Recent gyrations in the market have caused more than one investor some heartburn. Each day I hear disgruntled comments due to losses and see many people looking for an out. "The fact is people are scared and the only thing they're doing is selling," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working."(a) As a dividend and value investor, these are the times we live for - value priced stocks and golden dividends.
Below are four stocks that recently dipped below my target buy prices (before adding any quality premiums; yields, closing prices and, NPV MMA Diff. are as of 10/06/2008):
Sysco Corp (SYY) - 2.96% yield
Buy Below: $32.62
10/06 Close: $29.41
NPV MMA Diff: $21,180
I last discussed SYY on August 28, 2008 when it's yield was 2.79%.
Eli Lilly and Co (LLY) - 4.55% yield
Buy Below: $42.97
10/06 Close: $38.42
NPV MMA Diff: $6,922
When I last discussed LLY on September 23, 2008, it was trading at $46.69 with a $45.12 buy below price (including a 5% quality premium).
PepsiCo, Inc. (PEP) - 2.46% yield
Buy Below: $70.61
10/06 Close: $66.64
NPV MMA Diff: $5,155
PEP was last reviewed on May 24, 2008 and was trading at $68.26 at that time.
Johnson & Johnson (JNJ) - 2.78% yield
Buy Below: $67.70
10/06 Close: $64.50
NPV MMA Diff: $3,766
I last discussed JNJ on August 28, 2008 when it's yield was 2.60%.
Fear, panic and market meltdowns are good for the long-term investor. It provides the perfect circumstances for us to purchase shares in quality companies at discounted prices - if we are willing to seize the opportunity.
As always, you should do your own research and reach your own conclusion before buying or selling any security.
Disclosure: Long in SYY, LLY, PEP and JNJ
(a) Source: AP via Yahoo Finance
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PEP and JNJ are really expensive stocks relative to what you can get out there in today's crazy markets.
All it will take for PEP to drop is an earnings report that does not chalk up to their lofty valuation at 19x earnings. These stocks are both overbought in the ongoing flight to safety that has been going on. Long term value investors should avoid expensive consumer staples in bear markets IMO.
MG: I would agree relative to the market PEP and JNJ are high. However, relative to their history (P/E and Yield) they are low. In these markets, there is a premium for quality.
Best Wishes,
D4L
This is a once in a life time to buy stcok. LLY JNJ r the best in that lot of 4 stocks. There r so many great value's out. If I only had a lot of cash to buy with. But that is always the problem :)
Nothing like a cold Pepsi, Tylenol and Bandaid to comfort your losses in the market when you've been hit, dragged, thrown or turned upside down with all the volatility!