Thursday, October 16, 2014

A Case For Lower Volatility: Consumer Stocks

A review of five consumer stocks with high margins, low betas and steady dividends.
Why I like PepsiCo better than Coca-Cola.
Consumer stocks may minimize the damage in a downturn in equities.

Tuesday, October 14, 2014

The Economists Are Wrong: Rail Traffic Indicates GDP Growing Faster Than They Think

Record Setting Rail Traffic Shows Economy Growing Faster Than Economists Think 

U.S. railroad traffic in third quarter 2014 set records that lead me to believe Gross Domestic Product will rise higher than economists predict.
Last month, a survey of leading economists lowered their forecast for GDP growth to 3.0% from 3.1%.
I expect third quarter GDP to grow 4% to 4.5% due to record setting demand for intermodal freight, which is primarily the goods that trade in stores and businesses. 

How Likely Is A Merger Between CSX and Canadian Pacific?

E. Hunter Harrison, CEO of Canadian Pacific, wants to merge with CSX Transportation and acquire two Chicago switching companies.
A look back on the Surface Transportation Board's handling of proposed merger of BNSF Railway and Canadian National Railway. Why the deal fell apart.
CSX is growing flow of intermodal containers and trailers.

Thursday, October 9, 2014

Why I'm Long Canadian Pacific Railway


Canadian Pacific Earnings Will Double in Four Years.
Management Improves Operating Ratio.
CP is a Transcontinental Railroad With Penetration in U.S. Markets.CP Hauls Record Grain Harvest.

Thursday, September 25, 2014

Record Corn Harvest Will Challenge Railroads


  • Oil and grain are increasing rail congestion in the Dakotas.
  • Some rail stocks are up 30% YTD. Are they overvalued?
  • Union Pacific and Canadian National Railway have the highest returns on invested capital.

Saturday, September 13, 2014

In Demand: Massive Quantities of Craft Beer

Craft brewers like Boston Beer (NYSE:SAM) and Sierra Nevada can't brew beer fast enough to meet the growing demand for better-quality, richer-content, higher-alcohol beer. This trend is picking up pace as the economy improves and more consumers feel they can afford to pay for better beer.
Sierra Nevada Pale Ale quickly disappears off the shelf at my local retailer, Fleming Place Wine & Spirits, Topeka Kan. The 12-pack cans of Sierra Nevada Pale were sold out yesterday and won't be available for another two weeks, the seller says.
Another popular beer that gets sold out at this time of year is Boston Beer Octoberfest; every autumn customers look for this seasonal beer as temperatures cool and consumers want that extra spicy flavor that comes with this beer.
It's obvious. There is a craft brewing sensation developing across the country as you see local brewers taking market share from the beer giants.

Friday, August 29, 2014

Tobacco Dividends Plentiful and Reliable

Tobacco Dividends Plentiful and Reliable

Investors looking for yields may want to consider owning tobacco stocks. Dividend yields for tobacco stocks are more than double the yield of the S&P 500 index. Tobacco companies have been some of the most reliable dividend payers in American corporate history, despite health care initiatives against tobacco. I believe adults have the right to smoke tobacco as long as they know the health risks. Tobacco stocks with dividend payout ratios below 100% of their earnings can be lucrative additions to a dividend portfolio.
If you are going to own tobacco, you might as well own successful companies that have survived and thrived despite government oversight, high taxes and public health care initiatives to stop smoking.
Dividend yields for Altria Group (NYSE: MO  ) , Lorillard Tobacco Group (NYSE: LO  )Reynolds American (NYSE: RAI  ) and Vector Group (NYSE: VGR  ) range from from 4.58% to 9.30% -- substantially more than the S&P 500's yield of 2%.

Is There An Opportunity in PepsiCo?

This stock is up 17% since I wrote this article in Feb. 26, 2014.

Is There An Opportunity in PepsiCo?

Shares of PepsiCo  (NYSE: PEP  ) recently fell by 3% after the company reported that it had decided to retain its North American beverage business.
Shareholder activist Nelson Peltz hopes that PepsiCo will spin off its North American beverage business and focus on its more profitable and rapidly growing snack business.
Disgruntled investors have been selling the company's shares, which has driven the price of the stock down 4% since Feb. 13 when the company announced earnings and confirmed that it would not separate its beverage business. Earnings met expectations but investors are troubled by declining beverage volumes. Because PepsiCo is a blue-chip dividend payer with a long history of rewarding shareholders, investors are wise to take a hard look at this company.

Meet North America's Most Efficient Railroad

Meet North America's Most Efficient Railroad

A transcontinental railroad with a huge reach across Canada and the United States owns a competitive edge over other railroads and truckers. And because that railroad is also the most efficient in the industry, it can make tremendous profits in a growing economy. Meet Canadian National Railway (NYSE: CNI  ) , the only railroad with connections to the Pacific Ocean, the Atlantic Ocean, and the Gulf of Mexico.
History of the Trans-ConThe first transcontinental railroad was created in 1869 to connect San Francisco Bay with the existing Eastern U.S. rail network at Council Bluffs, IA. Union Pacific (NYSE: UNP  )  owns the route between Council Bluffs and San Francisco. UP's track covers the western two-thirds of the United States, but goes no farther east than Chicago.
Canadian Pacific Railway (NYSE: CP  ) completed Canada's first transcontinental railroad in 1885, connecting Vancouver with the Port of Montreal, but currently does not reach the Atlantic Ocean.

Railroad Renaissance Chugs Ahead

There is a renaissance under way in North American freight railroads.

U.S. rail traffic was up 4.6% through Aug. 23 compared with the same time period a year ago, according to the Association of American Railroads. Nearly all categories of freight showed gains, with the biggest improvements in shipment of grain, up 19.4% year to date, and the shipment of petroleum and petroleum products up 10.5%.