September 2014 – time to buy???

 Three months of retirement

Family Time

Teaching my grandson to write and publish books. First project, his grade 3 school stories. This is what retirement is about for me.

 

 Mid month update

Below see a couple of items for your review.

I am still waiting for a buying opportunity, which seems to be slow in coming.  I have a list of US buying possibilities below.  I will try to do a similar listing of Canadian stocks in the next week or so.

The Strategy – does it work?

Thanks to Peter M of Doha for this article reinforcing the strategy:

http://www.thestar.com/business/personal_finance/2014/09/03/how_to_earn_a_10_rate_of_return_on_your_investments.html

ADP update

Mark in Doha sent me an article about ADP spinning off its retail arm.  Thanks Mark.

You will find lots of commentary on this one.  It is not too dissimilar to COP spinning off its retail operations into PSX.  I received shares in PSX which I sold later as it did not fit my criteria.  COP continued to perform very well and still fits my criteria for being in my portfolio.

In this case those who own shares in ADP on September 30, will receive shares in the new company.  There will be value transferred, so the share price in ADP should drop by the amount of the value in the new shares.  In other words, when you add your two share holdings together, the value will be roughly the same as your previous holding of ADP.

Some analysts (eg Moody’s) have seen this as a negative and downgraded ADP.  ValueLine still has it rated as A++, but they have suspended their timing rating due to this action.  Thus ADP does not appear on the list below.  The market, on the other hand, seems to view this as a positive move and the share price has moved up.

If you don’t own ADP, I would not recommend a buy at this point.  If it is in your portfolio you have options:

1) Sell now and take your gains (it is never wrong to solidify gains)

2) Hold until spin off takes place then sell both stocks – hopefully at more than option 1

3) Hold until spin off takes place and then sell the shares you get on the spin off, keeping ADP (this is what I did with COP)

You have until Sept 30 to make that decision.  I am leaning towards option 3, but I have contemplated selling ADP anyway to try to improve my dividend yield on my portfolio as this represents my retirement income.  I may decide at the last minute to sell, solidify my gains and sit on the cash for a buying opportunity.

 

Fall Purchases

With the market still so high, I am reluctant to embark on my fall buying binge.  That said, I did a rough ranking of stocks in priority of purchasing now.  This is not a comprehensive list of good portfolio holdings (eg ADP is not in, nor is INTC), but it it my attempt to do market timing for purchases.  Here is the list with the scores I assigned.  Let me know if you want the full spreadsheet.  The higher the score, the less you would want to buy now, while a lower score favours buying.  Not scientific, nor history based, but and attempt anyway.  Although most of these would be good to have in a portfolio, I likely wouldn’t recommend buying anything below the top ten right now.

Ticker Score
XOM             93
LMT             93
CVX             94
BAX             98
KMB             98
VZ          100
MCD          100
TOT          101
MSFT          106
UL          106
DE          108
SJM          109
WMT          111
TRV          112
RDSB          113
CSCO          117
RTN          117
MRK          119
JNJ          121
PFE          121
KO          121
T          122
NOC          125
IBM          126
PG          131
INTC          134
PEP          135
HD          137
BMY          137
QCOM          139
NSRGY          139
DD          144
BA          144
CL          152
ACN          155
TXN          159
MMM          162
EMR          166
UTX          167

 

 

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About borgford

Feel free to contact me with questions: brianborgford@hotmail.com
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