Value Range

Accenture Ltd $35.16 $32-36

American Eagle Outfit 21.94 22-25

Amphenol 37.87 35-40

Quest Diagnostic 53.66 48-55

Eaton Vance 34.89 33-38

Fastenal Inc 41.65 36-41

Microsoft 28.34 26-30

SAP Inc 48.25 46-54

Sun Hydraulics 21.75 21-25

News on Stocks in Our Portfolios

Expeditors Int’l (Aggressive Growth Portfolio) reported fourth quarter and full year earnings per share of $.28 and $1.19 respectively versus $.28 and $1.06 in the comparable 2006 periods. Analysts had been expecting fourth quarter profits of $.34 per share. The stock declined 8% on this disappointment. Like two other of our holdings that have gotten popped lately (CME and LCAV), EXPD was trading above its Buy Value Range before the news--indeed last July the stock had traded into its Sell Half Range and the Aggressive Growth Portfolio took appropriate action. It closed yesterday ($40.95) above its current Stop Loss Price ($38.50). Given that plus the fact that I think that the company will continue to grow at an above average pace, the Aggressive Growth Portfolio will continue to Hold EXPD as long as it remains above its Stop Loss Price.

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

Coca Cola (Dividend Growth Portfolio) reported fourth quarter operating earnings per share of %.58 versus expectations of $.55 and $.52 recorded in the comparable 2006 quarter.

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

More Cash in Investors’ Hands

2/12/08

Economics

fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.) W’s spending legacy:

http://www.captainsjournal.com/2008/02/10/al-qaeda-diary-catalogs-organizations-decline/

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

http://mjperry.blogspot.com/2008/02/in-currency-of-time-good-old-days-are.html

Politics

Domestic

The latest on immigration enforcement:

http://michellemalkin.com/2008/02/11/how-to-clear-an-immigration-backlog-skip-the-background-checks/

International War Against Radical Islam

Iraq is not the worry:

http://article.nationalreview.com/?q=OThkYTMwN2UwNDlmNjdlZjRkNjcwZDRhNDBmY2QxZmU=

The Market

Technical

Fundamental

We got another piece of bad news from the financial sector yesterday--American International Group announced that its auditors had found deficiencies in its investment portfolio that had resulted from sub prime related difficulties; and while there was some damage among the financials, stock prices were generally up. The point, at the risk of being repetitive, is that as investors continue to gain clarity regarding the magnitude of this problem, they appear to be increasingly limiting those stocks that are penalized to the offenders rather than the entire Market.

More news on the monoline insurers:

http://www.bloggingstocks.com/2008/02/12/warren-buffett-offers-to-reinsure-800-billion-in-municipal-bond/

The High Yield Buy List

Company Close 2/11 Buy Value Range

AJ Gallagher 23.80 23-26

Martin Midstream Ptrs 34.59 35-40

Rayonier 41.70 39-45

Reynolds American 65.39 61-70

Subscriber Alert

The stock price of Alliance Resource Ptrs (ARLP-$39) has risen above the upper boundary of its Buy Value Range. Accordingly, it is being Removed from the High Yield Buy List. The High Yield Portfolio will continue to hold ARLP.

The stock price of SAP (SAP-$48) is once again trading inside its Buy Value Range. Therefore, it is being re-Added to the Aggressive Growth Buy List. This morning at the Market open, the Aggressive Growth Portfolio will Buy an additional 1/5 position in SAP.

Company Highlight

United Technologies is an industrial conglomerate which manufacturers and services aircraft engines (Pratt & Whitney), manufacturers heating, ventilating and air conditioning equipment (Carrier), manufacturers and services elevators (Otis), builds helicopters (Sikorsky) and manufacturers electronic controls (Hamilton Sundstrand). The company has earned over a 20% return on equity over the last five years while growing profits and dividends at a 15%+ rate. UTX is on pace to continue this growth as a result of:

(1) the need by airlines to upgrade and expand their fleets,

(2) the necessity to repair, overhaul and replace the US severely depleted stock of military equipment,

(3) the impact of the worldwide construction boom on Otis elevators.

UTX is rated A++ by Value Line, its balance sheet carries a debt/equity ratio of 27% and its stock yields 1.8%.

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

News on Stocks in Our Portfolios

3M (Dividend Growth Portfolio) raised its quarterly dividend per share from $.48 to $.50.

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

LCA-Vision (High Yield Portfolio) reported fourth quarter and full year earnings per share of $.22 and $1.64 respectively versus $.27 and $1.34 in the comparable 2006 periods. The company also noted that it was experiencing a slowdown in revenue growth; and investors took the stock out behind the barn and beat it like a rented mule. However, like the CME incident last week, LCAV closed ($14.20) only slightly below the lower boundary of its Buy Value Range ($15) and well above its Stop Loss Price ($12.75). Given the high yield (6.8%) that the stock provides and the lack of any clear threat to its dividend, I am going to at least wait to see how the stock trades today before taking any action--unless of course it trades down near its Stop Loss Price.

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

Ecolab (Aggressive Growth Portfolio) reported fourth quarter and full year operating earnings per share of $.40 and $1.66 respectively versus $.34 and $1.43 recorded in the similar 2006 periods.

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

More Cash in Investors’ Hands

2/11/08

Economics

January ’08: the second coldest in 15 years:

http://wattsupwiththat.wordpress.com/2008/02/04/rss-satellite-data-for-jan08-2nd-coldest-january-for-the-planet-in-15-years/

fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.) Where the candidates stand on earmarks:

http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2004171198&zsection_id=2003956730&slug=earmarks08m&date=20080208

More on earmarks:

http://jewishworldreview.com/cols/will021008.php3

Politics

Domestic

McCain on government spending:

http://article.nationalreview.com/?q=YTdiOGU1MjY5YWEzZTQzZmYzNzlhOWQ3MTdkMWUzMTI=

International War Against Radical Islam

The US Afghan policy:

http://www.slate.com/id/2183944

Good news from Iraq:

http://www.captainsjournal.com/2008/02/10/al-qaeda-diary-catalogs-organizations-decline/

The Market

Technical

Fundamental

The Dividend Growth Buy List

Company Close 2/08 Buy Value Range

Abbott Labs $56.80 $51-58

Clorox 57.04 56-64

General Electric 33.84 35-39

Genuine Parts 44.53 41-47

Johnson & Johnson 62.03 60-69

McGraw Hill 40.66 40-46

Northern Trust 70.53 61-70

Proctor & Gamble 65.02 66-75

T. Rowe Price 49.73 47-54

UPS 70.58 67-77

United Technologies 71.35 48-55

VF Corp 79.74 72-83

Company Highlight

United Parcel Service (UPS) is the world’s largest integrated air and ground package delivery service, operating in over 200 countries. The company also offers specialized transportation and logistics services. UPS had grown its earnings and dividend in excess of a 15% pace since its founding; it has a 19-20% return on equity and a debt equity ratio of only 17%. The company should continue to grow at an above average pace as it:

(1) acquires complementary operations. In the last two years, UPS has acquired LYNX Express, UK’s largest independent parcel carrier, Overnite Corp, a leading US non-union provider of less-than-truckload, truckload and truckload services, Stolica a Polish parcel carrier and Menlo Worldwide Forwarding, a heavy airfreight service,

(2) expands its base in China. The company has just completed new warehouse and distribution facilities which now number 60, is investing in one of China’s largest parcel operations and continues of add to the number of weekly flights to China,

(3) grows its UPS Store franchise, now in over 5,000 locations worldwide.

UPS is rated A by Value Line, has a debt/equity ratio of 17%, is bought back 35 million last year while raising its dividend by 7%. Its stock currently yields about 2.5%.

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

News on Stocks in Our Portfolios

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

http://www.zacks.com/rank/zcommentary/?id=6921

More Cash in Investors’ Hands