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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (60126)	11/25/2017 10:30:30 AM
From: E_K_S	Respond to of 78717

Re: Graham Number His valuation model also required 10 years of positive earnings, real tangible assets in the BV calculation minimal Goodwill, and historical earnings growth and stability. I use a modified GN screen that carries more risk. I will allow 1 or 2 years of losses over the past 10 years if there is a company specific and/or industry specific reason. I like to see new management and even a recent dividend cut and/or eliminated so FCF can go to fixing the balance sheet (typically to pay down debt). I would suggest referring to Graham's book including The Intelligent Investor and Security analysis. The GN screen is basically looking at the PE and BV. So the E (earnings) component is very important and must be examined. It's the earnings that eventually must grow again for the price to move higher. Hope that helps w/ those interested in this valuation model. EKS

To: E_K_S who wrote (60126)	11/25/2017 6:59:14 PM
From: David	Read Replies (2) \| Respond to of 78717

I didn't do any calculations but in the spirit of the thread started new positions in M and NWL yesterday. Have been watching NWL for a month or so, and liked some things I saw in the latest quarter's results. It is fairly close to book value, good PE, and although management has been divesting brands they have also been paying down debt. They did make one acquisition this year. Might be a bit early to say they are in growth mode, and they still have a few dissenting shareholders to deal with regarding the last big acquisition. To me things look like the management is taking care of the company. With M I was going for some yield, and although I hadn't looked at their financials recently I did remember thinking that they didn't look as dire some had been talking about. It looked like the big price decline had stopped and I saw an opportunity to move out of a REIT into a dividend stock. I'm not against REITs and still have a few for income purposes. I don't have a company pension and for some years now I have been trying to strengthen the portfolio with stronger companies where the dividend is covered by earnings, and that also provide some hope of dividend increases to combat the effects of inflation. Generally, I am wary of REITs ability to continually increase dividends even though I have seen a few impressive streaks. Neither of these positions are a big percentage of the portfolio at 1% each. I just thought they looked like well managed dividend companies at a decent entry point with less downside risk than upside potential. They both look like they have good cash flow and continued earnings potential that there is hope for company and dividend growth if they continue to be well managed. They both fit into my portfolio diversification at this time. Adding them also fits my investment planning with regard to dividend returns - I have a little more work to do in the JAJO period to cover my desired household budget.