Vol. 32, No. 2
February 2021 Challenges & Opportunities The US economy is fully in Know Thy Stocks, Bonds & Funds recovery mode. After the massive Dear Friend, rebound in the third quarter, GDP Right now, the US stock market is all about the stories. Many of them are growth is set to come in at a good compelling and grabbing. A new technology will change the market or the number for the fourth quarter. And world. A company is led by a visionary that will lead it to the promised land of 2021 is slated to deliver very positive profitability, eventually. The market has gone up and will go up, so buy now or growth numbers, particularly in you’ll miss out. the US. Driving that growth is But the real challenge in the markets is getting to know a stock, bond or fund the largest segment of the US before and throughout your investment. This unfortunately is lost on too many economy—consumers. Consumer individual investors that buy on a story and don’t understand why something spending for the fourth quarter goes up or down. should be positive, and this should Too many stocks are getting bid up with no profit margins from their continue to improve through 2021. operations and no plans to accomplish this simple goal. And the list of newer The jobs market in the US companies that simply have names associated with compelling stories are either remains a challenge. New weekly easily coming to the market directly or via backdoor special purpose acquisition jobless claims remain very high, companies (SPACs) and getting many buyers. and this extends to continuing Stories aren’t really the problem, though. We have several recommendations claims. The most recent monthly in the model portfolios with great stories of products, markets and capabilities. jobs data showed a major decline But what’s important is that each of these have proven businesses and financial in jobs. This is the leading problem numbers that make sense. Take the time to get to know investments before you in the US economy, because fewer buy, and learn more as you own them. jobs means fewer households with That said, the US economy should continue to get better, which will support better the ability to spend. sales and profits for good to great companies that will support higher stock prices. However, overall recent holiday And bonds from good corporations should also continue to provide lots of income sales show a remarkable increase and price gains again this year. Other bonds like municipals will do the same. over the same period for 2019. And In this issue, I’ll lay out the stocks, bonds and funds that will continue to work online sales as reported by Adobe for us moving forward and what they all have in common: Plenty of underlying Analytics were up for the holiday quality to deliver more safe growth and income. spending period by 32% over 2019. So, there are deeper data supporting Growth Strategies the idea that consumers are still working for US economic growth. What Will Keep US Stocks Up? Companies are watching all 2021 will be all about results and not just hopes and promises. Keep an eye of this for current management on what’s happening in individual company quarterly reports and their guidance and planning. And it’s not just for for subsequent quarters. As of this writing, nearly 10% of the 505 members of retailers but for manufacturers, the S&P 500 have reported for their fourth quarter of 2020. And the results are logistics companies and plenty more largely supportive for 2021 performance. industries. I see this all creating Quarterly reports come down to sales and profits. Sales for the initial collection sustained growth that should result of the S&P 500 show sales gains averaging 3.2% and earnings gains of 8.3%. in more sales and profits (earnings) While this is a small sampling, it should be a prelude to further similar reports as for US companies. more companies report over the weeks going forward. But only buy and own companies This is the proof the stock market will need to keep buyers buying as the overall that have proven themselves. valuation measures of the S&P 500 are at extreme highs. The core basic valuation There are plenty to choose from measures for the index include price to earnings (P/E) at 30.4, price to sales (P/S) throughout at 4.2 and price to book (intrinsic value, P/B) at 2.9. our model Each of these valuation measures are very high, and they represent the hopes and portfolios. promises that more of the leading companies in the US stock market will deliver on selling more stuff while also generating more profits, as measured by earnings. However, the market is a big discounter of future expectations. And as the (continued) plotted graph of compiled sales and S&P 500 Index Price to Earnings (P/E), Price to Sales (P/S) & earnings shows, expectations are for Price to Book (P/B) SPX Index current sales and earnings gains to SPX Index 4.231 — Price Earnings Ratio 30.4445 30.4445 climb further over the coming quarters 4.231 — Price Earnings Ratio 30.4445 3030.0.40445 4.00 — Price to Sales Ratio 2.8687 30.00 4.00 — Price to Sales Ratio 2.8687 of 2021. Sales should gain into the — Price to BookRatio 4.231 28.00 second quarter reaching 14.2%, and — Price to BookRatio 4.231 28.00 3.50 26.00 earnings should gain into the same 3.50 26.00 quarter by 46.4%. These are stellar 24.00 numbers that are compelling for stock 3.00 24.00 3.00 2.8687 22.00 buyers right now. 2.8687 22.00 2.50 20.00 Breaking Down the S&P 2.50 20.00 Members 18.00 2.00 18.00 2.00 The S&P 500 is made up of stocks 16.00 in several industry sectors. And so far 16.00 1.50 14.00 this year there are some engaging bits 1.50 14.00 2016 2017 2018 2019 2020 of performance to take note of. While 2016 2017 2018 2019 2020 the S&P 500 Information Technology Source: Bloomberg Finance, L.P. Index is borderline, the indexed S&P 500 Index Member Average Compiled Sales and Earnings Growth equity investment of the Vanguard Technology ETF (VGT) has returned ■ All Securities 7.9794 ■ All Securities 7.9794 10 10 Avg . Sales % 5.5% so far this year. This ETF shows Avg . Sales % that the alchemy of technology is still 0 very much working. 0 One of the major themes that I’ve been advocating is -10 ESG (Environmental, Social & -10 ■ All Securities 15.0852 40 Governance). Investors from insti- ■ All Securities 15.0852 40 Avg . Earnings % tutions to individuals continue to 20 Avg . Earnings % 20 demand that companies embrace and 0 adhere to ESG principles of better 0 -20 environmental practices, awareness of -20 communities and social goods and best CQ4 19 CQ2 20 CQ4 20 CQ2 21 CQ4 21 practices for leadership of companies. CQ4 19 CQ2 20 HistoricalCQ4 20 Trend CQ2 21 CQ4 21 Historical Trend 2020 saw the results, with ESG Source: Bloomberg Finance, L.P. indexes reflecting the successes of assets that go from very challenged an increasing number of companies and overall products and services. The Vanguard Health Care ETF retail and leisure to highly in-demand outperforming the general stock 6.00 (VHT)— Vanguard is the ES Gindexed US Stock ETinvestmentF logistics, healthcare, green energy and6.00 market for the first time in history. — Vanguard ESG US Stock ETF that— showcasesVanguard Health the Care vitality ETF of the other assets. ESG will be the big leader for 2021. — Vanguard Health Care ETF — Vanguard Information Technology ETF The Vanguard Real Estate ETF companies— Vanguard leadingInformation the Technology cause ET inF the US 4.00 The Vanguard ESG US Stock ETF -- Vanguard Real Estate ETF 4.00 and-- isVangua alreadyrd Real offEsta teto ET aF positive start. (VNQ) is comprised of real estate (ESGV) reflects this performance -- Vanguard Utilities ETF -- Vanguard Utilities ETF from across the segment and as such is with its return last year, and this year The foundation of our stock investing so far neutral but doesn’t fully reflect2.00 is off to a good start. is about core real asset companies 2.00 so many of the very successful REITs Healthcare got a big wake-up and essential services that make the economy work day in and day out. Real in the US market. I see the successful0.00 call last year with the virus mess 0.00 REITs continuing to generate lots of showcasing the vital importance of estate represents real assets of land and buildings that are tangible and generate income and gains for 2021. And even healthcare companies to keep the -2.00 in the challenged segments, vaccines-2 .00 populous safe and healthy. And it ample income month after month. Real will eventually bring some level of isn’t just about vaccines, but ongoing estate investment trusts (REITs) span improved conditions as we move -4.00 many different types of land and related -4.00 41567 8 11 12 3114 5 19 20 41567 8 Jan11 2021 12 3114 5 19 20 Neil George’s Profitable Investing® (ISSN 2577-9311) is published monthly by InvestorPlace Media, LLC, 1125 N CharlesJa St,n Baltimore,2021 MD, 21201. Please write or call if you have any questions. Phone: 800/211-8566. Email: [email protected]. Web site: profitableinvesting.investorplace.com Editor: Neil George Chief Executive Officer: Brian Hunt Senior Managing Editor: David Tony Marketing Director: Katy Anadale Managing Editor: Gregg Early Chief Marketing Officer: Brad Hoppmann Managing Editor: Wola Odeniran Marketing Director: Mary Southard Editorial Director: Luis Hernandez Senior Designer: Marc Gagarin Subscriptions: $249 per year. © 2019 by InvestorPlace Media, LLC, Founding Member of the Newsletter Publishers Association of America. Photocopying, reproduction or quotation strictly prohibited without the written permission of the publisher. While the information provided is based upon sources believed to be reliable, its accuracy cannot be guaranteed, nor can the pub-10 lication be considered liable for the investment performance of any securities or strategies mentioned. Subscribers should review the full disclaimer and securities holdings disclosure policy10 at https://profitableinvesting.investorplace.com/disclaimers-and-disclosures or call 800/219-8592 for a mailed copy. Periodicals postage rates paid at Baltimore, MD, and at additional mailing offices. Postmaster: Send address changes to Neil George’s Profitable Investing®, InvestorPlace Media, LLC, 1125 N Charles St, Baltimore, MD, 21201. 5 2 Profitable Investing | February 2021 | profitableinvesting.investorplace.com5
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— Bloomberg Barclay US Agg Total Return Value Unhedged USD — Bloomberg Barclay US Agg Total Return Value Unhedged USD — Bloomberg Barclay US Corporate Total Return Value Unhedged USD -10 — Bloomberg Barclay US Corporate Total Return Value Unhedged USD -10 — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an JanFeb MarMAprJay Jun 2020ul Aug SepDOct NovJec 2021an 2020 2021
— Hannon Armstrong Sustainable Infrastructure Capital Inc — Hannon Armstrong Sustainable Infrastructure Capital Inc — S&P 500 INDEX — S&P 500 INDEX 100 100
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JunDSep ec Mar Jun Sep DecSMar Jun ep Dec JunDSe20p 18 ec Mar Jun Se20p 19 DecSMar Jun2020 ep Dec 2018 2019 2020 SPX Index 4.231 30.4445 — Price Earnings Ratio 30.4445 30.00 4.00 — Price to Sales Ratio 2.8687 — Price to BookRatio 4.231 28.00
3.50 26.00
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Sector Performance Indexed Equity ETFs Total Return massive amount of dry powder is 6.00 at the ready for spending this year — Vanguard ESG US Stock ETF for the needed sales and resulting — Vanguard Health Care ETF earnings of US companies. — Vanguard Information Technology ETF 4.00 -- Vanguard Real Estate ETF Businesses are watching this data -- Vanguard Utilities ETF very closely for current operations 2.00 and planning for the coming months. And while there have been some improvements, business leaders of 0.00 corporations that are surveyed and studied by the Federal Reserve Bank -2.00 of New York show that they’re not yet fully on board with current optimism, but it’s getting better for their outlook -4.00 six months out. Again, we need 41567 8 11 12 3114 5 19 20 Jan 2021 consumers to spend, and we need Source: Bloomberg Finance, L.P. businesses to work for more sales and further into the year. the lockdowns earlier in 2020, but it’s earnings to make the stock market Then essential services, meaning now at levels not seen since 2016. work for further gains. utilities, are the companies that power The “comfy” index is a forward- 10 Bonds the country, providing vital natural gas looking indicator of how households The US bond market has been per- for many industries and keeping water view their own and the nation’s forming very well in recent years. And and other resources pumping to keep economies. And it should be a 5 while it has taken a pause in the early everything working for businesses and warning that households aren’t as days of this year, it’s still in good shape households. And utilities not only have ready to spend. This needs to change to continue to perform in 2021. hard to replace assets, but they also if company sales and earnings are to0 The overall US Aggregate Index generate lots of dependable and rising improve to better stock prices. has returned 6.3% over the trailing income for total return. The Vanguard This is showing up in retail -5 year reflecting strong demand for Utilities ETF (VPU) shows the broad spending by consumers. Retail sales bonds and the low inflation conditions initial performance in utilities. It’s in the US after peaking post the — Bloomberg Barclay US Agg Total Return Value Unhedged USD of the US. Inflation as measured marginally off to a positive start that initial lockdowns have been dropping — Bloomberg Barclay US Corporate Total Return Value Unhedged USD -10 by the core Personal Consumption should gain further as the year unfolds. and are now in negative numbers. — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD Expenditure Index (PCE) remains This is another warning for the stock JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an well below what the Federal Reserve Economic Challenges 2020 market that needs companies to2021 sell wants and needs to see in averaging To generate better sales and more for more earnings. Monthly data at and above 2.0%. earnings, companies need consumers. from the US Census Bureau tell part US corporate bonds have done And US consumers remain challenged of the story of retail but not all. The better, returning 8.1%. This reflects by job troubles and comfort in their vital holiday sales period in the fourth demand and constrained net own household finances and their quarter was actually a better indicator — Hannon Armstrong Sustainable Infrastructure Capital Inc supply along with improving credit view of the economy. Initial and of comfort by consumers overall. — S&P 500 INDEX conditions. I see that as the stock continuing unemployment claims are National retail sales for the period 100 market shows the way of improving far from positive. This means millions were up by 8.3% over 2019 and, more sales and earnings, US corporations of households are now out of work importantly, online sales were up by will continue to be in even better and without core income. 32.0% as reported by the National 50 fiscal and credit conditions aided by This is also reflected in the Retail Federation and Adobe Analytics. lower interest rates and the economy. monthly data showing the overall These are good indicators that the Municipal bonds have returned challenge of unemployment. For the non-seasonally adjusted data from 0 4.2% over the past year and are off to US economy to thrive and for the the Census are not showing the full a better start for this year. Contrary vital consumer segment of the US positive impact of households and their to popular belief, municipal financials economy to do its thing, this needs to capability and willingness to spend. -50 have been much better with good to be reversed. And without more sales And adding to the capability is the rising tax revenues and the ability to andJanF earnings,eb MastocksrMAp won’trJ ayrise.Jun ul vastAug savingsSepD hoardOct inNo vJthe economy.ec an better budget for expenses. Add in The further worry on this front 2020 The savings rate in the US as a2021 controlled net new supply of bonds and is the comfort level of overall percentage of disposable income ample demand, and municipal bonds US households. The Bloomberg is running at a very high level of are working and should continue to Consumer Comfort Index rolled over 12.9%. And in turn, this is building work very well for this year. and has been on the decline. It’s better on the huge savings by households than— Bloomber the direg Ba depthsrclay Municipal of the Bond virus Index Toandtal Return Indeamountingx Value Unhedged to over USD $2.2 trillion. This — BlackRock Municipal Income Trust II 30 Profitable— Nuveen Investing AMT-Free Mu| Februarynicipal Cred 20it Income21 | profitableinvesting.investorplace Fund .com -- Nuveen Municipal Credit Income Fund 3 20
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JunDSep ec Mar Jun Sep DecSMar Jun ep Dec 2018 2019 2020 SPX Index 4.231 30.4445 — Price Earnings Ratio 30.4445 30.00 4.00 — Price to Sales Ratio 2.8687 — Price to BookRatio 4.231 28.00
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6.00 — Vanguard ESG US Stock ETF — Vanguard Health Care ETF — Vanguard Information Technology ETF 4.00 -- Vanguard Real Estate ETF -- Vanguard Utilities ETF 2.00
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Proven Growth & US Aggregate, US Corporate & US Municipal Bond Indexes Total Return Income 10
Getting to Know You 5 “Getting to know you, getting to know all about you…” These are lyrics of the song of 0 the same name from Rodgers & Hammerstein from their 1951 musical, The King and I. It really embodies -5 my work on finding and making recommendations for growth and — Bloomberg Barclay US Agg Total Return Value Unhedged USD — Bloomberg Barclay US Corporate Total Return Value Unhedged USD -10 income as part of the overall total — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD return investment strategy of Profitable JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an Investing. Getting to know a stock and 2020 2021 the company behind it is necessary Source: Bloomberg & Barclays before any buy is even considered. ported projects with a large collection company and some cost controls by Now, one of the major themes of US government properties. This management, and that’s exactly what that I’ve been following and making provides a highly dependable credit has happened subsequently with that several recommendations to capitalize behind— Hannon its Arinvestmentsmstrong Sustainable as UncleInfrastructure Sam Ca pital Inimprovingc by 12.5% this year. on is green energy. A precursor to the has— theS&P 50power0 INDE Xof the US Treasury As a REIT, debts are part of the full ESG market that we are invested behind his wallet. capital structure and so the debt to 100 in through various stock and bond In addition, much of its investment assets of 58.4% is reasonable and index funds and several stocks, green projects also come with underlying sustainable given the US credit energy has been a major success for guarantees from not just the US market conditions now and in the 50 many companies for a while. government, but additionally state and foreseeable future. And part of its NextEra Energy (NEE) is one of the local governments. All of this aids core finance includes green bonds big stocks that is now a bold-faced name the credibility of the company and the that are strongly in demand. 0 stock as the largest by capacity utility security of its underlying assets and Dividend distributions are running producer of wind and solar energy. The cash flows. It is not the biggest in the at 34 cents, which now yields 2.0%. stock has returned a whopping 786.1% ESG business, having only $6 billion The yield last year was higher than -50 since being added to the model portfo- in assets in its portfolio. But it has the average for REIT dividend yields lio, including dividends. JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an been adding assets at a pace running2020 as measured by the Bloomberg2021 US Let me review another story and the at an additional $1 billion per year. REITs Index, but it now is lower as facts on a not so well known company It has investments that are in the stock price has been climbing. But that back in 2019 I first presented excess of 208 projects and climbing, those distributions have been on the and which subsequently has returned predominantly in the US. And its rise with the annual average over the 119.1%, including nice dividend portfolio is primarily generating past five years running at 4.7%. payments. It’s also outperformed the — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD investment— BlackRock interestMunicipal Income on financing Trust II and The shares in Hannon Armstrong S&P 500 Index by over five times 30 rental— Nu veenincome AMT-Free on Muitsnicipal properties Credit Income as Fundwell are up, yet they are still a relative and is still going for more. as --equity Nuveen participationMunicipal Credit Income revenues Fund and value. On a price to book basis, the The company is a great behind portfolio investments. intrinsic value was running at 2.4 20 the scenes business in the ESG Revenues continue to rise by 21.1% times back then but has been rising market for green energy called on a compound annual growth rate with the stock price to a current 10 Hannon Armstrong Sustainable basis (CAGR) over the past five years 4.6 times. However, the underlying Infrastructure Capital (HASI). It’s alone. As a REIT-organized financial intrinsic value continues to climb by0 set up as a real estate investment trust company, its net interest margin 8.4% on a CAGR basis, proving that (REIT) and operates largely outside (NIM) is a fat 11.8%. And when the company’s value is growing and of Federal corporate tax liability. compared to a traditional financial, its not just the stock price. -10 It invests in and finances projects return on assets is well above average The stock has performed, and it in renewable energy, which are built at 3.7%JunD andSep in turnec it hasMar a veryJun Sep isn’tDecS as cheapMar asJu itn was, epbut it Deisc still and operated on real estate properties. positive return2018 on equity of 10.5%. 2019 a compelling company2020 with rising HASI also provides lending and debt It is a bit more expensive to run revenue and intrinsic value, including financing and takes equity stakes in the company, which I argue is due the impressive climbing asset value the renewable and energy efficiency to its current size, as its efficiency of its portfolio. And it is increasingly markets. It does so through both ratio is at 56.2%. I wanted to see getting noticed as a leader in ESG and private and publicly funded and sup- that improve with more scale in the green energy. HASI is a buy under a 4 Profitable Investing | February 2021 | profitableinvesting.investorplace.com SPX Index 4.231 30.4445 — Price Earnings Ratio 30.4445 30.00 4.00 — Price to Sales Ratio 2.8687 — Price to BookRatio 4.231 28.00
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Hannon Armstrong Sustainable Infrastructure Capital (HASI) & enhancement is the driver for farms S&P 500 Index Total Return large and small around the globe that increasingly depend on the company. — Hannon Armstrong Sustainable Infrastructure Capital Inc And that includes tough markets in — S&P 500 INDEX Europe and Asia, including China. 100 FMC is a buy under a raised price of $118.75, ideally for a tax-free account. Franco-Nevada (FNV) is the gold 50 and other crucial resource royalty company. Gold has taken a pause in price despite the positive underlying 0 conditions of a lower US dollar and low US interest rates. But with further competition from stock and bond -50 markets in the US, it should be kept near its current values for a while. I JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an 2020 2021 see gold as an attractive asset, and Source: Bloomberg Finance, L.P. Franco is the best income generating raised price of $71.50, ideally for a and income will continue. AB is a buy investment for it. FNV is a buy taxable account. under a raised price of $38.25, ideally under a revised price of $132.10, for a taxable account. ideally for a taxable account. Hercules Capital (HTGC) is set up — Bloomberg Barclay Municipal Bond Index Total Return IndeAmazonx Value Unhedged (AMZN) USD is a fully known Total— BlackRoc Returnk Municipal Income Trust II as a business development company company. Everyone uses the company’s30 — Nuveen AMT-Free Municipal Credit Income Fund products and services either directly or (BDC) that allows it to invest with less Portfolio-- Nuveen Municipal Credit Income Fund indirectly. Online sales in the US and traditional corporate income taxes. The great collection of stocks, bonds 20 beyond are the driving force for con- And it does its investments like a and funds in the Total Return Portfolio venture capital company in technol- have been assembled for their proven sumers. And add in cloud services and 10 ogy. From electronics and online to ability to deliver growth over time and other avenues of the company, and this is a company to own for a long time. bioscience, Hercules provides finance lots of current income for safe and and guidance to hundreds of compa- reliable total return performance. Compass Diversified Holdings 0 (CODI) is an investment company that nies in various stages of development. This feeds lots of income for its divi- Indexed Equities buys, owns and occasionally sells great-10 In the Growth Strategies section of cash-generating, strongly branded dend and also has the benefit of the this issue, I went through the ETFs industrial and consumer companies. company taking equity participation in thatJu nDare heldSep in theec IndexedMar EquitiesJun Sep It Deis cSlike aMa muchr Ju earliern versionep De ofc many of its company clients. HTGC is 2018 2019 2020 section of the Total Return. I see Berkshire Hathaway that invests and a buy under a raised price of $16.50, that the overall S&P 500 Index will nurtures its companies and gains in ideally for a taxable account. be supported as long as sales and their value and collects ample income Hormel (HRL) provides safe earnings grow as expected through to feed a high dividend. Trading still at meats and other foods for the US the quarters of this year. This will a discount to sales by 10%, CODI is a and beyond. It continues to gradually support the Vanguard S&P 500 ETF buy under a raised price of $23.50, build sales with double-digit operating (VOO) as well as our other specific ideally for a taxable account. margins that feed an ample return on index ETFs covered earlier. Ericsson (ERIC) is one of the shareholder’s equity in the company. global leaders in fifth generation It is a dependable investment for the Growth & Income Plays (5G) equipment. Its innovations longer term in the food industry. The Growth & Income Plays has a control vital must-have technologies Microsoft (MSFT) is much like collection of proven companies that and patents that make 5G work Amazon in that nearly the entire are leading their markets. I start with and work better. It is still an world uses its products and services AllianceBernstein (AB), the leading underappreciated company and stock either directly or indirectly. From its asset manager set up as a passthrough that will continue to garner more operating systems to productivity partnership saving traditional attention through this year. software and its huge and surging income taxes for the company and its FMC Corporation (FMC) is a cloud services, the company is one of shareholders. Assets under management leading provider in technology for the must-have investments. (AUM) are the source of fee income agriculture. More than a century Nestlé (NSRGY) is the Swiss-based and as they keep rising, that generates old, it was one of the originators of global food and consumer products more income. That income pays for mechanical application of herbicides company. Its products are ubiquitous the ample dividend. The shares keep and pesticides and continues to develop in households and businesses the world gaining and with AUM gaining, growth industry leading technologies. Yield over. And like its other successful Profitable Investing | February 2021 | profitableinvesting.investorplace.com 5 peers, it has continued to have great vital properties that continue to be in locations in Asia and beyond that branded product management with demand now and for years to follow are must-have for the globe’s leading cost controls. Steady revenue gains run by impressive management teams. companies. And it keeps expanding and very high margins make for big I start with Alexandria Real Estate with a continuing stream of new returns on shareholder equity running Equities (ARE), which owns leading properties. Buy and own it. at 28.7%. It is a buy and own stock. and very hard to duplicate laboratories W.P. Carey (WPC) is a multi-prop- NextEra Energy (NEE) is the and related properties that are indis- erty REIT that is the leader in triple-net writer of the green energy playbook pensable for bioscience companies. leases in properties around the US and for modern utilities. As the world’s Thought of more as an office REIT, the globe. 2020 was a big challenge for the largest wind and solar company company is a bargain for its labs that company as it has office properties hit by capacity, the company takes its are located in research hubs around the by remote work. But it has plenty of dependable regulated base of business US. Buy and own this well run REIT. very diversified properties that span in Florida and continues to expand Digital Realty Trust (DLR) is the all of the segments while avoiding the its green power well beyond in its leader in data centers throughout the really troubled ones. Management is unregulated businesses. The stock US and the globe. Really nothing proven to work through thick and thin continues to be a very high performer. works for businesses and households in real estate. And it keeps its promise NEE should be bought under a without cloud computing and data of raising its dividend distribution raised price of $85.00, ideally for a transmission and storage. Documents, quarter after quarter. I have followed tax-free account. systems, even video streaming all and recommended this REIT since its Procter & Gamble (PG) is the need data centers. Digital Realty has IPO decades ago, and it is a buy and reforming consumer products company. the globe’s communications and data own company. With a collection of must-have soaps, leaders as long-term tenants. And it paper products and many other items, keeps adding to its attractive assets, Toll Takers the company continues to prove its including expanded centers and data Pipeline companies also had a ability to better manage its brands. And cables to make it all work. tough time for their stock prices in with rising costs of input goods and Life Storage (LSI) is in the tem- 2020. The market dropped oil and transportation, it keeps working on cost porary storage business. This is a gas companies like a hot potato controls for better returns. business that thrives in good or chal- early in the year. The idea was that Waste Management (WM) is a lenged economic times as everyone demand was going to not only crater leading waste and recycling company needs to store more stuff now and near term but also be much lower that is also embracing the ESG market again. And what also makes this with green energy. But pipelines are opportunities with greener operations, company work better than its peers is vital for the economy. Oil is a must including energy from waste (EFW) that it operates in a modern way with for transportation and industry. And generation. Challenged this past better storage properties with user natural gas is the core of a greener year with the shift from business to focused access to contracts with easy power grid both for primary and household waste and recycling, it to use applications. And it also is the backup as well as for the chemical came through with revenue up and leader in localized warehouse ser- industry for a host of products operating margins fat at 17.5%. It’s a vices with its Warehouse Anywhere including for agricultural products. company to buy and own. product. LSI is a buy under a Enterprise Products Partners Zoetis (ZTS) is the world leader in raised price of $121.75, ideally for a (EPD) and Kinder Morgan (KMI) animal health and vaccine products. taxable account. are the only two pipeline companies COVID-19 proved that animals do Medical Properties Trust (MPW) that I recommend. Both are run by provide risks for humans. And the owns a fully rent-paid collection of multi-decade experienced leaders company continues to develop and healthcare properties. Healthcare that know how to work through all deploy livestock vaccines that make remains a focus of the US economy market and economic times. And both animals all the healthier. Then for and stock market. And this REIT is continue to up their dividends from our pets, including my miniature the best in this segment. MPW is a their dependable and must-use pipes dachshund Blue, the company keeps buy under a raised price of $23.50, and related assets. her safe and healthy throughout her ideally for a taxable account. EPD is a buy and own with its life and the lives of millions of dogs, Prologis (PLD) is the pure ample dividend under a raised cats and other pets. focused REIT in the warehouse and price of $24.95, ideally for a taxable logistics market. Online commerce account. And KMI is a buy under a Real Estate Investment Trusts is just part of warehouse demand as raised price of $16.75, ideally for a REITs have some challenges in every company that makes or deals tax-free account. retail and leisure properties that have with physical goods needs to store Fixed Income largely been kept out of the holdings and move those goods. Prologis is of the portfolio. Instead, we’ve the go-to company with facilities Bonds and related fixed income continued to focus on REITs with throughout the US and strategic investments and funds continue to (continued on p. 8) 6 Profitable Investing | February 2021 | profitableinvesting.investorplace.com TOTAL RETURN PORTFOLIO Stocks (56%) Entry Fwd. Buy Indexed Equities (18%) Symbol T/TF Date Yield Under Comments Vanguard ESG US Stock ETF ESGV TF 9/23/20 1.35% $75.95 The indexed way to build a must-have ESG investment for overall stronger performance Vanguard Healthcare ETF VHT TF 3/16/16 1.52% $ 247.45 Healthcare companies are necessary for society, the economy and market Vanguard Info Tech ETF VGT TF 8/20/18 0.79% $378.70 Technology remains the alchemy of the stock market with more innovation & more profits Vanguard Real Estate ETF VNQ TF 10/28/19 6.26% $88.60 US REITs have real assets generating more income over time Vanguard S&P 500 ETF VOO TF 12/23/20 1.60% $370.50 The way to invest in the core of the US stock market tracking the leading S&P 500 Index Vanguard Utilities ETF VPU TF 9/24/18 3.85% $144.25 US utilities are cashing in on ESG buying with rise in green energy and benefits from growing economy Growth & Income Plays Alliance Bernstein AB T 11/19/18 7.85% $38.25 Asset managers are getting attention for dependable fee income; This is the one to own for more yield Amazon.com AMZN TF 4/22/20 0.00% $3,513.30 Cloud, streaming content, online retail is everything for the modern economy; revenue should keep rising Compass Diversified Holdings CODI T 5/21/18 6.71% $23.50 This is a smaller Berkshire when Buffett was younger with lots of cash and cashflows + great dividend Ericsson ERIC T 12/11/18 0.72% $13.50 5G equipment company with mission-critical equipment to buy right now while still cheap FMC Corporation FMC TF 4/25/19 1.60% $118.75 This century-old company is a technology leader for crop protection and farm-yield enhancement Franco-Nevada FNV T 6/26/19 0.86% $132.10 The way to own gold with income; gold is facing competition from strong stock & bond markets Hercules Capital HTGC T 6/25/18 8.58% $16.50 High dividend-paying company with impressive tech stock portfolio including pre-IPO companies Hormel HRL TF 4/17/17 2.18% $53.50 Safe quality meat & packaged food products with impressive margins Microsoft MSFT TF 11/30/12 1.05% $230.75 The go-to company for cloud, operating systems and must-have software + rising gaming revenues Nestlé NSRGY T 12/17/08 2.44% $124.20 Company is feeding households and pets along with livestock at ever rising levels NextEra Energy NEE TF 9/8/08 1.71% $85.00 ESG top mark company with its mega collection of wind and solar energy Procter & Gamble PG TF 12/17/08 2.35% $145.00 Leading consumer goods company continues to deliver brand management & cost controls Waste Management WM TF 10/30/18 1.90% $122.25 Expanding energy from waste makes for great ESG stock and keeps the trash & recycling picked up Zoetis Incorporated ZTS TF 5/28/19 0.50% $169.50 Global leader in pet and livestock vaccines protecting against next pandemic + increasing petcare spending Real Estate Investment Trusts Alexandria Real Estate Equities ARE T 7/29/20 2.59% $177.60 Leading owner of hard to replicate laboratories for drug and vaccine developers Digital Realty Trust DLR T 2/9/18 3.28% $142.25 Continued demand for cloud computing and data centers yet stock has paused; use as buying opportunity Hannon Armstrong HASI T 12/31/19 2.10% $71.50 This ESG renewable energy finance REIT with government support is a renewed great buy now Life Storage LSI T 12/26/18 3.61% $121.75 Self-storage & localized warehousing services like Amazon work well for new economy Medical Properties Trust MPW T 2/26/19 5.10% $23.50 Healthcare remains stronger in demand; company has prime tenants paying rent Prologis PLD T 7/29/20 2.38% $104.90 The leader in US and major market warehouses and logistics support; continues to build & focus portfolio W.P. Carey Inc. WPC T 1/3/14 6.22% $70.00 Rent collection remains robust and dividends keep getting hiked; still has some commerical property risk Toll Takers Enterprise Products Partners EPD T 2/22/05 7.76% $24.95 Even with ESG, US still needs natural gas; this is the proven midstream company with rising dividend Kinder Morgan Inc. KMI TF 11/28/14 6.78% $16.75 Complementary to ESG clean energy; proven history of success with pledged dividend hikes Fixed Income (44%) Cash (5%) Synchrony Bank high-yield savings account 7/31/15 0.60% Market 0.60% yield—call 866/226-5638 to order; watch FDIC limits; yield is above Treasurys with FDIC insurance Multisector Bonds BlackRock Credit Allocation Trust BTZ TF 7/26/19 6.82% $15.35 Corporate bonds gaining in price & delivering income; BlackRock is Fed's contracted buyer + discount to NAV DoubleLine Total Return Bond Fund DLTNX TF 7/22/14 3.02% $10.95 Non-leveraged open-end fund with government-guaranteed mortgages continues to work iShares ESG Aware USD Corp. Bond ETF SUSC TF 9/23/20 1.84% $28.95 ESG green bonds are providing more growth & income Vanguard Interm.-Term Corp. Bond ETF VCIT TF 10/28/19 2.35% $ 97.25 Corporate bonds continue to outperform general US bond market with Fed backstop Preferred Shares Atlas Corp. 7.875% Series H ATCO.PH TF 1/22/19 7.71% $25.75 CUSIP# 81254U304 Teekay LNG Partners 9.00% Series A TGP.PA TF 1/22/19 8.66% $26.35 ISIN# MHY8564M1131 iShares US Preferred Stock ETF PFF TF 3/9/17 1.92% $38.95 Preferred stocks continue to work for growth & safer income Flaherty & Crumrine Preferred Opp. Fund PFO TF 7/23/18 6.38% $12.18 Preferred stocks delivering growth & yield; watch buy under price Minibonds JMP Group 7.25% 11/15/27 JMPNL TF 1/22/19 7.26% $24.95 CUSIP# 466273109; Partially called in February; watch buy price Cowen Inc. 7.75% 06/15/33 COWNL TF 1/22/19 7.11% $ 27.90 CUSIP# 223622804 US Cellular 6.95% 05/15/60 UZA TF 1/22/19 6.82% $25.00 CUSIP# 911684405; Subject to call; watch buy price Municipal Bonds (5%) BlackRock Taxable Muni Bond BBN TF 2/26/20 5.51% $25.35 Taxable munis better value than US Treaurys boosting demand; fund works for IRAs; watch buy under price BlackRock Municipal Income BLE T 4/23/18 7.39%* $15.17 BlackRock is a top muni manager in attractive market; fund is trading around portfolio value; watch buy under price Nuveen AMT-Free Credit NVG T 4/23/18 7.45%* $17.00 Munis should be bought now; fund at discount to NAV with AMT-free income Nuveen Municipal Credit NZF T 4/23/18 7.55%* $16.85 Munis are great buys right now; fund is at discount to NAV Treasury Bonds (4%) Two-year Treasury Bond T 12/24/18 0.12% Matured Original recommendation matured in December; hold if you own later maturity
T: Buy in taxable account for best results TF: Buy in tax-advantaged account (IRA, etc.) for best results *Taxable-equivalent yield Bold indicates revised price Profitable Investing | February 2021 | profitableinvesting.investorplace.com 7 generate lots of current income with of BlackRock. This along with the issued in smaller size denominations, more gains to follow for 2021 on top BlackRock Credit Allocation fund typically around $25.00. of what they’ve done in 2020 and should be bought and owned. The three minibonds have done years past. well over the years, generating and The focus of the holdings continues to Preferred Shares paying plenty of high income with be in US corporate bonds and preferred Preferred shares are really another price gains along the way. There have stocks (that are really another form of form of corporate bonds that today been some partial calls by JMP Group bonds) and municipal bonds. I continue are used as part of credit management and there may be more. But note that to see credit conditions of both sectors by all sorts of companies and come I have the buy under prices to protect of issuers as good to better for this year. with accounting and tax advantages your total return and still allow you to This will enhance their prices over time. for both the issuers and investors, enjoy the ample income. And with low and controlled inflation, particularly for institutional investors. The JMP Group 7.25% Series D income investors should have it well for The iShares US Preferred Stock 11/15/27 (JMPNL) is from JMP Group, some time to follow. ETF (PFF) is the synthetic investment which is an institutional transaction in this growth and income space with brokerage company. Well run and very Multisector Bonds a good yield and price gains now capable, this has been a great minibond. The multisector bonds and funds are and to follow. PFF is a buy under a Watch the buy under price. focused on corporate bonds with some raised price of $38.95, ideally for a The Cowen Inc. 7.75% Series L additions of government-guaranteed tax-free account. 06/15/33 (COWNL) is from Cowen, mortgages. The BlackRock Credit The Flaherty & Crumrine another institutional brokerage Allocation Income Trust (BTZ) is Preferred Income Opportunity company. It makes for a solid the leading closed-end corporate fund Fund (PFO) is a closed-end version minibond with a great yield. run by the masters of BlackRock of PFF. It owns a great collection The US Cellular 6.95% Series (BTZ). The fund has a great collection of preferred and related securities A 05/15/60 (UZA) is from US of issues that feed a yield of 6.7%, offering a higher yield. But it keeps Cellular, which is a discount mobile and it is a big bargain as it trades at a gaining stock buyers, making the phone company that continues to be discount to net asset value by 4.6%. share price above net asset value. successful. The price of the minibond BTZ is a buy under a raised price of Own it now and buy more only closer is high and may be called soon. Only $15.35, ideally for a tax-free account. to the NAV that is currently at $12.18. buy UZA under $25.00. The DoubleLine Total Return Bond The Atlas Corp. 7.875% Series Fund (DLTNX) is an open-end fund H Preferred (ATCO.PH) is from Municipal Bonds that invests in mortgages with most the investment holding company that Municipal bonds are one of the best guaranteed by the US government. This owns Seaspan Holdings, which is a parts of the US bond market to buy is a fund that provides stability in its leading owner and leasing company and own right now for 2021. They assets with ample income that is well of container ships. These are firmly have been very good performers since above other safe alternatives. It should in demand as shipping is soaring in being added to the portfolio back in be bought for safer and more secure cargo around the seas. It also owns 2018 to date. The Bloomberg Barclays income over time. APR Energy that provides turn-key Municipal Bond Index from April The iShares ESG Aware USD cleaner power for both companies and 2018 to date has returned 16.2%, not Corporate Bond ETF (SUSC) is an governments. The credit conditions of including tax benefits. Compared to ETF that invests synthetically in green the company are positive, and this is some stock indexes that appears mild, bonds and ESG-focused corporate an attractive preferred to own. ATCO. but in the bond market it is very strong. bonds. ESG is the increasingly PH is a buy under a raised price of But the closed-end municipal funds proven market outperformer in stock $25.75, ideally for a tax-free account. have done way better. The BlackRock segments, and I see it continuing The Teekay LNG Partners 9.00% Municipal Income Trust II (BLE), the over to the bond market. This is a Series A Preferred (TGP.PA) is from Nuveen AMT-Free Municipal Credit newer ETF in a newer and rapidly a leading ship company in liquefied Income Fund (NVG) and the Nuveen expanding part of the US bond market natural gas (LNG). LNG is rapidly Municipal Credit Income Fund (NZF) that should only get bigger and better expanding in demand around the globe have returned 31.4% to 34.1% since in 2021 and beyond. SUSC is a buy with more shipments from the US being added to the portfolio. under a raised price of $28.95, taking advantage of the US glut of cheap These three tax-free municipal bond ideally for a tax-free account. and clean natural gas. This preferred funds remain great buys right now for The Vanguard Intermediate provides nice income right now. lots of tax-advantaged yields now and Term Corporate Bond ETF (VCIT) more gains for 2021. Watch the buy is the leading ETF in US corporate Minibonds under price for BLE, while both Nuveen bonds that has been a primary focus Minibonds are regular corporate funds are at ample discounts to NAV. of some of the bond buying by the bonds that have either been cut down Municipal bonds as noted earlier Federal Reserve under the leadership into smaller investment sizes or are benefitting from bigger demand
8 Profitable Investing | February 2021 | profitableinvesting.investorplace.com SPX Index 4.231 30.4445 — Price Earnings Ratio 30.4445 30.00 4.00 — Price to Sales Ratio 2.8687 — Price to BookRatio 4.231 28.00
3.50 26.00
24.00 3.00 2.8687 22.00
2.50 20.00
18.00 2.00 16.00
1.50 14.00 2016 2017 2018 2019 2020
■ All Securities 7.9794 10 Avg . Sales %
0
-10
■ All Securities 15.0852 40 Avg . Earnings % 20
0
-20
CQ4 19 CQ2 20 CQ4 20 CQ2 21 CQ4 21 Historical Trend
6.00 — Vanguard ESG US Stock ETF — Vanguard Health Care ETF — Vanguard Information Technology ETF 4.00 -- Vanguard Real Estate ETF -- Vanguard Utilities ETF 2.00
0.00
-2.00
-4.00 41567 8 11 12 3114 5 19 20 Jan 2021
10
5
0
-5
— Bloomberg Barclay US Agg Total Return Value Unhedged USD — Bloomberg Barclay US Corporate Total Return Value Unhedged USD -10 — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an 2020 2021
— Hannon Armstrong Sustainable Infrastructure Capital Inc — S&P 500 INDEX 100
50
0
-50
JanFeb MarMAprJay Jun ul Aug SepDOct NovJec an 2020 2021
Bloomberg Barclays Municipal Index, BlackRock Municipal (BLE), its investments and activities in Nuveen AMT-Free (NVG) & Nuveen Municipal (NZF) Total Return newer markets and should be rapidly building on its already impressive — Bloomberg Barclay Municipal Bond Index Total Return Index Value Unhedged USD asset growth in its portfolio gaining — BlackRock Municipal Income Trust II 30 — Nuveen AMT-Free Municipal Credit Income Fund 31.8% in the past year alone. -- Nuveen Municipal Credit Income Fund Armed with great management, 20 it has a net interest margin (NIM) that measures its cost of funds 10 against what it earns on its finance portfolio of 9.9%, which is a dream of traditional banks and financials. And 0 its efficiency ratio, which measures the percentage cost of each dollar in -10 revenue, is an almost unheard-of level of 14.9%, meaning that it costs only 14.9 cents to earn each dollar. Even JunDSep ec Mar Jun Sep DecSMar Jun ep Dec 2018 2019 2020 the best banks can’t reach this. Source: Bloomberg Finance, L.P. The stock market is learning about and lesser issuance outside of some safer overall monthly income streams. the company and is buying the stock refinancing last year primarily in In the January issue, I went through that is still cheap at only 1.25 times its the taxable municipal bond market. each and every holding in each cycle intrinsic (book) value. TSLX is now And add in much better credit and and explained why they are working a buy and own stock under a raised financial conditions for municipal well now and that they should be price of $23.50, ideally for a tax- issues around the US, and the market sustainable for a long time to follow. free account. is set for more gains to follow. Cycle A Cycle B The BlackRock Taxable Two of the leading data and tele- Municipal Bond Trust (BBN) was There are two companies that should be further addressed right now in communications companies in the US added early last year as the taxable are inside Cycle B. AT&T (T) and municipal bond market was really Cycle A. Mondelez (MDLZ), with its name that means “world of delicious,” Verizon (VZ) are both just getting getting a boost. With lower US going in the 5G wireless market stan- interest rates and support from the is a great maker of consumer foods and other products. Revenue has been dard. There is a lot to do for both Federal Reserve, municipal issuers companies in deploying new equip- wanted and needed to refinance older coming sharply back last year with consumers stocking up and despite ment, including from Ericsson and higher-coupon (interest) bonds. But Samsung Electronics (SSNLF). And with tax changes in the Tax Cuts & more reopening eventually, households should continue to enjoy consuming spectrum buys and expansion are also Jobs Act of 2017 (TCJA), it restricted underway by both to carry more for municipal issuers in how they could more stuff at home. The company has reached wireless. Both should be and can be refinance with new tax-free bonds. bought and owned for years to come. Taxable municipals were the impressive operating margins for an industry that has been challenged on Colgate-Palmolive (CL), like for solution, as they are municipals Mondelez in Cycle A, is a proven without the tax-free status. And they this front. At 14.9%, the company is highly profitable and should continue consumer products company with have been doing very well with both very ample operating margin at ample new issues last year and eager to be for a longer time to come. It has very strong brands that the stock 22.6%. This proves its product institutional buyers that normally management and cost controls are would not buy traditional tax-free market is noticing. And with little debt at only 29.4% of assets, it is very working and will continue to work. It municipal bonds. The BlackRock remains a buy and own stock. Trust has done well, but so has the underleveraged and low risk. The stock price, so keep an eye on the buy under has been improving in performance Cycle C price before investing. and should continue to do so. MDLZ The two financials in Cycle C is now a buy under a raised price of continue to perform in different Incredible Dividend $60.35, ideally for a tax-free account. segments of the markets. BlackRock Then there is Sixth Street (BLK) is the world’s largest asset Machine Specialty Lending (TSLX). This manager with trillions of dollars in The collection of investments is one of the alt-financials that AUM. This generates massive fee inside the three dividend cycles of provides innovative finance to a host income from its active management the Incredible Dividend Machine of companies and enterprises. The accounts, including for plenty of continue to generate dependable and company is fully in growth mode governments and their sovereign right now. It has been expanding
Profitable Investing | February 2021 | profitableinvesting.investorplace.com 9 investment funds and passive funds, has brought two impressive deals so not to mention its massive amount of Niche Investments far. This needs to be in your portfolio AUM inside its ETFs. The Niche Investments represent right now. RILY is a buy under a The stock keeps getting and keeping the farm team of stocks and other raised price of $52.95, ideally for a investor notice for very good reason. It investments that must prove tax-free account. has returned 184.3% over the trailing themselves to earn a spot in the main BlackBerry (BB) is a company that five years alone and has been a stellar Total Return or Incredible Dividend owns patents that are mission critical performer over the past year as well, Machine portfolios. Many of our for so many tech systems and products outpacing the S&P 500 Index and Niche stocks have now made the case to work. From data transmission and financials by good margins. The stock to become a main holding. They are security to systems that are used in is still a value at 3.3 times its intrinsic great companies with impressive nearly all modern vehicles, BlackBerry value. Buy and own BLK for a long and improving financials and are is a company and a stock that will be time under a raised price of $745.00, either beginning or are now being getting more attention. Buy and own ideally for a tax-free account. recognized by the markets for their BB under a raised price of $13.75, Main Street Capital (MAIN) is successes and prospects. Here’s the ideally for a taxable account. another alt-financial that focuses its rundown of the recommendations. Centene (CNC) is the perfect lending to main street businesses Activision Blizzard (ATVI) is a company for the new control of around the US. It does this with leading electronic gaming company the Federal Government. I started an efficiency ratio at a still very that operates on all platforms, recommending this company well profitable level of 32.3%. I see this including the primary ones from ahead of the elections as I saw company and its stock that has been Microsoft (MSFT) and Sony (SNE). changes coming. It is the go-to in the portfolio since early 2018 as I continue to see gaming as a major company for government healthcare having a lot of further potential. growth market even as the US and administration both on a Federal and MAIN is a buy and own under a globe eventually begin to emerge state level. Public sector healthcare raised price of $34.50, ideally for a with some more interactive normalcy. programs and insurance will continue taxable account. ATVI remains a buy and own under to get major budgetary stimulus, and $99.50, ideally for a tax-free account. Centene will be the prime contractor. AMN Healthcare Services (AMN) Buy and own CNC under $68.85, was added as I saw the ideally for a tax-free account. major continued shortages of Covetrus (CVET) is another must- The Fund Portfolio healthcare workers from nurses own company. It provides ongoing Stocks (56%) to doctors. And this is the stock Vanguard ESG US Stock ETF (ESGV) supplies for veterinarians and their and trade of AMN, providing offices as well as prescription drugs for Vanguard S&P 500 ETF (VOO) staffing both under contract and Vanguard Real Estate (VNQ) pets as well as other animals. It is very Vanguard Utilities ETF (VPU) permanently. It also is a tech well run and very entrenched in the Vanguard Information Technology ETF (VGT) leader in data management, high-growth market for pet and animal Vanguard Health Care ETF (VHT) including the vital accreditation care. Buy and own CVET even with Fixed Income (44%) that allows professionals to its price gains under a raised price of Vanguard Intermediate-Term Corporate ETF (VCIT) work. And its translation tech $42.25, ideally for a tax-free account. iShares ESG Aware USD Corporate Bond ETF (SUSC) is must-have for both patients iShares Preferred and Income Securities ETF (PFF) Gray Television (GTN) owns local and professionals that are not affiliates of all the major TV networks SPDR Nuveen Bloomberg Barclays Muni Bond ETF (TFI) English-speaking. The stock is Cash (5%) around the US. Television is not past its gaining as more figure out what prime time as everyone still tunes in. the company does and is. I see a And its local TV websites are among lot more for this even post-virus. Niche Investments the most visited in every market for AMN is a buy and own under local news and weather updates. This Name (Ticker, Yield) T/TF Buy Under a raised price of $79.85, ideally Activision Blizzard (ATVI, 0.5%) TF $99.50 is an ad revenue machine. And it has a AMN Healthcare Services (AMN, 0.0%) TF $79.85 for a tax-free account. cash hoard and keeps looking for deals. B. Riley Financial (RILY, 3.0%) TF $52.95 B. Riley (RILY) is a very But the new FCC leadership might be BlackBerry (BB, 0.0%) T $13.75 favorite company of mine that more restrictive. I like GTN, but it Centene (CNC, 0.0%) TF $68.85 has soared since being added to stays as a smaller buy to nibble on Covetrus (CVET, 0.0%) TF $42.25 the portfolio. It has a collection right now under $18.50, ideally for a Gray Televison (GTN, 0.0%) TF $18.50 of financial divisions that do all Ritchie Brothers Auctioneers (RBA, 1.5%) T $72.25 tax-free account. sorts of things from bankruptcy Ritchie Brothers Auctioneers Samsung Electronics (SSNLF, 2.7%) T $91.30 workouts, including retailers, TDK Corp. (TTDKY, 1.1%) T $192.50 (RBA) is the Canadian-based auction Tencent (TCEHY, 0.2%) T $ 97.40 to specialty finance, asset company for industrial and a wider Viper Energy (VNOM, 2.8%) TF $18.50 management and trading. It also collection of other major goods, has an active SPAC unit that including collector cars. This is
10 Profitable Investing | February 2021 | profitableinvesting.investorplace.com another of my heads-you-win-tails- latest and the next level technologies. you-win stocks. Good economy means TTDKY is another buy and own The Fidelity and demand to buy equipment now at stock under a raised price of $192.50, Vanguard Portfolios auction. Bad economy means creditors ideally for a taxable account. need to liquidate stuff to recover cash. Tencent (TCEHY) is a must-have Fidelity (800/544-8888) Stocks (56%) I see this company as a buy and own company for anyone or any company Fidelity 500 Index Fund (FXAIX) for a long time. RBA is a buy under that does business or interacts in or Fidelity MSCI Real Estate ETF (FREL) $72.25, ideally for a taxable account with China. The company has a host Fidelity US Sustainability Index Fund (FITLX) given its Canadian tax status. of platforms and services that provide Fidelity US Utilities ETF (FUTY) Samsung Electronics (SSNLF, communications, content and payments Fidelity Health Care ETF (FHLC) 005930 Korea) is a must-get-a-hold-of for everything by everyone in China. Fidelity Select Software & IT Services (FSCSX) stock to buy and own. It is a pain to Buy and own this with the near-term Fixed Income (44%) buy. Without a supported US listing, caveat that its lesser peer, Alibaba Fidelity Sustainability Bond Index Fund (FNDSX) Fidelity High Income (SPHIX) it must be bought in the over the (BABA), has its own challenges with Fidelity Principal Preferred Securities (PRFCX) counter market by your broker. This Beijing of its own misdoings that are Fidelity Intermediate Municipal Income (FLTMX) means that you must call the trade in, unrelated to Tencent. Buy TCEHY Cash (5%) potentially incurring additional fees. under a raised price of $97.40, It is absolutely worth the effort and ideally for a taxable account. Vanguard (800/662-2739) the fees. It is the source for nearly Viper Energy (VNOM) owns very Stocks (56%) Vanguard ESG US Stock ETF (ESGV) everything electronic from components valuable resource land primarily in Vanguard S&P 500 ETF (VOO) to high-quality branded goods. Buy the rich Permian Basin that is mainly Vanguard Real Estate ETF (VNQ) and own SSNLF for the long haul in Texas. It leases it out to prime Vanguard Utilities ETF (VPU) under $91.30, ideally for a taxable exploration and production companies Vanguard Information Technology ETF (VGT) account given its foreign status. that pump oil and gas out of the land Vanguard Health Care ETF (VHT) TDK Corp. (TTDKY) is another and pay royalties to Viper. This stock Fixed Income (44%) company that makes the technologies, got walloped early last year as oil and Vanguard Intermediate-Term Corporate ETF (VCIT) equipment and parts that are must-haves gas stocks were left for dead. I stayed iShares Pref. and Income Secs. ETF (PFF) for so many products and industries. with it after culling nearly all of our Vanguard Tax-Exempt Bond ETF (VTEB) Electric cars need its power equipment petrol companies. Vanguard ESG US Corporate Bond ETF (VCEB) and its batteries, including its newer While lower in price than it was in Cash (5%) solid state and hydrogen power sources. prior years, since March to now it has Autonomous and semi-autonomous gained 187.1%, proving my point that the similar expectations, investments cars need its sensors. 5G antennas need you never look back at what you paid, and performance are there for the its power sources and management only if you should buy a stock anew Fidelity and other index funds in the systems. It is the company for the and why. I see the business model as model fund portfolios. very compelling. The company For stocks, start with the base of has lots of cash, little debt and the S&P 500 Index fund. Then, add The Incredible Dividend Machine so much land that has yet to be in ESG, which is no longer just a fad. Cycle A (January, April, July, October) T/TF Buy Under Next, add in the technology sector. BCE Inc. (BCE, 5.9%) T $45.00 developed. And it is land that is Corporate Office Properties (OFC, 4.2%) T $ 27.50 outside of potential new Federal This is the big growth engine for Merck (MRK, 3.1%) TF $86.25 land limits. Buy and own the economy. Building further is the Mondelez International (MDLZ, 2.2%) TF $60.35 VNOM under $18.50, ideally healthcare market index investment. PPL Corp. (PPL, 5.8%) TF $30.25 for a tax-free account. Then come REITs and utilities. Sixth St. Specialty Lending (TSLX, 11.2%)** TF $23.50 Essential services companies are, Xcel Energy (XEL, 2.7%) TF $72.50 well, essential for the economy. Cycle B (February, May, August, November) Model Mutual For fixed income, corporate bonds, Alliant Energy (LNT, 3.1%) TF $58.25 Fund Portfolios preferred stocks and ESG corporate AT&T (T, 7.1%) TF $32.50 bonds are what have been working Colgate-Palmolive (CL, 2.2%) TF $ 87.25 The Fund Portfolio as well Verizon (VZ, 4.4%) TF $61.25 as the Fidelity and Vanguard and will work for more income now and more gains this year. I have the Cycle C (March, June, September, December) Portfolios are all designed to BlackRock (BLK, 2.0%) TF $745.00 follow the allocations of the best of the indexed funds in these Dominion Energy (D, 3.5%) TF $83.00 main Total Return Portfolio. sectors that can be bought and owned Duke Energy (DUK, 4.2%) TF $93.00 In the Growth Strategies for years. Then, the municipal index Easterly Gov’t Properties (DEA, 4.6%) T $26.75 and Total Return sections of funds should be bought and owned. Eversource Energy (ES, 2.6%) TF $93.25 this issue, I have outlined the And even for tax-free accounts, the Main Street Capital (MAIN, 7.6%)** T $34.50 specific sectors and the funds total return history and prospects Public Svc. Enterprise Group (PEG, 3.3%) TF $62.95 justify giving up some of the tax-free *Monthly dividend payer, **Annual Yield showcased using the Vanguard index funds for examples. But advantages.
Profitable Investing | February 2021 | profitableinvesting.investorplace.com 11 SUMMARY Final Thought Great Stocks, Great Bonds, Great Funds Actions to Take This I’m concluding this issue with an important announcement… and a farewell. Month InvestorPlace, the publisher of Profitable Investing, has decided to cease publica- tion of this research service. Running a publishing company requires making 1. This is the Final Issue of tough product decisions from time to time. It’s making a very tough one now. Profitable Investing. Please InvestorPlace management wants to make clear that the decision to cease be sure to read this issue publication of Profitable Investing has nothing to do with the quality of the carefully, as I’ve explained research or the performance of our recommendations. The company has why our current portfolios are struggled to attract a strong readership to this publication. We regret that this good to buy and own for a is the case. You’ll receive communication on how InvestorPlace will “make long time to follow. good” on its commitment to you. This final issue is all about making sure that you have insight on great stocks, 2. Getting to know a stock and bonds and funds to ensure that you achieve success in the future. The US the company behind it is economy went through a gut-wrenching blow last year. And while not out of the necessary before any buy is woods with the virus and its lasting impacts, the economy is proving its resil- even considered. Read the iency and has been recovering strongly. I see that this should continue in 2021. story starting on page 4. Consumers and households, while challenged by the jobs market, are 3. Low inflation and continued still capable of participating overall. A build-up in savings has the majority Fed actions should bode well of households with the thankful ability to spend as needed over time. for US stocks and bonds Businesses have the ability to step up and increase their activities with plenty through 2021, particularly of credit available. They still need more confidence to expand or at least get those in the Total Return back to normal, but I see this underway. Portfolio. I review the The stock market has been performing. But the facts of actual sales and portfolio starting on page 5. earnings gains need to prove out to keep it going. Again, I see this happen- ing this year as evidenced in recent quarterly reports. Bonds have also been 4. The Incredible Dividend performing. Low inflation, Federal Reserve actions and strong investment Machine continues to generate demand should continue to benefit bonds, particularly for good corporations dependable and safer overall and municipal issuers. monthly income streams. See The stocks, bonds and funds in the model portfolios continue to do well page 9 for my latest thoughts. overall. Understand that I have reviewed all of them and judge that they are good to own in the future. However, since we are ceasing publication of this 5. Be sure to check the portfolios service, we will not be providing future updates on the positions. throughout this issue and If you hold any of our investments under coverage, I’d like to suggest two online for my latest guidance, possible paths forward. as I’ve updated the buy- One, exit the positions if you feel uncomfortable holding them without under prices for many of our future updates. Two, hold any positions you like with a 25% trailing stop holdings. loss. This means that if a position declines 25% from its highest price point, you sell the position the next day. This type of “stop loss” strategy limits any losses a stock or a fund could generate in your portfolio. NEIL GEORGE began By following this stop loss strategy, you can hold these positions from this his financial services career in 1987 with Merrill point on while maintaining an exit strategy for the future. Lynch International Bank I am greatly appreciative for your subscribing to and reading my work. I in Vienna, Austria and enjoy my work very much and will look forward to finding another outlet in subsequently held senior the future. positions at what are now For any and all questions regarding your subscription status, please feel US Bank and globally- based Investec PLC. Neil’s long career has free to contact the InvestorPlace customer service team at Feedback@ included stints as a bond trader and the InvestorPlace.com or 800-211-8566. manager of a fixed-income fund worth over Thank you very much for your support and companionship on this $1 billion. An income hunter at heart, he’s endeavor. also the former editor of several successful investment advisories dedicated to finding Wall Street’s best yields. Neil earned an All My Best, MBA in international finance from Webster University in Europe and a bachelor’s degree in economics from King’s College. His market commentary and insights have been featured in the Wall Street Journal, Barron’s, Bloomberg, CNN and NBC. Neil George