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Strategies & Market Trends : Value Investing

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From: E_K_S	1/26/2010 11:58:04 PM
	1 Recommendation Read Replies (4) of 78748

Chasing Yield but with a Value twist. My goal was to lock in a yield above 6%, buy a stock close to BV, pick companies that have pricing power (ie able to raise prices) and find a hidden asset (usually in a subsidiary) that is undervalued. Here are two stocks that popped up on my screen. finance.yahoo.com In June 2006 EDE purchased the Missouri natural gas distribution operations of Aquila, Inc. for $102 million which consists of 1,192 miles of transmission and distribution mains. The company sold 3.8 million shares in a secondary offering at $20.25/share that raised $72.3 million which was applied to the purchase price. $30 million in long term debt (6.82% due 2036) was issued to pay the balance. At today's stock price of $18.50/share, you get the NG pipeline assets at a 10% discount to what was originally paid (through the secondary) in 2006. With Pepco Holdings, Inc. (POM) you get a secure dividend yielding 6.6% (reflecting a 91% payout) which currently sells at 86% of BV. Both utilities have maintained their pricing power receiving their requested increases when submitted. On 12/30/2009 POM submitted an increase in distribution rates in Maryland, only the third delivery rate increase in more than 12 years. I expect it to be approved which should support a steady uptrend perhaps to previous 2007 highs of $30/share. A reversion to the mean price for POM would be around $25.00/share a 51% increase from current levels. Both these stocks Empire District Electric Co. (EDE) and Pepco Holdings, Inc. (POM) provide a portfolio a good dividend yield and each offers a unique "value" twist. I started new positions in each company and will continue to add shares on any pull back to their 50 week MA. Both stocks sell below their 50 Day MA and 50 Month MA but are well above their 50 week MA. --------------------------------------------------------------- Also added to my Nokia Corp. (NOK) position. My last buy at the current price was 2/27/2003. Last sale was @ $22/share on 1/31/2007. The stock now yields 4.1% which is good for a technology stock. The Nokia Siemens Networks venture continues to land new business constructing wireless network infrastructure around the world. This is a growing and profitable business with new projects in China, Brazil and India. nokiasiemensnetworks.com This segment of their business is often overlooked. Their mobile phone business is profitable but loosing market share. I expect NOK to hold their own and maybe even surprise the street with their next generation smart phones. EKS

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