54 KIPLINGER’S PERSONAL FINANCE^ 09/2017INVESTINGinvestments in fast-growing companies
have always ended in disaster.
Fortunately, I found some wonderful
ideas in “What 7 Top Pros Are Doing
Now,” from last month’s issue. One of
those pros, John Rogers, manager of
the Ariel Fund, has a strategy that’s
similar to my own (and he’s a master
at executing it). He recommended sev-
eral stocks that I like. One, KKR (KKR, $19),
I already own. I bought two others:
LAZARD (LAZ, $46) and TEGNA (TGNA, $14).
Lazard is a Bermuda-based invest-
ment-banking and financial advisory
firm that has operations all over the
world. Although its businesses can be
cyclical, the stock’s reasonable valua-
tion provides a margin of safety. When
I purchased 225 shares on June 23 for
$45.22 apiece, the stock was selling for
13 times estimated year-ahead profits.
Better yet, Lazard just hiked its quar-
terly dividend by 8%, to 41 cents, giving
the stock a 3.5% yield at today’s price.
When I get nervous about stocks, I
pay closer heed to payouts and a firm’s
ability to maintain and, better yet,
boost them. Dividends provide some
comfort that my portfolio will grow at
least a little, even if stock prices don’t
appreciate. So Lazard’s yield is a plus.
Tegna operates television stations and websites. The
stock is a bit of a gamble because the firm is restructuring
to focus more on its TV properties, which account for a bit
more than half of revenues. As part of the restructuring,
Tegna spun off Cars.com, a shopping site, earlier this year
in a deal that paid Tegna $650 million in cash. Tegna also
agreed to sell a significant portion of its majority interest
in CareerBuilder, which runs the job-search site, for $250
million, leaving Tegna f lush with cash.
Profits will drop sharply this year as the result of those
sales. However, the shares trade for just 10 times estimated
earnings and have a yield of 1.9%. I picked up 1,000 shares
at $14.53 each. ■LISE METZGERKATHY KRISTOF Practical InvestingI Add Two Bargains to My Portfolio
F
resh from vacation, I recommitted
myself to finding a few good stocks
to buy with the nearly $51,000
that was sitting idle in the Practical
Investing portfolio. I searched through
dozens of analysts’ recommendations,
only to reject one after the next because
they were too pricey for this conserva-
tive, value-oriented investor. Then I
picked up the August issue of Kiplinger’s
and almost immediately found two
well-priced stocks.
To backtrack a bit: A few stock sales
in 2016 and early 2017 left the Practi-
cal Investing portfolio awash in cash.
Roughly 15% of the now $351,741
portfolio had been sitting in a money
market fund since the beginning of the
year, just begging to be invested.
I was slow to do anything about it for
a number of reasons, including discom-
fort with sky-high stock prices and the
long duration of this bull market. There
is no limit, of course, on how long a bull
market can last. The one that started
in October 1990 lasted a whopping 113
months before prices fell back to earth.
The current bull market will become
the longest on record if it keeps going
until September 2018.
That would mean little if stock valua-
tions were still cheap—or if corporate sales and profits were
expected to grow at a blistering pace. But they’re not.Rich prices. The broad market’s price-earnings ratio,
ref lecting current share prices in relation to estimated
corporate profits for the coming 12 months, is nearing a
lofty 18. That tops the five-year average of 15 and the 10-
year average of 14. Meanwhile, the projections for growth
in corporate sales and earnings are uninspiring. Company
revenues are expected to rise 5.4% and profits to climb 9.8%
in 2017, largely on the back of a slowly recovering energy
sector. (Prices and related figures are as of June 30.)
I would probably be less bothered by these figures if
I were a growth investor; many such individuals some-
how manage to make vast profits on highly valued stocks,
such as Amazon.com (symbol AMZN). But my occasionalOne pick, Lazard, is
a global investment-
banking firm. Its
reasonable share
price provides a
margin of safety.
KATHY KRISTOF IS A CONTRIBUTING EDITOR TO KIPLINGER’S PERSONAL FINANCE AND
AUTHOR OF THE BOOK INVESTING 101. YOU CAN SEE HER PORTFOLIO AT KIPLINGER.COM/LINKS/
PRACTICALPORTFOLIO.