JT’s DAILY (WEEKLY as of 12/9/2013) BLOG for Month Of May 2014

Note: All previous month's posts are available in the archives, as noted above. 

All postings for the month are available here, sorted in descending order - i.e. most recent at the top.

All times are Eastern Time - same as the NYSE

1st Posting for Week Beginning Tuesday 05/27/2014 08:30 AM

Stocks fell hard on Tuesday of last week, then rebounded on Wednesday, making it all back and more, and eked out modest gains on the other three days of the week. The end result was a positive week for all of the major averages, with the S & P 500 closing above 1900 for the first time, marking a noteworthy milestone, at least symbolically. So, once again, stocks have rebounded from what had looked like a looming correction a little over three weeks ago, notching yet another false alarm.

My dividend payers just keep on paying, thank goodness. Ex-dividend dates to be reached this week are as follows, by date:

05/28/2014

Molson Coors (TAP), yield 2.30%.

Total S A (TOT), yield 4.56%, which is before 30% withholding imposed by France.

Prospect Capital (PSEC), yield 13.12%. PSEC pays monthly. PSEC has taken a tumble lately because of an SEC ruling regarding the firm’s accounting, which may require some re-statements. I saw this as a buying opportunity in a market with very few such opportunities, so I added shares below $10 a few days ago.

Transocean (RIG), yield 7.05%. RIG is a new Tier3 holding.

05/29/2014

McDonalds (MCD), yield 3.18%.

Kellogg (K), yield 2.72%.

NextEra Energy (NEE), yield 3.01%.

Northrop Grumman (NOC), yield 2.33%.

Realty Income (O), yield 5.10%.

Safety Insurance Group (SAFT), yield 4.58%.

As can be seen, with the exception of high-yield higher-risk entities, such as BDCs, quality blue chip dividend payers are struggling to yield as much as 3%. If BDCs, Mortgage REITs, and unproven, new MLPs are too risky for one’s risk threshold, high quality property REITs, such as Realty Income (O), may be a reasonable compromise yield play.  

There were only a few new upgrades / downgrades on my stocks last week:

AT&T (T) was upgraded from Market Perform to OutPerform at Raymond James.

Ensco PLC (ESV) was downgraded from Buy to Hold at Jeffries. ESV is a new addition to my Tier3 list.

Kimberly Clark (KMB) was downgraded from Buy to Hold at Argus.

CenturyLink (CTL) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

General Dynamics (GD) was downgraded from Buy to Hold at Argus.

Digital Realty Trust (DLR) was downgraded from Buy to Hold at MLV & Co.

Vodafone (VOD) was downgraded from something to Neutral at Redburn. The notice did not specify what the rating was prior to the downgrade.

Fifth Street Capital (FSC) was initiated at Hold at MLV & Co.

Gladstone Investment (GAIN) was downgraded from Buy to Neutral at Ladenburg Thalman.

None of my stocks will be reporting earnings this week, other than SDRL, another new Tier3 firm. However, I misspoke when I said the same thing a week ago. One name on my lists did report last week:

Medtronic (MDT) reported Tuesday, May 20th that FQ4 EPS was $1.12, in-line. Revenue of $4.57B, up 2.5% Y/Y, missed by $10M. MDT now yields under 2%. Further, with the unsettled state of the entire medical arena just now, and the extent of government involvement, I would be leery of any medical firm. Still, for now, I will leave MDT on my Tier2 list.

BDCs have been in the doldrums lately because of a decision by S&P to drop them, as a group, from the S&P 500. Further, it appears they may also be dropped from the Russell 2000 small cap index. There are some buying opportunities in the sector as a result. These stocks will face headwinds for a time, however. Another group, one that I have stayed away from previously, is offshore oil well contract drillers. While most firms in the space pay dividends, yields are not excessive, and volatility has been a concern. I am adding three firms in this category to my Tier3 list, which represents high risk, high yield firms, or firms with outsize gain (or loss) potential. The three are Ensco PLC (ESV), yielding 5.84%, Transocean (RIG), yielding 7.05%, and Seadrill Limited (SDRL), yielding 10.78%. SDRL actually will be reporting earnings on 5/28/2014, before the open. All of these firms’ dividends could be in jeopardy if business conditions deteriorate further in the offshore contract drilling sector. Investor concerns about the earnings and sustainability of the dividends are the reason these firms are “on sale”, which is in turn the reason they have come up on my radar. Like all Tier3 firms, one should start small, tread cautiously, and set a firm limit to one’s total exposure to the fortunes of this business segment, and also to any single company in the sector. Or for that matter, in any sector. I find myself going out on the risk curve further and further these days, as far as new buys, as the yields on “safe” stocks continue to decline. It is not only the low yields, but also the likelihood of sub-par returns overall that discourages me from buying “solid blue chip” stocks at high valuations. As a value investor, I just can’t work up any enthusiasm for buying over-valued stocks, even of great companies.   

JT

1st Posting for Week Beginning Monday 05/19/2014 08:30 AM

Last week saw each day posting a poorer result than the previous day, until Friday. Monday saw a pretty decent gain, Tuesday was flat, Wednesday declined almost as much as Monday gained, then on Thursday, the stock averages all declined more than we had seen since April 10. Friday saw things turn around modestly, with all of the major averages ending in the green. The question now is, will the decline resume next week, or will this be another correction that never really got started? The financial media has generated a number of articles recently warning of a high probability for a major sell off. That is to be expected any time stocks start to falter.

Several upgrades / downgrades came out last week on my stocks:

Public Service Enterprise Group (PEG) was upgraded from Market Perform to OutPerform at Wells Fargo.

Walgreen (WAG) was downgraded from OutPerform to Market Perform at Cowen.

Total S A (TOT) was downgraded from OutPerform to Sector Perform at RBC Capital Markets.

Statoil (STO) was downgraded from Top Pick to OutPerform RBC Capital Markets.

Kinder Morgan Inc (KMI) was upgraded from Buy to Conviction Buy at Goldman. It appears Goldman does not concur with the recent derogatory articles on Kinder from Hedgeye and Barrons.

Frontier Communications (FTR) was downgraded from Neutral to UnderPerform by DA Davidson.

Fifth Street Finance (FSC) was upgraded from Neutral to Buy at Gilford Securities.

Calumet Specialty Products Partners (CLMT) was initiated at Buy at Ladenburg Thalmann.

Molson Coors (TAP) was upgraded from Neutral to Buy at ISI Group.  

Only five of my stocks go ex-dividend this week:

Walgreen (WAG), 05/19/2014, yield 1.86%.

Pan American Silver (PAAS), 5/19/2014, yield 3.76%.

ENI S P A (E), 5/19/2014, yield 5.86%, which does not factor in 30% withholding applied by Italy, the home country for E. The dividend upcoming is the first of two payments to be made in 2014. Even with the withholding, E has an effective yield of over 4%.

ConocoPhillips (COP), 5/21/2014, yield 3.54%.

Johnson & Johnson (JNJ), 5/22/2014, yield 2.78%.

None of my stocks are scheduled to report earnings this week. Last week saw three of my stocks report results:

TICC Capital (TICC) reported Q1 EPS of $0.29, in-line. Revenue of $28.66M, up 31.9% Y/Y, missed by $0.85M.

Cisco (CSCO) reported FQ3 EPS of $0.51, beating by three cents. Revenue of $11.54B, down 5.6% Y/Y, beat by $160M.

Wal-Mart (WMT) reported Q1 EPS of $1.10, missing by five cents. Revenue of $114.9B, up 0.7% Y/Y, missed by $1.39B.

As noted in my opening remarks, we are at a crossroads once again, with a start to a possible correction underway last week. This time, will it be like all the other times, is the question? That is, will it amount to nothing? Or will it be the last time, as the song (by Waylon Jennings) goes, not a head fake, but a real honest to heck correction, in the 10% to 15% range. I hope so, I’m sitting on too much cash, and too many of my stocks are yielding under 3%.

JT

1st Posting for Week Beginning Monday 05/12/2014 08:30 AM

Stocks did not move much last week, as the Dow Industrials gained slightly, while all of the other major averages I track lost slightly. These would be the S&P 500, the New York Composite, the NASDAQ, and the small-cap Russell 2000. The consensus view remains the same, that stocks are over-valued, and that a correction “should” occur soon. Of course, that has been the view for what seems like years now.

Stocks I follow going ex-dividend this week are, by date:

05/13/2014

Microsoft (MSFT), yield 2.83%.

Entergy (ETR), yield 4.45%.

Fifth Street Finance (FSC), yield 10.78%. FSC pays monthly.

05/14/2014

Emerson Electric (EMR), yield 2.56%.                                                                                                                                                            

GlaxoSmithKline (GSK), yield 4.65%.

Royal Dutch Shell (RDS.B), yield 4.34%.

Smucker J M (SJM), yield 2.32%.

Diebold (DBD), yield 3.12%.

Exelon (EXE), yield 3.43%.

05/15/2014

United Parcel (UPS), yield 2.69%.

Spectra Partners LP (SEP), yield 4.24%.

05/16/2014

Chevron (CVX), yield 3.42%.

Gladstone Investment (GAIN), yield 9.22%. GAIN pays monthly.

Main Street Capital (MAIN), yield 6.70%.

Stocks on my lists receiving upgrades / downgrades last week were as follows:

Southern Company (SO) was downgraded from Neutral to Sell at UBS. Granted, SO bears watching, with a new nuclear plant under construction, but I don’t see the situation as dire, or anywhere near enough concern to sell out in a panic.

Entergy (ETR) was upgraded from UnderPerform to Peer Perform at Wolfe Research.

Excelon (EXC) was upgraded from Peer Perform to OutPerform at Wolfe Research.

Astrazeneca (AZN) was downgraded from Buy to Sell at Danske. AZN was one of the major drug firms that was poorly positioned as the “patent cliff” was approaching, in my 2012 article on the topic.

Calumet Specialty Products Partners LP (CLMT) was initiated at Sector OutPerform at Howard Weil. The firm was also upgraded from Neutral to OutPerform at Credit Suisse.

QR Energy LP (QRE) was downgraded from Buy to Hold at Wunderlich, and from OutPerform to Neutral at Robert W. Baird.

Chevron (CVX) was downgraded from Buy to Hold at Argus.

Amerigas Partners LP (APU) was upgraded from UnderPerform to Neutral at Credit Suisse.

Ensco PLC (ESV) was downgraded from Hold to Sell at Nordea.

Earnings season continued on through the week just ended, with a number of the firms I track reporting:

First, Sanofi (SNY) reported in the previous week that Q1 net profit increased 9.6%, to €1.08B, as costs related to previous acquisitions fell. However, revenue fell 2.6% to €7.84B, and undershot forecasts of €7.99B, hurt by falling vaccine and animal health sales, and currency fluctuations. Adjusted income dropped 3.2%, to €1.55B, and missed consensus of €1.57B.

Pfizer Inc. (PFE) reported Q1 EPS of $0.57, beating by two cents. Revenue of $11.29B, down 9.0% Y/Y, missed by $780M.

SYSCO (SYY) reported FQ3 EPS of $0.38, missing by one cent. Revenue of $11.27B, up 3.1% Y/Y, missed by $130M.

National Health Investors (NHI) reported Q1 AFFO of $0.93, missing by seven cents. Revenue of $43.13M, up 59% Y/Y, beat by $2.01M.

Solar Capital (SLRC) reported Q1 NII of $0.40, in-line. Total Investment Income of $32.63M, down 29.2% Y/Y, missed by $0.69M.

Emerson Electric (EMR) reported FQ2 EPS of $0.80, missing by one cent. Revenue of $5.81B, down 2.5% Y/Y, missed by $90M.

HCP (HCP) reported Q1 FFO of $0.75, beating by one cent. Revenue of $529.99M, up 3.7% Y/Y, beat by $11.12M.

Magellan Midstream Partners (MMP) reported Q1 EPS of $1.07, beating by forty cents. Revenue of $618.6M, up 43.1% Y/Y, beat by $109.44M.

Ares Capital (ARCC) reported Q1 EPS of $0.38, missing by a penny. Revenue of $239.72M, up 22.9% Y/Y, beat by $9.02M.

Medical Properties (MPW) reported Q1 FFO of $0.26, missing by a penny. Revenue of $73.1M, up 26.9% Y/Y, missed by $0.35M.

Crestwood Midstream Partners LP (CMLP) reported Q4 GAAP EPS of -$0.03. Revenue was $537M, up dramatically over the comparable year-ago amount of $63.8M.

Exterran Partners (EXLP) reported Q1 EPS of $0.17, missing by eight cents. Revenue of $121.05M, up 14.1% Y/Y, missed by $1.94M.

Digital Realty Trust (DLR) reported Q1 FFO of $1.28, beating by nine cents. Revenue of $390.59M, up 9.0% Y/Y, beat by $3.42M.

Energy Transfer Equity (ETE) reported Q1 EPS of $0.30, missing by seven cents. Revenue of $13.08B, up 17.0% Y/Y, beat by $560M.

Energy Transfer Partners (ETP) reported Q1 EPS of $0.69, beating by six cents. Revenue of $12.23B, up 12.7% Y/Y, beat by $410M.

ONEOK Partners (OKS) reported Q1 EPS of $0.81, beating by fifteen cents.

Prospect Capital (PSEC) reported FQ3 NII of $0.31, missing by a penny. Total Investment Income of $190.32M, up 58.3% Y/Y, missed by $1.78M.

Frontier Communications (FTR) reported Q1 EPS of $0.05, missing by a penny. Revenue of $1.15B, down 5.0% Y/Y, missed by $20M.

Safety Insurance Group (SAFT) reported Q1 EPS of $0.79, beating by four cents. Revenue was $191.08M, up 5.1% Y/Y.

Spectra Energy (SE) reported Q1 EPS of $0.62, beating by eleven cents. Revenue of $1.84B, up 15.7% Y/Y, beats by $20M.

Spectra Energy Partners (SEP) reported Q1 Ongoing Net Income of $265M.

Revenue of $581M, up 26.6% Y/Y, missed by $13.18M.

Molson Coors Brewing (TAP) reported Q1 adjusted NI of $315.9M. Revenue was  $1.79B, up 0.6% Y/Y.

Memorial Production Partners (MEMP) reported Q1 EPS of -$0.56, which was reported as not being comparable to consensus of $0.42. Revenue of $100.9M, up 48.1% Y/Y, missed by $3.92M.

QR Energy (QRE) reported Q1 EPS of -$2.86, which as reported may not be comparable to consensus of $0.32. Revenue of $122.6M, up 2.8% Y/Y, missed by $3.49M.

Westar Energy (WR) reported EPS of $0.52, beating by five cents. Revenue of $628.55M, up 15.1% Y/Y, beat by $45.77M.

Kimco Realty (KIM) reported Q1 EPS of $0.34, in-line. Revenue of $246.87M, up 8.8% Y/Y, beat by $9.45M.

Triangle Capital (TCAP) reported Q1 NII of $0.50, beating by a penny.

Annaly Capital (NLY) reported Q1 EPS of $0.23, missing by six cents. Revenue was $530.93M, down 4.4% Y/Y. Book value per share of $12.30 was up from $12.13 after payment of $0.30 dividend. The interest rate spread of 0.90% tumbled 53 basis points from Q4. CPR was 6% vs. 7% in Q4.

CenturyLink (CTL) reported Q1 EPS of $0.66, beating by five cents. Revenue of $4.54B, up 0.7% Y/Y, beats by $60M.

Calumet Specialty Products (CLMT) reported Q1 earnings of $0.50/unit and revenues of $1.34B, both ahead of analyst expectations.

Health Care REIT (HCN) reported Q1 FFO of $1.00, beating by two cents. Revenue of $801.81M, up 27.3% Y/Y, beats by $5.13M.

Windstream (WIN) reported Q1 EPS of $0.04, missing by five cents. Revenue of $1.5B, down 2.0% Y/Y, beat by $30M.

BreitBurn Energy Partners, L.P. (BBEP): Q4 EPS of -$0.52, which as reported may not be comparable to consensus of $0.27. Revenue of $177.3M, up 50.8% Y/Y, missed by $31.28M.

Plains All American Pipeline L.P. (PAA) reported Q4 EPS of $0.76, beating by five cents. Revenue of $10.63B, up 12.6% Y/Y, missed by $600M.

Pan American Silver (PAAS) reported Q1 EPS of $0.06, beating by three cents. Revenue of $209.7M, down 13.7% Y/Y, beat by $14.08M.

Fifth Street Finance (FSC) reported FQ2 NII of $0.24, missing by two cents. Total Investment Income of $72.13M, up 32% Y/Y, missed by $1.25M.

Main Street Capital (MAIN) reported Q1 EPS of $0.52, missing by two cents. Revenue of $30.78M, up 20.0% Y/Y, missed by $2.32M.

Enerplus (ERF) reported Q1 EPS of $0.20, beating by three cents. Revenue of $495M, up 32.6% Y/Y, beat by $15.55M.

Whew! Last week was definitely the peak of earnings reporting for my stocks. Earnings season is now nearing an end, with only three of my stocks scheduled to report this week:

TICC Capital (TICC) on Monday the 12th, Cisco Systems (CSCO) on Wednesday the 14th, after the close, and Wal-Mart (WMT) on Thursday the 15th.

The market continues to defy the pundits who are arguing that it just has to go into correction mode, based on how long it has been since a meaningful correction has occurred. However, the market seldom does what it “should” do. Barring some type of geopolitical catalyst, always a possibility in this uncertain world, the market is unlikely to enter into a meaningful decline as long as so many experts are out there either predicting one, or at least lamenting that one should occur because it has been too long since we have seen one. My approach is to maintain an ample cash position, yet be cautious about letting go of over-valued stocks, which have an irritating tendency to become even more over-valued after having been sold. Occasionally a value will appear here and there, usually due to an overreaction to a short-term hiccup.

JT

1st Posting for Week Beginning Monday 05/05/2014 08:30 AM

Stocks managed to advance last week on through the end of April, then did not move up materially after that, as the first two days of May saw the major averages mostly march in place or decline slightly. The beginning of the month Payrolls report on Friday surprised to the upside, as far as the headline numbers were concerned, with 288K new jobs and a decline in the unemployment rate to 6.3%. Delving further into the data, the percentage decline was more due to participants leaving the labor force than unemployed people finding work, and the types of new jobs are heavily concentrated in low-wage, minimal-benefits occupations, commonly referred to as “McJobs”. Stocks remain expensive, with nearly all quality issues trading well above value.

Stocks on my lists going ex-dividend this week, by date, are as follows:

05/05/2014

Intel (INTC), yield 3.41%.

05/06/2014

Boardwalk Pipeline Partners LP (BWP), yield 2.52%.

Magellan Midstream Partners LP (MMP), yield 3.25%.

QR Energy LP (QRE), yield 10.37%.

05/07/2014

American Electric Power (AEP), yield 3.79%.

Pfizer (PFE), yield 3.38%.

Unilever (UL), yield 3.36%.

Wal-Mart (WMT), yield 2.43%.

Amerigas Partners LP (APU), yield 7.57%.

Spectra Energy (SE), yield 3.40%.

Exterran Partners LP (EXLP), 7.32%.

05/08/2014

Paychex (PAYX), yield 3.38%.

HCP Inc (HCP), yield 5.18%.

Health Care REIT (HCN), yield 5.04%,

05/09/2014

Exxon Mobil (XOM), yield 2.71%.

Stocks on my lists receiving upgrades / downgrades last week were as follows:

CenturyLink (CTL) was downgraded from OutPerform to Market Perform at BMO Capital.

NextEra Energy (NEE) was initiated at Hold at BGC Partners.

Boardwalk Pipeline Partners (BWP) was upgraded from UnderPerform to OutPerform at Credit Suisse, from UnderWeight to EqualWeight at Morgan Stanley, and from UnderPerform to Market Perform at Raymond James. That is a lot of love for an MLP yielding under 3%, which just recently cut the dividend by 80%, and lost over 50% of market value. Go figure!

Coca Cola (KO) was initiated at Buy at Nomura.

Ensco plc (ESV) was downgraded from Buy to Neutral at Global Hunter Securities.

Novartis (NVS) was upgraded from Hold to Buy at Jeffries.

Total S A (TOT) was downgraded from Buy to Neutral at Oddo, and also at Natixis.

Exelon was upgraded from UnderPerform to Market Perform at Wells Fargo, and also from Hold to Buy at Deutsche Bank.

Earnings season continues on through the peak time. First, I will present reports from last week, then will identify the reports expected in the coming week.

Boardwalk Pipeline Partners (BWP) reported Q1 EPS of $0.44, beating by fourteen cents. Revenue of $356.9M, up 8.6% Y/Y, beat by $53.81M.

American Capital Agency Corp. (AGNC) reported Q1 EPS of a negative forty-one cents. Economic net income was $1.18 per share, with $0.71 net spread and dollar roll income vs. expectations of $0.68. Q1 dividend was $0.65. Book value per share was $24.49, after $0.65 dividend, up from $23.93 at the end of last year.

ENI S P A (E) reported that Q1 adjusted net profit fell 14%, to an expected €1.19B ($1.65B). Net sales from operations fell 6.3%, to €29.2B. Output declined 1.1%, to 1.583M barrels of oil equivalent a day.

Statoil (STO) reported that Q1 net profit gained, to 23.6B Norwegian kroner ($3.94B) from 6.4B kroner a year earlier, beating the consensus of 12.12B kroner. Earnings were boosted by increased gas prices, particularly in the U.S. amid the harsh winter. Revenue rose to 169.9B kroner from 162.2B kroner, and topped expectations of 162.79B kroner. Oil and gas output slipped 1% to 1.978M barrels of oil equivalent per day.

Eaton (ETN) reported Q1 EPS of $1.01, beating by a penny. Revenue of $5.49B, up 3.4% Y/Y, was in-line.

Merck & Co (MRK) reported Q1 EPS of $0.88, beating by nine cents. Revenue of $10.26B, down 3.8% Y/Y, missed by $180M.

NextEra Energy (NEE) reported Q1 EPS of $1.26, beating by nineteen cents. Revenue of $3.67B, up 11.9% Y/Y, beat by $30M.

Southern (SO) reported Q1 EPS of $0.66, beating by eleven cents. Revenue of $4.64B, up 19.0% Y/Y, beat by $610M.

Exelon (EXC) reported Q1 EPS of $0.62, missing by seven cents. Non-GAAP revenue of $8.08B, up 17.3% Y/Y, beat by $1.77B. Exelon announced that it would buy Pepco for $27.25 per share in an all-cash deal, which represents a 29.5% premium to the average price of Pepco Holdings (POM) over the last twenty trading days. The acquisition is expected to be significantly accretive to Exelon's (EXC) adjusted earnings in the first full year after closing. That, along with recent court rulings backing EPA restrictions on coal usage for energy generation, has improved the outlook for EXC, the largest nuclear plant operator in the U.S.

Williams Partners L.P. (WPZ) reported Q1 EPS of $0.36, missing by seven cents.  

Total (TOT) reported that Q1 earnings fell 10% Y/Y, as refining margins and output slumped, but results were still in-line with analyst estimates. Q1 production fell 6% Y/Y, to 2.179M boe/day from 2,323M boe/day a year earlier, marking TOT's first production drop in three consecutive quarters (boe is barrels of oil equivalent). TOT has reached into the $70 range recently, and has thus become a bit pricey.

Martin Midstream Partners L.P. (MMLP) reported Q4 EPS of -$1.44.

ConocoPhillips (COP) reported Q1 EPS of $1.81, beating Wall Street expectations by twenty-five cents. Revenue rose 9.5% to $16.05B, also ahead of estimates.

Kellogg (K) reported Q1 EPS of $1.01, beating by four cents. Revenue of $3.74B, down 3.1% Y/Y, missed by $80M.

Realty Income (O) reported Q1 AFFO of $0.64, in-line. Revenue of $221.6M, up 29.1% Y/Y, beat by $10.1M.

Public Service Enterprise Group Inc. (PEG) reported Q1 EPS of $1.01, beating by five cents.

Royal Dutch Shell (RDS.B) reported that Q1 profit fell 44% Y/Y, to $4.47B, after taking a $2.86B impairment charge, largely on its refineries in Asia and Europe. Revenue fell to $109.6B, from $112.8B a year earlier. Oil and gas production totaled 3.25B boe/day, down 4% Y/Y.

Enterprise Products Partners (EPD) reported Q1 EPS of $0.76, beating by two cents. Revenue of $12.9B, up 13.4% Y/Y, beat by $300M.

BlackRock Kelso Capital (BKCC) reported Q1 NII of $0.19, missing by six cents. Total Investment Income of $29.56M, down 5.0% Y/Y, missed by $3.15M.

MFA Financial (MFA) reported Q1 EPS of $0.20, beating by a penny. Revenue of $80.25M, down 2.8% Y/Y, missed by $0.85M.

Consolidated Communications Holdings, Inc. (CNSL) reported Q1 EPS of $0.25, beating by four cents. Revenue of $149.6M, down 4.3% Y/Y, beat by $0.58M.

Linn Energy (LINE) reported Q1 EPS of $0.40, beating by two cents. Revenue of $734M, up 98.9% Y/Y, still missed by $158.6M.

Kraft Foods Group, Inc. (KRFT) reported Q1 EPS of $0.78, beating by two cents. Revenue of $4.36B, down 4.2% Y/Y, missed by $90M.

Alliant Energy Corporation (LNT) reported Q1 EPS of $0.97, beating by nineteen cents. Revenue of $952.8M, up 10.8% Y/Y, beat by $102.14M.

Hercules Technology Growth Capital (HTGC) reported Q1 NII of $0.30, beating by two cents. Revenue of $35.8M, up 15.6% Y/Y, beat by $2.59M.

Chevron (CVX) reported Q1 EPS of $2.36, missing by eleven cents. Revenue of $53.26B, down 6.3% Y/Y, missed by $1.21B. Earlier, CVX announced the dividend would be increased to $1.07 quarterly.

Buckeye Partners (BPL) reported Q1 EPS of $0.87, missing by six cents. Revenue of $1.99B, up 48.5% Y/Y, beats\ by $460M.

Reports expected this week are as follows, by date. Assume results are released before market hours, unless otherwise indicated.

05/05/2014

Pfizer (PFE), Sysco (SYY), before the open. Also, with no time specified, Sanofi (SNY), National Health Investors (NHI), Solar Capital (SLRC).

05/06/2014

Emerson Electric (EMR), HCP Inc (HCP), Magellan Midstream Partners LP (MMP), Ares Capital (ARCC), Medical Properties Trust (MPW), Crestwood Midstream Partners LP (CMLP), Exterran Partners LP (EXLP), all before the open. Then, after the close, Digital Realty (DLR), Energy Transfer Equity LP (ETE), Energy Transfer Partners LP (ETP), ONEOK Partners LP (OKS), Prospect Capital (PSEC), Frontier Communications  (FTR). Finally, with no time specified, Safety Insurance Group (SAFT).

05/07/2014

Spectra Energy (SE), Spectra Energy Partners LP (SEP), Molson Coors (TAP), Memorial Production Partners LP (MEMP), QR Energy LP (QRE). Then, after the close, Westar Energy (WR), Kimco Realty (KIM), Triangle Capital (TCAP), Annaly Capital Management (NLY), CenturyLink (CTL). Finally, with no time specified, Calumet Specialty Products Partners LP (CLMT).

05/08/2014

Health Care REIT (HCN), Windstream (WIN), Breitburn Energy Partners LP (BBEP). Then, after the close, Plains All American Pipeline LP (PAA), Pan American Silver (PAAS). Finally, with no time specified, Fifth Street Finance (FSC), Main Street Capital (MAIN).

05/09/2014

Enerplus (ERF).

These supposedly good times are the most difficult of all times for a value investor. I am still occasionally selling, taking profits, even though I know there is very little available to buy just now, as far as redeploying the proceeds to good effect. On the other hand, I am holding on to stocks that I normally would have sold by now, for that same reason. Even though it probably falls into the realm of “be careful what you wish for”, I am wishing for a bona-fide correction, in the 10% to 15% range, lasting just a month or two. That is what I need to get some reasonable entry points on some quality names.

JT

1st Posting for Week Beginning Monday 04/28/2014 07:30 AM

Stocks did not move much last week through Thursday, and it seemed as though a modest advance would be registered for the week. But then, Friday happened, with all of the major averages posting substantial declines. The end result was that the major averages ended the week slightly below where they began it. That being said, stocks are still expensive, with only the most tainted merchandise presenting anything close to a bargain price. It would take a month of Fridays like the one just logged to bring prices down enough to excite a value investor.

Stocks on my lists going ex-dividend this week, by date, are as follows:

04/28/2014

Alliant Energy (LNT), yield 3.47%,

ConAgra Foods (CAG), yield 3.23%.

Kinder Morgan Inc. (KMI), yield 5.09%.

Kinder Morgan Energy Partners LP (KMP), yield 7.21%.

ONEOK Partners LP (OKS), yield 5.31%.

Prospect Capital (PSEC), yield 12.11%. The BDC pays monthly.

El Paso Pipeline Partners LP (EPB), yield 7.90%.

04/29/2014

Realty Income (O), yield 5.11%. O pays monthly.

04/30/2014

Norfolk Southern (NSC), yield 2.30%.

Plains All American Pipeline LP (PAA), yield 4.48%.

05/01/2014

Eaton (ETN), yield 2.65%.

Southern Company (SO), yield 4.54%.

Energy Transfer Equity LP (ETE), yield 3.06%.

Energy Transfer Partners LP (ETP), yield 6.70%.

Enerplus (ERF), yield 4.97% estimated. ERF pays nine cents Canadian per month, and the yield in US Dollar terms varies slightly with exchange rates.

BreitBurn Energy Partners LP (BBEP), yield 9.78%,

Calumet Specialty Products Partners LP (CLMT), yield 9.74%.

Martin Midstream Partners LP (MMLP), yield 7.61%.

Stocks on my lists receiving upgrades / downgrades last week were as follows:

American Electric Power (AEP) was downgraded from Buy to Neutral at ISI Group.

Boardwalk Pipeline Partners (BWP) was upgraded from Sector Perform to OutPerform at RBC Capital. BWP is certainly more attractive at half the price it had attained before the recent implosion, but considering it is an MLP with a yield under 3%, I cannot see how it could be on anyone’s buy list. 

Enterprise Products Partners LP (EPD) was downgraded from Buy to Hold at Jeffries. EPD is a top-rated MLP, but considering the extended price and yield under 4%, it isn’t attractive at current levels.

Southern Company (SO) was downgraded from OutPerform to Sector Perform at RBC Capital. Like other SO holders, I am nervously tracking the progress of SO’s nuclear plant construction projects.

GlaxoSmithKlein (GSK) was upgraded from Hold to Buy at Panmure.

Frontier Communications (FTR) was reinstated at Hold at Gabelli.

ENI S P A (E) was downgraded from Buy to Hold at UBS.

Cisco Systems (CSCO) was downgraded from Buy to Hold at Standpoint Research.

GlaxoSmithKlein (GSK) was upgraded from Hold to Buy at Argus.

NuStar (NS) was upgraded from Hold to Buy at Stifel Nicolaus. NS has now risen above my highest entry point, so I could cash out now with a gain, plus I have received the substantial dividend payouts. NS was the subject of a Seeking Alpha article I wrote a couple of years ago, as NS was crashing down. I accepted that it was a speculation to hold on at that point, betting on a recovery that might not occur. Management seems to be pulling it off, thanks to a good strategy and possibly a bit of luck. With NS yielding 7.59% and on the verge of earning enough to cover the distribution, I can’t see bailing out now. I will continue to hold.

Earnings season is entering the peak time. First, I will present reports from last week, then will identify the reports expected in the coming week.

Kimberly Clark (KMB) reported Q1 EPS of $1.48, beating by a penny. Revenue of $5.27B, down 0.9% Y/Y, missed by $50M.

McDonald's (MCD) reported Q1 EPS of $1.21, missing by three cents. Revenue of $6.7B, up 1.4% Y/Y, missed by $30M.

AT&T (T) reported Q1 EPS of $0.71, beating by a penny. Revenue of $32.47B, up 3.5% Y/Y, was in-line.

Potlatch Corporation (PCH) reported Q4 EPS of $0.34, missing by two cents. Revenue of $139.95M, down 2.3% Y/Y, missed by $0.73M. PCH gained over $1.00 on the day following the report.

General Dynamics (GD) reported Q1 EPS of $1.71, beating by seven cents. Revenue of $7.32B, down 1.1% Y/Y, beat by $120M.

Northrop Grumman (NOC) reported Q1 EPS of $2.40, beating by twenty-five cents. Revenue of $5.84B, down 4.3% Y/Y, was in-line.

Procter & Gamble (PG) reported FQ3 EPS of $1.04, beating by three cents. Revenue of $20.56B, down 0.2% Y/Y, missed by $120M.

Dr Pepper Snapple (DPS) reported Q1 EPS of $0.74, beating by fifteen cents. Revenue of $1.4B, up 1.4% Y/Y, beat by $20M.

Norfolk Southern (NSC) reported Q1 EPS of $1.17. Revenue of $2.69B, down 1.8% Y/Y, missed by $50M.

Reynolds American (RAI) reported Q1 EPS of $0.72, missing by two cents. Revenue of $1.94B, up 3.2% Y/Y, beat by $30M.

Altria (MO) reported Q1 EPS of $0.57, in-line. Revenue of $5.52B, down 0.2% Y/Y, beat by $1.49B.

Microsoft Corporation (MSFT) reported FQ3 EPS of $0.68, beating by five cents. Revenue of $20.4B, down 0.4% Y/Y, was in-line.

Novartis (NVS) reported Q1 net profit up 24% to $2.97B, beating consensus of $2.7B. Sales in emerging markets, particularly China, also helped lift Novartis' earnings. Net sales rose 1% to $14.02B, falling short of estimates of $14.25B.

Raytheon (RTN) reported Q1 EPS of $1.43, missing by thirty-three cents. Revenue of $5.51B, down 6.3% Y/Y, beat by $10M.

SCANA (SCG) reported Q1 EPS of $1.37, beating by twenty-six cents. Revenue of $1.59B, up 21.4% Y/Y, beat by $310M.

United Parcel Service (UPS) reported Q1 EPS of $0.98, missing by eleven cents. Revenue of $13.78B, up 2.6% Y/Y, missed by $130M.

Verizon Communications (VZ) reported Q1 EPS of $0.84, missing by two cents. Revenue of $30.81B, up 4.7% Y/Y, beat by $110M.

Waste Management (WM) reported Q1 EPS of $0.49, beating by five cents. Revenue of $3.4B, up 1.8% Y/Y, missed by $10M.

Entergy (ETR) reported Q1 EPS of $2.29, beating by ninety-five cents. Revenue of $3.21B, up 23.0% Y/Y, beat by $440M.

Nucor (NUE) reported Q1 EPS of $0.35, missing by a penny. Revenue of $5.11B, up 12.3% Y/Y, beat by $270M.

Freeport-McMoRan Copper & Gold (FCX) reported Q1 EPS of $0.49, beating by eight cents. Revenue of $4.98B, up 8.7% Y/Y, missed by $30M.

Newmont Mining Corporation (NEM) reported Q1 EPS of $0.22, beating by three cents. Revenue of $1.76B, down 19.3% Y/Y, missed by $90M. Newmont’s recently announced dividend of 2.5 cents, generating a yield less than half of a percent, reflects the gold price decline and its effect on Newmont’s gold price-indexed dividend. I took advantage of the recent price uptick caused by merger speculation to lighten up on my NEM position. I will hold the remainder as a speculation on a gold price recovery. It will come eventually, but it may be a long wait.

American Electric Power (AEP) reported Q1 EPS of $1.15, beating by twenty-two cents. Revenue of $4.6B, up 20.1% Y/Y, beat by $560M.

Colgate Palmolive (CL) reported Q1 EPS of $0.68, in-line. Revenue of $4.32B, flat Y/Y, was also in-line.

Ventas (VTR) reported Q1 EPS of $1.09, beating by two cents. Revenue of $741.7M, up 8.4% Y/Y, beat by $16.14M.

Reports expected this week are as follows, by date. Assume results are released before market hours, unless otherwise indicated.

04/28/2014

MFA Financial (MFA), Boardwalk Pipeline Partners LP (BWP), then after market hours, American Capital Agency (AGNC). Also, ENI S P A (E), the Italian oil company, no time specified.

04/29/2014

Eaton (ETN), Merck (MRK), and Statoil (STO), the Norwegian oil company, no time specified.

04/30/2014

NextEra Energy (NEE), Southern Company (SO), Exelon (EXC), then after market hours, Williams Partners LP (WPZ). Two other firms are scheduled to report, with no time specified - Total S A (TOT), the French oil company, and Martin Midstream Partners LP (MMLP).

05/01/2014

ConocoPhillips (COP), Kellogg (K), Realty Income (O), Public Service Enterprise Group (PEG), Royal Dutch Shell (RDS.B), Enterprise Products Partners LP (EPD), BlackRock Kelso Capital (BKCC), Consolidated Communications (CNSL), Linn Energy LLC (LINE), then after market hours, Kraft Foods (KRFT), Alliant Energy (LNT), Hercules Technology Growth Capital (HTGC).

05/02/2014

Chevron (CVX), Buckeye Partners LP (BPL).

There is no doubt in my mind that stocks are reaching lofty levels at the present time. High yields can still be found, but only by going further out on the risk spectrum. Solid blue chips yielding above 3% are rare. REITS, BDCs, some utilities, and some less well-known MLPs are where you must go to get exciting yields. Just like a diet featuring too many sweets, too many of these in a portfolio can lead to (portfolio) health issues if the bubble pops.

JT