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Prospect Capital’s Insiders Have a Mixed Trading Record

Prospect Capital’s (PSEC) insiders have a good track record of making large purchases near major bottoms in the stock.

But then, they also have a good track record of making large purchases near major tops too…

CFO Brian Oswald made news this week by making a large, 50,000 share purchase on the open market valued at about $336,500. He’s already up modestly on the position, and I expect he’ll make good money having bought where he did.

But Oswald and directors Eugene Stark and William Gremp were also heavy buyers in March and May of this year, and they are well under water on those positions.

In late 2015 and early 2016, virtually the entire executive team — and particularly CEO  John Barry — went on a buying spree, snapping up several million shares at prices between $6 and $7 per share. That proved to be an excellent time to buy, as the shares rose by over 30% and paid dividends along the way.

But, they were also buying aggressively in late 2014, and those purchases are still well under water.

I should be clear that I consider Prospect Capital to be very cheap at today’s prices, trading at just 77% of book value, and I expect anyone buying at today’s prices to do well. I recent tiptoed back into the stock after selling in anticipation of the dividend cut.

But I also believe this is a stock better traded than held for long-term investment. Buy it when it trades below 80% of book value, but look to take profits when it reaches 90%-95% of book value. Or at the very least, keep your stops tight when it gets into that range.

But while I like the stock at today’s prices, I would recommend taking the news of Prospect Capital insider buying with a healthy grain of salt. It shows skin in the game by management, and I like that. But their track records as market timers hasn’t exactly been the best.

Disclosure: Long PSEC

 

 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Low-Risk Retirement Stocks

The following is an excerpt from 5 of the Best Low-Risk Retirement Stocks on the Market

When you think of “retirement stocks,” a few things come to mind. You’re generally looking for something timeless — a company that has been around for decades and appears to be future proof. After all, if you’re going to depend on this stock to support you in your golden years, you don’t want it to be at risk of technical obsolesce in a few years.

A good retirement stock also will have an iron-clad balance sheet with low or very manageable levels of debt. The quickest way to make a stable, boring business risky is simply to lever it up.

And ideally, you’d also like to see your retirement stock pay a dividend and have a long history of increasing its payout. A good dividend reduces your need to sell shares at what could be lousy prices during bear markets.

So today, we’re going to take a look at five low-risk retirement stocks that you can depend on in your golden years. I’ll give you fair warning: At today’s market prices, not all of these stocks are priced to deliver particularly high returns. You might want to wait for a pullback before really backing up the truck and buying any of these aggressively.

All the same, if you’re looking for companies that should survive the end of days, this list is for you.

I’ll start with the Oracle of Omaha’s baby, diversified conglomerate Berkshire Hathaway Inc. (BRK.B).

I’ll also warn you up front: Berkshire, unlike the rest of the stocks on this list, doesn’t pay a dividend. But there’s a reason for that. Every would-be dollar paid out as a dividend is a dollar that is no longer available for Warren Buffett to invest. When you have the most legendary stock picker in history running the portfolio, you let the man work.

Berkshire Hathaway’s portfolio is eclectic. It’s largest public holdings are the Kraft Heinz Co (KHC), Wells Fargo & Co (WFC), Apple Inc (AAPL) and The Coca-Cola Co (KO) — companies that, with the exception of Apple, all have very old business models that haven’t changed much over the decades and are themselves ideal retirement stocks. (And nothing against Apple, by the way; I’m long the company myself. It’s just not what I’d consider a prototypical “retirement stock.”)

Berkshire also owns See’s Candy, Justin Boots, Nebraska Furniture Mart and a host of other private companies that have also been around for decades with time-tested business models.

Yes, Mr. Buffett is 86 years old and won’t be running things forever. But he has assembled a fantastic portfolio of retirement stocks that should still be churning out profits decades after Mr. Buffett goes to that big stock exchange in the sky.

To read the rest of the article, see 5 of the Best Low-Risk Retirement Stocks on the Market

Disclosures: Long AAPL, EPD, O and OHI

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Prospect Capital at Extreme Valuations… Again

$PSEC Price/Book ratio at extreme lows… again.

— Charles Sizemore (@CharlesSizemore) Sep. 6 at 09:34 AM

Post dividend cut, Prospect Capital (PSEC) is now trading for 75% of book value. As Prospect’s history has shown, it can always go lower. Though if you’re time horizon is 6-12 months, this is likely a good opportunity to collect an 11% yield while waiting for the stock to appreciate to a more “normal” 85%-90% of book value.

I don’t currently own Prospect, but it’s on my watch list.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Cheap Dividend Stocks

The following is an excerpt from 7 Cheap Dividend Stocks to Buy for $20 or Less.

I have a well-deserved reputation as a cheapskate. I brown bag my lunches most days, keep my thermostat at 79 degrees, and — if my wife doesn’t intervene — I’ll generally wear my clothes until they’re moth-eaten and threadbare. I’m good with that. As Benjamin Franklin said, a penny saved is a penny earned.

Perhaps not shockingly, I take the same approach in my investing. I like cheap stocks and, specifically, cheap dividend stocks. I like getting paid in cold, hard cash, after all.

Now, as a general rule, price and value are two very different things. For example, Apple Inc. (AAPL) trades for well over $150 per share. But considering it trades for just 14 times estimated 2017 earnings, I’d argue it’s one of a handful of truly cheap dividend stocks to buy in an otherwise expensive market. At the same time, Snap Inc (SNAP) trades for less than $13 per share, barely half its IPO price … yet I’d argue that the profitless piece of junk is still too expensive.

But sometimes a stock that has a cheap share price really is a cheap stock. And today, we’re going to take a look at seven cheap dividend stocks to buy, all of which are trading for less than $20 per share. With a hundred dollar bill, you could buy at least five shares of any of these and still have cash left over.

I’ll start with American auto giant Ford Motor Company (F). Like poor old Rodney Dangerfield, Ford gets no respect these days. The stock trades at a pathetic $11 per share, which amounts to just seven times earnings and 0.29 times sales.

That’s not just cheap — that’s going-out-of-business cheap. Yet Ford today is, ironically, in its best financial health in decades. Yes, sales are down this year, and estimates have been consistently pushed lower. But you have to remember that last year was a record year and that some sort of pause was inevitable.

And for crying out loud, Ford’s sales are hardly in the dumpster. Sure, unit sales were down 7.5% last month. But this was driven mostly by a drop in lower-margin sedan sales. Higher-margin SUV sales were actually higher for the month. And analysts are still expecting total industry sales to top 17 million for full-year 2017. That’s slightly lower than last year’s number, but very much in line with the boom years the mid-2000s.

Ford yields and attractive 5.4% at current prices, making it one of the cheapest dividend stocks to buy today.

To read the full article see  7 Cheap Dividend Stocks to Buy for $20 or Less.

Disclosures: Long AAPL, F.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Blue Chip Stocks You Should DUMP

Photo credit: JD Hancock

The following is an excerpt from 7 Blue-Chip Stocks You Shouldn’t Hold Anymore.

Marriage should be for life. But stock ownership? Not so much. Yes, I understand that a long-term buy-and-hold strategy keeps fees and taxes low and has generally proven to be a solid plan. But not all stocks are keepers — even supposedly reliable blue-chip stocks. Sometimes you’re better off casually dating them for a while and then moving on.

So, when should you consider parting ways with a long-held blue-chip stock? I have a few general guidelines.This obviously applies to speculative plays like biotech companies, tech startups or oil and gas exploration companies. But it can just as easily apply to established blue chips — even ones you might have held for years or even decades.

  • To start, do an honest assessment of the company’s growth prospects. If its market is mature and not likely to see significant growth, it might be time to move on.
  • Also, look for the possibility of technological obsolescence. If you’re not sure what I’m talking about here, look at what Apple’s (AAPL) iPhone did to BlackBerry (BBRY).
  • Price is also a consideration. If a blue chip is simply too expensive, then your returns going forward likely will be disappointing.
  • But more than anything, think of opportunity cost. Money you have invested in a given stock is money you can’t invest elsewhere. So make sure that stock is the best use of your limited funds.

Today, we’re going to look at seven blue-chip stocks that you probably shouldn’t hold anymore.

All had their day in the sun … but now it’s time to move on.

 

Blue-Chip Stocks to Dump: Altria (MO)

I’m not much of a believer in socially responsible investing. It’s not that I advocate being socially irresponsible, but more that I don’t want to arbitrarily limit my options. And over the past several decades, the fact is that because they are shunned by socially responsible investors and relegated to perpetual value stocks, sin stocks tend to outperform.

Unfortunately, this no longer holds true — at least for tobacco stocks like Marlboro maker Altria Group (MO).

A decade of extremely low interest rates has led to a global hunt for yield, and desperate investors have pushed the prices of traditional dividend stocks like Altria to unreasonably high levels. MO trades for more than 18 times forward earnings and yields just 3.7%. That’s simply not good enough for a company whose primary product becomes less popular with every passing year.

Making it worse, the U.S. Food and Drug Administration announced today that it was considering lowering the nicotine content of cigarettes to “nonaddictive” levels. Investors reacted predictably by dumping the stock.

If you own Altria for the dividend, you likely will do better buying a decent REIT or even an oil and gas pipeline.

To finish reading the article, please see 7 Blue-Chip Stocks You Shouldn’t Hold Anymore.

Disclosures: Long AAPL

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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