How My Recommendations and Analyzes Have Worked Out? Part 1.

I wrote about my previous stock recommondations ‘My Previous Stock Recommendations’ 10th of March 2017. As I said at that time, it was too early to make far-reaching conclusions less than one year after I started. Now more time has passed and it’s a good time to come back. And now there are surely more new recommendations and analysis to gauge which I will comment in the Part 2. later.

Let us first go back to the older writings and articles. I wrote “How Can You Beat the Market?” 7th May 2016 and in this article was paragraph “Very Special Case.” There I wrote about investing in Russian companies after Crime crisis. Athough I admitted that political risk is often impossible to value I was convinced that market overreacted the situation and many of the best Russian companies were ridiculously undervalued. At that time, I recommended and owned two Russian companies: Gazprom and Sberbank. You could have been able to purchase Gazprom (OTCPK:OGZPY) at a price of $4.80. Right now share price is $4.42 and and the highest prices from January 2018 just over 5 USD – so no special success story. Instrad Sberbank (OTCPK:SBRCY) has done much better. The share price has risen from $7.73 to over $14 and at best the stock has been worth more than $20 a share. The investor has easily been able to, at least, double his investment in two years. Personally, I have already sold both stocks.

I analyzed Nokian Tyres (OHEL:NRE1V) 26th August 2016. It was trading at €32.95 at that time. You can buy the share now for €34.97 and during the January 2018 stock price was little over €40. Although annually increase of value was at best 10%, the dividend yield of the company has been 4-5% and growing. The management of Nokian Tyres has changed lately and the company faces new challenges. The company can still be long-term quality investment, but you should gauge the fundaments again. I still own my shares of Nokian Tyres (from June 2005), but I will do my deep analysis again in the near future.

Richardson Electronics (RELL) analysis was made first 15th September 2016, when the price of company was $6.94. RELL stayed long as a perennial net-net – which is typical for many net-nets. Last year I recommended to be patient what was the right advice. Right now RELL is traiding around $9.50 which gives acceptable 17% annual return.

About my short idea Bittium (OHEL:BITTI), written on 8th October 2016, I don’t have anything new to say after last year’s comments.

 

Then I wrote a large article about dividend investing. I picked up group of companies for dividend growth and dividend income investor.

My candidates for dividend growth investor were:

Wells Fargo (Price 10/24/16 $45.09 – price now $54.98/CAGR 12%)(Dividends 2016/2017 1.52-1.54)

Stable and safe, but disappointing dividend increase.

IBM (Price 10/24/16 $149.63 – price now $144.07/CAGR neg.)(Dividends 2016/2017 5.50-5.90)

A lot of negative sentiment after Buffett’s sales, although good dividend growth and yield.

Flowers Food (Price 10/24/16 $15.21 – price now $20.68/CAGR 20%)(Dividends 2016/2017 0.63-0.67)

Worked well so far, but debt load might deteriorate dividend growth.

Helmerich & Payne (Price 10/24/16 $66.48 – price now $64.12/CAGR neg.)(Dividends 2016/2017 2.76-2.80)

Industry problems are slowing down this good company.

Deere (Price 10/24/16 $86.43 – price now $147.11/CAGR 37%)(Dividends 2016/2017 2.40-2.40)

The company has done pretty well, but dividend growth has been a bit of a disappointment.

CVS Health (Price 10/24/16 $87.41 – price now $67.97/CAGR neg.)(Dividends 2016/2017 1.70-2.00)

CVS and its dividends are growing, but the industry has been more than challenging.

AXA (Price 10/24/16 €20.55 – price now €21.60/CAGR 3%)(Dividends 2016/2017 1.16-1.26)

Acting somewhat as expected.

Leifheit (Price 10/24/16 €29.98 – price now €25.00/CAGR neg.)(Dividends 2016/2017 1.05-1.05)

Some problems in US and particularly in France, but the worst is already behind.

Investor B (Price 10/24/16 323.20 SEK– price now 371.70 SEK/CAGR 9%)(Dividends 2016/2017 11.00-12.00)

Quality company and good results.

 

And my candidates for dividend income investor were:

Johnson & Johnson (Dividend yield 10/24/16 2.7% (price $113.44) – Dividend yield now 2.8% ($121.11)) (Dividends 2016/2017 3.15-3.32)

Very stable company and highly appropriate stock for dividend income investor.

Verizon (Dividend yield 10/24/16 4.7% (price $48.20) – Dividend yield now 5.0% ($47.46)) (Dividends 2016/2017 2.29-2.34)

VZ is model company for dividend income imvestor.

Consolidated Edison (Dividend yield 10/24/16 3.6% (price $76.17) – Dividend yield now 3.8% ($73.90)) (Dividends 2016/2017 2.68-2.76)

Very stable, defensive and recession-resistant Dividend Aristocrats and utility.

Southern Company (Dividend yield 10/24/16 4.4% (price $50.53) – Dividend yield now 5.2% ($44.57)) (Dividends 2016/2017 2.22-2.30)

High-yield utility, but earnings are challenged in the near-term.

Colgate-Palmolive (Dividend yield 10/24/16 2.2% (price $70.92) – Dividend yield now 2.6% ($63.31)) (Dividends 2016/2017 1.55-1.59)

The company has paid dividends for over 100 years. Whether the dividend yield is high enough for dividend income investor?

HCP (Dividend yield 10/24/16 6.4% (price $35.85) – Dividend yield now 6.2% ($23.95)) (Dividends 2016/2017 2.10-1.48)

Healthcare REIT HCP reduced its dividend only because it spun off ManorCare. HCP has a strong, diversified real estate portfolio and the company’s dividend has a high margin of safety.

Sanofi (Dividend yield 10/24/16 4.2% (price €69.20) – Dividend yield now 4.4% (€68.25)) (Dividends 2016/2017 2.96-3.03)

Dividends are increasing and stock valuation is moderate.

Sampo A (Dividend yield 10/24/16 5.2% (price €41.74) – Dividend yield now 6.3% (€41.39)) (Dividends 2016/2017 2.30-2.60)

Great yield plus stable and safe company.

 

I wrote about Japanese net-nets on 9 November 2016.

My net-net picks were:

Recommendations given                 11/9/16              5 months later           19 June 2018

Otec                                                         JPY 911             1500 (65% Return)    1999 (63%)

Charle                                                     JPY 458              511 (12%)                      518 (8%)

Original Engineering Consultants   JPY 377            478 (27%)                  876 (69%)

Tiemco                                                     JPY 492               488 (-1%)                   617 (15%)

Yotai Refractories                               JPY 310              386 (25%)                  680 (63%)

Daiken                                                      JPY 609               866 (42%)                  830 (21%)

Nansin                                                      JPY 419               555 (32%)                  577 (22%)

Taiyo Kisokogyo                                   JPY 689              770 (12%)                  1418 (57%)

Terasaki Electric                                  JPY 750              912 (22%)                  1357 (45%)

Kawaden Corp                                      JPY 2045            2269 (11%)               2638 (17%)

Nadex                                                        JPY 492              664 (35%)                  1129 (68%)

Toba Inc                                                   JPY 2048            2195 (7%)                 3240 (33%)

Yonkyu                                                     JPY 1120            1231 (10%)               1520 (21%)

Final results                                                             55% annual return   38% annual return

Japanese net-nets have been big success. Holding above listed companies little over a year and half would have provided 38% annual return (without dividends). The investor could hardly hope for better.

 

My 2016 Christmas gifts for bargain hunter were as follows.

First general undervalued companies and turnaround candidates:

Recommendations given                 12/19/16             6/19/18              Annual return

Nokia                                                           €4.65                  €5.15              7% + dividend yield 3%

Novo Nordisk                                         $35.41                $44.69                17% + 3%

Resolute Forest Products                 $4.82                  $9.58                  58% + 0%

Gilead Science                                         $73.87                $70.30               -3% + 2.5%

Mylan                                                           $37.49                $38.54                2% + 0%

Final results                                                                                                            16% + 2%

And then deep value net-nets were:

Recommendations given                     12/19/16           6/19/18             Annual return

support.com                                                $2.04                  $2.98                   29%

S i2i Ltd                                                          SGD 1.73           SGD 2.65           33%

Sing Holdings                                              SGD 0.31           SGD 0.43           24%

SP Corporation                                           SGD 0.48           SGD 0.79           39%

Brook Crompton Holdings                   SGD 0.32           SGD 0.73           73%

Final results                                                                                                                  40%

Undervalued and turnaround companies worked together satisfactorily mainly because good results of Resolute Forest Products. Company-specific differences in the results were large. And could you imagine five net-nets gave again brilliant returns!

 

At the beginning of 2017 I wrote about quality Swedish company called Assa Abloy (OSTO:ASSA B). In the long-term it could be good compounding investment, but the price has been challenging lately. After my writing it has retuned 10% plus 2% dividend yield annually. Its total return has been just as expected. If you want to get better odds for a higher return, then you have to wait until the P/E ratio drops to 16-18 levels.

 

In February 2017, I screened the companies using EV/EBIT ratio. After that I made some additional value and financial risk tests (more in my article Other Value Opportunities from UK). Finally, I found all my companies from homebuilding industry in United Kingdom.

List of companies:

Recommendations given                02/03/17             6/19/18              Annual return

Abbey PLC                                             £12.00                £13.35                8% + dividend yield 1%

Bellway                                                   £25.68                £32.77                19% + 4%

Bovis Homes                                         £8.56                  £12.34                30% + 4%

M Winkworth                                       £0.99                  £1.28                  20% + 6%

Final results                                                                                                        19% + 3.5%

Once again deep value gives good results.

 

All these analyzes have been written before my first summary ‘My Previous Stock Recommendations’ on 10th March 2017. In the second part I will make a summary later written recommendations and analysis.

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