Told Ya!

 

We explained last week what a market in correction could mean to you. Thank you for the couple of notes I got about tightening the portfolios and I was glad to hear some of you took some profits.

 

Today was bit predictable, and it could be a peak at the things to come. Besides the bad economic data out of Europe that we mentioned Sunday, Spain held a bond auction and nobody wanted to play. Their equivalent of the 10 Year Note went to a 6%+ yield. While their government says their debt is about 85% of GDP, some estimates have it as high as 130-140%. Not a good things since the ECB and Germany have basically dais no more bail outs.

 

The market followed Europe today and was down about 150 points right out of the box. A few of our stocks fell right through the stops we had in place and we had to get out of several positions in 16 accounts. We felt like one of those old time plate spinners at the circus.

 

 

We got almost everyone out of XOM, MGRC, and UNFI. This was a good day to take those actions. Yesterday would have been better. We did add to our ACET positions as the 5% correction was totally overdone. That created a good buying opportunity.

 

After the close, AA Alcoa was supposed to report a 4 cent loss. Instead, we saw a 10 cent profit and upwards guidance from the C Suite. That may help temper more bad news tomorrow from China and Europe.

 

Ok a few of you have asked some questions, and I have been enjoying myself way too much to get to them. Mia culpa. Here we go.

 

One of our regular readers asked about a mobile phone company that got some great press. It is a cell phone company but also is a fund transfer company allowing people a cheap efficient way of moving monies. The company name was TIGO. Our reader saw an article in Fast Company and was intrigued.

 

She new from the article that the parent company was MICCF Millicom Cellular International. I could not find out much about the company until I looked at the SEC filings. There is a lot of information about the parent company. TIGO seems to be a brand of service offered by MICCF in many of the countries it services. It's top country served (measured by subscribers) is Guatemala, followed by Tanzania, and then Honduras.

 

Our reader knew that MICCF was pink sheet traded but did not know why. I do know they were delisted from Nasdaq in 2011. There are a lot of reasons for a company delisting. Some are good but most are not.   While MICFF has an interesting story to tell with serious coverage in a lot of emerging markets, we would suggest that anybody serious about the stock look at its Dec 31, 2011 20-F form and make their own opinions. Click Here to see the 20-F.

 

You can buy MICCF from any reputable broker. It is currently selling for 108.15 a share so it is not a penny stock. I know this is not much help, but the 20-F is very informative.

 

Keep The Phones Ringing

 

Another reader asked about another cellular company, this one based in Spain. TEF Telefnica, S.A. provides fixed and mobile telephony services primarily in Spain, Latin America, and rest of Europe. It offers various mobile and related services and products that consist of mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and trunking and paging services.

 

Now the reader who brought this to me is a dividend hound. This stock has a yield (after today's 3% beating) of 14.15%. However its payout ratio (How hard it is working to make that dividend.) is an astronomical 128%. Motley Fool mentions this stock but does not explain why they think the recent 15 dollars a share is the bottom. That is a little unusual as Motley is usually very data oriented. With all the back round noise in Spain, I can easily ignore the 14% yield.

 

The stock is down almost 12% since the reader sent me the note. If I had bought I would have stopped out with an 8% loss.

 

Keep On Calling

 

The same reader let me know they were 2/3 cash as of yesterday. Good move. They still hang on to Verizon because of the 5%+ yield. Do not be ashamed of that decision. He correctly called it his Verizon Bond. Hey if you can have a bond safely throwing 5% and you can be patient for a return of growth and profitability for Verizon and see the stock back up near the 40-45 mark. Good on you. Be patient a couple more years. The 232% payout ratio is a bit misleading because of their part ownership of Verizon Wireless which is a cash cow. It looks like Verizon is working hard for the dividend but they just skim it from Verizon Wireless.

 

Hold The Phone, I Got Gas

 

The same reader asked about LINE Linn Energy, LLC, an independent oil and natural gas company, engages in the acquisition and development of oil and gas properties.

 

As you may have guessed it has a great 7.5% dividend. Unlike some other stocks we have looked at IBD likes this one giving it a 78 rating. It is about 8% below a recent entry point and as you know we would not entertain a new position in a market correction. That said, we kind of like this one and will add it to the watch list. Thank you Hutch.

 

Salve Lucrum