Category Archives: Retirement

3 Tips To Identify Winning Stocks

If you have stocks that have earnings stability and consistent earnings growth, higher margins compared to their peers, and price growth persistence, they’re probably winners.

If you’ve identified winners in your portfolio, hold on to them through thick and thin, and you’ll be immensely rewarded in the long haul. Oh, and, of course, add to them when they are attractively valued.

Earnings Stability & Growth

Aging and growing populations and advances in technology are reasons that the healthcare sector tends to experience stable growth. The juggernaut in the sector, of course, is no other than Johnson & Johnson (NYSE:JNJ), which has a piece of the pie in the different areas of Healthcare with a Pharmaceutical segment (about 41% of sales), Medical Devices segment (27%), and Consumer segment (14%).

J&J’s has experienced adjusted EPS growth every single year since 2000. It’s no wonder the company tends to trade at a premium P/E despite having been estimated to grow EPS by only about 6% per year over the next 3-5 years.

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The Market is Spooked Out! But You Shouldn’t Be.

The U.S. and Canadian stock markets have declined about 8% and 9%, respectively, from their 52-week highs. They’re spooked out from the Halloween month!

Let’s take a step back and be objective. The U.S. market is still about 29% higher than three years ago. The Canadian market? About 12% higher. From five years ago, the U.S. market is 52% higher and the Canadian market is 15% higher.

SPY Chart

SPY data by YCharts. The 10-year price action of SPY and TSX:XIU

You get the big picture. The stock markets go up over the long term. Historically, it has always been money-making opportunities to buy quality companies on dips. And this dip is no different if you find great businesses to be attractively priced.

Here are some North American dividend-growth stocks that I find compelling today.

Undervalued Healthcare Stock

halloween

AbbVie (NYSE:ABBV) offers a safe 4.7%. Its payout ratio of less than 50% is sustainable.

Since AbbVie was spun off from Abbott Labs (NYSE:ABT) in 2013, it has increased its dividend every year thereafter. Its four-year dividend growth rate is 13.2%. Its trailing 12-month dividend per share is 40% higher than the previous 12 months.

The spooked market has brought AbbVie back into undervalued territory. At less than US$82 per share, it trades at a blended P/E of about 11. Analysts estimate the company will grow its earnings per share by at least 12% per year for the next three to five years. Read More