Harry Domash's Winning Investing


 Five Stocks For 6 Months 

Usually, around this time, I suggest five stocks to hold for the year.

However, after examining my track record over the years, I’ve discovered that my picks do a lot better after six months than they do for the whole year.

For instance, looking at last year’s results, my picks averaged a 24% return compared to 9% for the S&P 500 when sold in July (six months).  By contrast, holding them for the full year cut my average return to 20%, only one percent better than the S&P over the same period. I found similar results when checking previous years.

Thus, starting this year, I’ll publish two lists, one in January and another in July. So, here’s my January 2018 list. As usual, they are all dividend payers.  

Albemarle (ALB)  

Electric cars are on the way. And what to all electric vehicles have in common? Lithium batteries! Albemarle is the world’s largest and among the lowest cost producers of lithium. Albemarle also produces chemicals for a variety of other applications. Lithium currently accounts for more than 30% of sales and 50% of profits, but those numbers are headed higher. For instance, in its recently reported September quarter, Lithium sales rose 62% compared to September 2016. Dividend yield is 1.0%.  

Potlatch (PCH)

The Napa/Sonoma fires destroyed more than 8,000 homes and Hurricane Harvey wiped out more than 15,000 homes in Texas alone. Even more were damaged and require substantial repairs. The rebuilding and repair efforts will consume lots of lumber. Timber producer Potlatch owns timberlands in Arkansas, Idaho, Minnesota and Wisconsin. Its wood products unit manufactures lumber, plywood and particleboard. Potlatch is organized as a Real Estate Investment Trust (REIT). As such, it pays no federal income tax as long as it distributes 90% of profits to shareholders. Its dividend yield is 3.1%, but a recent acquisition could trigger a substantial special dividend prior to year’s-end.

Moelis & Co. (MC)

Moelis is an investment bank that provides advisory services to corporations involved in mergers and acquisitions, financing and restructuring, etc. Media reports say that Moelis has been selected to be the sole independent adviser for the planned initial public offering of Saudi Aramco, which is expected to be the world’s biggest IPO (initial public stock offering). The IPO is an important piece of Saudi Arabia’s plan to attract foreign investment and diversify its economy. Moelis pays 5.2% dividend yield (including $1.00 per year of expected special payouts).

Texas Instruments (TXN)

TI produces semiconductor chips used in smart cars, factory automation, and other hot sectors. TI pays a 2.4% dividend yield. 

Six Flags Entertainment (SIX)

Operates 20 regional theme parks in the U.S., Canada, and Mexico. By itself, that doesn’t sound very exciting. But Six Flags’ global expansion has generally been overlooked by the market. For instance, it has six parks under construction in China, all expected to open within three years. Six Flags pays a 3.8% dividend yield, and plans to boost its payout by 11% in February.

As always, consider my picks to be research candidates, not a buy list. The more you know about your stocks, the better your results.

published 1/8/18

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