Saturday, June 29, 2013

Paid to Wait

Hi everyone, sorry I haven't written a blog in a while but if you watch my YouTube channel you can keep up with my investments I like to follow.

This blog will follow my Paid to Wait and Accumulate series videos. The purpose is to follow a few companies I feel are undervalued. I want to follow the price purchased, dividend, dividend growth, yield, the future yield on cost, and target price for the shares in the future.  BP is a holding company engaged in exploration and production of natural gas and crude oil. It also has refining, marketing, supply and transportation along with manufacturing and marketing petrochemicals.

Profile
Symbol NYSE: BP
Price purchased:  $42.85
Dividend/share:   $  2.16
Dividend Yield:  5.18%
Yield On Cost:    5.04%
PE Ratio:  6.22
EPS: 6.71

First purchase was June 5, 2013, for 31 shares with $6.95 commission for a total of $1335.30. I will be able to purchase up to a hundred shares so this is the first round and I will wait to see if there is a better entry point. I would like to see the price fall to around $40 a share.

I feel BP is undervalued by the PE Ratio. It has room to grow the dividend. BP is almost finished with the government clean up and will be able to focus only on its core business.

I think fair value would be 10 to 12 times earnings like its competitors so I have a price target of $67 to $80. This will give us time to accumulate shares until we get to our price target. I will give this investment a few years but along the way a nice yield is still available.


Company Number 2 (NAT)

First off I would have to admit I have many concerns about NAT when compared to BP. So the amount used to buy Nat will be less but I am looking to buy about 330 shares total. The problem with NAT is the supply of ships available in the market. But NAT share price has reflected this problem and I think everything may be priced into the stock. As I mentioned in the first video on YouTube NAT is very shareholder friendly and the goal is to buy as many shares when the price is low and the company is struggling. The ordering of new ships is expected to slow starting in 2014 this will allow NAT who already has 20 ships take market share. This story really comes down to an improvement in the economy.


Profile
Symbol NYSE: NAT
Price purchased:  $8.80
Dividend/share:   $  .64
Dividend Yield:  8.46%
Yield On Cost:   7.02%
PE Ratio:
EPS:


On May 16, 2013 I purchased 110 shares with a $6.95 commission for a total of $974.75. The shares have come down and I want to purchase again. June 28th may have been a low but the shares rallied and if they hold I may make another 110 share purchase.

My holding period is going to be a few years with an eye on the supply and demands of the shipping business.

Thank you for reading


DSF

2 comments:

  1. I'll be honest... I thought you abandoned the blog and just went with youtube.

    On NAT. That takes some brass balls for that one. The oil tanker sector is so bloated with too many ships. However if you want to go with oil tankers they are the pick, easily over FRO. I almost pulled the trigger on NAT several years ago. Last I looked they needed $14k/day spot rates to turn a profit.

    ReplyDelete
  2. Hi Pulling,
    I wrote a reply but it doesn't seem to post. Yea I'm back it was a while since I wrote. I do have caution with NAT I have watched them for quite some time I feel they have maybe turned the corner to stay profitable and the downside is better at $8 a share than $30. I will continue to monitor the companies rates very close.

    Thanks
    DSF

    ReplyDelete

Big Blue! Why I purchased IBM!

IBM is in the news at this moment! This merger would be the biggest in company history!! I like the move of buying a company to help reve...