Two Choices for Split Buyers

02/01/2017 9:00 am EST


Neil Macneale III

Editor, 2 for 1 Stock Split

Coming off such a successful 2016, it’s with some unhappiness that I’m guessing 2017 may not be as great for investors, cautions Neil Macneale, editor 2-for-1 Stock Split Newsletter.

Based solely on the length of the current, record setting bull market, it’s reasonable to assume a significant market correction is waiting somewhere around the bend and out of sight for now.

It would also be reasonable to speculate the coming upheaval in Washington will have unintended consequences, some of which could be dire. We can only wait and see.

Meanwhile, we continue our strategy of adding one stock each month to our portfolio; each monthly stock is chosen exclusively from those firms that have announced upcoming 2-for-1 stock splits.

One split announcement came from OpenText Inc. (OTEX) — a stock we had already added to our portfolio back in July, 2014; it has since done very well.

OTEX provides enterprise information management software. If this stock is not already part of your portfolio, then by all means, I recommend you make it this month’s buy.

Otherwise, we are adding A.O. Smith (AOS) to our model portfolio now. It announced its 2 for 1 split way back in September and was passed over with relatively low scores compared to the other candidates at the time.

The price has slipped just a bit since the split was delivered in October. That, and other factors, have improved its ranking score but, truth be told, the score is still not as high as our average monthly pick.

I’m going to overlook that because AOS  — a global supplier of water heaters, boilers, water tanks and water treatment products — is a money making machine.

AOS was one of the most successful stocks ever included in the 2 for 1 portfolio during our ownership between 2010 and 2015. Our net return over five years was 33% annualized.

The growth of this company has not slowed in the interval since our sale and company and analyst projections suggest continued upward momentum can be expected.

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