Hello Everyone, ForsakenSushi in Da House!!!

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Today we had earnings from a couple of defense companies come in, namely LMT(Lockheed Martin) and RTX(Raytheon) both of which I currently own shares of. Both companies beat earnings expectations for bottom line net income (profit) but LMT failed to match estimates for revenue and also gave guidance for a weak 2022. Both stocks took it on the chin today, with LMT taking the brunt of the blow.

So today this is my list of stocks of interest:

Symbol / Price / P/E(FWD) / Div yield (FWD)

++∞LMT / 327.47 / 12.30 / 3%++

RTX / 88.47 / 21.78 / 2%

NOC / 394 / 15.79 / 2%

++∞IBM / 127.08 / 12.31 / 5%++

In addition to the 3 defense companies on my list for today, I included IBM which also popped on my radar recently due to price declines.

Dividends

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In general, I try to buy stocks with a forward p/e below 15, and a dividend yield above the S&P 500 yield at that time. The current forward dividend yield of the S&P 500 stands at approximate 1.33%. Both LMT and IBM greatly exceed the current yield for the S&P 500. Not only do we want dividend yield to exceed what the market is giving us on average, we also want the dividend to outpace inflation which averages 2-3% per year in the long run. If LMT stopped increasing its dividend today, indefinitely your income would protect you from losing your purchasing power to inflation given no major changes in business fundamentals, but we want to beat inflation. With this in mind, my main focus for investment is companies that have a long track record of consistently increasing their dividends even during major market downturns. This ability to increase shareholder payout consistently over time indicates that these businesses are doing something special to maintain a competitive advantage through one way or another (whether by cost advantage, trade secret, superior operating efficiency, superior product, large moat). Both LMT and IBM have a long history of increasing their dividends every year.

Business Fundamentals

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From my research and experience, a p/e below 15 will yield outsize returns in the long run on solid businesses. As you can see the forward p/e for LMT and IBM are both approximately 12.3. When I look at P/E ratio, (price of stock, divided by bottom line profit of stock) I think of it in the way that it will take 12.3 years of the company’s profit to equal the company’s current value. Compare that with companies who sport a P/E above 100, see you next century!! LOL… In addition, we want companies that can consistently grow their earnings and free cash flow, because growing free cash flow allows for a growing dividend and shareholder payback over time. We like that.

Technical Analysis

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Once my target stocks have been picked, I then move over to the technical side. I like your business and want to own it, but what price do I want to own it at? Technicals help this. My favorite and only technical that I have stuck with over the 15+ years Ive been trading is Fibonacci Retracement levels.

“Fibonacci retracements are popular among technical traders. They are based on the key numbers identified by mathematician Leonardo Fibonacci in the 13th century. Fibonacci's sequence of numbers is not as important as the mathematical relationships, expressed as ratios, between the numbers in the series.

In technical analysis, a Fibonacci retracement is created by taking two extreme points (usually a peak and a trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.

Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels.

KEY TAKEAWAYS

Fibonacci retracements are popular tools that traders can use to draw support lines, identify resistance levels, place stop-loss orders, and set target prices.

A Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.

Fibonacci retracements suffer from the same drawbacks as other universal trading tools, so they are best used in conjunction with other indicators.”

Source: investopedia.com/ask/answers/05/fibonacciretracement.asp

· It’s easier to see it in action so let’s see where I will place my limit buy orders for LMT, CGC, IBM considering the Fibonacci levels.

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View this link to view the Fibonaccis for LMT, Limit order Buy Price placed $325 dollars per share

http://www.stockta.com/cgi-bin/analysis.pl?symb=LMT&cobrand=&mode=stock

View this link to view the Fibonaccis for IBM, Limit order Buy Price placed $126.75 dollars per share

http://www.stockta.com/cgi-bin/analysis.pl?symb=IBM&cobrand=&mode=stock

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Please remember this is not financial advice, this is what I am personally doing with my portfolio. Please subscribe if you like my content, I will continue to advise the community as to which stocks I am purchasing.

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Best wishes to everyone!!

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