Three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week. This update also includes questions from subscribers along with my answers. Prices appearing after each stock symbol are the closing prices on Thursday, December 15, 2016.
At the end of the update, I present two indexes, which list companies featured in the Cabot Value Model or in the Cabot Enterprising Model during the most recent four months so you can quickly find my recent write-ups for stocks appearing in the models.
My schedule for the next five weeks will be:
• Friday, December 23, Weekly Update
• Monday, December 26, Wall Street’s Best Daily
• Tuesday, December 27, Wall Street’s Best Daily
• Friday, December 30, No Weekly Update – New Year’s weekend
• Thursday, January 5, Cabot Value Model issue 270V
• Friday, January 6, Weekly Update
• Thursday, January 12, Cabot Enterprising Model issue 270E
• Friday, January 13, Weekly Update
• Friday, January 20, Weekly Update
Company Reports
Guggenheim Bulletshares 2016 High Yield Corporate Bond ETF (BSJG 25.80) will mature on December 30. The amount of the net asset value (currently 25.81) for your shares will be credited to your brokerage account during the first week of January 2017.
I recommended purchase of the ETF in November 2013 at 26.95. The loss of $1.14 is more than offset by the total dividend distributions during the past 37 months of $2.52. The net return for the ETF will be about 5.1%, which is quite reasonable.
I advise investing the proceeds from your BSJG redemption into the Guggenheim Bulletshares 2020 High Yield Corporate Bond ETF (BSJK: Current Price 24.22; Max Buy Price 23.95) which will mature at the end of 2020. BSJK’s portfolio is well diversified with 195 bonds, the expense ratio is 0.43%, and the net asset value is 24.22. The dividend yield is attractive at 5.27%. Wait for BSJK to fall to 23.95 before buying, though. New Buy at 23.95 or below.
Kroger (KR 35.96) is back in investors’ good graces. The company could see a big boost in profits if President-elect Trump and Congress lower corporate taxes from the current 35% rate down to 15% to 20%. Kroger’s current tax rate is 34%. Also, the company is offering early retirement to 2,000 corporate employees in an effort to cut costs. Hold.
Silver Wheaton (SLW 17.04) dropped 8.8% on December 15 in the wake of the Fed’s hike in interest rates. Precious metals stocks tend to fall when interest rates rise because higher interest costs on debt can lower profits. However, Silver Wheaton’s sales and earnings are rising rapidly, and probably will increase again in 2017. SLW will likely remain strong if the stock market falters. Buy at 19.45 or below.
Questions and Answers
Q. Any reason for SNI’s price drop? (from subscriber T.A.)
A. Scripps Networks (SNI) Current Price 70.49; Max Buy Price 69.12; Min Sell Price 91.25. There is no news on SNI recently. The stock is consolidating recent gains after rising 9.5% since the election on November 8. SNI could fall further to about 68.50 before climbing to a new 52-week high above 73.71. The sales and earnings growth achieved in 2016 should carry into 2017 and beyond. Buy at 69.12 or below.
Q. Do you have a maximum number of stocks in your portfolios? Can I benefit from your service with my small account? (from subscriber E.S.)
A. I recommend investing in a minimum of 12 stocks. Also, I advise investing in stocks from both Models, which will provide the chance to diversify your portfolio and lower your risk. Each Model contains 16 buy-rated stocks from which to choose. Select the stocks that best fit your objectives. I would be pleased to provide help with your choices if you send me an email.
Index of Latest Summaries – Recommendations featured in recent issues.
