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Getting a discount of 10%, 20% or even more is awesome. When it is on a big ticket item like a automobile, there are a lot of dollars to be saved and people have been known to drive great distances to receive the discount. Everyone loves a sale!
Well, maybe not everyone. When stocks go on sale it seems to depress a large number of market participants. However, for those of us that like buying stocks at a discount, a market pullback provides us a little relief.
My fair value model was constructed back in 2007 at a time many stocks had already fell from grace. It was designed to focus on only the best companies. I took an extremely conservative stance with my model. Ultimately, determining fair value requires the investor to accurately forecast free cash flow, dividend growth rates and other metrics on a forward looking basis, which is no simple task.
This week, I screened my dividend growth stocks database for select stocks trading at a double-digit discount (based on 4/27/18 closing price). The results are presented below:
Medtronic PLC (MDT) is a global medical device manufacturer with leadership positions in the pacemaker, defibrillator, orthopedic, diabetes management and other medical markets.
Discount: 14.3% Yield: 3.1%
Franklin Resources Inc. (BEN) is one of the world’s largest asset managers, serving retail, institutional and high-net-worth clients.
Discount: 24.5% Yield: 5.0%
Aflac Incorporated (AFL) provides supplemental health and life insurance in Japan and the U.S. Products are marketed at work sites and help fill gaps in primary coverage.
Discount: 28.0% Yield: 3.0%
Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie’s key drug is Humira for rheumatoid arthritis.
Discount: 42.0% Yield: 4.1%
Lowe’s Companies, Inc. (LOW) sells retail building materials and supplies, lumber, hardware and appliances through more than 1,850 stores in the U.S. and Canada.
Discount: 53.0% Yield: 2.3%
As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for low yields and/or poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long AFL, ABBV, my Dividend growth Stock Portfolio.
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Tags: MDT, BEN, AFL, ABBV, LOW,
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