Saturday, May 21, 2016

Recent buys - WFC & TGT



Earlier this week, I initiated new positions in WFC and TGT. These two companies are always on my watchlist. It’s just waiting for acceptable entry points (at least my acceptable from my perspective). I noticed MyDividendPipeline buying TGT at exactly the same time and exactly the same number of shares! Strange things going on in Texas.

Transactions

Date
Transaction
Ticker
Price
Quantity
Amount
Divs/Year
Est. For Dividend
5/17/2016
Buy
WFC
47.66
33
1579.73
1.52
$50.12
5/18/2016
Buy
TGT
67.48
40
2699.20
2.24
$89.60




Total
$4,278.93
Total
$139.76



Wells Fargo

WFC 5/2016
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
5 Years
ROE/Op Margin
Stable
Yes - except during the Great Recession
Stable
Long term Avg Growth
Stable
Yes - except during the Great Recession
Stable
FCF over Dividends
Yes
Yes - except during the Great Recession
FCF covers Dividends
M* Moat
Wide Moat
Yes
Wide
M* & S&P
Credit Rating
> BBB+
Yes
A
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest Coverage > 5
Yes
Cash to Debt 0.06
Interest Coverage 7.8
Debt to Equity N/A
M* & S&P Stars
> 3 Stars for both
Yes
M* 4 Stars
S&P CapIQ 4 Stars
Payout Ratio
<60%
Yes
37%
Dividend Growth
& Yield
Dividend Yield
>3%
Yes
3.12%
Dividend Growth
>5%
Yes
25.93%
Chowder
>12%
Yes
29.05%
Valuation
Yield/Avg Yield
>1.1
Yes
1.42
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 52.98
Low Point 48
P/E
Below Mid Point
Yes for Forward PE
Median 11.09 Current 11.98 Forward 11.03
DRRM
~10%
Yes
Assuming 7% growth; projected return=9.98%
M* Estimate
<M* est
Yes
M* 61
S&P Estimate
< S&P cap IQ est
Yes
S&P Cap IQ 70

You can read more about WFC here: http://www.wikinvest.com/stock/Wells_Fargo_(WFC)

Target


TGT 5/2016
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
48 Years
ROE/Op Margin
Stable
Yes
Stable
Long term Avg Growth
Stable
Yes except with earnings drop last year
Stable
FCF over Dividends
Yes
Yes except in 2008
FCF covers Dividends
M* Moat
Wide Moat
No
None
M* & S&P
Credit Rating
> BBB+
Yes
A
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest Coverage > 5
Yes - higher than prefered Debt to Equity
Cash to Debt 0.28
Interest Coverage 5.85
Debt to Equity 98.54
M* & S&P Stars
> 3 Stars for both
Yes
M* 4 Stars
S&P CapIQ 3 Stars
Payout Ratio
<60%
Yes
41%
Dividend Growth
& Yield
Dividend Yield
>3%
Yes
3.27%
Dividend Growth
>5%
Yes
15.28%
Chowder
>12%
Yes
18.55%
Valuation
Yield/Avg Yield
>1.1
Yes
1.37
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 76.77
Low Point 66
P/E
Below Mid Point
Yes
Median 13.61 Current 12.92 Forward 12.22
DRRM
~10%
Yes
Assuming 4% growth; projected return=10.5%
M* Estimate
<M* est
Yes
M* 77
S&P Estimate
< S&P cap IQ est
Yes
S&P Cap IQ 78


You can read more about TGT here: http://www.wikinvest.com/stock/Target_(TGT)

Based on my DDRM, PE and Yield Theory tools, my fair value estimates for WFC and TGT are low 50s and low 70s respectively so I bought these companies close to their mid points. Again, I split up my purchase so that I can add more shares when the market dips again. I think WFC can easily go down to the low 40s and TGT to the 50s.

What do you think of WFC and TGT?

D4s

14 comments:

  1. D4s,

    Hell yeah! I bought shares of both companies recently as well. Great minds....

    MDP

    ReplyDelete
    Replies
    1. Great minds indeed. Let's see how the markets will behave next few months.
      D4s

      Delete
  2. Interesting i bought WFC on 17th and that too 33 shares only.

    ReplyDelete
    Replies
    1. I am hearing the theme from the twilight zone! How weird and coincidental this is!
      D4s

      Delete
  3. I have a buy setup for Tuesday for more WFC. Like it here. I was eyeing TGT as well but think it may go down more before recovering so I may wait a bit to buy. I suspect we will see quite a few TGT buys this week. Congrats on the additions!

    ReplyDelete
    Replies
    1. I saw you purchased WFC today so I am glad to be a fellow shareholder. TGT may go down further, so my buys for me if thus is the case. Appreciate your comments!
      D4s

      Delete
  4. good buy on WFC D4s with interest rates increasing. Still can't pull the trigger because of the PTSD from 2008...

    ReplyDelete
    Replies
    1. Yep. Almost stopped my purchase - but the recovery was impressive. Actually, I will keep this in mind in the future if they cut the dividends again.
      Thanks for your comments.
      D4s

      Delete
  5. I like the purchases D4S. Congrats on adding great companies to the portfolio. Don't stop bud and thank you for sharing. Cheers my friend.

    ReplyDelete
  6. WFC is still a great financial to own. I'm still a fan of that name and less so for TGT. It's just my bag. I don't like retail for my long term portfolio. Thanks for sharing.

    ReplyDelete
    Replies
    1. I thought that I didnt like retail - but I ended up buying TGT, WMT, VFC. Hopefully, they have some traction - still down a lot with my industrials.
      D4s

      Delete
  7. Hey D4, congrats on the buys. I like Wells Fargo, I'm a bit like Divhut on the retail side though, don't see much long term good growth (should still be a cashflow powerhouse though).

    Tristan :)

    ReplyDelete
    Replies
    1. I see a nice rebound with WFC which is nice, but I actually want it to go lower a bit more to invest more in the company. I agree with you on retail - but I still buy these companies...?
      Appreciate your comments.
      D4s

      Delete