Timely Ten: Top Values from IQ Trends

12/05/2018 5:00 am EST


Kelley Wright

Managing Editor, Investment Quality Trends

Yes, there was a strong rebound off the October lows, which is classic market action. Almost textbook as well is the dramatic intra-day swings and alternating days of declines and advances, explains dividend specialist and value investing expert, Kelley Wright, editor of IQ Trends.

What this tells me is there are competing views between those who think it is time to sell and those who think they are getting a bargain by buying on the dips. Eventually there will be a resolution and the market will pick a direction.

In the interim, however, it is my observation that there is a substantial amount of distribution taking place. And, if I am reading it correctly, more than a few hedge funds are having to sell to meet redemption requests, which means there’s a reasonable probability that the selling isn’t quite done yet.

With the mid-term elections behind us and only one more Federal Open Market Committee on the docket, this is typically a favorable season for stocks.

As this is widely known and anticipated, many will position themselves for what they believe will be the inevitable Santa Claus rally. When too many get on the same side of the boat, however, Mr. Market has a tendency to throw them a curveball and go the other way.

While our focus is on the market of stocks as opposed to the stock market, enlightened investors know that it is best to remain flexible and open minded to all possibilities. This is to say that we could have a rip-off-your-face rally, a gut-wrenching sell-off, or something in between.

Whatever the outcome it is important to stick with your knitting. In our case it is limiting our investment considerations to high-quality stocks that offer good present value. I offer this admonition because it is in times of heightened volatility where many investors jump from one strategy to another, which rarely has a good outcome.

Meanwhile, whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or are fully invested and merely in need of some affirmation and hand holding, The Timely Ten represents our top ten recommendations from the Undervalued category as of each issue.

Franklin Resources (BEN) — yielding  2.96%
AbbVie (ABBV)  — yielding 4.85%
Whirlpool (WHR)  — yielding 3.93%
International Business Machines (IBM) — yielding 5.20%
Omnicom Group (OMC) — yielding 3.15%
Philip Morris International (PM) — yielding 5.28%
Colgate-Palmolive (CL) — yielding 2.72%
T. Rowe Price (TROW) — yielding 2.92%
Cracker Barrel (CBRL) — yielding 2.94%
Cummins (CMI) — yielding 3.16%

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