I purchased Hawaiian Electric (HE) today for $27.18 per share. I have had a limit buy on this stock for about 2 weeks and it hit my purchase limit today. This stock is going to be part of my Blue Chip base. It has a narrow trading range $25.50 to $28.60. It's not a stock to buy looking for a huge gain in the short term, but a nice dividend paying stock $1.24 per share (4.5 percent).
Hawaiian Electric Industries, Inc. (HEI) supplies power to 93% of the Hawaii electric public utility market through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited, and provides a wide range of financial services to individuals and businesses through American Savings Bank, F.S.B., the state’s third largest financial institution based on asset size. HEI has a long dividend history, paying dividends continuously since 1901. Currently, HEI pays a dividend of $1.24 per common share annually.
Friday, December 29, 2006
Friday, December 22, 2006
BOYD GAMING & RIO
I sold my position in Boyd Gaming (BYD) today for $44.75 per share. I held it for 1 month and realized a profit of 2.8 percent. My hope was it would be the next takeover target in the Gaming industry but with it declining over the past week from the $46 range I felt I would get out now with a small profit and look to return if it gets down to the $40 to $42 range. I made out big with Harrahs and MGM and was trying for the trifecta with Boyd.
The other position I sold today was Rio for $29.03 per share. I realized a 10.8 percent profit over a 2 month period. Companhia Vale do Rio Doce (RIO) is a huge producer of iron ore as well as nickel, potash, gold, copper, and aluminum. I am a little scared of the minerals market right here as it has had a big runup this year and with the housing market in the tank I don't look for demand to be as strong.
The other position I sold today was Rio for $29.03 per share. I realized a 10.8 percent profit over a 2 month period. Companhia Vale do Rio Doce (RIO) is a huge producer of iron ore as well as nickel, potash, gold, copper, and aluminum. I am a little scared of the minerals market right here as it has had a big runup this year and with the housing market in the tank I don't look for demand to be as strong.
CENTRAL FUND of CANADA (CEF)
I want to highlight a company I have bought and sold 12 times over the past 3 years. A business summary will explain what this company does.
Central Fund of Canada Limited, is an investment holding company, it invests in gold and silver bullion primarily in bar form. As of October 31, 2005, the company’s gold holdings were 614,242 fine oz. of physical bullion and 5,349 fine oz. of gold bullion certificates; and silver holdings were 30,728,142 oz. of physical bullion and 245,572 oz. of silver bullion certificates. Central Fund of Canada was founded in 1961 and is headquartered in Calgary, Canada.
I have found this an ideal way to play the gold and silver market without the hassle of taking physical possession of the actual commodity. The stock trades under the symbol CEF. I sold my holdings in CEF today at $9.20 per share. I will be interested again when it trades below $9.00 per share. Below I will list the 12 trades I have made in this company along with the time frame I held and profit or loss.
4 months +22 percent $570 profit
2 months +4 percent $224 profit
1 month +11 percent $369 profit
1 month +21 percent $880 profit
1 week +6.1 percent $263 profit
3 months +4.4 percent $196 profit
3 months +15.4 percent $340 profit
6 months +7 percent $185 profit
2 months +10 percent $257 profit
2 days -6.5 percent $259 loss
1 month +3.4 percent $150 profit
1 month 2 weeks +28 percent $1189 profit
Grand total for 12 trades was a $4364 profit.
I illustrate this to show a strategy you can use on a stock that trades in a fairly predictable range. As you can see from the chart above the longest time I held the stock was 6 months and the shortest 2 days. Most were in the 1 to 2 month time period. I make it a rule to sell if I get down 10 percent to hold losses to a minimum.
Central Fund of Canada Limited, is an investment holding company, it invests in gold and silver bullion primarily in bar form. As of October 31, 2005, the company’s gold holdings were 614,242 fine oz. of physical bullion and 5,349 fine oz. of gold bullion certificates; and silver holdings were 30,728,142 oz. of physical bullion and 245,572 oz. of silver bullion certificates. Central Fund of Canada was founded in 1961 and is headquartered in Calgary, Canada.
I have found this an ideal way to play the gold and silver market without the hassle of taking physical possession of the actual commodity. The stock trades under the symbol CEF. I sold my holdings in CEF today at $9.20 per share. I will be interested again when it trades below $9.00 per share. Below I will list the 12 trades I have made in this company along with the time frame I held and profit or loss.
4 months +22 percent $570 profit
2 months +4 percent $224 profit
1 month +11 percent $369 profit
1 month +21 percent $880 profit
1 week +6.1 percent $263 profit
3 months +4.4 percent $196 profit
3 months +15.4 percent $340 profit
6 months +7 percent $185 profit
2 months +10 percent $257 profit
2 days -6.5 percent $259 loss
1 month +3.4 percent $150 profit
1 month 2 weeks +28 percent $1189 profit
Grand total for 12 trades was a $4364 profit.
I illustrate this to show a strategy you can use on a stock that trades in a fairly predictable range. As you can see from the chart above the longest time I held the stock was 6 months and the shortest 2 days. Most were in the 1 to 2 month time period. I make it a rule to sell if I get down 10 percent to hold losses to a minimum.
Monday, December 11, 2006
BROWN FORMAN
After several months of watching Brown Forman (BFB) it has now come down to a price I am willing to pay for it. Today I bought BFB at $66.69 per share.
Brown-Forman is best known for producing Jack Daniel's, the world's top-selling brand of whiskey, has fallen out of favor with investors. The stock hit a 52-week low Tuesday, closing at $66.06, or some 20% below its August highs.
The 136-year-old company also owns liquor brands like Southern Comfort and Finlandia vodka, in addition to Fetzer wine and Korbel champagne. The Hartmann luggage business also accounts for about 1.5% of Brown-Forman's total revenue and is reportedly up for sale.
The consensus analyst estimate is for the company to grow earnings 10% in fiscal 2007 to $3.15 a share, marking the fourth straight year of double-digit profit improvement.
The company posted fiscal second-quarter (ended October) results Nov. 30. Brown-Forman earned 92 cents a share, up 5% from the previous year, but 4 cents shy of analyst estimates. This shortfall came even though management produced 10% year-over-year revenue growth during the quarter, to $735 million.
The reason for the shortfall: The company reported soft overseas sales of its Jack Daniels brand, especially in the U.K., China and Spain. But despite fears of increased foreign competition, I believe that Brown-Forman will benefit from a weaker U.S. dollar. In fiscal 2006, 41% of the company's revenue was generated overseas.
Because of this, its product will look cheaper in Europe and Asia, and money earned overseas will be worth more when converted back into American dollars. In the U.S., shipment volume missed quarterly targets as wholesalers reportedly worked down inventory.
Brown-Forman also recently increased its bet on tequila, which is seeing the fastest-growing demand of any type of alcohol in the U.S., up 7.8% last year. The company bought Mexican tequila-maker Grupo Industrial Herradura in August for $876 million.
Brown-Forman boosted its quarterly dividend to 30.25 cents a share Nov. 16. Management has now raised its payout 21 consecutive years, and the company's 1.8% yield is on par with what the average stock in the S&P 500 offers.
Despite its operating woes in the most recent quarter, I believe that Brown-Forman is attractive at current levels. The company continues to post solid revenue growth both organically and through acquisitions, and the stock has already come down enough to reflect one disappointing quarter.
Management has pledged its confidence behind the stock with the recent dividend boost, and I believe that Brown-Forman's consistent double-digit earnings growth will get back on track in the coming quarters.
Brown-Forman is best known for producing Jack Daniel's, the world's top-selling brand of whiskey, has fallen out of favor with investors. The stock hit a 52-week low Tuesday, closing at $66.06, or some 20% below its August highs.
The 136-year-old company also owns liquor brands like Southern Comfort and Finlandia vodka, in addition to Fetzer wine and Korbel champagne. The Hartmann luggage business also accounts for about 1.5% of Brown-Forman's total revenue and is reportedly up for sale.
The consensus analyst estimate is for the company to grow earnings 10% in fiscal 2007 to $3.15 a share, marking the fourth straight year of double-digit profit improvement.
The company posted fiscal second-quarter (ended October) results Nov. 30. Brown-Forman earned 92 cents a share, up 5% from the previous year, but 4 cents shy of analyst estimates. This shortfall came even though management produced 10% year-over-year revenue growth during the quarter, to $735 million.
The reason for the shortfall: The company reported soft overseas sales of its Jack Daniels brand, especially in the U.K., China and Spain. But despite fears of increased foreign competition, I believe that Brown-Forman will benefit from a weaker U.S. dollar. In fiscal 2006, 41% of the company's revenue was generated overseas.
Because of this, its product will look cheaper in Europe and Asia, and money earned overseas will be worth more when converted back into American dollars. In the U.S., shipment volume missed quarterly targets as wholesalers reportedly worked down inventory.
Brown-Forman also recently increased its bet on tequila, which is seeing the fastest-growing demand of any type of alcohol in the U.S., up 7.8% last year. The company bought Mexican tequila-maker Grupo Industrial Herradura in August for $876 million.
Brown-Forman boosted its quarterly dividend to 30.25 cents a share Nov. 16. Management has now raised its payout 21 consecutive years, and the company's 1.8% yield is on par with what the average stock in the S&P 500 offers.
Despite its operating woes in the most recent quarter, I believe that Brown-Forman is attractive at current levels. The company continues to post solid revenue growth both organically and through acquisitions, and the stock has already come down enough to reflect one disappointing quarter.
Management has pledged its confidence behind the stock with the recent dividend boost, and I believe that Brown-Forman's consistent double-digit earnings growth will get back on track in the coming quarters.
Friday, December 8, 2006
Blue Chip Base
When building a stock portfolio I highly recommend building what I call a Blue Chip base. These are stable stocks which pay a dividend of at least 2 percent and have strong brand names. Usually these stocks do no make wild swings but are steady growing companies which over the long term should return 8 to 12 percent returns with the dividends. Below I have listed 4 stocks that I own as a Blue Chip base.
General Electric (GE) 2.8 percent dividend 21.44 P/E
Johnson & Johnson (JNJ) 2.3 percent dividend 17.36 P/E
Coca Cola (KO) 2.6 percent dividend 21.91 P/E
Altria Group (MO) 4.1 percent dividend 15.71 P/E
I will use Coca-Cola as an example of how a blue chip should work over the long term. I bought 100 shares of KO in Nov. 2004 for $39.66 per share. Today KO closed at $48.91 per share and I own 104.91 shares because I reinvested the dividends. Todays value is $5130.97 and my cost basis was $3986 including broker fees. This equals a profit of $1144.97 if I were to sell today, which I won't because it is a long term holding. This is a return of 28.7 percent over a two year period which equals 14.3 percent return per year. Not a bad return for a relativly safe company. The key to this strategy is to compound your dividends by reinvesting them. If you notice the extra 4.91 shares I reinvested are now worth $239.65.
To show this strategy over a long period of time read this example.
If an investor purchased $40 of Coke stock in 1919 and spent all the dividends, the total value of his investment at year end 1999 would be worth $298,218. If the same investor instead chose to reinvest his dividends in Coke his investment would be worth $5,866,413.00. Yes 5.8 Million dollars on a $40 dollar investment. Seems impossible but it's not with the power of compond interest.
The Rule Of 72 should be taught in every school. Every young person should understand compound interest and the simple secret to financial success, before they begin earning, investing and spending.
Step 1 of 2: How long does it take my money to double?
This step teaches you how to determine the number of years it will take for your investment or debt to double in value.
Divide the number 72 by the percentage rate you are paying on your debt, or earning on your investment. Here are two examples...
You borrowed $1,000 from your friend, who is charging you 6% interest. 72 divided by 6 is 12. That makes 12 the number of years it would take for your debt to your friend to double to $2,000 if you did not make any payments.
You have a savings account with $500 deposited in it. It earns 4% interest from the bank. 72 divided by 4 is 18. It will take 18 years for your $500 to double to $1,000 if you don't make any deposits.
Remember: 72 divided by the Interest Percentage is the number of years it takes to double.
Step 2 of 2: How many times will my money double?
This step teaches you how important it is for your money to double as many times as possible, and for your debts to double as few times as possible.
Determine how many years you will keep your investment before cashing it in. Divide that by the number of years it will take to double each time, the number you figured out in step one.
Now look at what happens to your money each time it doubles...
$1 ... $2 ... $4 ... $8 ... $16 ... $32 ... $64 ... $128 ...
You can see that it makes a big difference how many times your money doubles. If you can make it double only a few more times by making just slightly better investments, you can end up with many times more money at retirement, or whenever you cash in your investment.
Think about how fast your debts can double with high interest rates, such as those charged on most credit card accounts.
General Electric (GE) 2.8 percent dividend 21.44 P/E
Johnson & Johnson (JNJ) 2.3 percent dividend 17.36 P/E
Coca Cola (KO) 2.6 percent dividend 21.91 P/E
Altria Group (MO) 4.1 percent dividend 15.71 P/E
I will use Coca-Cola as an example of how a blue chip should work over the long term. I bought 100 shares of KO in Nov. 2004 for $39.66 per share. Today KO closed at $48.91 per share and I own 104.91 shares because I reinvested the dividends. Todays value is $5130.97 and my cost basis was $3986 including broker fees. This equals a profit of $1144.97 if I were to sell today, which I won't because it is a long term holding. This is a return of 28.7 percent over a two year period which equals 14.3 percent return per year. Not a bad return for a relativly safe company. The key to this strategy is to compound your dividends by reinvesting them. If you notice the extra 4.91 shares I reinvested are now worth $239.65.
To show this strategy over a long period of time read this example.
If an investor purchased $40 of Coke stock in 1919 and spent all the dividends, the total value of his investment at year end 1999 would be worth $298,218. If the same investor instead chose to reinvest his dividends in Coke his investment would be worth $5,866,413.00. Yes 5.8 Million dollars on a $40 dollar investment. Seems impossible but it's not with the power of compond interest.
The Rule Of 72 should be taught in every school. Every young person should understand compound interest and the simple secret to financial success, before they begin earning, investing and spending.
Step 1 of 2: How long does it take my money to double?
This step teaches you how to determine the number of years it will take for your investment or debt to double in value.
Divide the number 72 by the percentage rate you are paying on your debt, or earning on your investment. Here are two examples...
You borrowed $1,000 from your friend, who is charging you 6% interest. 72 divided by 6 is 12. That makes 12 the number of years it would take for your debt to your friend to double to $2,000 if you did not make any payments.
You have a savings account with $500 deposited in it. It earns 4% interest from the bank. 72 divided by 4 is 18. It will take 18 years for your $500 to double to $1,000 if you don't make any deposits.
Remember: 72 divided by the Interest Percentage is the number of years it takes to double.
Step 2 of 2: How many times will my money double?
This step teaches you how important it is for your money to double as many times as possible, and for your debts to double as few times as possible.
Determine how many years you will keep your investment before cashing it in. Divide that by the number of years it will take to double each time, the number you figured out in step one.
Now look at what happens to your money each time it doubles...
$1 ... $2 ... $4 ... $8 ... $16 ... $32 ... $64 ... $128 ...
You can see that it makes a big difference how many times your money doubles. If you can make it double only a few more times by making just slightly better investments, you can end up with many times more money at retirement, or whenever you cash in your investment.
Think about how fast your debts can double with high interest rates, such as those charged on most credit card accounts.
Thursday, December 7, 2006
November Trades
November purchases
11/01/06 Peabody Energy Corp. (BTU) $40.78
11/01/06 Companhia Vale do Rio Doce (RIO) $26.05
11/07/06 Whole Foods (WFMI) $46.38
11/09/06 BlackRock Global Opportunities Equity Trust (BOE) $28.29
11/24/06 Enterra Energy Trust (ENT) $9.16
11/27/06 Boyd Gaming (BYD) $43.49
12/06/06 United States Oil (USO) $53.75
November sales
11/27/06 Whole Foods (WFMI) $48.36 3.8 percent profit Time held 20 days
11/01/06 Peabody Energy Corp. (BTU) $40.78
11/01/06 Companhia Vale do Rio Doce (RIO) $26.05
11/07/06 Whole Foods (WFMI) $46.38
11/09/06 BlackRock Global Opportunities Equity Trust (BOE) $28.29
11/24/06 Enterra Energy Trust (ENT) $9.16
11/27/06 Boyd Gaming (BYD) $43.49
12/06/06 United States Oil (USO) $53.75
November sales
11/27/06 Whole Foods (WFMI) $48.36 3.8 percent profit Time held 20 days
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