Friday, April 19, 2013

New Buys: BGG & AAPL

Just a quick note here on a few new buys. Today I bought more shares of Briggs & Stratton (BGG) and a new position in Apple (AAPL).



I started buying Briggs & Stratton last summer after realizing that nearly every lawnmower on the market uses their engine. I figure people need to buy more lawnmowers as they buy new houses. Since the recession began, household formation has been terrible. There is a lot of pent-up demand for young adults to move out of their parents' basements and buy their own place. That, and the company is cheap at 13x next year's earnings. I added 150 shares at $20.30, or a $3,045 outlay. My position in BGG is now 500 shares.

I also bought 2 shares of Apple at $395. I don't know much about how much AAPL could be worth, but know it has $150/share of cash, no debt, and at least flat earnings. That makes it ridiculously cheap at something like 5x earnings, after removing cash.

These purchases add $93.20 to my annual dividend income.

3 comments:

  1. Like you, I couldn't resist picking up Apple when it dropped below $400/share. I picked up 8 shares yesterday. It's turning into a pure dividend play as low as it has dropped. It meet my 2.5% entry yield. If it keeps dropping, I might have to buy some more.

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  2. Why such a small amount of AAPL? Do you have free commissions for stock trades or something?

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    1. I do have a few free trades, but the reason for the small AAPL purchase was lack of confidence. I knew earnings were coming soon and have heard rumors of a bad print, which made me hesitant to get too much in front of this. If earnings are indeed bad (but long-term fundamentals remain robust), I'll buy more. If earnings are great, I'll probably buy more.

      I tend to buy small positions like this to force me to make a decision to build a real position or stop fretting about the stock altogether. I've done the same thing with VET, MLR, DPS, and INTC. I like the stock & valuation and see upside, but think near-term news will confirm the positive or negative - which would force me to sell or buy more. It may not be the best trading strategy, but it's worked for me over the years.

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