One Way To Play The Current Market Crisis

By: ispeculatornew
Date posted: 01.21.2016 (6:44 am) | Write a Comment  (0 Comments)

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$MCDFair to say that the market has made things interesting to start 2016 and there are certainly real concerns about not only the market but the fundamentals involved for these companies especially with the prices of commodities, impact of China, etc. When crisis strikes, great opportunities rise as the number of investors making “irrational” moves increases. This seems to be a great time to find bargain stocks and finding a quality dividend stock at 20-30% less than its price from a few weeks ago is certainly very attractive.

I personally think one potentially interesting way to play this is to look at consumer cyclicals sector where I personally noticed quite a few stocks that are trading at significant dividend yields.

You will notice that there are several very known names in there including:

Staples (SPLS)
Ford Motor (F)
General Motors (GM)
Six Flags Entertainment (SIX)
Macy’s (M)
Viacom (VIA)
Darden Restaurants (DRI)
Best Buy Co (BBY)
Nordstrom (JWN)
Toyota Motor (TM)
Abercrombie & Fitch (ANF)
McDonald’s (MCD)

I’d personally likely go for the clothing and restaurant names rather than media for example where there is a deep transformation going on. These are mostly offline companies but for online shopping consumers could head to http://www.cost.co.uk for example. I’d stay away from companies (such as Best Buy and Staples) that are directly competing with online giants as it’s unclear how that future will play out. Why? My main concern is that there are many industries that are being drastically changed by the technology sector. When you think about shopping for electronics, books, media, transportation and so many more, you can think about the “traditional” players and how quickly their world is being transformed. Best Buy, Barnes & Nobles, traditional media companies and taxis are facing a very uncertain future and while it’s easy to say they should adapt to this new reality, that is far from easy. Many have failed and are out of business while others like the New York Times are adapting as fast as they can to survive in this new world.

Another factor to consider when buying is the impact of a very strong dollar. An international presence is always a positive and provides additional diversification but I would say a strong US presence isn’t terrible these days either and will offer less resistance when converting those revenues (and profits) back to US dollars. Just look at this 3 year chart for US dollar index and you’ll see what I mean. This explains why so many companies are reporting currency impact as a major negative in their earnings.

DXY

While online shopping for clothing and food delivery is certainly growing and happening, I’d say we seem much further away from companies such as Macy’s being disrupted.

Do you hold any of these names? Here is the full list:

SymbolNameIndustryDividend Yield (TTM)
IGTInternational Game TechGambling8.8
PSOPearsonPublishing7.94
LVSLas Vegas SandsResorts & Casinos6.71
GEFGreifPackaging & Containers6.33
FUNCedar FairLeisure6.05
MATMattelLeisure5.92
GMEGameStopSpecialty Retail5.62
TIMETimePublishing5.5
TUPTupperware BrandsPackaging & Containers5.42
SPLSStaplesSpecialty Retail5.32
GESGuess?Apparel Stores5.16
WYNNWynn ResortsResorts & Casinos5.14
RGCRegal EntertainmentMedia - Diversified5.04
FFord MotorAuto Manufacturers5.01
SEASSeaWorld EntertainmentLeisure4.8
GMGeneral MotorsAuto Manufacturers4.67
MDPMeredithPublishing4.63
MDCM D C HoldingsResidential Construction4.61
IPInternational PaperPackaging & Containers4.5
SIXSix Flags EntertainmentLeisure4.44
DINDineEquityRestaurants4.31
COHCoachLuxury Goods4.3
GPSGapApparel Stores3.96
VIABViacomMedia - Diversified3.84
AMCAMC Entertainment HldgsMedia - Diversified3.82
TRIThomson ReutersPublishing3.81
PKGPackaging of AmericaPackaging & Containers3.76
KSSKohl'sDepartment Stores3.74
MMacy'sDepartment Stores3.68
VIAViacomMedia - Diversified3.61
SONSonoco ProductsPackaging & Containers3.59
DRIDarden RestaurantsRestaurants3.57
AEOAmerican Eagle OutfittersApparel Stores3.49
DSWDSWApparel Stores3.48
CBRLCracker Barrel OldRestaurants3.48
BKEBuckleApparel Stores3.46
WRKWestRockPackaging & Containers3.4
BBYBest Buy CoSpecialty Retail3.39
CNKCinemark HoldingsMedia - Diversified3.29
JWNNordstromDepartment Stores3.26
LEGLeggett & PlattHome Furnishings & Fixtures3.26
TMToyota MotorAuto Manufacturers3.23
CATOCatoApparel Stores3.22
KARKAR Auction ServicesSpecialty Retail3.2
GPCGenuine PartsSpecialty Retail3.14
ANFAbercrombie & FitchApparel Stores3.13
JCIJohnson ControlsAuto Parts3.08
HOGHarley-DavidsonRecreational Vehicles3.07
CHSChico's FASApparel Stores3.06
MCDMcDonald'sRestaurants2.99
HSNIHSNSpecialty Retail2.95
OMCOmnicom GroupAdvertising Agencies2.87
JW.BJohn Wiley & SonsPublishing2.87
WWEWorld Wrestling EnterMedia - Diversified2.86
JW.AJohn Wiley & SonsPublishing2.85
TGNATegnaBroadcasting - TV2.83
PAGPenske Automotive GroupAuto & Truck Dealerships2.8
RENXRELXPublishing2.8
DNKNDunkin Brands GroupRestaurants2.8
MINIMobile MiniPackaging & Containers2.74
WSMWilliams-SonomaSpecialty Retail2.74
PIIPolaris IndustriesRecreational Vehicles2.68
TVPTTravelport WorldwideLeisure2.66
MGAMagna InternationalAuto Parts2.62
LUXLuxottica GroupApparel Stores2.61
YUMYum BrandsRestaurants2.59
ALSNAllison TransmissionAuto Parts2.57
WYNWyndham WorldwideLodging2.57
BMSBemis CoPackaging & Containers2.54
EATBrinker InternationalRestaurants2.53
HASHasbroLeisure2.51
HRBH&R BlockPersonal Services2.51
HOTStarwood Hotels & ResortsLodging2.51
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