Fair Value and the Graham Number

It's probably too early for all the predictions I've been reading about Bank of Canada's holding interest rates as is and they have peaked. Expected to slowly come down in 2024. That and the US interest rate holding for now as well has put a spark into the Markets with an upswing lately. 

I've been paying more attention to a stock's "Fair Value" and the "Graham Number". I find it makes sense to buy when a stock is undervalued with growth potential than overvalued where it's price "could" drop after buying while investor sentiment has boosted the price beyond what a company is "worth". 

One can Google the Graham Number and I'll probably add more info on that with the stocks I hold or plan to that are in my Watchlist. However, I call it an investing measuring stick when researching a stock or stay updated on it's value while other investors use different metrics or guidelines.

That approach is probably called defensive investing while attempting to minimise risk, with risk always being a part of investing. 

When a stock is overvalued, it may have future potential and post company forecasts in the news about their plans but things can go south in a hurry at times. Different than Tech stocks like Apple and Microsoft, where those two companies always have something new to build on like AI for example while leading the way in the S&P 500 these days.

Below are some of the Canadian stocks that have performed well in the last year and their dividends, which I snipped from the Globe and Mail about a week ago, Today being the 19th of November, 2023.

I own shares in all but CNQ-T which has become very popular lately, hiking it's dividend by 11%. It's the more expensive stock in the list but it's financial data is decent. The boring but defensive investor stocks some call them which I have onboard for the long haul. 

• Canadian Natural Resources Ltd. (
  CNQ-T +1.48%increase
  ): Dividend yield of 4.4 per cent, five-year dividend growth of 23 per cent and a one-year return to early November of 7.6 per cent.
• Manulife Financial Corp. (
  MFC-T +0.47%increase
  ): A 5.75-per-cent dividend yield, five-year dividend growth of close to 10 per cent and a one-year return of 12.3 per cent.
• Sun Life Financial Inc. (
  SLF-T +0.35%increase
  ): A 4.6-per-cent dividend yield, five-year dividend growth of 9.6 per cent and a one-year return of 8.6 per cent.
• Power Corp. of Canada (
  POW-T +0.41%increase
  ): A 6-per-cent dividend yield, five-year dividend growth of 7 per cent and a one-year return of 4.4 per cent.
• Fortis Inc. (FTS-T): A 4.2-per-cent dividend yield, five-year dividend growth of close to 6 per cent and a one-year return of  7.2 per cent.

A November Shipping Stock

 

The cold northerly winds here near the Atlantic Ocean makes one forgot about global warming but it's happening never the less. I find the summers getting hotter and more humid as I see more and more Heat Pumps on the decks in the new apartment buildings going up constantly ... instantly providing cooling air.

One of the most Blogged about topics these days from those I read is about staying invested through the down market times where over time the indexes; S&P/TSX and in the US, the S&P 500 go up over the years. It can be hard on the nerves when down markets can carry on for 2 or 3 years then change over to a bull run recouping losses and move up into gains.

The main thing I concentrate on with my holdings is dividend activity and any stock specific negative news that could be just a short term thing or be a long term downward drag on a companies profits. That can be a guessing game with what data, quarterly/yearly reports and press releases a company provides to the public.

When a stock is undervalued and buying low comes to mind but the yield increases over time in my watchlist, it catches my eye. ALC-T, Algoma Central has a current yield of 4.93% which moves with the stock price. After a "Split" it has increased it's quarterly dividends since 2012. The ex-dividend date is November 16th, 2023 with payment on December 1st, 2023.

Algoma Central Corp owns and operates a fleet of dry and liquid bulk carriers operating on the Great Lakes, St. Lawrence Waterway. The company's Canadian flag fleet consists of self-unloading dry-bulk carriers, gearless dry-bulk carriers, and product tankers. The company operates its business through six segments that are Domestic Dry-Bulk, Product Tankers, Ocean Self-Unloaders, Corporate, Investment Properties, and Global Short Sea Shipping. The company earns revenues from marine operations through contracts of affreightment, time charters, and pool revenue.

In the last half of November, I'll be adding to the Insurance stocks or Lifeco's in the Financials sector with GWO-T, Great-West Life having a decent growth run this year so far and it's currently undervalued.

This November is mainly about building on my Utilities, Pipelines and Lifeco's in my portfolio.