The market continues to correct. The S&P 500 is now down 7.5% from its recent peak while the Dow dipped below the 12,000 mark, a -7.3% pull back from the recent peak. Our investment filter showed 50 companies within 11% of the low so we decided to reduce our list to those that are within 5% of the low. The list produced 24 quality companies. The following are stocks on our list that are within 6% of their 52-week low.
June 24, 2011 Watch List
| Symbol | Name | Price | % Yr Low | P/E | EPS (ttm) | Dividend | Yield | Payout Ratio |
| NTRS | Northern Trust Corp. | 44.98 | -0.49% | 16.60 | 2.71 | 1.12 | 2.49% | 41% |
| SYBT | S.Y. BanCorp., Inc. | 22.5 | 0.04% | 13.16 | 1.71 | 0.72 | 3.20% | 42% |
| TGT | Target Corp. | 46.33 | 0.39% | 11.33 | 4.09 | 1.20 | 2.59% | 29% |
| WEYS | Weyco Group, Inc. | 22.37 | 0.54% | 19.45 | 1.15 | 0.64 | 2.86% | 56% |
| GBCI | Glacier BanCorp., Inc. | 12.97 | 1.01% | 21.98 | 0.59 | 0.52 | 4.01% | 88% |
| SFNC | Simmons First National Corp. | 24.4 | 1.08% | 11.35 | 2.15 | 0.76 | 3.11% | 35% |
| GS | Goldman Sachs Group, Inc. | 130.91 | 1.09% | 14.34 | 9.13 | 1.40 | 1.07% | 15% |
| HGIC | Harleysville Group Inc. | 29.89 | 1.32% | 10.71 | 2.79 | 1.44 | 4.82% | 52% |
| ANAT | American National Insurance | 75.4 | 1.70% | 12.76 | 5.91 | 3.08 | 4.08% | 52% |
| CMA | Comerica, Inc. | 33.74 | 2.00% | 18.54 | 1.82 | 0.40 | 1.19% | 22% |
| CHFC | Chemical Financial Corp. | 18.27 | 2.35% | 16.61 | 1.10 | 0.80 | 4.38% | 73% |
| WABC | Westamerica BanCorp. | 48.12 | 2.58% | 15.13 | 3.18 | 1.44 | 2.99% | 45% |
| BRK-A | Berkshire Hathaway Inc. CL 'A' | 113,100 | 2.89% | 17.19 | 6580.82 | N/A | N/A | N/A |
| SUSQ | Susquehanna Bancshares, Inc. | 7.65 | 3.66% | 45.00 | 0.17 | 0.08 | 1.05% | 47% |
| MCY | Mercury General Corp. | 38.85 | 4.18% | 14.28 | 2.72 | 2.40 | 6.18% | 88% |
| HHS | Harte-Hanks, Inc. | 7.91 | 4.22% | 10.01 | 0.79 | 0.32 | 4.05% | 41% |
| NWN | Northwest Natural Gas Co. | 44.6 | 4.62% | 17.02 | 2.62 | 1.74 | 3.90% | 66% |
| TCB | TCF Financial Corp. | 13.56 | 5.12% | 13.70 | 0.99 | 0.20 | 1.47% | 20% |
| MDP | Meredith Corp. | 30.4 | 5.12% | 10.67 | 2.85 | 1.02 | 3.36% | 36% |
| AVP | Avon Products, Inc. | 27.53 | 5.40% | 16.99 | 1.62 | 0.92 | 3.34% | 57% |
| BXS | BanCorp.South Inc. | 12.21 | 5.53% | 76.31 | 0.16 | 0.04 | 0.33% | 25% |
| BOH | Bank of Hawaii Corp. | 45.34 | 5.59% | 12.63 | 3.59 | 1.80 | 3.97% | 50% |
| UVV | Universal Corp. | 37.37 | 5.68% | 6.89 | 5.42 | 1.92 | 5.14% | 35% |
| SJW | SJW Corp. | 23.18 | 5.94% | 18.11 | 1.28 | 0.69 | 2.98% | 54% |
24 Companies
Watch List Summary
Northern Trust (NTRS) top our list this week. The shares of NTRS traded down and hit a fresh 52-week low at the close of Friday on big volume. Readers may recalled that we recommended buying Norther Trust back on 9/1/10 and selling it on 12/3/10. While the current price is about 5% lower, we believe Northern Trust may prove to be a good investment. Investors should note that the company has not raise its dividend since 2007 but hasn't cut the dividend during the recent banking crisis either. We view such action as a good indication by NTRS management. The current payout ratio of 41% gives room for earning to fall by half and still meet the current dividend. Credit Suisse cut its estimates on NTRS in this article. Also, the company purchased a fund-administration unit from Citadel last month.
Target (TGT) landed in the third spot after Fitch cut its debt rating. They've taken the rating down from A to A- on claims that Target is aggressively buying back its own shares and remodeling stores in Canada. We've said it before that shares of Target look attractive at a 2% yield but it's even more attractive at a 2.59% yield. This yield boost was because the company raised its dividend by 20%, from $0.25 to $0.30 per share. Once again, IQTrend has estimated that Target is a good buy when it reaches a 1% yield.
Another company on our radar is American National Insurance (ANAT). Shares are trading 0.54x book value and we can't help but think that this company is about to go on the acquisition block after seeing Transatlantic (TRH) get a buyout offer at almost 0.8x book value. In any case, investors will receive a 4% dividend as a token to wait for the price to skyrocket or get acquired. The payout ratio for ANAT is manageable at 52%. With $570 million in cash and only $60 million in debt, we'll be taking a closer look at this name in the coming weeks (probably will get snatched up before we can pull the trigger.)
Top Five Performance Review
In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from June 25, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.
| Symbol | Name | 2010 Price | 2011 Price | % change |
| WAG | Walgreen Co. | 26.93 | 41.39 | 53.69% |
| MON | Monsanto Co. | 48.27 | 65.96 | 36.65% |
| SVU | SUPERVALU Inc. | 12.00 | 8.57 | -28.58% |
| XOM | Exxon Mobil Corp. | 59.10 | 76.78 | 29.92% |
| HSC | Harsco Corp. | 25.05 | 30.88 | 23.27% |
| Average | 22.99% | |||
| DJI | Dow Jones Industrial | 10,143.81 | 11,934.58 | 17.65% |
| SPX | S&P 500 | 1,076.76 | 1,268.45 | 17.80% |
It's interesting to note that a "boring" company like Walgreen (WAG) would outshine all those companies on the list. It even outperformed the high flying Apple (AAPL) since that list was published. Walgreen returned over 50% while Apple did 21.3%. In our on-going comparison of WAG and AAPL, what we're trying to emphasis is the consistency of one stock over the other. As AAPL's popularity waxes and wanes, WAG continues to methodically provided above average returns along with an outstanding dividend.
Disclaimer:
On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.
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