The bad news for American Express over the last 18 months has been large and steady. And so too has the share price decline. We believe the bad news is now in the rear view mirror (knock on wood), there is good reason to be optimistic, and the shares could easily rise 30%. We own shares in our Blue Harbinger Disciplined Growth portfolio.
Union Pacific: Back on Track with Room to Run
After suffering significant stock price declines from over $120 per share in early 2015, to around $67 in January 2016, we believe Union Pacific is back on track, and it has significant upside price potential ahead. The market is overly pessimistic, the market cycle is slowly beginning to turn, and the dividend (2.5%) is attractive. If you are a long-term investor, Union Pacific is worth considering. We own it.
AstraZeneca: Big Dividend, Big Long-Term Prospects
We are contrarians with regards to AstraZeneca. Whereas the market consensus is becoming increasingly negative (the stock is down 12.4% this year while the S&P 500 is up 2.7%), we believe the patent loss fears are overdone, and the market is not recognizing the dramatic long-term potential of the AstraZeneca pipeline. If you are a diversified long-term income-focused investor, AstraZeneca is worth considering.
OneBeacon: 10 Reasons to Own this Big Yielder
OneBeacon (OB) is a boring, low beta, low volatility, property & casualty insurance company that offers a big safe dividend yield (6.4%). Because of the nature of its business, it is a great diversifying “widows and orphans” stock, and it that can be very valuable within the constructs of a diversified, income-focused investment portfolio. The stock is down 8.5% in the last year while the S&P 500 is essentially flat over the same time period, thus creating a more attractive entry point for long-term, income-hungry investors.
CenturyLink: Big Dividend (7.9%), Attractive Price
CenturyLink is a big dividend (7.9%) telecom stock that is trading at an attractive price. The stock has been beat up over the last month (Mr. Market didn’t like earnings) and over the last several years (it cut its dividend in 2013, and market volatility has increased). We believe the market is overly negative on this stock, and now is a compelling time to add shares because the price is down, the valuation is attractive, and the dividend yield is outstanding.
Williams Partners: Turmoil Creates Opportunity
We believe the market has overreacted to the challenges Williams faces (e.g. low energy prices, counterparty credit/default risk, management reorganization, and rising interest rates), under-reacted to the value it creates (e.g. energy price agnostic fee business, the value of its assets, and its future growth potential), and it could be a valuable addition to the higher risk portion of a diversified, income-focused, investment portfolio.
Ladder Capital: Fear Highlights Risk, Creates Opportunity
Ladder Capital an mREIT with a big +9% dividend yield, (~+20% dividend yield if you count the December special dividend). Ladder’s price has fallen 30% in the last year for a variety of reasons (e.g. fears related to commercial real estate prices, rising interest rates, widening credit spreads, decreased CMBS issuance, and increasingly challenging regulations). But we believe this maybe creating opportunity...