AT & T

On T and VZ, the dividends and the fact that they have lagged the market during the recovery are the reasons to look at them. Telecommunications may come back into vogue and we would be rewarded.In addittion, they are low beta stocks.

If we discount the annual dividends (after taxes) using the 10-years treasury bond yield as the risk-free rate (3.22%) and substract the price of the stock, we have the highest present value of the cash flow of all the 30 companies listed in the DOW JONES.

Some numbers:

EPS 12/2008: $0.41
EPS 03/2009: $0.53
EPS 06/2009: $0.54

Annual dividend: $1.64. Taxes: 35%

Discount cash flow = - Today's price close + Annual dividend *(1-35%)/ (Risk free rate) =
-27.15 + 1.64*(1-0.35)/0.0325 = $5.65

The discount cash flow (using the risk free rate) is  the highest in the Dow Jones.

In addition, the payout ratio is very high. We can doubt on the sustainability of the dividends in the near future, but the EPS and sales are stable. However, 100% of the revenues come from the US, which increase the volatility of them.

Some charts:

REVENUE, GROSS PROFIT AND GROSS MARGIN:

Explore more T Data on Wikinvest

Interest Coverage:

Explore more T Data on Wikinvest


Technical's charts:

Daily charts:

 

Weekly charts:

Some US Indexes and key patterns

Previous related posts:
Real State Index and Financials 


Dow Jones Industrial

S & P 400 / Mid Cap Index

Some long term charts of this index. Next resistance: 50% fibonacci retracement.

 

 

OIL vs GAS

Following a suggestion of a good friend, here we can see the OIL / NATURAL GAS ratio.
It interesting to notice the bearish divergences in this ratio (full stochastics), and therefore, we can expect a possible rebound in the index. This mean that, in the near future, the probability of Natural Gas outperforming OIL is very high.
In addition, I suggest to look the long term situation of the Natural gas (here), which is struggling with a support @ USD 2.71.
Time for a reversal in Natural Gas? A big drop coming in Oil?. As it always happen, time will tell.

Natural Gas: shelter?

Some long term charts on the Natural Gas Future. Time of rebound?

Natural Gas Future Weekly chart:                                                                                                                                                                            

Natural Gas Future daily chart:

 

Natural Gas Future daily chart (only price)
 

 

Natural Gas Future monthly chart:

Natural Gas Future Long Term weekly chart:

Exact Fibonacci's confluence at DOW JONES

We have a double confluence fibonacci's resistance in the DOW (both monthly and weekly charts).

Look at the 38.2% Fibonacci's resistance in the monthly chart (9.410 points), 20 years period, from 1989 to 2009.



Then, look the the 38.2% Fibonacci's resistance in the weekly chart (9.409 points, this chart is from the August 10 week), October 2007, September 2009. Link to the previous post (some additional charts)



Both coincides in the 9.410 level.

If we look at the technicals indicators, we can expect that the rally resumes, since they are very bullish, on both, weekly and monthly charts. But it will not be easy to overcome. Tight your stops!

Merck & Co. (MRK) Update

I find very interesting the pattern that MRK is developing, as the MRK fundamentals.

From the fundamentals:

Merck & Co. is one of the largest pharmaceutical companies in the world with 2008 annual sales of $24.2 billion. While Merck produces a wide assortment of medications, a few blockbuster drugs bring in the bulk of its revenue. Currently Merck's four most profitable drugs account for more than half of total sales.
The company's decision to acquire rival Schering-Plough (SGP) will be a major expansion, though, as the two companies' combined 2008 revenues were $47 billion.

Some key ratios:

Explore more MRK Data on Wikinvest

Number of drugs in face I:

Explore more MRK Data on Wikinvest

Revenue, Net Income and Net Margin:

Explore more MRK Data on Wikinvest

Interest coverage:

Explore more MRK Data on Wikinvest

You can read more from:

http://www.wikinvest.com/wiki/Mrk

Technical perspective:

MRK Monthly chart:


Daily Chart:




Be careful, tight your stops if you are holding MRK, because it is developing some divergences (RSI, CMF, Accum/Dist, MACD and Force Index).