Steve Cook's Strategic Stock Investments

Subscriber Alert-11/20/09

2009-11-20T14:36:00Z

Subscriber Alert

    The stock price of The Buckle (BKE-$28) has traded below the lower boundary of its Buy Value Range. Accordingly, it is being Removed from the Aggressive Growth Buy List. The stock price remains above its Stop Loss Price, so the Aggressive Growth Portfolio will continue to Hold BKE.

    News on Stocks in Our Portfolios

    Donaldson (Aggressive Growth Portfolio) reported third quarter operating earnings per share of $.45 versus expectations of $.34 and $.60 recorded in the comparable 2008 quarter.

    A positive write up on Nike (Dividend Growth Portfolio):
    http://seekingalpha.com/article/174520-nike-an-example-of-graham-s-goodwill-giant

More Cash in Investors’ Hands

Review of Northern Trust (Dividend Growth Universe)

2009-11-17T14:28:00Z

Northern Trust is a leading provider of investment management, asset and fund administration, fiduciary and banking solutions to institutions and individuals worldwide and is the largest US personal trust company. The company has earned a 12-15% return on equity while growing profits and dividends 10-11% annually for the last 10 years. Despite a difficult environment for financial institutions, NTRS expects to continue to grow as a result of:

(1)    the company’s revenues are heavily skewed to fee-based services allows it to avoid the volatility associated with interest based revenues,

(2)    the rising equity market should have a positive impact on client assets values,

(3)    NTRS has redeemed all the preferred shares sold to the US Treasury under TARP, relieving it from the preferred dividend payments,

NTRS is rated B++ by Value Line, has a debt/equity ratio of about 40% and its stock yields 1.9%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
        Yield      Growth Rate     Ratio       Since 1999

NTRS        1.9%           8%              30%             7
Ind Ave      2.2              2                 35               NA

                Debt/                    EPS Down       Net        Value Line
        Equity         ROE      Since 1999      Margin       Rating

NTRS       40%            12%           3                NA            B++
Ind Ave     56               4              NA              NA            NA

      Chart

    NTRS has been unsuccessful in holding its up trend off the March low, its November 2008 trading high and the down trend off its September 2008 high. The straight blue lines are the boundaries of an up trend dating back to 2003. The wiggly blue line is on balance volume.

http://finance.yahoo.com/q?s=NTRS
11/09

    News on Stocks in Our Portfolios

    Lowe’s (Aggressive Growth Portfolio) reported third quarter earnings per share of $.24 in line with expectations and versus $.33 recorded in the comparable 2008 quarter.

    Positive comments from Zack’s on Avon Products (Aggressive Growth Portfolio):

    Avon Products Inc. (AVP - Analyst Report) recently declared a quarterly dividend of 21 cents per share, which translates into an industry-leading yield of 2.4%. In late October, the company reported third-quarter earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 8%.

Rewarding Shareholders with Outstanding Income

The company recently declared a quarterly dividend of 21 cents per share, which translates into an industry-leading yield of 2.4%.

The dividend is payable December 1 to shareholders of record November 20.

Solid Earnings

In late October, the company reported third-quarter earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 8%. Revenue slipped 4% year-over-year but was up 7% on a local-currency basis.

Higher Forecasts and Strong Momentum

The company is seeing bullish earnings estimates on the strong quarter. The full-year Zacks Consensus Estimate of $1.70 per share is up 4 cents over the past 30 days.

For 2010, analysts polled by Zacks are projecting earnings of $2.17 per share, versus last month’s $2.11.
The share price, which is very close to a 52-week high, has seen strong momentum, outpacing the market by about 40% during the past year.

Favorable Industry Comparisons

Avon boasts a return on equity (ROE) of 87%, dwarfing the industry average of 11%. The company’s net profit margin of 6% compares to an industry average of 3%.

Review of Boeing (Dividend Growth and High Yield Portfolios)

2009-10-27T13:37:00Z

Boeing Co. is a leading manufacturer of commercial aircraft, military aircraft as well as variety of command and control and advanced radar systems. The company has grown profits and dividends at a 10-12% annual rate over the past 10 years earning a return on equity in excess of 20%.

The key factor in BA’s financial performance of late has been the delay of the 787 Dreamliner which has resulted in increased costs and order cancellations. However, deliveries should begin in 2010. Despite the aforementioned order cancellations, current backlog currently stands at $328 billion, nearly five years of sales, approximately 90% of which is from foreign carriers that benefit from financial backing of their governments. Demand should remain strong as there is an underlying need for new more efficient jetliners.

     Boeing is rated A+ by Value Line, has a 96% debt to equity ratio (though this is largely a function of accounting treatments) and its stock yields 3.5%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
            Yield      Growth Rate     Ratio       Since 1999

BA             3.5%           10%            72%*             8
Ind Ave      3.1               9                21                 NA

                Debt/                    EPS Down       Net        Value Line
       Equity         ROE      Since 1999      Margin       Rating

BA            96%*          46%            4                5%           A+
Ind Ave     31               14              NA              8             NA

*due to the accounting treatment of the first three 787 Dreamliner, which were expensed as R&D

   Chart

    Note: Until yesterday, BA was in an up trend off its March low. However, it has not successfully challenged the down trend off it s September 2007 high (red line). The blue line is the lower boundary of an up trend dating from 2003.

http://finance.yahoo.com/q?s=BA
10/09

     News on Stocks in Our Portfolios

    VF Corp (Dividend Growth and High Yield Portfolios) reported third quarter earnings per share of $1.94 versus expectations of $1.95 and $2.10 recorded in the comparable 2008 quarter.

    Verizon (High Yield Portfolio) reported third quarter operating earnings per share of $.60 versus expectations of $.69 and $.66 reported in last years’ third quarter.

Subscriber Alert; plus Option note

2009-10-16T13:32:00Z

Subscriber Alert

    The stock prices of McDonald’s (MCD-$58) and Genuine Parts (GPS-$39) have traded above the upper boundary of their respective Buy Value Ranges. Hence they are being Removed from the Dividend Growth Buy List (MCD, GPC), the High Yield Buy List (GPC) and the Aggressive Growth Buy List (MCD). These stocks will continue to be Held in their respective Portfolios.

    We recently altered the Valuation Model assumptions for Emerson Electric. Once done, the stock price of Emerson Electric (EMR-$40) is now trading in its Buy Value Range. Accordingly, EMR is being added to the Dividend Growth Buy List and the High Yield Buy List. Both Portfolios already own this stock and additional shares have been bought in recent transactions.

    The stock price of Qualcomm (QCOM-$42) has traded below the upper boundary of its Buy Value Range. Accordingly, QCOM is being Added to the Dividend Growth and Aggressive Growth Buy Lists. Both Portfolios already own this stock.

    The stock price of Buckle (BKE-$32) has traded below the upper boundary of its Buy Value Range. Hence it is being Added to the Aggressive Growth Buy List. Yesterday, the Aggressive Growth Portfolio swapped its position in Ross Stores for a similar sized holding in BKE.

    Our Portfolios are moving to 12.5% cash at the opening this morning.

    In all Portfolios, a one quarter position in the ishares Australian ETF (EWA) will be bought.

    In the Dividend Growth Portfolio, additional shares will be bought in Emerson Electric (EMR) and Qualcomm (QCOM).

    In the High Yield Portfolio, additional shares will be bought in Emerson Electric (EMR).

    In the Aggressive Growth Portfolio, additional shares will be bought in Amphenol (APH-$41), Frontier Oil (FTO-$15) and Fastenal (FAST-$32).

      Options

    Unless the Market tanks completely today, our VFC Oct 75 calls and Oct FDS 65 calls will get exercised and the stock called away. I am fine with that. VF Corp stock price has advanced sufficiently that our Portfolios’ positions in this stock was larger than normal; consequently, those positions after the exercise will be only slightly less than normal sized. The FDS holding will be reduced to roughly a three quarters sized position.

    Unfortunately, the only decent covered write I could find in the November series was the Blackrock November 250 calls @ 2. At the Market open this morning, the Aggressive Growth Portfolio will sell these calls against one quarter of its position.

Subscriber Alert--Adding to stocks; review of Rockwell Collins (Aggressive Growth Portfolio)

2009-10-15T13:36:00Z

Subscriber Alert

    With the resolution of the technical state of the S&P and the accumulating proof that the revenues-are-key thesis will prove correct, at the Market open this morning, our Portfolios will move cash from 15% to 13.75% as follows:

    In the Dividend Growth Portfolio, additions will be made to the Wisdom Tree Emerging Markets ETF (DEM-$50), Emerson Electric (EMR-$40), Marathon Oil (MRO-$34) and UGI (UGI-$25).

    In the High Yield Portfolio, additions will be made in the Wisdom Tree Emerging Markets ETF (DEM-$50), Emerson Electric (EMR-$40) and Caterpillar (CAT-$55).

    In the Aggressive Growth Portfolio, additions will be made in the Wisdom Tree Emerging Markets ETF, Frontier Oil (FTO-$14), Donaldson (DCI-$34) and started a new one third position in Fastenal (FAST-$39).

In addition, it is making what is a very unusual move for us. It is selling its position in Ross Stores (ROST-$46) and buying a similar sized position in Buckle (BKE-$32). The reasoning is all price related.    The Aggressive Growth Portfolio Sold a portion of ROST when it traded into its Sell Half Range. The stock continued to advance. In the same time, BKE languished and trades in its Buy Value Range. Yet we think it has equally attractive long term appeal as ROST.

      Company Highlight

Rockwell Collins is a maker of aviation electronics and mobile and airborne communication systems, navigation, display and automatic flight control systems to multinational corporations and government agencies. The company has grown earnings and dividends 20% annually over the last five years while earning a 30%+ return on equity. Despite the impact of the economic malaise on the airline and private aircraft industries, earnings should resume its long term growth rate due to:

(1)    government sales should continue to fuel profits,

(2)    an economic rebound should prompt a dramatic increase in fleet replacement by airlines and sales of private aircraft,

(3)    acquisitions

COL is rated A by Value Line, has a debt to equity ratio of 23% and its stock yields 2.1%

Statistical Summary

                 Stock      Dividend         Payout      # Increases
            Yield      Growth Rate     Ratio       Since 1999

COL          2.1%           11%            29%             7*
Ind Ave     2.9               9**             21               NA

                Debt/                      EPS Down       Net        Value Line
          Equity         ROE      Since 1999      Margin       Rating

COL          23%           28%            1                12%           A
Ind Ave      31              14             NA               9              NA

*COL has paid a dividend for only 8 years
** the majority of companies in COL industry do not pay a dividend

     Chart

Note: COL is in a solid up trend off its March low and has traded above the down trend off its October 2007 (red line) and the November 2008 high. The wiggly blue line is the advance/decline line.



http://finance.yahoo.com/q?s=COL
10/09

    News on Stocks in Our Portfolios

    Abbott Labs (Dividend Growth Portfolio) reported third quarter operating earnings per share of $.92 versus estimates of $.90 and $1.00 recorded in the comparable 2008 quarter.

    Altera (Aggressive Growth Portfolio) reported third quarter profit per share of $.19 in line with expectations and versus $.31 reported in last year’s third quarter.

    WW Grainger (Dividend Growth Portfolio) reported third quarter operating earnings per share of $1.51 versus estimates of $1.34 and $1.77 recorded in the 2008 third quarter.

Subscriber Alert--selling long bonds; review of Praxair (Dividend Growth Portfolio)

2009-10-13T13:32:00Z

Subscriber Alert

    Corporate bond prices are starting to break up trends, likely in anticipation of rising inflation. That is a call to action on our own holdings of longer bonds as cash substitutes. This morning, our Portfolios are selling one half of all bond ETF’s that they currently hold except the TIPS ETF: ING Prime Trust (PPR), Nuveen Senior Trust (NSL)
    http://bespokeinvest.typepad.com/bespoke/2009/10/investment-grade-corporate-bond-etf-breaks-down.html


     Company Highlight

          Praxair Inc (PX) is the world’s second largest supplier of industrial gases. It produces atmospheric, process and specialty gases used to enhance performance applications in the metal fabrication, primary metal, chemical, healthcare, electronic, glass, pulp, paper and environmental industries. PX has grown its earnings and dividends at a 12-13% pace annually for the last 10 years and earns a return on equity of approximately 25%. The company has suffered both lower volumes and currency difficulties in the recent economic malaise; however, earnings should rebound as a result of:

(1) its a huge order backlog,

(2) a major cost reduction program,

(3) expansion into emerging markets which are recovering sooner and expected to grow faster than other areas of the globe,

(4) has instituted numerous programs that reduce its business risk such as cost recovery clauses in its contracts, dollar denominated contracts and network optimization and efficiency programs.

PX is rated A by Value Line, carries more debt (45%) than we believe optimal and its stock yields 1.9%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
        Yield      Growth Rate     Ratio       Since 1999

PX            1.9%           10%              34%             10
Ind Ave     1.7               5                    32               NA

                Debt/                    EPS Down       Net        Value Line
           Equity         ROE      Since 1999      Margin       Rating

PX            45%           26%            1                30%           A
Ind Ave     50              14              NA               5              NA

Chart

Note: PX is in a solid up trend off its March low. It is well over the down trend off its July 2008 high (red line) and above the November 2008 high. The wiggly line is the 30 day moving average.

http://finance.yahoo.com/q?s=PX
10/09

    News on Stocks in Our Portfolios

    Positive comments on FactSet Research from The Street.com:

     FactSet Research Systems (FDS Quote) designs applications for investment professionals. Its risk-management tools add value during market turmoil. So when financial markets swoon, FactSet's stock benefits. The company has achieved a three-year growth rate of 17% for revenue and 20% for profit.

The company's fiscal fourth-quarter net income rose 8% to $36 million, or 74 cents a share. Revenue inched up 1% to $156 million. Its gross margin remained steady at 72% and its operating margin grew from 33% to 35%. The company holds $216 million of cash and no debt.

FactSet has tailor-made applications for wealth managers, institutional asset managers, hedge funds and research professionals. Its platforms give clients access to proprietary data. It collects a swath of information from third-parties, and then compiles and organizes it for clients.

Money management and trading decisions are made in real-time. The only edge in the markets is through superior research and technological innovation. Professional investors are in a perpetual arms race to gain an edge in financial markets.
This trend has helped FactSet consistently grow profits since its inception in 1978. Its stock has doubled over the past five years and is up 265% over a 10-year period, far outperforming major U.S. indices. Shares have rallied 37% this year, more than the Dow Jones Industrial Average and S&P 500 Index.

FactSet trades at a price-to-earnings ratio of 23, a premium to the market, but a discount to application software peers. Shares pay a 1.3% dividend yield and have a beta, a measure of market correlation, of 1.4. We rate FactSet "buy."

    A brief positive note on Amphenol (Aggressive Growth Portfolio) from Zacks’:

Amphenol Corporation (APH - Analyst Report) is scheduled to release its fiscal Q3 results on October 15. The company stated that though the economic environment remains uncertain, there was a stabilization of demand in most markets.
We remain optimistic about Amphenol's long-term growth prospects in the mobile devices business. Demand for mobile phones remains strong. Beyond mobile phones, the company continues to expand the use of its products into fast growing submarkets such as PDAs, laptops and desktop computers.

Based on constant currency exchange rates and some seasonal moderation, APH expects revenues between $670 million and $685 million in Q3:09. EPS is projected within 41 - 43 cents. We maintain our Outperform rating with a target price of $40.

Review of Phillip Morris International (Dividend Growth and High Yield Portfolios)

2009-10-06T11:52:00Z

Philip Morris International is a spin off from Altria. It manufacturers, sells and distributes a wide range of tobacco products in markets outside the US. Operating profits from this segment of the old Altria business grew at an 11% annual rate. PM expects earnings to grow at a 10-11% rate in the future; given its commitment to payout 65% of profits, the dividend growth should match growth of earnings. The company is expected to earn a return on equity in the 50-60% range. Management believes earnings will advance based on:

(1) strengthening its brand through product innovations such as smoother taste, new tobacco blends and innovative packaging which provides pricing power,

(2) acquisitions [10 in the last three years] in particular into Asian markets [China, India, Bangladesh and Vietnam] where it had little exposure,

(3) management’s focus on cost controls, productivity gains and manufacturing efficiencies,

(4) strong cash flows allow for an ongoing major stock buy back program

PM is rated B++ by Value Line, has a higher than we would like debt to equity ratio of about 60%, and its stock yields 4.4%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
          Yield      Growth Rate     Ratio       Since 1999

PM           4.4%           11%              59%             1*
Ind Ave     4.5               5                  68               NA

                Debt/                   EPS Down       Net        Value Line
        Equity         ROE      Since 1999      Margin       Rating

PM           60%            60%            1*              19%          B++
Ind Ave     40               44              NA              15            NA

*the company has only reported separately for two years

Chart

Note: PM is in a solid up trend off its March low and trading well above the down trend off its September 2008 high (red line) and the November 2008 trading high. The wiggly red line is the 30 day moving average.

http://finance.yahoo.com/q?s=PM
10/09

Subscriber Alert 10/2/09

2009-10-02T13:33:00Z

Subscriber Alert

    The stock prices of Nike (NKE-$63), Abbott Labs (ABT-$40 and General Dynamics (GD-$63) have traded above the upper boundary of their respective Buy Value Ranges. Accordingly, they are being Removed from the Dividend Growth Buy List. The Dividend Growth Portfolio will continue to Hold these stocks.

    The stock price of Buckle (BKE-$34) has traded above the upper boundary of its Buy Value Range. Therefore, it is being Removed from the Aggressive Growth Buy List. The Aggressive Growth Portfolio never established a position in BKE, so no further action is required a this time.

    The stock price of Lowe’s (LOW-$20) has traded below the lower boundary of its Buy Value Range. Accordingly, it is being Removed from the Aggressive Growth Buy List. It remains above its Stop Loss Price, so the Aggressive Growth Portfolio will continue to Hold LOW.

     Thoughts on Investing--More from The Money Game

    ‘If I really had a system for making money in the market and it worked all the time, first of all, I wouldn’t tell anybody and second of all, I would soon have just about all the money there is. What I have told you is my set of biases but there are all kinds of ways to make money in the market. Go find your own biases and work out your salvation with diligence.

However, irrespective of your biases, one of the most important of the Irregular Rules is ‘find smart people’, because if you can do that, you can forget a lot of other rules. Good ideas come from smart people. However, no one can cover everything, and no one can know everything. So most professionals (money managers) depend on--their own analysts, other analysts, other managers--whom they have come to respect as acute intelligences and as talents in whatever field they happen to be talented at. But remember, there are no more brilliant investment men than there are brilliant lawyers or top flight surgeons.’

    News on Stocks in Our Portfolios

    A positive write up on Johnson & Johnson (Dividend Growth Portfolio):
    http://seekingalpha.com/article/164353-johnson-johnson-well-positioned-for-growth

Review of Walgreens' (Aggressive Growth Portfolio)

2009-10-01T13:33:00Z

Walgreen’s (WAG) is the second largest drugstore operator in the US, operating over 6000 drugstores. The company has grown earnings and dividends 16% annually over the past five years, earning a 15-16% return on capital. WAG should be able to sustain an above average earnings growth rate because:

(1) the +60 year old population, which is the largest user of drugs, is growing faster than any other segment of the population; in addition, the improvement in the quality of drugs for the maintenance of medical conditions should drive enhance revenue growth,

(2) it recently introduced a pharmacy benefits manager for Medicare prescription drug plans which should accelerate revenue growth, and

(3) not only does WAG operate an aggressive new store introduction campaign, its strategy focuses on convenient locations and many are 24/7 stores,

(4) the company also is expanding complementary operations via acquisition into pharmacy and health services [seven in the last three years]. This year WAG created a new division which will manage health centers and pharmacies at large company worksites.

(5) it is also improving the utilization of existing store space to enhance traffic through new services such as printer cartridge refills and convenient care clinics,

WAG is rated A+ by Value Line, has a 15% debt to equity ratio and its stock yields 1.3%

Statistical Summary

                 Stock      Dividend         Payout      # Increases
         Yield      Growth Rate     Ratio       Since 1999

WAG         1.3%           12%            22%             9
Ind Ave      1.2               9*              11               NA

                Debt/                  EPS Down       Net        Value Line
       Equity         ROE      Since 1999      Margin       Rating

WAG         15%           22%            1                30%          A+
Ind Ave     25               14              NA               4             NA

*over 50% of the companies in this industry don’t pay a dividend

Chart

    Note: WAG has sustained an up trend off its March low. It has successfully challenged the down trend off its September 2007 high (red line) and it November 2008 high. The blue line is the lower boundary of a trading range dating back to 2003.

http://finance.yahoo.com/q?s=WAG
9/09

    News on Stocks in Our Portfolios

    A positive write up on Chevron (Dividend Growth Portfolio):
    http://seekingalpha.com/article/164247-an-opportunity-in-chevron

Review of CR Bard (Dividend Growth Portfolio): Earnings reports

2009-09-30T13:35:00Z

C.R. Bard is a medical device manufacturer with products in three markets: vascular (angioplasty catheters and stents, grafts and blood oxygenation), urology (catheters, urine collection systems and incontinence aids) and oncology (gastroenterological, bladder, prostate, hernia, orthopedic and laparoscopic products). The company produces a 20%+ return on equity and has grown earnings at approximately 15% for the past 10 years. Dividend growth has been slower but should pick up in the next 2 to 3 years.

As you can tell by its product mix, Bard is well situated to benefit from an aging population and should be able to maintain above average profit and dividend growth because:

(1) a top notch R&D effort producing exciting new high margin proprietary products,

(2) strategic acquisitions to complement and enhance its current product line,

(3) an expanding marketing effort,

(4) an aggressive cost control effort.

BCR’s stock has been a stellar performer in our Portfolio having traded well past our Sell Half Price and is a great example of why we only sell half of a well performing position as long as the company continues to meet all our financial hurdles. While the current yield on the stock is only .9%, it is yields 5% on our cost--again another great example of why we want to own the stocks of companies who consistently raise their dividend.   The company is rated A+ by Value Line and has only a 7% debt to equity ratio. In addition, management has indicated that it intends to shrink its share base by 1% annually.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
         Yield      Growth Rate     Ratio       Since 1999

BCR          .9%             9%              13%             10
Ind Ave     1.5               9*              25               NA

                Debt/                      EPS Down       Net        Value Line
       Equity         ROE      Since 1999      Margin       Rating

BCR          7%            26%            0                29%           A+
Ind Ave     18              20              NA               8              NA

*over 50% of the companies in this industry don’t pay a dividend

Chart

Note: BCR made slow progress off its March low until recently. It has traded above the down trend off its September 2008 high (red line) but remains well below its November 2008 high. The blue line is the upper boundary of an up trend dating back to 1990.

http://finance.yahoo.com/q?s=BCR
9/09

    News on Stocks in Our Portfolios

    Walgreen’s (Aggressive Growth Portfolio) reported its fourth fiscal quarter earnings per share of $.44 versus expectations of $.39 and $.45 in the comparable 2008 fiscal quarter.

    Nike (Dividend Growth Portfolio) reported its first fiscal quarter earnings per share of $1.04 versus estimates of $.97 and $1.03 recorded in the 2009 first fiscal quarter.

    A negative article on XTO Energy (Dividend Growth and Aggressive Growth Portfolios):
    http://seekingalpha.com/article/164037-why-xto-energy-is-overvalued

Review of General Mills (Dividend Growth Portfolio)

2009-09-29T13:31:00Z

General Mills Inc. processes and markets such well known products as Cheerios, Wheaties, Total, Chex, Betty Crocker, Bisquick, Hamburger Helper, Yoplait and Colombo. The company has grown profits and dividends at a 5-8% pace over the last five years earning a 20%+ return on equity. However, the growth rate of both earnings and dividends should increase as a result of:

(1)    product innovation. GIS has introduced 400+ products in each of the last two fiscal years and the trend is expected to continue in FY2009,

(2)    an aggressive cost cutting program,

(3)    expansion of the company’s distribution network especially overseas. The company currently derives only 18% of its sales internationally versus 50% for Kellogg and 45% for Kraft,

(4)    management is committed to enhancing shareholder value via increasing dividends and share buy backs. The company has raised its dividend eight times since 2004 and has re-purchased shares in each of the last five years.

    GIS is rated A+ by Value Line, has a 51% debt to equity ratio and its stock yields 2.6%

     Statistical Summary

                 Stock      Dividend         Payout      # Increases
         Yield      Growth Rate     Ratio       Since 1999

GIS           2.6%           9%               45%             6
Ind Ave     2.8              6                  42               NA

                Debt/                   EPS Down       Net        Value Line
       Equity         ROE      Since 1999      Margin       Rating

GIS           51%            23%            2                 9%          A+
Ind Ave     40               18              NA               6            NA

*over 50% of the companies in this industry don’t pay a dividend

Chart

Note: GIS is in a firm up trend off its March low, has successfully breached the down trend off its September high (red line) and is now near the lower boundary of a long term up trend dating back to 2000 (blue line).

http://finance.yahoo.com/q?s=GIS
9/09

    News on Stocks in Our Portfolios

    This note from The Street.com on JNJ (Dividend Growth Portfolio):

Johnson & Johnson (JNJ Quote) has purchased 14.6 million shares of Crucell(CRXL Quote), or 18% of the Dutch biotechnology company, for 301.8 million euros ($441 million) under a partnership to develop flu vaccines.
J&J said the immediate focus of the collaboration will be to develop and commercialize a universal monoclonal antibody product (flu-mAb) for treating and preventing flu. The companies also will work to develop vaccines for other infectious and non-infectious diseases.

The companies also have agreed to development milestones and royalty payments based on the successful development and commercialization of products.

Under the flu-mAb collaboration, J&J's Ortho-McNeil-Janssen Pharmaceuticals division and Crucell will seek to develop a universal flu-mAb product targeting all influenza A strains, which cause seasonal flu and the current pandemic including H1N1 strains, and the bird flu strain.

J&J said the transaction is expected to dilute 2009 adjusted earnings by 2 cents to 4 cents a share.

-- Reported by Joseph Woelfel in New York

Subscriber Alert-9/28/09

2009-09-28T13:46:00Z

Subscriber Alert

    At the Market open this morning, our Portfolios will Sell one half of their positions in ING Prime Trust (PPR) and Nuveen Senior Income Fund (NSL) and re-invest the proceeds into Barclay’s Intermediate Term Fund (ITR).

    You will recall that PPR and NSL were originally purchased as alternatives to cash reserves for two reasons: (1) they provided a much higher yield than short term reserves and (2) the yield spread between long term corporate bonds and long Treasuries was still historically high and we anticipated a further reduction in that spread. Since their purchase, they have lived up to our expectations.

    However, a couple of things are concerning me: (1) over the past month the Fed has been the major buyer of long Treasuries in the weekly auctions. That has served at least partially to keep long rates low. Well, if I understand the Fed balance sheet correctly, it is running out of funds to make those purchases. Without major buying support from the Fed, this could in turn result in some upward movement in long rates [lower bond prices], (2) the more the economy improves, the closer we come to the point where the Fed has to start to tighten. Yeah, I know. I have been a skeptic about the Fed’s ability to time that process with any accuracy; but the Friday editorial by Fed member Kevin Walsh makes me believe that whether the Fed gets it right or not, investors have been put on alert that the tightening will likely come sooner than many expected and that in and of itself will discourage long Treasury buyers.

    So despite having to give up some yield short term, I think it makes sense to move to a much shorter maturity range to reduce principal risk to what is cash reserves.

Review of Suncor Energy (Aggressive Growth Portfolio)

2009-09-24T13:31:00Z

Suncor Energy is the fifth largest crude oil producer, the tenth largest natural gas producer in Canada and is a primary means of participating in the Canadian oil sands play. The company explores, acquires, develops, produces and markets crude oil and natural gas; it transports and refines crude oil; and it markets petroleum and petrochemical products. SU has grown profits at a 25%+ rate over the past ten years, while raising its dividend at a 8% rate. Earnings growth is likely to slow somewhat in coming years though dividend increases should accelerate. The company earns a 15-20%+ return on equity. SU has experienced a fall off in profits during the recent economic down turn but should see future growth as a result of :

(1)    the benefits from its merger with Petro-Canada. The combined entity will posses the largest oil sands resource, the strongest downstream asset base and the most solid exploration and production in Canada,

(2)    its aggressive capital spending program which will expand capacity improve its mining capability.

Suncor is rated A by Value Line, has a 38% debt to equity ratio and its stock pays a 1.1% yield.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
          Yield      Growth Rate     Ratio       Since 1999

SU              1.1%         9%               8%               6
Ind Ave       1.2            6                 16                 NA

                  Debt/                    EPS Down       Net        Value Line
          Equity         ROE      Since 1999      Margin       Rating

SU           38%            19%            3                 32%            A
Ind Ave    50               19              NA               15               NA

Chart

Note: SU is in a solid up trend off its March low and has successfully challenged both the November 2008 high and its down trend off its June 2008 high (red line). The blue line is the lower boundary of an up trend dating back to 1993
.

http://finance.yahoo.com/q?s=SU
9/09

Review of Sun Hydraulics (Aggressive Growth Portfolio): plus earnings reports and write ups

2009-09-23T13:34:00Z

Sun Hydraulics designs and manufacturers screw-in hydraulic cartridge valves and manifolds which control force, speed and motion as integral components in fluid power systems worldwide. Its products are used in construction, agricultural, industrial and utility equipment. The company has achieved a 20%+ return on equity over the last four years as well as generating earnings and dividend growth in excess of 25% over the last five years. SNHY revenues and profits have suffered in the recent decline but should recover to grow at an above average pace because:

(1)    its penetration into the industrial base of the emerging growth countries,

(2) the rising need to expand the infrastructure to conserve and purify water.

SNHY is rated B+ by Value Line, has no debt and its stock yields approximately 2.3%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases
            Yield      Growth Rate     Ratio       Since 1999

SNHY        2.3%           7%              29%               5
Ind Ave      2.7              4                 60                 NA

                Debt/                   EPS Down       Net        Value Line
           Equity         ROE      Since 1999      Margin       Rating

SNHY        0%             24%            1                247%          B+
Ind Ave     50                7              NA                4               NA

Chart

Note: SNHY is in a firm up trend off its March low and has successfully challenged the down trend off its July 2008 high (red line) and the November 2008 high.

http://finance.yahoo.com/q?s=SNHY
9/09

    News on Stocks in Our Portfolios

    FactSet Research (Aggressive Growth Portfolio) reported its fourth fiscal quarter earnings per share of $.74 versus $.67 in the similar 2008 quarter.

    General Mills (Dividend Growth Portfolio) reported its first fiscal quarter earnings per share of $1.25 versus expectations of $1.03.

    Positive comments on ExxonMobil (Dividend Growth Portfolio):
    http://seekingalpha.com/article/162453-exxonmobil-presents-investors-with-timely-opportunity

    Positive write up on Nuskin Enterprises (High Yield Portfolio):
    http://seekingalpha.com/article/162906-nu-skin-rapid-aging-of-world-population-portends-strong-future-growth

    Positive comments on Johnson & Johnson (Dividend Growth Portfolio):
    http://seekingalpha.com/article/162891-johnson-johnson-a-buy-on-early-expansion-weakness

Subscriber Alert-9/12/09

2009-09-12T15:44:00Z

I apologize for the delay. The server decided that it didn't know me and it took us three days to figure out how to correct the problem

SUBSCRIBER ALERT
9/10/09

The pin action yesterday was good. Our financial, retail, industrial and technology stocks were up noticeably; and these groups have been the Market leaders to date.

It looks like gold is off this morning; but the dollar continues to get trashed.

It sure looks like I was wrong in the recent moves to take money off the table. So at the risk of getting whipsawed, this morning our Portfolios are taking cash back to 16%. As a hedge, our a small part will go into US stocks; the remainder will add to gold and our foreign ETF’s.

The Dividend Growth Portfolio is establishing a new one half position in General Mills and Adding to its positions in gold and the Bric 40 (BIK).

The High Yield Portfolio is Adding to its positions in Federated Investors (FII) and the Vanguard European ETF (VGK)

The Aggressive Growth Portfolio is Adding to its positions in CH Robinson (CHRW), gold, Vanguard European ETF (VGK) and the Wisdom Tree Emerging Markets (DEM).

SUBSCRIBER ALERT
9/11/09

The S&P broke above its old resistance level on good volume and good internal strength. This market just seems to want to go higher.

Today our Portfolios are putting another 1% of their cash to work.

The Dividend Growth Portfolio is Adding to its holdings in Brown Forman (BFB), Boeing (BA) and the Bric 40 ETF (BIK).

The High Yield Portfolio is Adding to its holdings in Penn Virginia (PVR) and Oneok (OKS).

The Aggressive Growth Portfolio is Adding to its holdings in Monsanto (MON), Pepsico (PEP), Donaldson (DCI) and the Bric 40 ETF (BIK)