There are five new stocks and five stocks that I’m removing. The five new stocks are Ball Corp. ($BLL), Hormel Foods ($HRL), Signature Bank ($SBNY), Snap-on ($SNA) and Wabtec ($WAB).

The five deletions are CA Technologies ($CA), DirecTV ($DTV), IBM ($IBM), McDonald’s ($MCD) and Medtronic ($MDT).

The average market cap is $69 billion. That ranges from a high of $382 billion for Microsoft ($MSFT) to $3 billion for Moog ($MOG-A).

Thirteen of the twenty stocks pay dividends. The total yield of the Buy List is 1.06%.
Only three stocks have been on the Buy List all ten years: AFLAC ($AFL), Bed Bath & Beyond ($BBBY) and Fiserv ($FISV). Stryker ($SYK) and Moog ($MOG-A) are both making their eighth appearance.

Buy Below Prices for the New Buys

Now let me give you the Buy Below prices for our five new buys. Remember, these aren’t price targets. They’re guidelines for new entry.

I’m starting Ball Corp. ($BLL) out as a buy up to $72 per share. This is a good stock for conservative investors. Ball also pays a very small dividend. I’m going to initiate Hormel Foods ($HRL) with a Buy Below of $56. By the way, Hormel reports on a Jan-Apr-July-Oct Cycle, so its earnings will come a bit after most of our other stocks. Signature Bank ($SBNY) is a buy up to $133. I’d like to see SBNY start paying a dividend soon. Snap-on ($SNA) is a buy anytime you see it below $143 per share. Lastly, I rate Wabtec ($WAB) a buy up to $90 per share. This week, I’m also raising the Buy Below on Ross Stores ($ROST) to $96 per share.

On Thursday, January 8, Bed Bath & Beyond ($BBBY) will report earnings for its fiscal third quarter. This covers September, October and November. On the last earnings call, BBBY said they expect Q3 to range between $1.17 and $1.21 per share. Interestingly, they also gave guidance for Q4 which they see ranging between $1.78 and $1.83 per share. The fourth quarter is the biggie for Bed Bath. For the entire year, management said they see earnings coming in between $5.00 and $5.08 per share.

I was impressed with this guidance. Buybacks are helping out a lot. My numbers pretty much match up with what the company is saying. If they hit $5.08 for the year, that means the stock is going for 15 times earnings, which is hardly overpriced. Last week, Barron’s ran a feature on BBBY and noted that the company has ramped up its Internet presence. For now, I’m going to keep a fairly tight Buy Below on BBBY. Let’s see how Q4 is shaping up. Bed Bath & Beyond remains a buy up to $77 per share.

That’s all for now. The market is closed on Thursday for New Year’s Day, but Friday will be a full work day. At 10 a.m., the December ISM will come out. Next Friday, we’ll get some of the key turn-of-the-month econ reports like Trade Balance and Factory Orders. The latest Fed minutes come out on Wednesday. This all leads up to the big jobs report next Friday. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

Posted by Eddy Elfenbein on January 1st, 2015 at 7:42 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.