Lots of crazy happenings here in the world due to this Global Pandemic. Here in Atlanta, GA most businesses are closed, some cities even have curfews. People are rushing to stock up on essentials such as food, toilet paper, and hand sanitizer. On the other hand, traffic at our local parks has increased greatly; people are all cooped up inside and want to get outside. I’m not so sure walking in the park around big crowds is the smart thing to do. Anyways, onwards to the STOCK PICKS.
How did I pick these stocks? What were my main selecting factors?
1)Debt to Equity ratios. Companies that are highly leveraged right now are being priced to fail. Even if there is a smaller chance of that happening, they are being punished. This makes sense because investors are even dumping MUNICIPAL BONDS, due to fear that cities’ revenues will be cut and unable to pay obligations. Think about all of the sports events that were canceled; that is a TON of income for cities. Less business = fewer taxes paid.
2)Cash on hand. Companies that have a good portion of cash can weather this storm than those that don’t. Many companies will have to take out loans to meet their obligations.
So I’ll give you the list and then break each of them down
- Mcgrath Rent Corp
- Eaton Vance
- Schneider Trucking
- Marten Transport
- Stanley Black and Decker
Ennis is one of my favorite DIVIDEND STOCKS. It’s a smaller-cap stock, not much of a capital appreciator but the dividend is safe and will protect your portfolio in the event of a worse market crash. They make paper products/forms for businesses.
It currently has a Debt to Equity ratio of only 6.87%. Its cash on hand is 88.4 million. Current liabilities per quarter are around 31 million. Free cash flow last quarter was 55.3 million. So, given that the Free Cash flow PAYOUT ratio is around 42%. This company has plenty of room to keep paying dividends.
Fortinet is one of my top 3 growth stocks; I LOVE this company. It has an impeccable balance sheet. The Debt to Equity is only 3.5%. Cash on hand is 1.2 BILLION, wow! Revenue increased by 21% last quarter. This company is in the cybersecurity business. Even if the world slows down, companies will still need their networks protected and I think it’s somewhat insulated from some of the issues in other sectors.
Mcgrath Rent Corp is another small-cap company. They produce storage and modular buildings. This is a more capital intensive business but their books look good as well. 47% Debt/Equity and a Free Cash Flow payout of only around 20%. Currently, the Dividend is 3.44%. MCGR is also a growth play, it’s earnings has increased dramatically every year.
Akamai is also one of my top growth stocks. AKAM does cybersecurity and content delivery. The more video games people play online the more they benefit and right now TONS of people are online. This stock has held up INCREDIBLY during the Coronavirus Crash. Some days it is green while the rest of the market is red. Akamai has 1.54 Billion in cash and a 73% Debt/Equity ratio. The Debt ratio is higher than others on this list; however, I believe they are built to weather the storm given their business and cash. Free Cash Flow, Revenues and EPS growth as been fantastic with this company over the last year. I’m buying anywhere 85 and under.
Eaton Vance is an asset management company. They will, of course, be hit hard in the event of a stock market crash. However, look at 2009 as an example of how fast they bounce back. EV is a dividend aristocrat that’s increased its dividend over 37 years. With a Free Cash Flow payout of only around 33%, the dividend is SUPER safe here. Not only are you getting a great dividend, (currently 5.22% yield ) you are getting EARNINGS as well. Revenue and Earnings is up incredibly on EV over the last year. This is one of the most undervalued stocks in the market in my opinion. They currently have 606 million in cash on hand with current liabilities running around 385 million a quarter.
Schneider Trucking and Marten Transport I am going to combine. These are both trucking companies. First and foremost, trucking has already been in a recession for the last year. These things were already priced to fail so they didn’t far to fall. I’ve noticed the little SNDR that I still own has held up a lot better than the majority of my other stocks. You could argue this is the value factor at play. I think trucking stocks, defying logic, will be one of the gems of this crash to buy. SNDR only has a debt to equity of 19.85%. Its dividend is only 1.44% but is super safe with less than a 30% payout ratio. If this puppy hits 15 bucks and some change I’m buying back in. Marten transports was on my radar before the virus, but the price was too high. Now that it’s corrected, I’m watching it closely. It has a Debt to Equity of an INSANE 0.2%; however, its not much of a dividend play at a .67% yield.
Cisco has of course been around for a long-time. The dividend yield is 3.82% but a payout ratio of 54%, so that dividend is definitely safe here. Debt to Equity of 48% and 11.8 Billion in cash on hand. Looks good to me to beat the virus. Not to mention it’s a play on online learning and web conferencing as well.
Intel has a very low Debt/Equity ratio of 38%. The dividend is currently 2.88% with a payout ratio of only 26.75%. Cash on hand is a whopping 13 billion. Intel is VERY well suited to weather the storm here. Valuations look sound as well.
Stanley Black and Decker is, of course, the toolmaker. They make everything from drills and saws, to big fasteners used on automobiles. They also have a small play on security and healthcare equipment. The current dividend is 3.47% with a payout ratio of only 42.5%. They have a Debt/Equity ratio of 44.78% with 297.7 million in cash on hand. This stock is currently getting DESTROYED day in and out, I just had to buy some at these prices.
Kforce is a small-cap temp service, mostly in the tech fields but many others as well. It has a 52% Debt/Equity ratio. The dividend yield is currently 3.18% with a free cash flow payout ratio of only 29.5%. This company is taking charge and reducing its debts quickly, they have their eyes focused on being debt-free over the next few years. Last year this thing had a 32% Return on Equity, so they are doing a great job of managing their money and investments. Of course, we will have to see how the job market goes and lays off here. The business will be hurt; however, I will also say, companies are more inclined temps to do work, so they don’t have to pay them benefits. This helps Kforce’s business indirectly.