Newsletters 2010 Newsletters Core Equity Analysis
Friday, 12 November 2010 10:30
Important hallmarks of companies selected for the Osher Van de Voorde core equity portfolio include high-quality, consistent earnings and dividend growth, strong balance sheets, low volatility and reasonable valuation. The following table provides data from Value Line that helps measure and substantiate these portfolio characteristics:
| Company | FinancialStrength | Safety | Beta | Debt | PayoutRatio | 2011 PE | 2011 EGrowth | 2011 DGrowth |
| Chevron Corp | A++ | 1 | 0.90 | 9% | 30% | 8.3 | 2% | 4% |
| Exxon Mobil | A++ | 1 | 0.75 | 11% | 28% | 10.2 | 10% | 5% |
| 3M Company | A++ | 1 | 0.80 | 26% | 38% | 14.3 | 3% | 8% |
| Emerson | A++ | 1 | 1.05 | 34% | 43% | 17.4 | 17% | 1% |
| L-3 Comm | A++ | 2 | 0.90 | 33% | 20% | 8.1 | 9% | 13% |
| United Tech | B++ | 1 | 0.95 | 32% | 36% | 14.1 | 13% | 11% |
| Johnson Cont | A++ | 3 | 1.25 | 22% | 24% | 15.3 | 18% | 8% |
| McDonald's | A | 1 | 0.65 | 44% | 50% | 15.9 | 8% | 9% |
| Colgate-Palm | A++ | 1 | 0.55 | 54% | 43% | 14.7 | 9% | 10% |
| Pepsico Inc | A++ | 1 | 0.60 | 47% | 45% | 14.2 | 12% | 5% |
| Wal-Mart | A++ | 1 | 0.60 | 35% | 31% | 12.2 | 10% | 14% |
| Abbott Labs | A++ | 1 | 0.60 | 39% | 40% | 10.9 | 13% | 9% |
| Becton Dick | A++ | 1 | 0.65 | 22% | 28% | 13.5 | 9% | 11% |
| Johnson & John | A++ | 1 | 0.60 | 13% | 45% | 12.5 | 8% | 9% |
| Novartis | A++ | 1 | 0.65 | 19% | 46% | 12.2 | 4% | 12% |
| Teva Pharma | A+ | 1 | 0.55 | 21% | 14% | 10.0 | 14% | 1% |
| Berkshire Hath | A | 1 | 0.75 | 40% | 0% | 16.6 | 10% | 0% |
| Charles Schwab | A++ | 3 | 1.15 | 18% | 32% | 18.1 | 42% | 8% |
| NYSE Euronext | A | 3 | 1.50 | 24% | 51% | 12.5 | 9% | 4% |
| Automatic Data | A | 1 | 0.70 | 1% | 56% | 18.2 | 3% | 3% |
| Cisco Systems | A++ | 1 | 0.85 | 22% | 23% | 15.2 | 13% | NA |
| Linear Tech | A++ | 3 | 0.90 | 16% | 39% | 13.2 | 51% | 7% |
| Oracle Corp | B++ | 1 | 0.90 | 27% | 11% | 15.5 | 14% | 25% |
| Qualcomm Inc | A++ | 2 | 0.80 | 0% | 36% | 19.6 | 15% | 7% |
| Vodafone Group | A | 2 | 0.80 | 24% | 59% | 11.5 | 4% | 8% |
| AVERAGE: | A+ | 1.44 | 0.82 | 25% | 35% | 13.8 | 13% | 8% |
Quality: Value Line’s highest rank for Financial Strength is A++ and its highest rank for Safety is 1, on a scale of 1 to 5. The average ranking for the OVIM core is A+ for Financial Strength and 1.44 for Safety.
Earnings Growth: Based on Value Line’s estimates for 2011, earnings for the OVIM core is expected to increase by an average 13% from 2010 levels.
Balance Sheet: OVIM core equities carry an average total debt to capitalization ratio of 25%.
Volatility: With a Beta of 1 being equal to the volatility of the overall market, the average Beta for the OVIM core is 0.82 or 18% less volatile than the overall market.
Valuation: Using October month-end prices, the OVIM core trades at a forward PE of 13.8.
Dividend Growth: The average dividend growth rate for the OVIM core was 19% in 2010 and is expected to be 8% in 2011. On an absolute basis, dividends rose 9% in 2010 and should rise another 9% in 2011. With an average payout ratio of only 35%, there is ample room for further dividend hikes.
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