Subscriber Alert

    With the indices moving into the upper end of their trading range, our Portfolios are going to take the occasion to Sell the shares of Alcon (Dividend Growth and Aggressive Growth Portfolios), Zenith National Insurance (High Yield Portfolio) and Smith Int’l (Aggressive Growth Portfolio). As you know, these companies are all being acquired, so some action will be required in the near future anyway.  This seems the correct time to convert these holdings to cash and await more attractive prices for other stocks we want to own.

    A portion of the funds received will be used to Add to the Dividend Growth and Aggressive Growth Portfolios’ holding of Qualcomm.  QCOM stock has been whacked following a disappointing fourth quarter earnings report and is now trading in its Buy Value Range.  Accordingly, it is being Added to the Dividend Growth and Aggressive Growth Buy Lists and sufficient shares Bought to bring these to full positions.  Incidentally, last night the company raised its dividend and announced a large stock buy back.

  Company Highlight

Chevron is the world’s fourth largest oil company based on proven reserves.  The company has grown its profits at a 15% annual rate over the last 10 years while earning a 15-20% return on equity.  The dividend growth rate has not kept pace with profits; but the gap in the rate of increase has been closing.  Earnings faltered in 2009 as a result of the global economic slowdown; however, CVX should return to an attractive growth rate in 2010 because:

(1) improving oil prices,

(2) rising exports,

(3) the company has a number of very promising exploration projects that will grow its reserves.  They include deep water production in the Gulf of Mexico as well as fields in Brazil, Angola and Nigeria. major new refinery.

Chevron is rated A++ by Value Line, has a low 11% debt to equity ratio and its stock yields approximately 3.4%.

   Statistical Summary

                 Stock      Dividend         Payout      # Increases   
                 Yield      Growth Rate     Ratio        Since 2000
 
CVX           3.4%         5%                35%              10
Ind Ave       3.2            7                   42                NA  

                Debt/                        EPS Down       Net        Value Line
                 Equity         ROE      Since 2000      Margin       Rating

CVX          11%           17%           3                  7%            A++
Ind Ave      19              17             NA                7             NA

   Chart

    Note:  CVX stock had made good progress off the March 2009 low, surmounting the down trend off its March 2008 high (red line).  It also managed to challenge its November 2008 trading high (green line) but couldn’t hold above it.  The blue line at the top of the chart is the lower boundary of an up trend dating back to 1988.





 


http://finance.yahoo.com/q?s=CVX
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