Tag Archives: accounting

Why I Bought Unum Healthcare Today

In the past I have focused on two strategies for my stock investing.  The original one that I started with is what I would call “Quantitative, Fundamental, Technical”.  It focused on finding an industry sector that is performing well (Quantitative analysis).  From there I would start to dig into the best company fundamentally within that sector and then look at the technicals as well.  I would rank those companies that paid a dividend and also were profitable on 16 different aspects and then purchase shares in the one that came out with the best overall rating.

The second investing style that I started utilizing was strictly technically based.  I would look at short term, medium term, and a long term moving averages and then select those over different industries to diversify this portfolio.  To simplify this as much as I can to write this here is as follows:  I would watch for when the stock price was above the short term moving average and where the medium term had just recently crossed above the long term moving average.

My new system is strictly focused around the fundamental analysis of the business and starts with the P/E ratio.  If you look at the P/E ratio of Unum Healthcare, it is currently trading at 9.63 times their trailing earnings and 8.19 their forward earnings.  I’m looking at their historical average P/E ratios for the 5 and the 10 year terms, which are 15.12 and 10.88.  That puts Unum at 37% below their 5 year average P/E and 12% below the 10 year average.  Other positives in the fundamental valuations of the company are the P/B ratio where typically these companies are bought at values around 30% above their book value, Unum currently trades at 5% below their book value so if they were to be bought out you would look for a significant premium to be attached to a bid for their company.

Now for some tough spots that we have noticed on the fundamental side.  The current price is at 71 times the cash value that they have on hand.  The cash amount will be growing again though as they only trade at 8 times their free cash flow amount.

They do pay a decent dividend of 2.2% and over the past few years they have increased the annual dividend rate by 3.67% over the last 3 years and 9.14% over the last 5 years.  They have plenty of room to continue to grow that dividend as well, since their payout is only 20% of their current earnings.  If you are interested in the dividend they will be going ex-dividend on 4/27/16.  They are also buying back stock right now, which some people are not necessarily a fan of but I like that they are returning value to their shareholders.  The current closing price is right at the price where they averaged their buyback price from early 2015 at 33.75 a share.

Just this month they have entered into an agreement to purchase Starmount Life Insurance Company that they expect to be accretive by 2017.  This adds more potential revenue to the top line very quickly.

Lastly, and not that it even entered into my decision when purchasing this company I see that the company is trading above it’s 20, 50, and 200 day moving averages.  The 20 day and 50 day are both trending up, and will likely catch the 200 day soon.  It may be poised for a rally but if you put in a nice 20% stop loss this stock has the potential to run for quite some time going forward.

Happy investing,

Chris

feel free to reach out to me here on the blog, Twitter, Facebook, or at mealickinvesting@gmail.com.

 

Fall is coming to an end

Let’s go back to what my original post for Wednesday was going to be about, the end of another season of our lives.  Fall coming to an end is always one of the more difficult seasons for me to close up.  Primarily due to the fact that winter comes, and we get stuck in the house for so long that it really lowers our mood and sense of productivity.  I’m going to focus on being as productive and positive as possible, because if I am ready to come out of the winter on fire then next year will undoubtedly get going in the right direction.

Another reason why I miss this time of year, is due to cross country season coming to a close.  This season is specifically going to be an awesome moment and a sad moment all at the same time.  Tomorrow, one of the best runners that I have ever been around ends her high school cross country career.  I look for her to have a great race, and I’m sure a continuation of a great running career as she heads off to college next fall.  I’m sure it’ll be a lot of fun, and without a doubt she has set the expectations bar very high going forward.  I don’t expect everyone to race like she can, but anyone that puts in the hard work like she has will always have a role on our team.

Now for a positive note, I finally hit the weights again on Wednesday and have started to set up my exercise program.  Maybe, just maybe, I can turn this flabby body back into an athlete’s body.  On top of that, I also intend to get very intentional when it comes to studying to further my education and career this winter by plugging through the CPA coursework.  If I’m going to be inside while it’s dark, I might as well push myself!

Make every day great,

Chris

Going to make this at least a weekly update from now on…

So another of my dreams is to finally go it alone, and start my own business.  I am currently taking some classes in order to get the required amount of accounting classwork to sit for the CPA exam.  I am taking 3 courses this quarter while working full time, and my wife is also in school full time and working full time, and we have an almost 2 year old son.  Needless to say, we are usually stressed out.  I have started a small job search so that I can get into an accounting firm and get some experience.  When I get into a new job, I am going to look into starting a small insurance agency so that I can build a clientele base and eventually be able to cross sell insurance, accounting, and financial services.  I really enjoy helping people with these arenas and think that once I can get the ball rolling have the potential to be very successful for myself, and very helpful for my clients.