April 2019 Watchlist

Once again, I accumulated some funds and am thinking how to best deploy it. It became a good practice to create a watchlist and post it in my blog, as I tend to give more consideration to the companies I am watching, as a result. I also can hear your opinions and some insights about the companies.

The stock market is running pretty well since the beginning of the year. It means that there are not that many attractive looking companies with current price levels. So I have a few choices. First option is to wait for a market pullback. Another option is to try and find companies that are still undervalued in this bull market. Finally, I can just ignore the market timing and add another solid company which would stay in my portfolio for years to come.

Let’s see what I came up with this month.

WestRock Company (WRK)

Let’s start the list with a new name which was never in my watchlist before – WestRock.

Short description about the company:

WestRock Company manufactures and sells paper and packaging solutions for the consumer and corrugated markets in North America, South America, Europe, Australia, and Asia. The company operates through three segments: Corrugated Packaging, Consumer Packaging, and Land and Development.

The company was created as a result of a merge between RockTenn and MeadWestvaco in 2015. It also acquired KapStone Paper and Packaging Corporation for $4.8B last November.

This company was really beaten during the last year. Let’s just look at the price graph for the last 12 months:

It’s current price is almost half of what it was a year ago. Of course, there are reasons for that. Packaging industry isn’t in the best shape. Containerboard companies are expanding capacity. At the same time, the demand is slowing due to alternative packaging options and slowdown in the economy. It will be interesting to see if the company is able to get through but it may be a good time to enter this industry. But we are never sure if this is the bottom yet.

Anyway, let’s review how the company ratios stand:

• Current price – $35.49;
• P/E TTM – 10.11;
• Dividend yield – 5.13%;
• Payout Ratio – 52%;
• Debt/Equity – 0.93.

Honestly, the valuations are looking pretty good at the moment. There are definitely headwinds in the industry but I will keep an eye on this company.

Uniqa Insurance Group AG (UQA)

Second idea is borrowed from a fellow blogger Dividend-Cashflow. It was presented in his latest watchlist and the company caught my attention.

Shortly about the company from their website:

The UNIQA Group is one of the leading insurance groups in its core markets of Austria and Central and Eastern Europe (CEE). We have approximately 40 companies in 18 countries and serve about 9.6 million customers. With UNIQA and Raiffeisen Versicherung, we have the two strongest insurance brands in Austria and are well positioned in the CEE Markets.

First of all, I think it would be nice to diversify my portfolio by adding a company from another country. I don’t own any company listed in Austrian exchange or any other Western European country. It would save some currency exchange costs as well, as I wouldn’t need to convert EUR to USD. Furthermore, I don’t own any insurance companies, so it would be diversification in sector as well.

Let’s see how company’s fundamentals are looking at the moment:

• Current price – €9.51;
• P/E TTM – 13.72;
• Dividend yield (with proposed dividend of €0.53/share) – 5.6%;
• Payout Ratio – 77%;
• Debt/Equity – 0.56.

The company has been steadily increasing in price this year. Still, the ratios look pretty good and I especially like that juicy dividend yield. I compared it with a few other insurance companies in Europe and the fundamentals are encouraging.

Dominion Energy, Inc. (D)

Final company in the list was featured in my latest watchlist as well. I still didn’t manage to purchase any Utility company and Dominion Energy is looking the most attractive to me.

Dominion Energy, Inc., commonly referred to as Dominion, is an American power and energy company headquartered in Richmond, Virginia that supplies electricity in parts of Virginia, North Carolina, and South Carolina and supplies natural gas to parts of West Virginia, Ohio, Pennsylvania, North Carolina, South Carolina, and Georgia. Dominion also has generation facilities in Indiana, Illinois, Connecticut, and Rhode Island.

The company acquired Questar gas in the Western United States, including parts of Utah and Wyoming, in September 2016. In January 2019, Dominion Energy completed its acquisition of SCANA Corporation.

At the end of February, the share price was standing at $75.05 which was close to their 52-week high. I was waiting for a pullback but the price is still hovering at around $75 at the moment. If I were to purchase shares of Dominion, it would be the case to ignore market timing. Let’s see how the company’s main ratios stand at the moment:

• Current price – $74.92;
• P/E TTM – 19.70;
• Dividend Yield – 4.56%;
• Payout Ratio – 89.30%;
• Debt/Equity – 1.75.

Not much changed since my latest watchlist. It still bugs me that I don’t have any Utility company in my portfolio and maybe I should just ignore the price level. The dividend yield is high which is good. But their P/E and dividend payout ratios look too high for my liking.

Summary

There you have it – three companies from three different sectors are on my radar this month. I’m trying not to pay attention to all the market noise and thoughts about recession, as they are hovering for a few years already. In my opinion, the main point is to keep investing to companies that will survive those recessions and that’s exactly what I’m trying to do.

What do you think about my list? What would be your top choice? Are you considering adding some other company to your portfolio? As always, I would love to hear your opinions!

 

Photo by Brendan Church on Unsplash