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Found 6 stocks that are down this year, pay dividends, and pass initial valuation due diligence

4/12/2022

1 Comment

 
By Jeffrey Cohen, April 12, 2022, President and Investment Advisor Representative
Today we did a special analysis.  Find all dividend paying stocks that paid more than the $SPY (1.32%) last year.  Then, look at those stocks that declined significantly in share price over that same timeframe.

These dividend paying stocks are down 35% to 65%.

​Then, we do initial stock valuation due diligence by reading the 10-K for each firm.  Out of 12 stocks we like 6, and are putting them on a dividend purchase watch list. (see image below)

The work isn't done yet.  We need to set a buy price for each of these while monitoring the macro-economic factors that are impacting these stocks. 

Retailers:
Most are retailers and they are impacted by recession fears.  CPI should help them if they can pass along price increases, or find and sell lighter and more local merchandise.  Optimizing shipping is important.  Labor costs and supply are another driver of performance (product does not often sell itself).  Supply chain costs hurt them too. 

Furniture:
Two are in the furniture trade.  These are impacted by supply chain and materials costs. Of course, economic activity and moves help them, and with increases in mortgage interest rates or fears of recession (and fewer moves), activity could slow. In one case, an acquisition was made that increased debt, and that debt is variable.

Variable debt
In most of these cases, the companies are financing their acquisitions or growth by borrowing money that has a variable interest rate (e.g., LIBOR + 3%).  In this situation, as the US Federal Reserve raises interest rates, it will increase their interest costs.  Firms that can pay down debt will do so, while others will see their Net Incomes, and ability to pay dividends, decline.
​
Picture
At the end of the day, we are building a set of efficient dividend paying stocks (mostly in the money management business) with one technology growth stock, and now we see 'downtrodden' retailers and furniture companies.  

Once we see some 'blood in the streets' we will start to buy dividend names and build an income stream.  Both for ourselves and with our clients.
1 Comment
Jeffrey Cohen link
4/13/2022 11:51:35

We crushed it today. All six stocks went up. Median return today is ~4%.

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    Jeffrey Cohen, President and Investment Advisor Representative
    ​US Advanced Computing Infrastructure, Inc.

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Copyright 2022 US Advanced Computing Infrastructure, Inc.  
Chicago Quantum (SM) is a protected service mark, registration 113562, by the Secretary of State of Illinois.
US Advanced Computing Infrastructure CRD#: 316375
Business Mailing Address: PO BOX 1292, Highland Park, Illinois 60035-7292

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  • Home
    • Our Brochure | Chicago Quantum
    • Stocks Held By Advisers
  • Investment Information
    • Negative BETA Stocks
    • Top dividend stocks
    • Leptokurtic Stocks
    • Platykurtic Stocks
    • High & Low BETA Stocks
    • Positive and Negative Skew Stocks
    • Fallen in price
    • Price & Volume Spikes
    • Stocks that split this year
  • Research
    • Today's Insights
    • Today's Market Insights (part 2)
    • MEME Stocks
    • Daily Price Variance R&D
    • Results from our model
    • US-Listed Stocks of Foreign Firms
    • Liquidity Research
  • Contact
  • Stock Market Quant Analysis
    • Portfolio.m
    • Stock analysis, US Composite tickers, "UP" run
    • Stock analysis, US Composite tickers, "Down" run
    • Custom Algorithm Development
    • Investment Planning Workshop
    • Newsletter Service
  • Project Services