Saturday, November 8, 2008

november limit orders

When I look out a few years many stocks are still looking like very good value at today's recession fear induced levels. As I continue to accumulate stocks for my non-registered portfolio during these dreary times, here are the current limit orders that I have placed with my online broker to expire on at the end of November:

United Parcel Service (UPS) at $45.01
General Electric (GE) at $18.00
Walgreen (WAG) at $21.50
IGM Financial (IGM) at $32.00
Reitman's Canada (RET.A) at $12.01

GE, IGM, and Reitman's are all yielding over 6% at my strike price. They should all report lower near term earnings but a 6%+ yield should limit downside and give me some nice immediate return in lean years. Walgreen is trading under 10x earnings at $21.50, and UPS at $45.01 is under 12x earnings and yielding 4%. Each of these stocks with the exception of Reitman's have touched levels below my strike price during the last month or so. I hope we get another test of the October 10 lows and I can pick up some or all of these great companies at bargain basement prices.

16 comments:

Jae Jun said...

I was looking at Walgreen myself and its a solid solid company. Barely a budge in margins over 10 years. That is what I call fantastic management.

Anonymous said...

GE's 6% yield is only good if it doesn't cut its dividend. After reading this:
http://money.cnn.com/2008/10/09/news/companies/colvin_ge.fortune/index.htm

I am not sure if it will maintain its dividend after 2009.

Potato said...

I've been pretty conflicted on what to do with this. On the one hand, the volatility has made for a couple of brief dips that limit orders like this could take advantage of... but I'm also afraid I wouldn't be conservative enough, and might be better off waiting until after the drop...

Nurseb911 said...

Happy Hunting MG!

Anonymous said...

hey MG what are your thoughts on preferred shares? The stability of a bond but better yields and possibility of capital gains.

For example sun life preferreds are yielding close to 7%

I'm thinking of getting into these since they are taxed as dividends!

Dividend Growth Investor said...

An alternative to limit orders could be selling naked puts at the desired entry prices and collecting the premium if the order expires worthless.

The drawback is that if the stock briefly falls below the entry price and the buyer of the put option fails to call it and sell you his stock. You might not end up buying the stock.

MG (moneygardener) said...

I usually just buy at market but I've been travelling so I want to have all of my bases covered. These are all entry points that I am comfortable buying in at even if the stocks drop lower than this post purchase. I have the wherewithall to buy more at a later date if the price weakness extends further.

Anonymous said...

what's so special about Reitman?

Sarlock said...

Reitmans is a well run company with a good dividend yield, but my fear is that they will be hit hard by weak retail sales and when the cash crunch comes, like it will for many retailers, they will have little choice but to cut back their dividend. You may be stuck with a weakening stock that no longer yields what you purchased it for.

This holiday retail sales season may be the most dismal in many many years.

MG (moneygardener) said...

Reitmans sports a pay out ratio of sub 45%. I don't expect a dividend cut even with a large reduction in earnings, which I do expect. The stock is pricing in a major recession and probably no earnings growth for many years which I feel is an overeaction. This company is very well run and knows how to retail. It is a long term hold for me and I will take short term pain for long term gain in the name. This period might actually be a positive for Reitmans as several U.S. retailers will likely retrench and stall, postpone, or cancel any Canadian forays.

Anonymous said...

Well you must have got GE, it fell below 18 (went as low as 17.74 though)

Sarlock said...

And RET hit $11.99 last I checked, so you nailed that one too.

Happy shopping!

MG (moneygardener) said...

Anon, i don't like the growth limitaiton of preffered shares. I'm young, I want to use the time ahead of me to my advantage.

I did get GE today at $18. I did not get Reitman's yet as I buy the non-voting shares for the liquidity.

MG (moneygardener) said...

Got Reitmans

Patrick said...

Ugh, what's with these low yields dude?
Why not check out a REIT like AX.un (or even REI.un)?
AX.un currently yields 12.86% and it's distributions should be close to 100% ROC.

Analyst Dennis Mitchell really likes it. See here: http://broadband.bnn.ca/?vid=112637

Mark said...

You have numbers of companies that are trading at levels that would have been unthinkable before this year. I think GE is a steal at its current levels. I have been a buyer at the $15 level and below.