United Parcel Service Stock Analysis – It is now in my “Buy Zone”

Summary

  • This United Parcel Service stock analysis is based on Q4 and FY2016 results reported on January 31, 2017.
  • UPS reported its results and the stock dropped roughly 8%.
  • Results were impacted by a Mark-to-Market Pension Charge which resulted in EPS falling short of expectations.
  • UPS continues to grow its business and FCF is still strong.
  • UPS’ shares are now at the upper end of my “buy zone” and I acquired more shares on January 31, 2017.

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Colgate-Palmolive Stock Analysis – A Little Patience

Summary

  • This Colgate-Palmolive stock analysis is based on Q4 and FY2016 results and outlook for fiscal 2017 reported on January 27, 2017.
  • Colgate reported its third year in a row of declining global sales.
  • Diluted EPS, FCF, and NI increased relative to FY2015. Positive results are attributed to company initiatives and because FY2015 results were negatively impacted by the write-off of Venezuelan operations.
  • Colgate is a Dividend King. I anticipate a $0.01/quarter dividend increase to be announced within 2 months to keep this string of increases intact.

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Canadian National Railway Stock Analysis – Riding the Rails

Summary

  • This Canadian National Railway stock analysis is based on Q4 and FY2016 results and outlook for 2017 reported January 24, 2017.
  • Revenue dropped but net income, operating income, and diluted EPS increased.
  • Record Free Cash Flow (FCF) of $2.520B was reported which permitted the repurchase C$2B of shares vs. C$1.75B in 2015.
  • The annual dividend has been increased 10% to C$1.65. The C$0.4125/share dividend will be paid on March 31, 2017.
  • Management has forecast mid-single-digit EPS growth in 2017 from the adjusted diluted EPS of C$4.59 recorded in 2016.

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3M Stock Analysis – This Behemoth Belongs in Everyone’s Portfolio

Summary

  • This 3M stock analysis is based on Q4 and FY 2016 results and outlook for fiscal 2017 released January 24, 2017.
  • 3M reported strong result in FY2016 thus enabling it to return $6.431B to shareholders via share repurchases or dividends.
  • 3M has been taking advantage of favorable interest rates and has increased LTD from $4.3B in FY2013 to over $11B as at end of Q3 2016.
  • 2017 projections include EPS range of $8.45 to $8.80 (a 4% – 8% increase) and FCF conversion range of 95% to 105%.
  • I would be prepared to acquire additional 3M shares below $164.

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McDonald’s Stock Analysis – I Need Those Dividends to Service My McDonald’s Coffee Consumption

Summary

  • This McDonald’s stock analysis is based on Q4 and FY 2016 results and outlook for fiscal 2017 released January 23, 2017.
  • McDonald’s FY2016 results reflect a drop in revenue but a corresponding larger drop in expenses.
  • It has been repurchasing its share at a torrid pace using LTD under attractive terms.
  • I am prepared to acquire additional shares under $117.

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Union Pacific Stock Analysis – I Continue to Patiently Wait for a Pullback

Summary

  • This Union Pacific stock analysis is based on Q4 and FY 2016 results and the outlook for fiscal 2017 released January 19, 2017.
  • Union Pacific, North America’s largest railroad, reported a substantial full-year decline in volumes vs. FY2015 but declines moderated in Q4 FY2016.
  • Union Pacific’s operating ratio increased to 63.5 percent but UNP is committed to its G55 + 0 initiatives which it initiated in FY2015.
  • Dividend and share repurchases amounted to roughly $5B or 118% of net income in FY2016.
  • Since 2007, Union Pacific has repurchased just over 29% of outstanding shares.
  • I view Union Pacific as being a bit too expensive at the moment and will patiently wait for it to retrace to the low $90s.

Introduction

We currently own shares in only one railroad, the TSX listed shares of Canadian National Railway (NYSE: CNI) in the FFJ Portfolio and no other shares within the Transportation sector. I would like to beef up our exposure to this sector and after a quick review of certain financial metrics for various North American Rail Freight Transport companies, decided to analyze Union Pacific Railroad (NYSE: UNP).

I have been monitoring UNP with the hope of a pullback to a more reasonable valuation level so I can add it to our investment portfolio. Today’s earnings release and the subsequent jump in price has not helped my cause. I am cautiously optimistic, however, of a correction in UNP’s valuation at some stage in 2017. Continue reading “Union Pacific Stock Analysis – I Continue to Patiently Wait for a Pullback”

VISA Stock Analysis – I Will NEVER Sell This Holding

 Summary

  • VISA appears expensive at current levels but this is a result of several sizable one-time charges.
  • The legal issue as it relates to interchange fees has still not been resolved.
  • Even if VISA ends up having to pay a multi-billion dollar fine the interchange fee legal case should not dissuade investors from initiating / increasing a position in VISA with a long-term investment time horizon.
  • VISA continues to operate on a business as usual basis and is investing heavily to address the ever evolving needs in the payment industry.

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