JTís DAILY (WEEKLY as of 12/9/2013) BLOG for Month Of October 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 Monday 10/27/2014

Posted Sunday 10/26/2014 09:00 PM

Well, I survived my travels, and now it is time to get caught up on the market, and my stocks. A lot has happened since my last post, yet not much has changed. The correction, such as it was, ended a few days after my last posting, around 10/17/2014, and stocks have regained over half of the decline from the September highs. Salivating over some decent buy prices finally showing up, I entered several orders, literally minutes too late, as stocks turned up at that point and never looked back, at least not yet.

First, a review of stocks going ex-dividend this week, by date:

10/28/2014

Enerplus (ERF), yield approximately 6.56%. ERF pays nine cents Canadian monthly, so the amount received in U.S. Dollar terms varies slightly each month, depending upon the exchange rate.

10/29/2014

Alliant Energy (LNT), yield 3.38%.

ConAgra Foods (CAG), yield 2.92%.

Enterprise Products Partners LP (EPD), yield 3.79%.

Kinder Morgan Inc. (KMI), yield 4.51%.

Kinder Morgan Energy Partners LP (KMP), yield 5.87%.

El Paso Energy Partners LP (EPB), yield 6.31%.

Plains All American Pipeline LP (PAA), yield 4.71%.

Williams Partners LP (WPZ), yield 7.43%.

Prospect Capital (PSEC), yield 13.62%. PSEC pays monthly.

American Capital Agency (AGNC), yield 11.47%. AGNC has switched to a monthly dividend, now at $.22 per month, which is equivalent to the prior quarterly rate.

10/30/2014

Realty Income (O), yield 4.89%. O pays monthly.

Paychex (PAYX), yield 3.34%.

Southern Company (SO), yield 4.43%.

Energy Transfer Equity LP (ETE), yield 2.90%.

Energy Transfer Partners LP (ETP), yield 6.02%.

ONEOK Partners LP (OKS), yield 5.83%.

10/31/2014

Calumet Specialty Products Partners LP (CLMT), yield 9.78%.

A number of my stocks have reported earnings since my last posting. I will provide a brief summary, by date. As always, a wealth of detail on each report is available from Seeking Alpha, including in most cases a detailed transcript of the earnings conference call.

10/14/2014

Johnson & Johnson (JNJ) reported Q3 EPS of $1.50, beating by six cents. Revenue of $18.47B, up 5.1% Y/Y, beat by $90M.

Intel (INTC) reported Q3 EPS of $0.66, beating by a penny. Revenue of $14.55B, up 8% Y/Y, beat by $100M. Guidance given was that the firm expects Q4 revenue of $14.2B-$15.2B vs. $14.49B consensus.

10/15/2014

Kinder Morgan (KMI) reported Q3 EPS of $0.32, missing by two cents. Revenue of $4.29B, up 14.4% Y/Y, beat by $310M.

Kinder Morgan Energy Partners (KMP) reported Q3 EPS of $0.57, missing by seven cents. Revenue of $3.93B, up 16.3% Y/Y, beat by $360M.

El Paso Pipeline Partners (EPB), the homely step-sister of the Kinder Morgan family, reported Q3 EPS of $0.31, missing by eight cents. Revenue of $352M, down 4.6% Y/Y, missed by $34.2M.

I will continue to report on KMP and EPB until they are dissolved into KMI, as per the consolidation plan.

10/16/2014

Philip Morris (PM) reported Q3 EPS of $1.39, beating by six cents. Revenue of $7.85B, down 1.0% Y/Y, beat by $240M. I bought into a small position in PM a few weeks ago, but I now have a sell order in Ė I will have a nice short-term gain plus a dividend to show for my trouble, and I just donít care to own a tobacco stock for the long term.

10/17/2014

General Electric (GE) reported Q3 EPS of $0.38, beating by a penny. Revenue of $36.17B, up 1.4% Y/Y, missed by $620M.

10/20/2014

Potlatch (PCH) reported Q3 EPS of $0.81, missing by two cents. Revenue of $177.2M, up 12.2% Y/Y, missed by $9.26M

10/21/2014

Coca-Cola (KO) reported Q3 EPS of $0.53, in-line. Revenue of $11.98B, down 1.2% Y/Y, missed by $140M. I own KO, and as long as Warren is holding on, Iím not selling.

Kimberly-Clark (KMB) reported Q3 EPS of $1.61, beating by seven cents. Revenue of $5.44B, up 3.4% Y/Y, beat by $80M.

McDonald's (MCD) reported Q3 EPS of $1.51, beating by thirteen cents. Revenue of $6.98B, down 4.6% Y/Y, missed by $210M.

Walgreen (WAG) reported FQ4 EPS of $0.74, in-line. Revenue of $19.1B, up 6.5% Y/Y, beat by $80M.

Reynolds American (RAI) reported Q3 EPS of $0.95, beating by four cents. Revenue of $2.24B, up 4.7% Y/Y, beat by $50M.

Verizon (VZ) reported Q3 EPS of $0.89, missing by two cents. Revenue of $31.6B, up 4.4% Y/Y, was in-line.

10/22/2014

General Dynamics (GD) reported Q3 EPS of $2.05, beating by fourteen cents. Revenue of $7.75B, up 0.1% Y/Y, beat by $170M.

GlaxoSmithKline (GSK) reported Q3 EPS of 27.9p. Revenue was £5.65B, down 3% Y/Y.

Northrop Grumman (NOC) reported Q3 EPS of $2.32, beating by eighteen cents. Revenue of $6B, down 1.8% Y/Y, beat by $110M.

AT&T (T) reported Q3 EPS of $0.63, missing by a penny. Revenue of $33B, up 2.6% Y/Y, missed by $240M.

Norfolk Southern (NSC) reported Q3 EPS of $1.79, missing by four cents. Revenue of $3.02B, up 7.1% Y/Y, missed by $50M.

10/23/2014

American Electric Power (AEP) reported Q3 EPS of $1.01, missing by a penny. Revenue of $4.3B, up 2.4% Y/Y, missed by $130M.

3M (MMM) reported Q3 EPS of $1.98, beating by two cents. Revenue of $8.1B, up 2.3% Y/Y, missed by $140M.

Microsoft (MSFT) reported FQ1 GAAP EPS of $0.54, beating y five cents. GAAP revenue of $23.2B, up 25.2% Y/Y, beat by $1.18B.

Raytheon (RTN) reported Q3 EPS of $1.65, beating by five cents. Revenue of $5.47B, down 6.3% Y/Y, missed by $140M.

Unilever (UL) reported Q3 Revenue of Ä12.2B, down 2.0% Y/Y. Underlying sales growth was up 2.1%.

Dr Pepper Snapple (DPS) reported Q3 EPS of $0.98, beating by ten cents. Revenue of $1.58B, up 2.6% Y/Y, beat by $40M.

Nucor (NUE) reported Q3 EPS of $0.76, beating by three cents. Revenue of $5.7B, up 15.4% Y/Y, beat by $330M.

10/24/2014

Colgate-Palmolive (CL) reported Q3 EPS of $0.76, in-line. Revenue of $4.37B, down 0.7% Y/Y, missed by $70M.

Procter & Gamble (PG) reported FQ1 EPS of $1.07, in-line. Revenue of $20.8B, down 0.1% Y/Y, missed by $30M. PG was expected to declare a dividend very soon, as per my last posting, and it did come through, with an ex-dividend date of 10/22/2014. Yield is currently 3.02%.

United Parcel Service (UPS) reported Q3 EPS of $1.32, beating by three cents. Revenue of $14.29B, up 5.7% Y/Y, beat by $90M.

Ventas (VTR) reported Q3 FFO of $1.12, beating by a penny. Revenue of $779.03M, up 9.5% Y/Y, beat by $30.54M.

Before listing upcoming earnings, of which there are a few, I will note upgrades / downgrades which came out over the past two weeks on my stocks:

Colgate Palmolive (CL) was upgraded to Neutral at Bank of America (BAC). The prior rating was not indicated by Benzinga, the source from MarketWatch that I use.

Dr Pepper Snapple (DPS) was initiated at Neutral at BAC.

Darden Restaurants (DRI) was initiated at Market Perform at BMO Capital.

Coca Cola (KO) was upgraded to Buy at BAC. Same situation as CL, no prior rating given.

Potlatch (PCH) was upgraded from Sector Perform to OutPerform at RBC Capital.

Wal-Mart (WMT) was upgraded from Neutral to Buy at Gilford Securities.

Darden Restaurants (DRI) was downgraded from OverWeight to Neutral at Piper Jaffray.

General Dynamics (GD) was upgraded from Neutral to Buy at Buckingham Resources.

Paychex (PAYX) was upgraded from Hold to Buy at Argus.

Eaton (ETN) was upgraded from Equal Weight to OverWeight at Barclays.

Norfolk Southern (NSC) was initiated at Buy at UBS.

Energy Transfer Equity LP (ETE) was upgraded from Neutral to OutPerform at Baird.

Kimco (KIM) was upgraded from Sell to Neutral at UBS.

Vodafone (VOD) was initiated at Buy at Deutsche Bank. I took advantage of the recent sell off to buy back into VOD a few days ago.

Boardwalk Pipeline Partners LP (BWP) was upgraded from Neutral to Buy at BAC.

Magellan Midstream Partners LP (MMP) was also upgraded Neutral to Buy at BAC.

NuStar Energy LP (NS) was upgraded from UnderPerform to Neutral at BAC.

Intel (INTC) was downgraded from Equal Weight to UnderWeight at Morgan Stanley.

Magellan Midstream Partners LP (MMP) was upgraded to Buy at Ladenburg. Another upgrade action with no prior rating indicated.

Norfolk Southern was downgraded from OutPerform to Neutral at Credit Suisse.

American Capital Agency (AGNC) was re-instated at Market Perform at JMP Securities.

Freeport-McMoran (FCX) was upgraded from Sell to Neutral at Citigroup.

Newmont Mining (NEM) was upgraded from Neutral to Buy at Citigroup.

Westar Energy (WR) was downgraded from Buy to Neutral at UBS.

Coca Cola (KO) was downgraded from Buy to Hold at Gabelli.

Coca Cola (KO) was downgraded from Hold to Sell at Societe Generale (SocGen).

ENI S P A (E) was upgraded from Hold to Buy at SocGen.

Kinder Morgan Energy Partners LP (KMP) was downgraded from Buy to Hold at Argus.

Earnings reports expected on my stocks this week, by date, are shown next. As usual, assume reports will be before the open, unless otherwise indicated.

10/27/2014

Merck (MRK), American Capital Agency (AGNC).

10/28/2014

Novartis (NVS), Pfizer (PFE), Freeport-McMoran (FCX), then Kimco (KIM) and Digital Realty (DLR) after the close, and Gladstone Investment (GAIN), no time given.

10/29/2014

Eaton (ETN), Realty Income (O), Southern Company (SO), Waste Management (WM), Exelon (EXC), Total S A (TOT), then Kraft Foods (KRFT) and Williams Partners LP (WPZ) after the close, plus Statoil (STO) and Martin Midstream Partners LP (MMLP), no time given.

10/30/2014

ConocoPhillips (COP), Kellogg (K), Altria (MO), Public Service Enterprise Group (PEG), Royal Dutch Shell (RDS.B), SCANA (SCG), Sanofi (SNY), Diebold (DBD), Enterprise Products Partners LP (EPD), Consolidated Communications (CNSL), then Newmont Mining (NEM) and Ensco PLC (ESV) after the close.

10/31/2014

Chevron (CVX), Exxon Mobil (XOM), Magellan Midstream Partners LP (MMP), and NuStar Energy (NS).

Barring a major geopolitical event, earnings will be the focus this week. I will be leaving my buy orders in place, although they wonít be accomplishing anything unless a major decline occurs, for several days in a row. I was fooled a bit, in that I really thought that this time a 10% to 15% drop was in the cards. But instead, a Joker turned up, as did the stock market. As always, the best plan is to have multiple plans: Plan A if stocks decline, Plan B if they go up, and Plan C if they go nowhere. I think that should cover the possibilities.

JT

Posting for Two Weeks Beginning Monday 10/13/2014

Posted Thursday 10/09/2014 1:30 PM

I will be taking a break from posting for a couple of weeks, so I am generating this out-of-phase update to cover things until I can get back on the job.

As of this posting, volatility has returned to the market after a summer of complacency. Oil and related stocks in general, and contract drillers in particular, have been hit the hardest in recent weeks. The majors represent pretty good value now, although they certainly can go lower. The offshore rig firms have been in a free-fall in recent weeks, and they may not be done yet. These firms represent great values if a recovery is in the cards, but if not, a classic value trap. The continuing fall in crude prices in the face of ever-expanding unrest in the Middle East does not bode well for a recovery anytime soon.

Currently, only two of my stocks have announced firm ex-dividend dates for the two weeks beginning 10/13/2014:

Colgate Palmolive (CL), 10/15/2014, yield 2.20%.

Kayne Anderson Energy Development (KED), 10/15/2014, yield 6.44%.

It will have been three months, on 10/16/2014, since the last ex-dividend date for Procter & Gamble (PG), so I expect an announcement soon. Very little is guaranteed in stocks, or in life, for that matter, but a regular quarterly dividend from PG is pretty close. Iím not much worried about it.   

A few upgrades / downgrades of interest have come out this week:

ConocoPhillips (COP) was upgraded from Sell to Neutral at UBS.

Health Care REIT (HCN) was initiated at Buy at ISI Group.

HCP Inc. (HCP) was initiated at Neutral at ISI Group.

McDonalds (MCD) was downgraded from OverWeight to Equal Weight at Morgan Stanley.

Ventas (VTR) was initiated at Buy at ISI Group.

Intel (INTC) was initiated at Market Perform at Northland Capital.

MicroSoft (MSFT) was initiated at Market Perform at BMO Capital Markets.

Entergy (ETR) was downgraded fromOutPerform to Neutral at Macquarie.

Transocean (RIG) was upgraded from Sector Perform to OutPerform at Iberia Capital.

Earnings came out earlier this week on two of my stocks:

RPM International (RPM) reported on 10/09/2014 that FQ1 EPS was $0.73. Revenue of $1.2B, up 3.4% Y/Y, missed by $30M.

PepsiCo (PEP) reported just this morning (10/09/2014) that Q3 EPS was $1.36, beating by seven cents. Revenue of $17.21B, up 1.8% Y/Y, beat by $120M.

Donít look now, but earnings season is nearly upon us, starting slowly next week, and continuing to build the following week. Earnings reports expected in the next two weeks on stocks I follow are presented following, by date. Announcements are before market hours, unless otherwise noted.

10/14/2014

Johnson & Johnson (JNJ), then after the bell, Intel (INTC).

10/15/2014

El Paso Pipeline Partners LP (EPB), Kinder Morgan Energy Partners (KMP), and Kinder Morgan Inc. (KMI), all after the bell.

10/16/2014

Phillip Morris (PM).

10/17/2014

General Electric (GE).

10/20/2014

Potlatch (PCH).

10/21/2014

Coca Cola (KO), Kimberly Clark (KMB), McDonalds (MCD), Reynolds American (RAI), Verizon (VZ).

10/22/2014

General Dynamics (GD), Norfolk Southern (NSC), Northrop Grumman (NOC), then after the bell, AT&T (T) and Ensco (ESV).

10/23/2014

3M (MMM), Altria (MO), American Electric Power (AEP), DrPepper Snapple (DPS), Nucor (NUE), Raytheon (RTN), and after the bell, MicroSoft (MSFT).

10/24/2014

Colgate Palmolive (CL), Procter & Gamble (PG), United Parcel Servise (UPS), and Ventas (VTR).

Note that all data is from Etrade, and while usually correct, not always. If seriously interested in the exact dates, check the companyís website to confirm.

As noted, I will be dropping out for a while. But I will be following the market, and I will post a catch-up on Monday, 10/27/2014. It will be interesting to see if the contract drillers continue to slide, or if a bottom forms. I can hardly wait to find out. Ditto for oil prices.

JT

1st Posting for Week Beginning Monday 10/06/2014

Posted Sunday 10/05/2014 09:00 PM

Stocks dropped four out of five days last week, although a strong rally on Friday regained about 40% of the lost ground. While most economic indicators have come in modestly below expectations in recent weeks, giving the impression that the economy is slowing, Fridayís Jobs Report came in stronger than expected, which resulted in the stock rally. Even though most stock groups gained, the energy sector participated little, if at all. Energy has been the big loser since mid-July, as oil prices have declined, breaking below $90 Friday for WTI. The reason is economics 101 - reduced demand and excess supply. The turmoil in the Middle East and elsewhere has, thus far, not had any effect on supply.

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

10/08/2014

General Dynamics (GD), yield 2.01%.

General Mills (GIS), yield 3.25%.

AT&T (T), yield 5.20%.

Verizon (VZ), yield 4.43%.

Darden Restaurants, yield 4.26%.

10/09/2014

ConocoPhillips (COP), yield 3.91%.

Universal (UVV), yield 4.59%.

Several upgrades / downgrades came out last week on stocks I follow:

Waste Management (WM) was upgraded from Neutral to OutPerform at Wedbush.

Energy Transfer Partners LP (ETP) was upgraded from Equal Weight to OverWeight at Morgan Stanley.

QR Energy LP (QRE) was downgraded from Buy to Hold at Stifel.

Raytheon (RTN) was upgraded from Hold to Buy at Stifel.

Medtronic was initiated at Buy at Needham.

Exelon (EXC) was upgraded from Neutral to Buy at ISI Group.

Freeport-McMoran (FCX) was upgraded from Neutral to Buy at BAC.

Kellogg (K) was downgraded from Equal Weight to UnderWeight at Morgan Stanley.

Cisco Systems (CSCO) was initiated at OverWeight at Atlantic Equities.

Freeport-McMoran (FCX) was initiated at Buy at Brean Capital.

Johnson & Johnson (JNJ) was downgraded to Market Perform at Bernstein. The notice did not indicate the prior rating.

Eaton (ETN) was downgraded from OutPerform to Perform at Oppenheimer.

Johnson & Johnson (JNJ) was initiated at Neutral at Guggenheim.

Merck (MRK) was initiated at Neutral at Guggenheim.

MicroSoft (MSFT) was initiated at OutPerform at FBN Securities.

Newmont Mining was upgraded from UnderPerform to Sector Perform at RBC Capital.

Walgreen (WAG) reported on Tuesday 9/30/2014 that FQ4 EPS was $0.74, in-line. Revenue of $19.1B, up 6.5% Y/Y, beat by $80M.

The only stocks on my lists scheduled to report this week are RPM International (RPM), before the open on 10/8/2014, and Pepsico (PEP), before the open on 10/9/2014.

I took advantage of the recent slide to buy some more Seadrill (SDRL) below $25. Thatís it for SDRL for now, Iím maxed out. Obviously, I was early on SDRL Ė I should have waited longer to buy. As often happens when a stock declines rapidly, it went lower than I ever expected. I believe the sell-off is overdone, and that I will eventually come out ok, but I am certainly deep in the red at this point on SDRL. I am looking a buying some more ConocoPhillips (COP) this week if I can get it below $75, more Freeport-McMoran (FCX) if I can get it below $32, and I might start a position in Pan American Silver (PAAS) if I can get in close to $10, but not much over that level. Iím still going to hold a high cash level, just in case ďthe big oneĒ is coming. That is, the big one, as in a big market crash.

JT

1st Posting for Week Beginning Monday 09/29/2014

Posted Sunday 09/28/2014 09:30 PM

Stocks declined three days last week, and gained two, by substantial margins each day. While the end-of-week reading was only a little below the prior week, it was a real see-saw ride getting there. By recent standards, it was a volatile week. This week will end with the closely-watched monthly Jobs Report from the Department of Labor. Things may slow down a bit until Friday, as the market awaits the report.

Stocks on my lists going ex-dividend this week are:

Annaly Capital (NLY), 9/29/2014, yield 10.70%.

Raytheon (RTN), 9/29/2014, yield 2.38%.

Realty Income (O), 9/29/2014, yield 5.30%. O pays monthly.

Cisco (CSCO), 9/30/2014, yield 3.04%.

Sysco (SYY), sometimes referred to as ďthe other ciscoĒ, 10/1/2014, yield 3.09%.

Kimco Realty (KIM), 10/1/2014, yield 4.09%.

Medtronic (MDT), 10/1/2014, yield 1.93%.

Upgrades / downgrades from last week on my stocks were:

Enerplus (ERF) was upgraded from Sector Perform to OutPerform at RBC Capital.

Public Service Enterprise Group (PEG) was downgraded from Buy to Hold at Jeffries.

Walgreen (WAG) was downgraded from OverWeight to Equal Weight at Barclays.

Freeport-McMoran (FCX) was downgraded from Strong Buy to Neutral at Tigress International.

Freeport-McMoran (FCX) was initiated at OutPerform at Scotia Bank.

Pan American Silver (PAAS) was downgraded from Buy to Hold at TD Securities.

Freeport-McMoran (FCX) was assumed at Neutral at Credit Suisse. I assume that ďassumedĒ is synonymous with ďinitiatedĒ.

Medtronic (MDT) was reinstated at Buy at BAC.

Northrop Grumman (NOC) was upgraded from Hold to Buy at Argus.

Statoil (STO) was downgraded from Hold to Sell at Carnegie.

Northrop Grumman (NOC) was upgraded from Hold to Buy at Deutsche Bank.

Paychex (PAYX) reported on 9/24/014 that FQ1 EPS was $0.47, beating by a penny. Revenue of $666.8M, up 8.8% Y/Y, beat by $4.18M. The ever-more-popular payroll processor popped up to even more ridiculous heights after the report, closing Friday at $44.00, bringing the yield down to 3.45%. PAYX is a great company, but the stock is at least 15% over-valued, and is not a buy at these prices.

None of my stocks are due to report this week.

The contract drillers continued to slide last week, reaching new lows. I extended my deep dive into Seadrill (SDRL), buying a little more right at $27. I will add to my positions in Transco (RIG) and Ensco (ESV) below $30 and $40, respectively, if they continue on down. While I am not a big fan of closed-end funds (CEFs), the news that broke on Friday regarding Bill Gross exiting from Pimco has created a buy opportunity in some Pimco CEFs.  Two I am looking at, as brought to my attention by a Seeking Alpha article from author Morgan Myrmo, are Pimco Dynamic Income (PDI), yielding 7.21%, and Pimco Corporate Income Opportunity (PTY), yielding 9.08%. Two others are Pimco Dynamic Cr Income (PCI), yielding 8.53%, and Pimco Income Strategy II (PFN), yielding 9.31%. While Bill Gross wonít be managing these funds, Iím confident they will be well-managed by his successors, which likely were schooled by Mr. Gross. This is Mr. Myrmoís take on it, and I agree with him. This a classic example of a market over-reaction to news creating opportunity. And in a market where value opportunities are lacking, when one comes up, it should be taken advantage of.

JT