It has been an interesting week to say the least. With political unrest occurring while the markets continue to stay at or near the all-time highs. However, the rally was short lived and markets sold off nearly -3% from the high by the end of the week. The market breadth, based on the number of companies on our watch list, is telling a different story. There are 61 names on the list this week which is the most we've had since the start of this year.
| Symbol | Name | Price | % Yr Low | P/E | EPS (ttm) | Dividend | Yield | Payout Ratio |
| IBM | IBM | 139.70 | 0.09% | 11.59 | 12.05 | 6.00 | 4.29% | 50% |
| MSM | MSC Industrial Direct Co Inc | 67.28 | 0.58% | 16.78 | 4.01 | 1.80 | 2.68% | 45% |
| VNO | Vornado Realty Trust | 73.91 | 0.59% | 15.96 | 4.63 | 2.40 | 3.25% | 52% |
| GWW | W.W. Grainger | 161.39 | 0.69% | 18.59 | 8.68 | 5.12 | 3.17% | 59% |
| CSL | Carlisle Companies | 92.75 | 0.72% | 26.20 | 3.54 | 1.48 | 1.60% | 42% |
| MMP | Magellan Midstream Partners LP | 64.84 | 0.92% | 17.57 | 3.69 | 3.46 | 5.34% | 94% |
| HNI | HNI Corp. | 35.05 | 1.30% | 25.22 | 1.39 | 1.14 | 3.25% | 82% |
| OMI | Owens & Minor | 27.60 | 1.36% | 17.58 | 1.57 | 1.03 | 3.73% | 66% |
| SCG | SCANA Corporation | 60.83 | 1.38% | 14.35 | 4.24 | 2.45 | 4.03% | 58% |
| UFPI | Universal Forest Products | 78.93 | 1.45% | 15.66 | 5.04 | 0.90 | 1.14% | 18% |
| SKT | Tanger Factory Outlet Centers | 24.06 | 1.65% | 15.93 | 1.51 | 1.37 | 5.69% | 91% |
| QCOM | QUALCOMM Inc | 51.92 | 1.70% | 19.89 | 2.61 | 2.28 | 4.39% | 87% |
| BMS | Bemis Co Inc | 41.94 | 1.80% | 18.89 | 2.22 | 1.20 | 2.86% | 54% |
| HOG | Harley-Davidson Inc | 46.88 | 1.91% | 13.75 | 3.41 | 1.46 | 3.11% | 43% |
| SON | Sonoco Products | 48.44 | 1.94% | 18.42 | 2.63 | 1.56 | 3.22% | 59% |
| GPC | Genuine Parts | 81.60 | 2.18% | 17.66 | 4.62 | 2.70 | 3.31% | 58% |
| CASY | Caseys General Stores | 104.27 | 2.34% | 23.27 | 4.48 | 1.04 | 1.00% | 23% |
| ADM | Archer Daniels Midland | 41.27 | 2.61% | 17.41 | 2.37 | 1.28 | 3.10% | 54% |
| CAH | Cardinal Health | 64.38 | 2.68% | 15.98 | 4.03 | 1.85 | 2.87% | 46% |
| LANC | Lancaster Colony Corp. | 116.47 | 2.77% | 27.21 | 4.28 | 2.20 | 1.89% | 51% |
| ARLP | Alliance Resource Partners, L.P | 18.55 | 2.77% | 4.48 | 4.14 | 2.00 | ##### | 48% |
| RLI | RLI Corp. | 54.09 | 3.01% | 23.93 | 2.26 | 0.84 | 1.55% | 37% |
| BRC | Brady Corp. | 32.70 | 3.15% | 17.68 | 1.85 | 0.82 | 2.51% | 44% |
| UBSI | United Bankshares | 32.75 | 3.28% | 17.51 | 1.87 | 1.32 | 4.03% | 71% |
| PAYX | Paychex | 54.99 | 4.19% | 24.44 | 2.25 | 2.00 | 3.64% | 89% |
| PRK | Park National Corp. | 94.68 | 4.22% | 16.82 | 5.63 | 3.76 | 3.97% | 67% |
| T | AT&T Inc | 37.37 | 4.36% | 17.54 | 2.13 | 1.96 | 5.24% | 92% |
| AROW | Arrow Financial Corp. | 31.90 | 4.38% | 15.87 | 2.01 | 1.00 | 3.13% | 50% |
| CAG | ConAgra Foods | 34.46 | 4.65% | 23.60 | 1.46 | 0.85 | 2.47% | 58% |
| TNC | Tennant | 62.90 | 4.66% | 55.18 | 1.14 | 0.84 | 1.34% | 74% |
| TMP | Tompkins Financial Corp. | 74.18 | 4.71% | 18.00 | 4.12 | 1.80 | 2.43% | 44% |
| RPM | RPM International | 48.44 | 4.74% | 35.36 | 1.37 | 1.20 | 2.48% | 88% |
| CHRW | C.H. Robinson Worldwide | 66.78 | 5.31% | 19.58 | 3.41 | 1.80 | 2.70% | 53% |
| FDS | FactSet Research Systems | 159.02 | 5.35% | 18.53 | 8.58 | 2.24 | 1.41% | 26% |
| INTC | Intel Corp. | 35.01 | 5.36% | 13.36 | 2.62 | 1.09 | 3.11% | 42% |
| LEG | Leggett & Platt | 46.42 | 5.45% | 18.42 | 2.52 | 1.44 | 3.10% | 57% |
| HRL | Hormel Foods Corp. | 34.09 | 5.67% | 20.79 | 1.64 | 0.68 | 1.99% | 41% |
| TJX | TJX Companies | 70.47 | 5.73% | 19.96 | 3.53 | 1.25 | 1.77% | 35% |
| ANAT | American National Insurance | 118.04 | 5.86% | 16.35 | 7.22 | 3.28 | 2.78% | 45% |
| MO | Altria Group Inc | 63.69 | 6.13% | 8.40 | 7.58 | 2.44 | 3.83% | 32% |
| MATW | Matthews International Corp. | 60.30 | 6.31% | 25.44 | 2.37 | 0.68 | 1.13% | 29% |
| WABC | Westamerica BanCorp. | 50.31 | 6.34% | 21.59 | 2.33 | 1.56 | 3.10% | 67% |
| SJM | JM Smucker | 121.90 | 6.64% | 23.90 | 5.10 | 3.12 | 2.56% | 61% |
| DHR | Danaher Corp. | 80.87 | 6.82% | 25.84 | 3.13 | 0.56 | 0.69% | 18% |
| SBSI | Southside Bancshares | 32.21 | 6.83% | 16.95 | 1.90 | 1.12 | 3.48% | 59% |
| FNB | F.N.B. Corp. | 12.78 | 0.0776 | 16.4 | 0.78 | 0.48 | 0.038 | 0.62 |
| VMC | Vulcan Materials | 114 | 0.0781 | 36.6 | 3.11 | 1 | 0.009 | 0.32 |
| FAST | Fastenal Company | 40.68 | 0.079 | 22.4 | 1.82 | 1.28 | 0.031 | 0.7 |
| MKC | McCormick & Company | 96.09 | 0.084 | 25.5 | 3.77 | 1.88 | 0.02 | 0.5 |
| TR | Tootsie Roll Industries Inc | 36 | 0.0847 | 33.3 | 1.08 | 0.36 | 0.01 | 0.33 |
| SYY | Sysco Corp. | 51.17 | 0.0853 | 24.6 | 2.08 | 1.32 | 0.026 | 0.63 |
| PBCT | People's United Financial | 16.63 | 0.0891 | 18.7 | 0.89 | 0.69 | 0.041 | 0.78 |
| NC | NACCO Industries | 66.3 | 0.0892 | 12.8 | 5.19 | 1.09 | 0.016 | 0.21 |
| FII | Federated Investors Inc | 26.74 | 0.0905 | 12.7 | 2.1 | 1 | 0.037 | 0.48 |
| KMB | Kimberly-Clark Corp. | 121.4 | 0.0907 | 20.3 | 5.99 | 3.88 | 0.032 | 0.65 |
| PFE | Pfizer Inc | 32.67 | 0.0952 | 23.8 | 1.37 | 1.28 | 0.039 | 0.93 |
| DNB | Dun & Bradstreet Corp. | 110.1 | 0.0956 | 37.4 | 2.94 | 2.01 | 0.018 | 0.68 |
| JW-A | John Wiley & Sons CL 'A' | 53.1 | 0.0971 | 27.2 | 1.95 | 1.28 | 0.024 | 0.66 |
| TRMK | Trustmark Corp. | 29.53 | 0.1015 | 17.4 | 1.7 | 0.92 | 0.031 | 0.54 |
| CHFC | Chemical Financial Corp. | 45.1 | 0.1019 | 18.9 | 2.39 | 1.12 | 0.025 | 0.47 |
| COST | Costco Wholesale Corp. | 157.1 | 0.1053 | 27.3 | 5.76 | 2 | 0.013 | 0.35 |
| 61 companies | ||||||||
Watch List Review
IBM (IBM) appears to be a classic value stock with high yield and low multiple. However, Warren Buffett has revalued the company intrinsic value downward (see here). Is this a case of value stock or value trap, only time will tell. Our team is not so keen on IBM but we will not ignore the fact that dividend yield of 4% and low P/E multiple (less than 15) provide an ample of margin of safety. The trend that points to trouble is the continuous decline in revenue for several years now. Until that trend in reverse, it would be difficult to convince us to be bullish.
Next on the list is a mid-cap company, MSC Industrial Direct (MSM). Year-to-date, the compay lost 27% of its value. Our valuation model suggest that shares may be worth considering at this level. Expectation for additional downside of -20% should be factored in. We hope to build a stronger conviction in this company in the near future.
We wrote a short commentary on W.W. Grainger (GWW) on April 21st. There, we specifically advised our readers to wait for a -15% decline before accumulating shares. Sure enough, shares have fallen -17% since and now would be the time for accumulation. An initial purchase should be coupled with additional purchases 10% below the current level if and when it occurs.
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. Our view is to embrace the worse case scenario prior to investing. 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.