Don’t Trust This Utility’s Dividend

Smart investors consider more than just the dividend of a stock. They also consider the principal risk. If the principal risk is greater than the dividend yield then the dividend is of no real value. I see the principal risk of this stock at more than 15% with a fair value closer to $50 – after adjusting for the pension accounting shenanigans.

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Less Than 1% of Managers Deliver Alpha: Here Are Details

“New research on the performance of institutional portfolios shows that after risk adjustment, 24% of funds fall significantly short of their chosen market benchmark and have negative alpha, 75% of funds roughly match the market and have zero alpha, and well under 1% achieve superior results after costs—a number not statistically significantly different from zero.”

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The Danger Zone Pick: 9/17/12

The impact on valuation: instead of a fair value in the mid $50s, I now see it in the low $40s – about 30% lower than where the stock is today. 30% dwarfs the 4% dividend yield.

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The Danger Zone Pick: 9/11/12

Check you the latest Danger Zone interview on a company employing misleading merger accounting.

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September’s Most Dangerous Stocks Report Released to Public Today

September’s Most Dangerous Stocks report is now available to the public. 6 new stocks were added this month.

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September’s Most Attractive Stocks Released to the public today

September’s Most Attractive Stocks list is now available to the public. 13 new stocks were added this month.

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“Earnings Accretion” Is a Mirage: Sell HOLX

Sometimes when I analyze a stock, I am reminded of the marvels that investment bankers can do for their valuations, especially if the company is a good client. With its recent $3.7 billion acquisition of Gen-Probe, I would bet that Hologic (HOLX) made its investment bankers quite happy. Investors, on the contrary, should sell the stock and not be happy with that deal.

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The Danger Zone Pick: 9/4/12

My Danger Zone pick this week is also my Stock Pick of the Week. Listen to all the details in my weekly interview with MarketWatch’s Chuck Jaffe.

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The High-Low Fallacy: Don’t Believe the Merger Hype

One of the biggest misconceptions in the investing world is that the merit of an acquisition should be judged by whether or not it is “earnings accretive”. The impact of an acquisition on a company’s accounting earnings is not indicative of its economic value to shareholders.

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A Value Investor’s Classic: Phillip Morris (PM)

My last recommendation was new to the value-investing club (see Buy CSCO: A Treat For Value Investors). This week, I bring back a classic value stock: Phillip Morris (PM).

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The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?

As detailed in “How To Make Money Picking Stocks”, quantifying the future cash flow expectations embedded in stock prices is critical to making an informed investment decision.

My mentor, Michael Mauboussin, in his latest piece: ” The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?” explains more eloquently than I that the key to successful investing is to systematically distinguish between price and value – two very distinct concepts.

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My Top Picks on MoneyLife’s Market Call

I explain key details behind our uniquely rigorous research process.
I also cover my top picks and pans in the “Hold It Or Fold It” portion of my interview with host Chuck Jaffe.

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The “Danger Zone” for Week of 8/27/2012

Really enjoyed my first edition of the “Danger Zone” for Chuck Jaffe’s MoneyLife radio show.
MGM Grand (MGM) is in the first stock to put in the Danger Zone.

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Citigroup (C) and Bank Of America (BAC) Dropped from Most Dangerous List

For the first time in many months, both Citigroup (C) and Bank Of America (BAC) are not on our Most Dangerous Stocks list as of the release of the August report.

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Free report for Ask Matt, Exxon Mobil (XOM) – Very Attractive Rating

Exxon was my Stock Pick of the Week last week. Here is an excerpt from my article: “Buying Exxon Mobil (XOM) now is one of the easiest calls in the market these days…”

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Buy CSCO: A Treat For Value Investors

Seldom do value investors get a chance to have their cake and eat it too. And that is exactly what we have with Cisco (CSCO) stock.

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Slow & Steady Wins The Race: Buy XOM

Sometimes, picking stocks is easy if you focus on the basic principles of cash flows, valuation and competitive advantage.

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Risk Gets Lighter, Opportunity Gets Bigger for Weight Watchers

One of the best “win-win” combinations in today’s world is Weight Watcher International’s (WTW) stock.

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Make Money By Losing Weight: Buy WTW

One of the best “win-win” combinations in today’s world is Weight Watcher International’s (WTW) stock.

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Starbucks (SBUX) Plunge Is Beginning Of Bad Trend

When stocks are priced for perfection as SBUX is, they are very risky. Just look at today’s 10%+ drop in SBUX shares in a market that is up 1%.
My regular readers know that I have, for a while, warned investors that SBUX was overpriced and due for a correction. See “Get Off the SBUX Bandwagon Before It Crashes”.

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