H&B Block (HRB) is one of the leading tax preparation companies in the U.S. On Monday May 18th, HRB reached a new 52-week low at a price of $13.73. HRB has increased its dividend every year for 11 consecutive years in row. Prior to cutting the dividend by 31%, from 1995 to 1997, HRB had increased the dividend payment 13 years in a row.
According to Value Line Investment Survey (dated 5/22/2009), HRB is selling under the average price-to-cash flow of 12 times. Using the full year cash flow of $1.84 for 2007, HRB has a mean price of $22.08. At the current price, HRB is expected to increase by 35% if it were to revert to the mean.
Unless we're going the way of an even "Greater" Depression, this stock has an exceptional amount of potential. HRB has rid itself of the toxic waste of subprime mortgages that it once owned. Unlike the major banks, which recently had to water down their stock, HRB has maintained the same number of share outstanding. This means that any earnings in the future will be dramatic compared to the last two years.
According to Morningstar (dated 4/24/2009), HRB faces lawsuits related to the former mortgage unit that was involved in subprime lending. Additionally, HRB has accumulated massive amounts of long-term debt as well as sub par return-on-equity and return-on-assets in 2007 and 2008.
Applying Dow Theory to HRB gives us the following upside and downside targets:
According to Value Line Investment Survey (dated 5/22/2009), HRB is selling under the average price-to-cash flow of 12 times. Using the full year cash flow of $1.84 for 2007, HRB has a mean price of $22.08. At the current price, HRB is expected to increase by 35% if it were to revert to the mean.
Unless we're going the way of an even "Greater" Depression, this stock has an exceptional amount of potential. HRB has rid itself of the toxic waste of subprime mortgages that it once owned. Unlike the major banks, which recently had to water down their stock, HRB has maintained the same number of share outstanding. This means that any earnings in the future will be dramatic compared to the last two years.
According to Morningstar (dated 4/24/2009), HRB faces lawsuits related to the former mortgage unit that was involved in subprime lending. Additionally, HRB has accumulated massive amounts of long-term debt as well as sub par return-on-equity and return-on-assets in 2007 and 2008.
Applying Dow Theory to HRB gives us the following upside and downside targets:
- Upside
- $19.15
- $24.57
- $30
- Downside
- $7.71
By falling to $13.73 intra-day, HRB pierced a prior technical support level ($13.90). If HRB can hold at the current levels then a 24% gain to the $19 level would be easy to accomplish. HRB seems like a great company to investigate for your next investment purchase. It is my hope that the stock price can continue to fall so that the shares can be acquired at a better price. Emphasis should be placed on the downside risk of HRB going to $7.71.
The purpose of my research recommendations is to point out quality Dividend Achievers that have reached a new 52-week low. From this point begins the research to verify the quality of the stock for both short and long-term investing. These recommendations are within the context of the 2nd year of an 18-year bear market. A bear market that I expect to trade in a range between 16,000 and 5,000. Touc.
The purpose of my research recommendations is to point out quality Dividend Achievers that have reached a new 52-week low. From this point begins the research to verify the quality of the stock for both short and long-term investing. These recommendations are within the context of the 2nd year of an 18-year bear market. A bear market that I expect to trade in a range between 16,000 and 5,000. Touc.
No comments:
Post a Comment