Investing 102 - Lateral-g Forums

ErikLS2 · #1 10-28-2014, 09:40 PM

Just a quick share, not pitching this stock. I've been a mechanic for far too long so I've long known that Snap On makes the best tools, period, and you pay accordingly. Anyway, I decided to look at the stock because it's something, like Greg says, "I know" (even heard Jim Cramer prasising it). I can talk to my tool guy each week and I will know right away if something with the company is sliding. Bought some on this recent dip, but look at this chart over 5 years, or even 10.

http://finance.yahoo.com/echarts?s=S...22linear%22%7D

**GregWeld** · #2 10-29-2014, 06:35 AM

See how easy this is? Brilliant! You simply invested in something you actually know - and trust - the chart is right - it pays a dividend... and you're right there to see if you start to notice anything going sideways.

It's when people try to get "cute" when things go badly. Buying stuff they know nothing about - because they heard some dipwad on TV saying it's a "buy". Or buying what they think they can put $500 in to and be a millionaire by the end of the week...

I've looked at Snap-On many times - each time it's the low dividend that's kept me out of this fantastic name. I'm a customer. I love their stuff... maybe I'll buy some today.

Quote:

Originally Posted by ErikLS2

Just a quick share, not pitching this stock. I've been a mechanic for far too long so I've long known that Snap On makes the best tools, period, and you pay accordingly. Anyway, I decided to look at the stock because it's something, like Greg says, "I know" (even heard Jim Cramer prasising it). I can talk to my tool guy each week and I will know right away if something with the company is sliding. Bought some on this recent dip, but look at this chart over 5 years, or even 10.

http://finance.yahoo.com/echarts?s=S...22linear%22%7D

**GregWeld** · #3 10-29-2014, 06:59 AM

Done! I bought 500 Snap-On (SNA) with a limit order @ $130.25

A very small buy for me because of the terrible dividend. But now when the big truck rolls up to the shop - I'll feel better being an owner! LOL

Funny about that truck -- and my dealer is a good guy -- I always tell the guy - "just let me look - I don't NEED anything..." But I can never get out of there without buying stuff!

**GregWeld** · #4 10-30-2014, 07:03 PM

Looks like GoPro (GPRO) owners will wake up very happy tomorrow.... They SMASHED earnings numbers.

That's what a stock MUST do when they're priced for perfection... they can't just equal... they certainly can't even hint that business was only just great... This one smashed the expectations.

**AMSOILGUY** · #5 10-31-2014, 04:55 AM

Can someone explain to me looking at these 3 stocks why one would be a better choice over the other? I enjoy all 3 companies drinks and wouldn't have a problem owning any of them. KO, PEP, DPS.

KO=Div/yield .31/2.95 and cost 41.40

DPS=Div/yield .41/2.38 and cost 68.94

PEP=Div/yield .65/2.74 and cost 95.65

All 3 looking at the 5yr start lower on the left and get higher on the right. Are you better off purchasing more of one stock and earning multiple Div or purchasing less stock and earning a higher Div? I'm sure the name of the game is to try and figure out which one is going to do better long term and thats what you should base you choice off of. But lets just say for discussion sake that they are going to continue to perform equally.

Or am I trying to make it to simple?

**WSSix** · #6 10-31-2014, 06:57 AM

Quote:

Originally Posted by AMSOILGUY

Can someone explain to me looking at these 3 stocks why one would be a better choice over the other? I enjoy all 3 companies drinks and wouldn't have a problem owning any of them. KO, PEP, DPS.

KO=Div/yield .31/2.95 and cost 41.40

DPS=Div/yield .41/2.38 and cost 68.94

PEP=Div/yield .65/2.74 and cost 95.65

All 3 looking at the 5yr start lower on the left and get higher on the right. Are you better off purchasing more of one stock and earning multiple Div or purchasing less stock and earning a higher Div? I'm sure the name of the game is to try and figure out which one is going to do better long term and thats what you should base you choice off of. But lets just say for discussion sake that they are going to continue to perform equally.

Or am I trying to make it to simple?

When I'm faced with the decision between multiple good choices, this is what I typically default to. I'm in a growth mode with some choices and simply steady eddy with others though. Because dividend payments are based on the number of shares owned, I go for as many shares as I can for a set dollar amount on any stock I'm looking for growth in. I did this when comparing Altria and Phillip Morris. I could get many more shares with the price of Altria at the time. This in turn allowed me to receive many more shares with each dividend payment.

Everyone is going to be different and have different priorities, tolerances, and goals. A good, general rule though is to invest in quality names so that over the long haul, you are comfortable with your choice and make money. With that said, I don't think you'd be making a bad choice investing in any of those choices. You may want to dig a little more into Pepsi though as they do have a large snack food component to them versus purely beverages like Coke and Dr Pepper/Snapple. That may or may not matter to you. I just mention it as it is a differentiator that I doubt most people would know about the company when it's mentioned.

**GregWeld** · #7 10-31-2014, 06:58 AM

Quote:

Originally Posted by AMSOILGUY

Can someone explain to me looking at these 3 stocks why one would be a better choice over the other? I enjoy all 3 companies drinks and wouldn't have a problem owning any of them. KO, PEP, DPS.

KO=Div/yield .31/2.95 and cost 41.40

DPS=Div/yield .41/2.38 and cost 68.94

PEP=Div/yield .65/2.74 and cost 95.65

All 3 looking at the 5yr start lower on the left and get higher on the right. Are you better off purchasing more of one stock and earning multiple Div or purchasing less stock and earning a higher Div? I'm sure the name of the game is to try and figure out which one is going to do better long term and thats what you should base you choice off of. But lets just say for discussion sake that they are going to continue to perform equally.

Or am I trying to make it to simple?

You failed to add to the thought process the TOTAL RETURN of the 3 --- go back and check those numbers out then come back. I'd do it for you but I won't. Ya gotta do the work on your own. See if the TR helps you make the choice.

**GregWeld** · #8 10-31-2014, 07:10 AM

Trey....

Good thought process. The only "correction" I would do for you (and others) is that dividends are paid in dollar amounts.... but the MATH is PERCENTAGES. 3% dividend is 3% dividend regardless of the number of shares owned. So - If you were comparing two stocks and they both paid the same PERCENTAGE dividend but ones share price is TWICE AS HIGH.... it's still earning the same percentage dividend on your dollars invested (given that you'd have the same exact dollars to invest).

10K invested in one company buys you 100 shares ---- and in the other company only 50 shares --- but the PERCENTAGE of return (dividend) would still be the exact same.

I got what you were saying.... but mathematically it doesn't work out the way you were saying.

HERE is what I would rather see people thinking about..... THE FUTURE as in 10 or 20 years from now. What is the BRAND they like and buy. Don't get trapped in the past. Do you no longer buy the product even though if you did - you'd buy "X"? OR ---- is there another company that might be in the SAME CONSUMER STAPLES SPACE that has better growth and a higher dividend.... So don't get locked into just comparing Coke vs Pepsi.... expand that to look at other "food/grocery/retail/consumer" products for comparison. Are their names that you love even better? That have better growth? That are just as stable?

Not saying there is ---- I'm saying open yourselves up to expanding your research. It will make you a better investor - it will give you ideas for future money - it will make you more rounded in your knowledge so that when you do make a choice -- you KNOW that's the right one for you!

Woody · #9 10-31-2014, 07:51 AM

Quote:

Originally Posted by AMSOILGUY

Can someone explain to me looking at these 3 stocks why one would be a better choice over the other? I enjoy all 3 companies drinks and wouldn't have a problem owning any of them. KO, PEP, DPS.

KO=Div/yield .31/2.95 and cost 41.40

DPS=Div/yield .41/2.38 and cost 68.94

PEP=Div/yield .65/2.74 and cost 95.65

All 3 looking at the 5yr start lower on the left and get higher on the right. Are you better off purchasing more of one stock and earning multiple Div or purchasing less stock and earning a higher Div? I'm sure the name of the game is to try and figure out which one is going to do better long term and thats what you should base you choice off of. But lets just say for discussion sake that they are going to continue to perform equally.

Or am I trying to make it to simple?

If we are assuming they are going to perform equally, it would not matter which stock you choose.

Depending on your situation you may prefer a stock that pays a higher dividend which could help you narrow your selection. You may also want to compare earnings and revenue growth, as well as the dividend growth rate. I will tell you this about the three stocks you have selected. You will pay a premium for KO for its brand strength, long term history, etc. That is not necessarily a bad thing, because sometimes it does make sense to own the best. It may be the more conservative choice, for which you get a slightly lower return (risk/reward).

**GregWeld** · #10 10-31-2014, 01:08 PM

Just to add to the thought process... of which to pick.

I've always only gone on two factors... How I PERSONALLY feel about the company... and if most things are equal -- then the historical TOTAL RETURN. I might love one company - but when I compare the TR -- and the "other" company is higher by a good margin.. I'm buying that company. The reason for this is that a large part of TR is the GROWTH in the share price.... and that's where I must turn into a lemming by following the collective herd. "They" have pushed the share price higher... (more buyers than sellers) and I have to respect that market force.

Just using your three stocks mentioned

KO is 1 year 9% - 3 year is 32% - 5 year is 78%

PEP is 1 year 18% - 3 year is 66% - 5 year is 79%

DPS is 1 year 48% - 3 year is 83% - 5 year is 180%

Now ---- I'm going to go look to see WHY did DPS have such a huge TR --- was there a merger? Acquisition? Big change that skewed the numbers.... or was there a fundamental shift to the products they carry vs the other two? I like to be able to explain any anomaly! So I'll research to see what's up and if I can find something to explain the huge difference. If I can't -- then I might choose the DPS over the others because you can't fight history and momentum. Quadrupling your money is better than only doubling your money. 5K turns into 20K vs only 10K. Big difference.

I own KO for the record. It's a steady eddie for me.