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Fact Sheets


November 12, 2014

No, it’s not the parties for hosting or the marshmallows for toasting or caroling out in the snow. Nor is it the scary ghost stories or tales of the glories of Christmases long, long ago. With apologies to Andy Williams, it’s the most wonderful time of the year because the calendar just rolled over to November and the start of the seasonally favorable period in which stocks historically have enjoyed terrific performance. And this holiday season, with the major market averages having climbed to record highs, we believe that undervalued, dividend-paying stocks will be the most memorable—and ultimately profitable—presents found under the tree.

Adding to the holiday cheer, in 2015 we are heading into the historically positive third year of the four-year Presidential Cycle. Even better, the midterm elections in which the Republicans took control of the Senate and maintained power in the House of Representatives mean that the next two years will see a Democrat in the White House and the GOP holding forth in Congress, a particularly propitious form of divided government that in the past has been Special Report detailing why we think it a fine time to be adding to equity portfolios and highlighting 26 of our undervalued dividend-paying favorites. The Most Wonderful Time of the Year report is available by clicking here.

To whet the appetite, we reveal stock #1 on our list, the consumer electronic powerhouse known as Apple AAPL -0.37% …

Apple recently reported sales of $42.1 billion in its fiscal fourth quarter, well above analyst expectations of $39.9 billion. The earnings per share figure was $1.42, also trumping the $1.30 consensus estimate. The beat was driven largely by terrific iPhone 6 and 6 Plus launch sales and good sales for the existing iPad lines. Apple CEO Tim Cook added some color on iPhone demand, “Momentum in enterprise markets remains very strong. The latest data published by IDC indicates that iPhone has 69% share of the U.S. commercial smartphone market.” We believe that Apple still has plenty of room to grow, despite its already significant position as the global consumer technology leader.

Although its newest families of products like digital wallet service Apple Pay (launched Oct. 20) and Apple Watch (arriving Spring 2015) have not yet had the opportunity to contribute to earnings, we do believe that they will become significant contributors over time. Despite one particular ‘activist’ investor pushing for Apple to distribute more cash to shareholders, we are content at present with the $17 billion in stock repurchases made last quarter and the $2.8 billion paid in dividends. Though the current 1.6% dividend yield is more on the modest end of the spectrum relative to some of its peers, the tremendous amount of cash on the balance sheet leaves the company with plenty of dry powder to make strategic acquisitions and grow the business. We like that the Board is maintaining a long-term view of capital management. The current P/E ratio of less than 18 is below the market multiple and the EPS tally is expected to grow from $6.45 in fiscal 2014 to $7.70 in 2015 and $8.50 in 2016.

The Most Wonderful Time of the Year has write-ups on the other 25 companies as well!

If you would like to see more of our recommended stocks, click here for a free sample copy of our newsletter. Subscribe here or view a complete list of all previously recommended stocks here. To view our Buckingham Portfolio Purchase Candidates click here.

Opinions expressed are those of John Buckingham, chief investment officer of Al Frank Asset Management, Inc. (AFAM) a division of AFAM Capital, Inc., and are subject to change without notice and are not intended to be a forecast of future events, a guarantee of future results or investment advice.

AFAM Capital is an SEC registered investment advisor. Al Frank Asset Management is a division of AFAM Capital. AFAM Capital is editor of The Prudent Speculator newsletter and is the investment advisor to certain no-load proprietary mutual funds and individually managed client accounts. Registration of an investment adviser does not imply any certain level of skill or training.