Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (6354)	9/12/2020 12:54:37 PM
From: E_K_S	1 Recommendation Recommended By robert b furman Read Replies (2) \| Respond to of 13803

I also had to buy a bit more KMI too. I am long on oil & NG pipelines and have focused my core Oil holding in CVX. Will sell a few high cost shares in CVX at/above $100.00. Also looking at more IBM w/ their 5% dividend. Still think their new server chip design & production is being overlooked by the industry. I like IBM better when I could buy when their div yield was 6%. I do believe w/ the very low 10 year Treasury at 0.067%, these steady dividend payers will see PE expansion just to normalize the Treasury spread between $SPX div return and Bonds (this around 2.5%). $SPX PE now at 30x and CVX forward PE at 15x, IBM at 11x, KMI at 22x (fairly valued), BGS 12.5x, T 9.6x and INTC 11.8x should see their PE expand to at least 20x (ie $SPX PE moves lower from 30x to something near 20x). The longer term winners will be those companies w/ low PE's (< 17x), that have been consistent div payers (w/ low payout ratios) that have moderate 'Organic' growth and have a world wide market for their products & services. I also believe NG will be the go to transition fuel for decades to come. FWIW, I replenished my KMI shares that I sold covered calls on, so on next run above $15/share, I will sell another chunk of covered calls (out to capture two div payments). The one area I am watching is the impact on their cash flow due to new contract terms/rates for the NG gathers & producers from the Chesapeake structured BK. I show KMI analyst estimates for 2021 +4.6% to $0.92/share so at $15/share that implies a PE at 16x about 1/2 that of the $SPX 500. They may cut their $1.05/share annual divided that yield 8.2% but in this business it's all about FCF and capacity utilization. Therefore, I believe KMI is fully valued at $15/share but could change if/when long term delivery contracts are renegotiated and put into place. The wild card is what their plans are for future CapX and if that is lower then FCF increases, no need to cut dividend and their payout ratio falls substantially. EKS