Friday, September 10, 2010

RSY VII: Buy BBY 100 @ $33.89


The table is above is a snapshot of the model portfolio at of the close of the markets on Friday. {Click on table to get a larger, clearer picture.} NGPC and IVR are definitely doing good for us so far, but ANAT has not yet met our exit price of $78.49 and GAIN while weak is holding steady.

Let us revisit Best Buy (BBY) which we mentioned on August 31st on the post
Rock Solid Yields: Dividend Growth Stocks and Some for the Stock Watch. A reminder of what was said about BBY:
Best Buy Co., Inc. {BBY} is one I have been watching closely for some time. Although the dividend yield is on the low end of the range at less than two percent, it would provide diversity into the retail sector and the market cap of Large-cap stocks. There are lots of things to like about BBY, including good insider buying recently, the forensic accounting score is looking good, and analyst expectations for revenue and earnings growth are good. Everything looks good except for the chart. The ex-dividend date for the next dividend is on October 1st which gives us some more time to consider this choice.

One other point worth mentioning, although it appears to have been put on hold for the mean time, was some type of merger or buyout with Radio Shack {RSH}. Either way, it should not materially alter our decision going forward as RSH has a similar PE ratio and even provides a comparable dividend yield of 1.27%. Since our first mention of BBY, it has followed nearly identical moves to the Nasdaq index with a significant rise in price.

Sabrient rates BBY as a strongbuy and we should add this to our portfolio at some time. For the model portfolio we are adding a limit order of 100 shares at a strike price of $33.89 {GTC} for Monday opening. The portfolio will engage in dollar cost averaging if it makes some retreat from current prices. It is important to remember this is on a $100,000 portfolio, and as such, this is will be less than 4% of our portfolio. The portfolio's goal is to have between 10 to 20 stocks at any time and thus each position should be around 5 to 10%.

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