2023-04-20 10:58:44 ET
Summary
- My weekly articles are getting to be too time-consuming, so my goal is to write a separate weekly update for the watchlist.
- The primary purpose of Watchlist articles is to give readers actionable information instead of a recap which often has information 1-2 months old.
- We recently mentioned that Boston Properties is out and we explain why it's been replaced with Tyson.
- Updated Watchlist comparisons and added screenshots of the trades that have been made as well as pending limit trades.
The Watchlist consists of companies that we think look interesting for one reason or another. In most cases, I have a modest familiarity with the company including having read recent quarterly earnings releases and reviewed various investor presentations and annual reports.
When a name like Boston Properties (BXP) is removed it's often because I have learned information about the company that makes it less attractive and often explains why the company is currently trading at what looks like a major discount.
Why I Removed Boston Properties
In the case of BXP, we initially pointed out that it had a fairly conservative payout ratio of 52.1% based on funds from operations (FFO). Although this is true, fellow SA Contributor Paul Drake pointed out that it would be more accurate to use adjusted funds from operations (AFFO) because this takes into account the maintenance costs of the buildings over the useful life of the building. This small change resulted in the payout ratio jumping from 52.1% to 79.5%. Given that office REITs are in decline, even BXP's above-average portfolio of attractive properties looks like a much higher risk than it is worth.
With BXP removed, I decided to focus on consumer staples which was a challenge due to the fact that this sector has performed quite well as a whole with many of the top-performing companies trading at 52-week highs.
Why I Added Tyson Foods
What initially caught my eye about Tyson Foods (TSN) is that the company is trading close to its 52-week low and its current price has served as a strong base since 2016 (the stock price rarely drops below $60/share). Upon further investigation, we would also see that the dividend rarely provides a yield greater than 3% and has typically traded at a yield closer to 2% over the last five years. TSN currently pays a quarterly dividend of $.48/share per quarter for a total of $1.92/share annually so if the dividend yield was to revert back to its recent midpoint that would result in the stock price of $96/share (this makes sense given that the 52-week high stands at $99.54/share).
Long-term dividend metrics are also favorable with a current payout ratio of 27.7% and a five-year dividend growth rate of 12.4%.
On March 29th, a total of three articles were published by fellow SA Authors about TSN with ratings of Buy, Hold, and Sell. The fact that there were three different ratings all on the same day makes for an interesting enough situation that it was worth adding TSN to the Watchlist.
Watchlist
Watchlist - Reasonably Priced (CDI) Watchlist - Dividend Metrics (CDI) Watchlist - Debt Metrics (CDI)
The last image is slightly different because it includes two separate time frames to look back at. These are intended to show readers how much a stock price has moved over a certain period of time.
Watchlist - Share Price Comparison (CDI)
This shows that almost all of these stocks rallied going into the end of March but the rally had mixed results in the first half of April.
April Trades
Below are screenshots of the trades made in John and Jane's Taxable and Retirement portfolios since the beginning of April.
Taxable Account - April Trades (Charles Schwab) Jane's Traditional IRA Account - April Trades (Charles Schwab) Jane's Roth IRA Account - April Trades (Charles Schwab) John's Traditional IRA Account - April Trades (Charles Schwab)
There have been no trades made in John's Roth IRA during the month of April.
Open Trades
Watchlist stocks aren't the only stocks that interest me but it's the only list I have that track stocks John and Jane don't currently have in their portfolio. We use limit trades on a regular basis and the purpose of these trades is dependent on market conditions and potential opportunities. I think it is worth noting that many of these trades never materialize because they expire or I cancel them.
Purchases - If I have a very specific price point for a stock I will set a purchase limit trade and most of these will have execution orders that last for up to six months.
Sales - If you read the monthly updates for John and Jane you will notice occasional limit trades where we have chosen a desired price point to sell shares at. This is especially useful when we are trimming back a high-cost portion of a position to lower John and Jane's exposure. These also have the same (up to) six-month expiration.
Here are some of the more notable limit trades we have in play. Let me know in the comment section if there are any questions about these trades.
Jane Traditional IRA - Open Trades 2023-4-17 (Charles Schwab)
**The trade for DLR is highlighted in red because this was adjusted from a limit price of $125/share sale price down to $115/share sale price. The size of the limit sale has also been increased to 30 shares as shown at the top of the list.
Jane Roth IRA - Open Trades 2023-4-17 (Charles Schwab) John Traditional IRA - Open Trades 2023-4-17 (Charles Schwab) John Roth IRA - Open Trades 2023-4-17 (Charles Schwab)
Conclusion
I hope this article gives additional insight into the method behind the madness and I look forward to answering questions in the comments. My goal is to keep these articles under 1000 word count and provide screenshots that give actionable changes that readers can either take advantage of or at least see in real-time the changes (or potential changes) that may take place in future article updates.
John and Jane are currently long on the following positions in the watch list: American Tower ( AMT ), Avient ( AVNT ), Crown Castle International ( CCI ), Enbridge ( ENB ), EOG Resources ( EOG ), East West Bancorp ( EWBC ), Honeywell ( HON ), Helmerich & Payne ( HP ), Intercontinental Exchange ( ICE ), Nordson ( NDSN ), Sun Communities ( SUI ), T. Rowe Price ( TROW ), WestRock Company ( WRK ).
For further details see:
April Watchlist: Adding Tyson Foods To The List And Trade Updates