Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• ADP – Automatic Data Processing – Undervalued (upgraded) & Enterprising
• CB – Chubb Corp – Undervalued & Defensive
• CVS – CVS Caremark Corp – Undervalued & Defensive
• NUE – Nucor Corp – Undervalued & Defensive
• SYY – Sysco Corp – Fairly Valued & Enterprising

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not hold positions in any of the listed companies at the time of publication.

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Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• AEP – American Electric Power Co – Undervalued & Defensive
• AFL – Aflac Inc – Fairly Valued (downgraded) & Defensive
• BHI – Baker Hughes Inc – Undervalued & Defensive
• BMS – Bemis Co Inc – Overvalued & Defensive
• DIS – The Walt Disney Co – Undervalued & Defensive
• ETN – Eaton Corp – Undervalued (upgraded) & Defensive
• GPC – Genuine Parts Co – Fairly Valued & Defensive
• GPS – Gap Inc – Fairly Valued (upgraded) & Defensive (upgraded)
• GR – Goodrich Corp – Undervalued & Defensive
• JNJ – Johnson & Johnson – Undervalued & Enterprising
• LOW – Lowe’s Companies – Fairly Valued & Defensive
• MSFT – Microsoft Corp – Undervalued & Enterprising
• NKE – Nike Inc – Undervalued & Defensive
• NSC – Norfolk Southern Corp – Undervalued & Defensive
• PG – Proctor & Gamble Co – Undervalued & Defensive
• UNH – UnitedHealth Group – Undervalued & Defensive
• UNP – Union Pacific Corp – Undervalued & Defensive
• WMT – Walmart Stores Inc – Fairly Valued (downgraded) & Defensive

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author held a long position in DIS at the time of publication.

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Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• AXP – American Express Company – Overvalued & Speculative (downgraded)
• HNZ – H.J. Heinz Company – Undervalued & Enterprising
• INTC – Intel Corp – Overvalued & Enterprising
• ISH – International Shipholding Corp – Undervalued & Enterprising
• MDT – Medtronic Inc – Fairly valued (downgraded) & Enterprising (downgraded)

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not own any of the above companies at time of publication.

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What Worked

• Valuation Database – In March, I created the valuation database as a way to easily navigate through the companies I track on the site. Overall, it seems to have been very helpful to readers. It has provided inspiration to continue adding companies to the site along with requiring me to continue to keep the site updated.
• Portfolios – In the fall I introduced a number of portfolios based on screens of the database. The posts of the screens consistently brought more traffic than any other type of posts .
• Festival of Stocks – Over the last several months I have hosted the Festival of Stocks on a fairly regular basis. The festival is a blog carnival held on Mondays that features a number of excellent finance related posts from a variety of blogs.
• Seeking Alpha – I also began a relationship with Seeking Alpha this year which has been very helpful to the growth of the readership base of this site.

What Didn’t Work

• Modern Graham’s Friday Linkfest – At one point I attempted to create a weekly feature sharing articles I found interesting during the week. I also sought to have readers submit articles they found interesting. Unfortunately, the few submissions I received did not follow the rules I set up for the feature and overall it seemed to take more work than the value it provided.
• Modern Graham Academy – This is a part of the site I hope to revive in 2010 (tomorrow I’ll outline some goals for the year) but the fact remains it was an unsuccessful venture in 2009.

Biggest Lesson Learned

• Importance of dividends – I’ve always understood that dividends are a critical part of an investment strategy, but this year I feel like that fact has become ever more evident. My old view was that dividend payments are a great indicator of a company’s financial strength (which they are) but now it is clear they also can be used to boost investment returns, stablize downside risk or simply provide income. My knowledge base related to dividends increased significantly from following posts at Dividends Value, The Dividend Guy, and Dividend Growth Investor.

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Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• BGS – B&G Foods Inc – Undervalued & Enterprising
• DOV – Dover Corp – Undervalued & Defensive
• GRMN – Garmin Ltd – Undervalued & Defensive
• MTSC – MTS Systems Inc – Undervalued & Enterprising
• NPK – National Presto Industries Inc – Undervalued & Defensive
• PFE – Pfizer Inc – Fairly valued (downgraded) & Defensive
• RBC – Regal-Beloit Corp – Undervalued & Defensive
• TDW – Tidewater Inc – Undervalued & Defensive

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not own any of the above companies at time of publication.

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I didn’t have time to add any new companies to the database, but you can view more by visiting the valuations database in the navbar.  There are 145 companies in the database including all 30 components of the Dow Jones Industrial Average!

Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• AMGN – Amgen Inc – Undervalued & Enterprising
• BAX – Baxter International Inc – Undervalued & Defensive
• EVEP – EV Energy Partners LP – Undervalued & Enterprising
• NAT – Nordic American Tanker Shipping Ltd – Overvalued & Speculative (downgraded)
• OLN – Olin Corp – Undervalued & Enterprising
• PMD – Psychemedics Corp – Undervalued (upgraded) & Enterprising
• SPH – Suburban Propane Partners LP – Undervalued & Enterprising
• EXC – Exelon Corp – Undervalued & Defensive

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not own any of the above companies at time of publication.

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Before I get to this week’s submissions from some of the best financial blogs on the web, I want to take a moment to introduce new readers to our site here at ModernGraham.  Since August of 2006 we have been devoted to the study and modernization of Benjamin Graham’s teachings from his classic book, The Intelligent Investor. Some features you may find interesting include our valuation calculator, where you can estimate the value of a company based on the formula Graham presented, our valuation database, a growing list of companies that we are tracking, and our ValueInvesting Search Engine, a search engine focused on providing content relevant to the value investor.  Please feel free to subscribe to our site, by RSS feed or email, and come back again to use our features.  In addition, we are currently looking for guest authors as well as full-time contributors.  If you are interested, please contact us.

Now, on to this week’s submissions.  There are a lot of great posts included here from some great writers and thinkers.  Enjoy!

Magic Diligence presents Magic Formula Stock Review: McKesson (MCK).   McKesson enjoys a tight oligarchy in its pharmaceutical distribution business, and a highly profitable healthcare software unit adds both margin and growth advantages over competitors. A good Magic Formula buy.

ETF Database presents The Definitive Guide To Inverse Gold ETF Investing.

ZachStocks presents Talecris Bounces Off IPO Price – Strong Growth Potential.   Talecris Biotherapeutics (TLCR) is trading above its IPO price and should gain more strength due to strong earnings. Debt levels are high but strong earnings should bolster the stock price.

Dividends Value presents Cincinnati Financial Corp. (CINF) Dividend Stock Analysis.   Cincinnati Financial Corp. markets primarily property and casualty coverage; it also conducts life insurance and asset management operations. Linked here is a detailed analysis and commentary.

Darwin’s Finance presents Will the ETF be Viewed as Another Financial Innovation Disaster? Could ETFs be the next financial innovation to backfire? While the low fees and tax efficiency seem to be huge wins for retail investors, there are several hidden bombs waiting to explode that we may not have considered yet.

The StockMasters presents Sony Corp.’s PS3 a Big Hit, Also a Big Cost (SNE).

Bargaineering presents Introduction to FOREX Investing.

Personal Dividends presents Disciplined Investing: Value Averaging versus Dollar Cost Averaging.

The Digerati Life presents Where To Invest Extra Cash and Savings Today.

The Dough Roller presents Frontier Markets: To boldly go where few investors have gone before!

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• A – Agilent Technologies Inc – Overvalued & Speculative
• ABC – AmerisourceBergen Corp – Undervalued & Speculative
• ACS – Affiliated Computer Services Inc – Overvalued & Speculative
• ADBE – Adobe Systems Inc – Overvalued & Enterprising
• ADI – Analog Devices Inc – Overvalued & Enterprising

Due to the increasing number of companies in the database and the amount of time involved, I will only be updating on a three-month basis companies  that are Enterprising or Defensive.  Companies that are considered speculative will only be updated once a year.

The following companies were updated this week:

• PM – Philip Morris Int’l – Undervalued & Speculative (downgraded)

Don’t forget to check out the valuation calculator.

In addition, we are looking for more contributors.  If you’re interested in being a guest writer or a full-time contributor, please contact us.

FULL DISCLOSURE:  Author did not own any of the above companies at time of publication.

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To see the portfolio, you can view this google spreadsheet.

This month’s screen resulted in the following companies being targeted.

• EVEP – EV Energy Partners (11.64% dividend yield)
• PMD – Psychemedics Corp (9.6%)
• NRP – Natural Resource Partners LP (9.05%)
• BGS – B&G Foods Inc (7.94%)
• SPH – Suburban Propane Partners LP (7.47%)
• ISH – International Shipholding Corp (6.02%)
• NPK – National Presto Industries (5.96%)
• BMY – Bristol-Myers Squibb Company (4.90%)
• OLN – Olin Corp (4.77%)
• DD – E.I. du Pont de Nemours and Company (4.74%)

The significant difference between this month and last is that I have decided to include limited partnerships in the screen after some readers suggested I do so.  As a result, EVEP, NRP, and SPH were added and PFE, MRK, and PM were dropped from the portfolio.

The following mock transactions were made this month:

• Received $0.16/share dividend on 565 shares of PFE for $90.40 (before sale).
• Received $0.20/share dividend on 573 shares of OLN for $114.60.
• Received $0.41/share dividend on 302 shares of DD for $123.82.
• Received $0.50/share dividend on 290 shares of ISH for $145.00.
• Sold 565 shares of PFE for $10,266.05, gain of 9.8%.
• Sold 311 shares of MRK for $11,261.31, gain of 14.5%.
• Sold 202 shares of PM for $9,714.18, gain of 1.54%.
• Sold 84 shares of PMD for $516.60, gain of 0.3%.
• Sold 14 shares of BGS for $119.84, gain of 4.52%.
• Sold 20 shares of BMY for $506.20, gain of 12.39%.
• Sold 1 share of DD for $34.58, gain of 7.59%.
• Bought 24 shares of ISH for $797.04.
• Bought 1 share of NPK for $93.17.
• Bought 48 shares of OLN for $804.96.
• Bought 402 shares of EVEP for $10,391.70.
• Bought 437 shares of NRP for $10,404.97.
• Bought 237 shares of SPH for $10,404.30.

Here is the portfolio in comparison to the DJIA and the S&P 500:

Photo provided by Acomment.

FULL Disclosure:  At the time of publication, author held a long position in NPK and PFE.

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This screen targets the top dividend payouts out of the companies I follow here on Modern Graham that pass the tests for the enterprising investor, updated from Benjamin Graham’s tests presented in The Intelligent Investor.

Specifically, here are the tests required for the enterprising investor:

Enterprising Investor – must pass at least 4 of the following 5 tests:

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1
3. Earnings Stability – positive earnings per share for at least 5 years
4. Dividend Record – currently pays a dividend
5. Earnings growth – EPSmg greater than 5 years ago

Additionally, a company can qualify for the enterprising investor if it passes the tests for the defensive investor.

This month, the screen produced the following companies:

• EVEP – EV Energy Partners (11.64% dividend yield) – EV Energy Partners is a limited partnership engaged in the exploration, development and production of oil and natural gas properties.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be only $1.04, considerably lower than last year’s $11.14.  However, normalized earnings per share (based on a five year weighted average of the earnings per share) will remain at $4.28.  This is the first time EVEP has appeared in this screen (in response to some reader comments I decided to include limited partnerships in the screen).
• PMD – Psychemedics Corp (9.6%) – Psychemedics Corp provides testing services for substance abuse.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $0.24 and normalized earnings per share will be $0.58.  This is the third consecutive month PMD has appeared in this screen.
• NRP – Natural Resource Partners LP (9.05%) – Natural Resource Partners is a limited partnership involved in coal properties in the United States.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $0.92, the lowest level since 2003.  However, normalized earnings should be $1.43.  This is the first time NRP has appeared in this screen.
• BGS – B&G Foods Inc (7.94%) – B&G Foods produces and sells food products.  The company passes four out of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $0.59, and normalized earnings per share should be $0.45.  This is the third consecutive month BGS has appeared in this screen.
• SPH – Suburban Propane Partners LP (7.47%) – Suburban Propane Partners is a limited partnership focused on energy distribution products.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $4.98 and normalized earnings per share will be $3.82, both increases over last year.  This is the first time SPH has appeared in this screen.
• ISH – International Shipholding Corp (6.02%) – International Shipholding Corp provides marine trasportation through charters.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $4.97 and normalized earnings per share will be $3.50, both increases over last year.  This is the third consecutive month ISH has appeared in this screen.
• NPK – National Presto Industries (5.96%) – National Presto is primarily a producer of small appliances.  The company is a favorite of mine (and was a favorite of Graham himself – see chapter 15 of The Intelligent Investor) and passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $7.67 and normalized earnings per share will be $6.11, both significant increases over last year.  This is the third consecutive month NPK has appeared in this screen.
• BMY – Bristol-Myers Squibb Company (4.90%) – Bristol-Myers Squibb is a pharmaceuticals company.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $1.70 and normalized earnings per share will be $1.34.  This is the third consecutive month BMY has appeared in this screen.
• OLN – Olin Corp (4.77%) – Olin is a chemical and ammunitions producer.  The company passes all of the tests of the enterprising investor.  I estimate earnings in 2009 will be $0.64 and normalized earnings per share will be $1.37, both decreases from last year.  This is the third consecutive month OLN has appeared in this screen.
• DD – E.I. du Pont de Nemours and Company (4.74%) DuPont is a diversified company.  The company passes four of the five tests for the enterprising investor (failing only the debt to net current assets requirement).  I estimate earnings in 2009 will be $1.78 and normalized earnings per share will be $2.41.  This is the third consecutive month DD has appeared in this screen.

Photo by Benjamin Clark.

Full Disclosure:  At time of publication, author was long NPK.  See a list of the author’s current holdings.

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