Odds ‘n Ends – Conservative Portfolio

Conservative

  • ABB, Ltd. is buying Newron System, a French software company, that will help ABB expand its market reach and offerings for managing building efficiency. This acquisition for state-of-art software and know-how will enlarge the Zurich-based company’s offering to wholesaler and system-integrator partners for automation solutions in buildings. ABB has high return on equity and earnings momentum metrics in its favor and can continue to be held for the long-term. The reasonably valued shares yield 3.3%.
  • Drugstore and pharmacy benefits manager CVS Caremark said it has suspended filling prescriptions written by 36 prescribers for high-risk drugs as part of a broader push to combat the prescription drug abuse. The company is using its database to identify and halt inappropriate prescribing of high-risk drugs such as opioid painkillers. CVS also launched a new online Drug Information Center on CVS.com. The new resource was developed to help consumers take control of their health by providing them with best-in-class drug information and a variety of innovative resources. The new offering details information on customer prescription and non-prescription medications, vitamins and supplements, as well as a Drug Interaction Checker and a printable, personalized health information wallet card feature. The issue remains a solid investment option with potential for increased dividend growth.
  • The Coca-Cola Co. is holding its own in a sluggish operating environment. Case volumes in the June quarter inched ahead only 1% from 2012, compared to a 4% gain in the first period, the company still increased its share of the global nonalcoholic, ready-to drink beverage market across all its beverage offerings. Overall, emerging markets continue to provide the most fertile growth opportunities for Coke and the shares should continue to appeal to conservative investors.
  • New York-based Colgate-Palmolive Co. introduced a new mouthwash offering under the Colgate Total name. The U.S. is the largest mouthwash market in the world with about 50% of global sales. The non-alcohol product is based upon 12-hour protection, even after eating and drinking. The Hills pet food division has come out with a reformulated natural ingredient line called Ideal Balance. The two largest pet retail chains – Petco and PetSmart – are going to carry this product that has a new technology under its Prescription Diet line, which allows dogs to eat as much as they want without gaining weight. CP’s valuation, while not cheap, is fitting given its extensive international marketing presence, earnings dependability and strong finances.
  • Danaher Corp.’s Beckman Coulter division got some good news as the lab equipment  manufacturer has regained formal FDA approval for its Access AccuTnI+3 troponinI assay for use on its Access 2 immunoassay system used in diagnosing myocardial infarctions. This marks the resolution of a product quality deficiency that has weighed on operations for the past three years. With cash on the incline, I would not rule out some acquisitions for DHR and the shares can continue to be held.
  • Personal care products company Kimberly-Clark Corp. got off to a good start this year and will probably continue to reward its shareholders though share buybacks in the $1.0 to 1.2 billion range. In addition, it raised its second quarter dividend payout almost 9% to bring its yield to 3.5% under current quotations. Long-term, sales should be helped by expansion in its non-core categories of household and sanitary products and into healthcare and industrial markets as well as focusing on emerging economies in Asia and South America.
  • For an update on Deere & Co.,see later post.
  • Economic bellwether 3M Co.’s sales growth is being curbed in most of its extensive operations, owing to a low-growth macro environment, which is creating soft demand in certain pockets of the developed world.The strong U.S. dollar is also taking a toll on the top line, and stiff foreign exchange headwinds will likely clip 2% of local currency revenue growth this year. Nonetheless, I am very optimistic about MMM’s long-term prospects and share repurchase and dividend increases add to my confidence in higher prices over time. Also, if history is any measure, the shares may be due for a stock split.
  • Oracle Corp. has introduced PeopleSoft In-Memory Project Discovery to help customers avoid project failures by proactively providing visibility into projects and resources. By taking advantage of the extreme performance delivered by Oracle Engineered Systems, the new Oracle In-Memory Application unites structured and unstructured data to help provide a full picture of project operations and help customers gain a competitive advantage. The company’s focus on cloud computing will help offset weakness in on-site software and hardware, and those investors with a two-three year horizon may have continued interest in the shares.
  • Package delivery provider United Parcel Service has a number of growth initiatives in play. UPS has invested in its Healthcare platforms to support growth in that sector. In fact, the company recently opened new healthcare distribution facilities in the U.S. and China. Elsewhere, the company introduced a business-to-consumer model, whereby customers can opt to pick up their packages at conveniently located retail outlets. I believe UPS will see increased international – especially in South America – and domestic volumes and higher pricing when the economy shows significant improvement. The shares also yield a respectable 2.9% and the dividend should grow about 7% – 8% per year, commensurate with earnings.

 Over the next few days, I will take a look at the Income and Aggressive portfolio choices.

 

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