My August 2013 Watchlist

I took a week’s break from looking at the stock market and it experienced a pullback. Maybe I should take breaks more often. Jokes aside, I reviewed my watchlist, and picked out some that are worth further investigation. Of course, you as your own portfolio manager should determine whether these companies are a right fit to your portfolio based on diversification and allocation needs.

I have shortlisted my watchlist for the month of August, looking for income growth and growth for my portfolio in general. Here is the shortlist:

  • Realty Income (NYSE:O) – $39.29
  • Yamana Gold (NYSE:AUY, TSE:YRI) – $11.33 USD, $11.74 CDN
  • Exxon Mobil (NYSE:XOM) – $86.92
  • Coca-cola (NYSE: KO) – $38.78

Realty Income

Since Realty Income is an US REIT, there will be a withholding tax on its distributions no matter which account (TFSA, RRSP, non-registered account) I place it in. My research shows that the withholding tax should only be 15%. On the perspective of holding it long-term, it makes sense to place it in the RRSP or TFSA. Holding it in the non-registered account would incur the marginal rate on the distribution instead, which in my case is higher than the 15%. In addition, holding a REIT in the non-registered account will probably increase the complexity of tax reporting.

Yamana Gold

If I buy a position in Yamana, it’d be for capital appreciation. Expect to experience volatility, as the miner’s price would be more or less co-related to the precious metal. From my painful experience in buying Teck Resource (TSE:TCK.B) without a margin of safety, I have learned to be patient with any miners. So, I will only buy low for such companies. Right now, I believe it’s low. As noted below, there’s 36% of margin of safety. In addition, it seems to have broken out of the downtrend. So, I may initiate a position under $12 on the Toronto Stock Exchange. Miners will only be a small part of my portfolio. I’m using it for short-term capital gain to grow my portfolio a little faster.

Exxon Mobil

If I had the funds, I would initiate a position because I have no shares right now. I do however hold some Chevron shares. If I do buy some, I will initiate a partial position, and wait to see how it reacts after breaking the major support. For the long-term, I think Exxon Mobil is a good investment. Also, its yield is currently at its historical high.

Coca-cola

I already hold some Coca-cola shares. However, I might add a small block of it around 3% yield.

Valuation, Upside, and Technicals

These are just some quick numbers I bring up from Morningstar. The technical comment is just my quick opinion after I look at the Finviz charts. In other words, this is a quick and dirty analysis. Remember to perform your own due diligence before investing.

Ticker * Price Morningstar stars Morningstar Fair Value Estimate Upside to Fair Value Finviz Technicals
O $39.29 3 $44 12% Heading to support line at $38.50 area
NYSE:AUY, TSE:YRI $11.33 USD / $11.74 CDN 4 $15 USD / $16 CDN 32% / 36% Bouncing off from double bottom earlier this month, and broke the downtrend.
XOM $86.92 4 $97 11.6% Breaking a major support in the $87 area.
KO $38.78 4 $45 16% Breaking 200-day moving average.

* Closing Prices of August 19, 2013.

Conclusion

I feel most inclined to initiate a position in Yamana first because it is the only one showing a positive sign technically. In addition, I have no other precious metal exposure except a small position in Silver Wheaton (TSE: SLW). Next, I would most likely add Realty Income and Exxon Mobil because I don’t own any shares in those blue chips. I would probably add to Coca-cola last because I already have some shares.

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Disclosure: At the time of writing, I am long KO.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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3 thoughts on “My August 2013 Watchlist

  1. waterbuffalo

    With the exception of AUY, I like your short list. I just purchased O under $40 and am taking a hard look at adding either KO or XOM next.

    1. Passive Income Earner Post author

      Hi WB, thanks for visiting my blog!

      I bought a small position in AUY for possible short-term price appreciation. I’m willing to hold longer if it doesn’t play out in the short-term. Looking to add O next. Purchasing it under $40 is a good buy. Congratulations!

      Passive Income Earner (Canadian)

  2. Passive Income Earner Post author

    Update: I bought a small position in AUY the week before, and I sold my SLW shares this past week.

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