Thursday, February 20, 2014

Walmart (WMT) - Adding Some

Adding some Walmart today on price weakness, taking me to a full 3% position in the IRA.  Here is a recent FAST Graph:

WMT is a dividend superstar, increasing the dividend every year for the last 1,000 years or so.  It's trading at an historically low PE of around 14, and just keeps going.  WMT is a very nice defensive stock, with a beta of 0.31, it rarely moves in sync with the broader market.  This is a nice entry point for WMT.

The price is down today due to disappointing earnings in the fourth quarter.  Soft consumer spending and crappy weather are the main culprits.  A common theme among retailers.  Here are some highlights:

Wal-Mart earnings per share (EPS) were $1.34, down from $1.67 the same quarter a year ago; it had been projected to report EPS of $1.37.
For the full fiscal year 2014, Wal-Mart delivered EPS of $4.85 - a 2% increase over fiscal 2013's EPS of $5.01, but missing Wall Street expectations of an EPS between $5.11 and $5.21 per share.
The brightest news for Wal-Mart this morning was the company's global online sales and acquisitions, which topped $10 billion (a 30% increase compared to last year).
"We will continue to grow our global business by focusing on customers and serving them how they want to be served," Walmart Chief Executive Officer Doug McMillion said with earnings release this morning. "Improving store sales figures will be a priority, and we'll focus on being even stronger item and category merchants, delivering value and improving our service levels. We'll remain focused on our expense structure, and innovate to improve productivity and aid our ability to deliver everyday low prices."
I'm taking the long view.  Great company at a good price today, happy to hold for a very long time.


Wednesday, February 19, 2014

Judges, Hubris, and Same-Sex Marriage

Very good article regarding same sex marriage legislation from Dennis Prager.

Judges, Hubris, and Same-Sex Marriage

Tuesday, Feb 18, 2014
In 2006, 57 percent of Virginia’s voters voted to amend their state’s constitution to define marriage as the union of a man and a woman. Last week, U.S. District Judge Arenda Wright Allen ruled the amendment unconstitutional.
In 2004, 76 percent of Oklahoma’s voters voted to amend their state’s constitution to define marriage as the union of a man and a woman. On Jan. 14, 2014, U.S. District Judge Terence Kern ruled the amendment unconstitutional.
In 2004, 66 percent of Utah’s electorate voted to amend their state’s constitution to define marriage as between a man and a woman. On Dec. 20, 2013, U.S. District Judge Robert J. Shelby ruled the amendment unconstitutional.
In 2004, 75 percent of Kentucky’s voters amended their state’s constitution to define marriage as between a man and a woman. On Feb. 12, 2014, U.S. District Judge John G. Heyburn II “struck down part of the state ban that he wrote treated ‘gay and lesbian persons differently in a way that demeans them’” (Washington Post).
In 2008, 52 percent of California’s voters amended their state’s constitution to define marriage as between a man and woman. On August 4, 2010, U.S. District Judge Vaughn Walker ruled that vote unconstitutional.
There is no doubt that federal judges will continue to do this throughout the country. Even the vote of 81 percent of Alabama voters will count for nothing to some federal judge.
Society may no longer define marriage in the only way marriage has ever been defined in the annals of recorded history. Many societies allowed polygamy, many allowed child marriages, some allowed marriage within families; but none in thousands of years defined marriage as the union of people of the same sex.
None of this matters to these judges or to all those who seek to re-define marriage and can’t convince a majority of their fellow citizens to agree.
For them, it is identical to ruling that laws that banned interracial marriages were unconstitutional. But that argument is utterly flawed. First, the analogy is false because there is no difference between black people and white people, while there are enormous differences between males and females. Second, no great moral tradition or thinking ever forbade interracial marriages (inter-religious marriages were sometimes forbidden). Moses, for example, married a black woman, and neither the Bible nor God hinted that it was wrong.
Some conclusions:
Proponents of same-sex marriage regularly label opponents “radical” and “extremist.” However, given that no society in thousands of years has allowed same-sex marriage, it is, by definition, the proponents of same-sex marriage whose position is radical and extreme. You cannot re-define marriage in a more radical way than allowing members of the same sex to marry. You can argue that is the moral thing to do. But you cannot argue that is it not radical.
All these judges have a hubris that is simply breathtaking. They not only know that they read the Constitution more accurately than the vast majority of the residents of many of America’s states, but they are also entirely comfortable with forcing great majorities of Americans to accept this new definition of marriage.
That it is conceit rather than legal reasoning is easily shown when one peruses the opinions of these judges.
I will cite only Judge Vaughn Walker as an example:
Walker: “Proposition 8 fails to advance any rational basis in singling out gay men and lesbians for denial of a marriage license.”
“No rational basis”? This is hubris. What he is stating is that for all of Western history — and contemporaneous non-Western history — there has not been a rational basis for defining marriage as the union of a man a woman. Vaughn Walker is convinced that he thinks more rationally than every moral leader and thinker in history, not one of whom advocated same-sex marriage. Judaism, Christianity, Islam, Buddhism, Hinduism, the Enlightenment — all were irrational regarding same-sex marriage, according to Judge Walker.
In Judge Walker’s mind, it is irrational, just to cite one example, to prefer that men and women form families in order to provide children with a mother and a father.
Walker: “Indeed, the evidence shows Proposition 8 does nothing more than enshrine in the California Constitution the notion that opposite sex couples are superior to same-sex couples.”
Yes, without in any way reducing the worth or the decency of any gay human being or dismissing the depth of same-sex love, California, like the rest of the world, has indeed believed in the superiority of man-woman unions. Not in the superiority of straight men and women as people: The gay human being is created in God’s image every bit as much as the straight human being, and there are gays who have led vastly more moral lives than many straights. But regarding how the family — the building block of society — should be constituted, the civilized world has always believed that it should be based on a married mother and father.
Society has also believed in the superiority of mother-father families to single-parent families. And that, too, never meant that every married person is inherently superior to every single person.
Walker: “Proposition 8 prevents California from fulfilling its constitutional obligation to provide marriages on an equal basis.”
This is another example of the lack of serious thought — as opposed to serious passion — that underlies the movement to redefine marriage. If American society has a “constitutional obligation to provide marriages on an equal basis,” then there is no plausible argument for denying polygamous relationships, or brothers and sisters, or parents and adult children, the right to marry.
On the matter of same-sex marriage, mass passions and coercive judges are winning. Above all, hubris is winning. That is why proponents always assert that they are “on the right side of history.”
But history is very long. Our grandchildren, or their grandchildren, will judge whether this is true. The Left since Marx has asserted that every one of their radical positions — such as the demise of capitalism — is on the right side of history. Virtually none turned out to be.

Tuesday, February 18, 2014


Added a little Coke (KO) to the portfolio today on price weakness.  Earnings and revenue hit expectations, but the price got hammered.  Added shares at $37.43.   This takes KO to about 2.9% of the portfolio, roughly a full position.

FAST Graph for your enjoyment:

As you can see from the charts above, the PE for KO never gets much lower than 20.  KO is not undervalued today, but it rarely is.  I'd say its trading at a "normal" multiple, and should give steady growth in share price and dividends dang near forever ;-)  Buy it, then forget about it.


** See the nice write up below from Paul Price on Coke (one day after my post above).  Great minds think alike I suppose.....

The Pause that Refreshes – Market Shadows Drank Coke

by Dr. Paul Price
Buying a Coke for the Value Portfolio
Market Shadows’ Virtual Value Portfolio pulled the trigger and purchased 107 shares of beverage giant Coca-Cola (KO) this morning at $37.27 per share.
The $3,988 investment amount came out of our cash reserve fund.
 KO quote Feb. 19, 2014
KO is a conservative position with a greater than 3% dividend yield. We expect to see an increased payout announcement in the near future.
Risk appears low as the absoulte and relative Price to earnings ratios  are both near the low points of the past 15 – 20 years. While the company’s rate of growth has slowed, its fundamentals have never been stronger. 
KO  - Value Line Metrics   Jan. 2014

KO estimates
KO chart 2001 - 2014

Dr. Paul Price | February 19, 2014 at 7:22 am | URL:

Tuesday, February 4, 2014

Emerson Electric (EMR)

Emerson announced quarterly earnings today, here is a summary:

Nothing negative here, but the stock is down today.  Here is a snapshot via FastGRAPHs:

A bit overpriced today, but has dropped from $70 recently, and I trimmed the holding back last full, so the IRA has a full position in EMR at present.  If the stock starts rising again in the coming months, I will likely sell additional shares and redeploy into holdings with a better valuation.  Here is a look at PE over time, a good indicator of over/under valuation:

As this graphic shows, a PE at or above 20 tends to be dangerous and likely to correct.