Early in March Peter Ashton of Recognia Inc examined stocks offering the potential for long-term earnings growth while providing reasonable valuations and efficient operations today.

His criteria was:

minimum market capitalization of $1o billion which should focus on large and stable companies.

companies with price to earnings ratios (P/E ratios) of less than 15

5 year historical annualized Earnings per Share (EPS) of 15% or more

dividend yield of 2.5% or more

companies with operating margins of 10% or greater. Operating margin is a measure of the profit a company makes on each dollar of revenue.

Company                                     Mkt Cap              P/E               EPS Growth     Div        Operating

($ Bil)                   Ratio            (5 year)              Yield      Margin

Blackstone Group                   19.1                        14.4                104.8                 5.1            44.3

Gilead Science                         92.9                         6.0                  75.6                 2.6            61.3

Verizon Commun                  202.3                      12.8                228.3                 4.6             21.5

AbbVie                                          98.6                    13.0                    34.8               3.7              38.1

AT&T                                          256.7                     14.8                    56.7               4.6              15.6

Lyondell Bassell Ind                36.7                     10.0                     20.5              3.6              17.4

Principal Financial                   18.0                     14.5                     16.0               2.5             13.5

Linking to dividend paying stocks, all these companies pay dividends and are profitable. If you focus on the margins, each of the companies have competition but still the margins are very good. Even if the company did very little, they would likely make money. If we expect the companies to innovate and execute, then they would have to screw up badly not to make money. Note all stock prices go up and down however if you buy these types of companies you should have little to worry about and gain a good night’s sleep.

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