Author: Andrew Fletcher, Fletcher Wealth Management
Covestor model: Fundamental Targets
Disclosures: Long F, FE, EXC, WLP, NRG, WU, PF
June 2011 was a lackluster month for the market, which required a positive five day run at month’s end to help the S&P 500 to only drop 1.83%. With its 1.87% loss according to Covestor’s calculations, my Fundamental Targets model narrowly underperformed the S&P 500.
Trades
Despite the lower prices achieved during the month, only one stock, Ford Motor Company (NYSE: F) was purchased. Many of the stocks on the watch list became more attractively valued, and may be purchased in the coming month.
The portfolio maintained approximately 25% in cash throughout most of the month. After the purchase of Ford, cash accounted for 18% of the total portfolio, as of 6/30/2011.
No holdings approached their target sell prices during June.
Update on some holdings
Two energy stocks had analysts initiate coverage during June. Two research groups, RBC Capital Markets (Outperform) and Wunderlich (Buy), initiated positive coverage on Exelon (NYSE: EXC). RBC Capital Markets also initiated coverage (Sector Perform) on FirstEnergy Corporation (NYSE: FE).
WellPoint, Inc. (NYSE: WLP), is looking to purchase CareMore in order to expand its revenues from Medicare. According to WellPoint, the deal, which is expected to close by year end, will not have an effect on 2012 earnings, but will be accretive to earnings starting in 2013. Robert Dixon, Jr., Senior Vice President and Global Chief Information Officer at PepsiCo, Inc., was named a director on 30 June 2011.
NRG Energy (NYSE: NRG) announced that its joint venture with The United Illuminating Company, a 200 megawatt peaking power plant, is now operational and will be able to provide power during extreme weather conditions. Another joint venture with GE and ConocoPhillips is helping NRG expand into international markets and diversify into water-related power generation.
In order to provide even more ease in transferring cash, Western Union (NYSE: WU) announced the launch of the Western Union Money Transfer Receive Card. Currently, a card can be obtained at select Western Union locations. The transaction to receive a money transfer is completed either online or by phone, with no forms to complete. The card is then used as a debit MasterCard.
On 23 June 2011, Pfizer (NYSE: PF) declared its 291st consecutive quarterly dividend. The 20 cent dividend is payable 6 September 2011 to shareholders of record at the close of business on 5 August 2011.
Conclusion
I’ll continue to choose strong individual companies value-priced versus their industry peers according to my calculations.
I still expect a sharp rebound for steel producers, and continue to watch for the energy bull market to slow. Most importantly, I don’t worry when quality stocks drop due to trader activity, as that helps move stocks on my watch list onto my buy list.
Sources:
EXC Upgrades & Downgrades History. Yahoo Finance. https://finance.yahoo.com/q/ud?s=EXC
FE Upgrades & Downgrades History. Yahoo Finance. https://finance.yahoo.com/q/ud?s=FE
“WellPoint to buy seniors specialist CareMore” Lewis Krauskopf, Reuters, 6/8/11 https://www.reuters.com/article/us-wellpoint/wellpoint-to-buy-seniors-specialist-caremore-idUSTRE75731Q20110608
WLP press release 6/30/11 http://www.prnewswire.com/news-releases/wellpoints-board-welcomes-robert-dixon-jr-as-new-director-124767918.html
NRG press release 6/28/11 https://www.businesswire.com/news/home/20110628006225/en/GenConn%E2%80%99s-200-Megawatt-Peaking-Power-Plant-Operational
NRG press release 6/28/11 https://www.businesswire.com/news/home/20110628005654/en/Energy-Technology-Ventures-GE-NRG-Energy-ConocoPhillips-Joint-Venture
WU press release 6/30/11 https://www.businesswire.com/news/home/20110630005219/en/Western-Union-Launches-Receive-Money-Transfers-Globe
PFE press release, 6/23/11 https://www.businesswire.com/news/home/20110623006439/en/Pfizer-Declares-20-Cent-Third-Quarter-2011-Dividend
