Stocks I'm looking at. Tell me what you don't like about them.
Here's the background. I've accumulated some cash and am looking to add some positions to my portfolio. I'm not looking to time the market as my investment horizon is up to 30 years so I don't really care if there is a pullback or big run up this year or not. This next buy will only represent a small percentage of my portfolio as I've been investing and accumulating shares for over a decade. Here's four stocks which have managed to stay on my watch list and I'm looking for people to poke some holes in them.
TAL International Group (Intermodal Container Leasing)
http://www.google.com/finance?q=NYSE:TAL
International Paper (Paper and Packaging)
http://www.google.com/finance?q=NYSE:IP
Kimberly Clark (Personal Care and Health Brand)
http://www.google.com/finance?q=NYSE:KMB
General Mills (Food)
http://www.google.com/finance?q=GIS
Tell me what you don't like about their long term prospects, valuations, threats, company strategy, ect. I'm not looking for portfolio strategy advice in this thread, just specific negatives (or positives I guess) about these companies.
I'm no financial adviser, but I'll give my opinion based on a quick look at the stocks.
TAL - They look to have solid fundamentals and good cash flow. Margins are good. As far as negaties, my biggest concern is future growth. I don't know a lot about their market, but it seems pretty one-dimensional. Revenues fluctuate quite a bit from year to year. How much growth and scalability can their be in leasing containers? Are they capable of expanding into some emerging markets to gain more revenue? Are they researching new revenue streams besides buying and selling containers? Their dividend yield is currently close to 6%, so it looks like they're paying a significant portion of their earnings out to stockholders instead of reinvesting. If you want a high dividend paying stock for a few years, it seems like this is ok. But I don't see a lot of appreciate and growth out of the company in the longer term. You may do some research and find that they do have a lot of potential growth, but just based on a quick look, I don't really see it.
KMB - This stock is decent, imo. I don't see anything outstanding with them, but they pay a good dividend, and they have several different revenue streams under large, well-established brands. Growth seems to be pretty stagnant and it looks like their margins fell last year. I would say this is a pretty reliable dividend for the long term, but there are probably some better options out there. If their earnings increase and/or the price falls by 15-20%, I would be more interested in the stock. If you have any indication that they're investing into a new brand, product, etc that might spur some growth, then it might be a more enticing investment.
GIS - I think this is a pretty strong stock. They're growing steadily (although not as much in 2011) and paying a good dividend, so you get a good combination of steady income and potential stock appreciation. Their margins are growing as well as their earnings every year. If you're looking for negatives, I will say that their cash flow is a bit lower than what I like to see in a company, but it's not terrible. Of the stocks you have listed, I think this is my favorite. Fundamentally, they're the strongest and I think they have the best long term viability.
IP - This looks like a pretty good company. They're growing fairly quickly, cash flows are good, and the dividend is decent. My only worry here would be how much of the business is based on printing paper and other paper goods that are going to decline over the next several years. With so much information being made digital, you have to be confident that IP is going to be able to grow their packaging and distribution products. After a quick look, it seems like they're investing in new revenue streams, so they may see an increase in growth once these are implemented.
Originally Posted By graysonp:
I'm no financial adviser, but I'll give my opinion based on a quick look at the stocks.
TAL - They look to have solid fundamentals and good cash flow. Margins are good. As far as negaties, my biggest concern is future growth. I don't know a lot about their market, but it seems pretty one-dimensional. Revenues fluctuate quite a bit from year to year. How much growth and scalability can their be in leasing containers? Are they capable of expanding into some emerging markets to gain more revenue? Are they researching new revenue streams besides buying and selling containers? Their dividend yield is currently close to 6%, so it looks like they're paying a significant portion of their earnings out to stockholders instead of reinvesting. If you want a high dividend paying stock for a few years, it seems like this is ok. But I don't see a lot of appreciate and growth out of the company in the longer term. You may do some research and find that they do have a lot of potential growth, but just based on a quick look, I don't really see it.
KMB - This stock is decent, imo. I don't see anything outstanding with them, but they pay a good dividend, and they have several different revenue streams under large, well-established brands. Growth seems to be pretty stagnant and it looks like their margins fell last year. I would say this is a pretty reliable dividend for the long term, but there are probably some better options out there. If their earnings increase and/or the price falls by 15-20%, I would be more interested in the stock. If you have any indication that they're investing into a new brand, product, etc that might spur some growth, then it might be a more enticing investment.
GIS - I think this is a pretty strong stock. They're growing steadily (although not as much in 2011) and paying a good dividend, so you get a good combination of steady income and potential stock appreciation. Their margins are growing as well as their earnings every year. If you're looking for negatives, I will say that their cash flow is a bit lower than what I like to see in a company, but it's not terrible. Of the stocks you have listed, I think this is my favorite. Fundamentally, they're the strongest and I think they have the best long term viability.
IP - This looks like a pretty good company. They're growing fairly quickly, cash flows are good, and the dividend is decent. My only worry here would be how much of the business is based on printing paper and other paper goods that are going to decline over the next several years. With so much information being made digital, you have to be confident that IP is going to be able to grow their packaging and distribution products. After a quick look, it seems like they're investing in new revenue streams, so they may see an increase in growth once these are implemented.
Very well done!
Anyone else?
