Normally the US Presidential election is a toss up between 2 equally good people and within reason you know what to expect. This year one of the candidates has a knack of throwing into the mix something no one expects which has meant one is less predictable than the other. When you are investing for the longer term, the less predictable although interesting is not desirable. Given much of the world’s events are less predictable what should you do?

Julie Michaels of Morningstar Group has an idea in terms of trying to find those undervalued companies with the potential to continue growing.

She started with the S&P Index, picked companies which have a dividend and the other criteria are:

forward reinvestment rate (the rate the company is expected to reinvest earnings back into their business)

forward price to earnings

earnings variability (in percentage terms around the 5 year EPS)

price to book

5 year beta against S&P 500 index

price changes from 6 months ago

Company                    Fwd      Fwd reinvest  Earn   Trailing      P/B     Beta      6M price     Div

P/E             Rate (%)      Var       ROE                                     Chg (%)       Yield %

Wyndham World      11.1             63.4            2.5        64.9         10.4      1.2        -3.9               2.9

Western Union           11.3            43.8             5.8      63.5            7.8      1.2         -1.1                3.2

AmerisourceBergen  13.9           53.1             7.2       78.0           9.6      0.7        -4.7               1.7

Rockwell Collins        15.0           26.9           2.2        35.3           5.3        0.8        -4.6              1.6

Scripps Networks     11.6             30.2           3.1        40.0          4.3         1.2         -1.1             1.6

Foot Locker                13.0             21.7           3.1         23.9          3.6         0.6          10.5           1.6

Robert Half Intl       12.6             26.8           3.2         35.8           4.8       1.0           -0.7           2.3

Northrop Grum       19.1              25.6          1.8          30.3            7.1       0.7             6.4          1.6

Aon PLC                     15.4              28.9          2.6         28.9           5.4        1.0             5.2         1.2

Torchmark                13.6              10.3          1.7          12.2            1.6         0.9          11.1         0.9

Linking to dividend paying stocks, in this example all 10 stocks are dividend paying and in Ms. Michaels chart in the Globe there were more companies. From the data, you can receive as much metrics as you want and more. There is no shortage of metrics to try to determine which stock to buy or not to buy. If you were to go through the list you could add why the industry is in favor or not, but the important aspect is they are all consistent money makers and likely will be around for many more years to come. At least your money is protected and it will accumulate through dividend payments as well as capital gains. Charts like this one is useful to narrow down your list to what is important to you.

There are more questions than answers, till the next time – to raising questions.

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