Sell in May?
My Current Retirement Project
Note on the TSX – Toronto Stock Exchange.
You may have noticed that the TSX has had a reasonable run this year, up almost 4%. However the stocks that I invest in and recommend – the strong, dividend growers – have not performed as well. The spill-over from oil prices combined with the lower Canadian interest rates, have combined to suppress these stocks. However they still produce good and growing dividends. So what is pushing the TSX up? It is the more marginal, speculative companies that I would never touch. One prime example is Valeant Pharmaceuticals Intl Inc (VRX). This obscure company has become one of the larger components of the TSX. VRX is trading near $270 per share, up from it’s 52 week low of $116. It is trading at a PE ratio of 75, pushing it into the territory that Nortel (anyone remember Nortel?) held before it collapsed to a penny stock and filed for bankruptcy. This type of company is distorting the index much like Nortel did in the late 1990s. Nortel, now defunct, accounted for 30% of the TSE in the 1990s.
So if your blue chip stocks are not performing as well as the general market, don’t fret. They are still solid stocks producing growing dividends. Hang tough.
Stock Ranking – looking to cull
I have used my usual rudimentary scoring scheme to rank the stocks in order of best to buy now to least best to buy now. I use a variety of equally weighted factors, such as dividend yield, dividend growth, PE, Beta, price change, etc. The lower the score the better, as far as purchasing goes. I am looking at culling some of my holdings, so I will look at the higher scores for selling. (note: the stock price date is May 4)
On the “buy” side there are a few oil industry companies. It looks like oil has bottomed out and rebounded a bit, but there is a chance it could drop again before a real recovery. I wouldn’t advocate selling your oil stocks now, but I’m not sure this is the right time to buy, even though they seem to be rated highly.
With that said, COP sits in the top 10 on the US stocks, so in spite of ValueLine dropping it to A+, I may hang on to it for a bit. If nothing else, I am getting a good cash dividend. Click HERE for one analyst’s opinion on COP.
I will update you on any changes I make. I normally sell in May and hold the cash until fall for purchasing. However the last couple of years have not produced the expected summer doldrums, so any selling I do will likely just be replaced with a position in an existing holding.
(The lower the score, the better to buy now, the high scores are candidates for culling.) Note: if anyone wants my spreadsheet, just send me your email address.
|Canadian Stocks||US Stocks|