FEBRUARY 2020 STOCK WATCH LIST

Well, January was quite the volatile month in stock prices.   The Coronavirus scare over the past couple of weeks has given Wall Street a case of the flu.   Quite a big drop over the past few days.

A search for a solid dividend growth company at a good value had been quite the challenge over the past half year or so.   Finding a good one has been harder to find than a bunny dove.....

...oh, you can just buy one for $269....

Here's what I see are two that I will consider buying over the next few weeks.   I have a large list of stocks that I have been eyeing that you can see here, but I really like to narrow them down to one or two before I decide to go shopping.  From that current list, I revisit my screener and see what stands out.

Here's what I want to see:
- P/E under 20
- PEG ratio under 2
- Dividend growth of over 10% over the past 5 years
- A dividend yield over 2%
- Dividend payout under 65%

MORGAN STANLEY (MS)

With a drop of about $5 from it's recent high, it looks like a chance to get in at a good price.
This multinational investment bank and financial services company has more going for it than name recognition.

At the time of this writing, MS is selling at $52.26 per share.  Here's how it stack up to my screener

- P/E at 10.37 - PASS!
- PEG ratio at 1.27 - PASS!
- Dividend growth of 28.47% over 5 years - PASS!
- Dividend yield of 2.68% - PASS
- Dividend payout ratio of 26.97% - PASS

5 for 5 for my screener.  Winner winner chicken dinner.

AO SMITH (AOS)

These guys make hot water tanks, boilers, and water treatment products for both home and commercial.   Who does not need a hot water tank or on demand system?

As of right now, AOS is selling at $42.69. They are off 10.8% over the past year.  Here's how they rate in my screener

- P/E of 19.48 - PASS (just barely)
- PEG ratio at 2.44 - FAIL
- Dividend growth of 26.19% over 5 years - PASS
- Dividend yield of 2.25% - PASS
- Dividend payout ratio of 43.24%

4 of 5 for my screener.  I'll give it a pass of the PEG at this time since we usually see companies with larger growth rates usually have a higher PEG, giving it an appearance of being overvalued.  But being under 2.5 is great.

I will stop here.  There are a couple others I am looking at (like Kroger (KR), and Lockheed Martin (LMT), and T. Rowe Price (TROW), but I am more interested in AOS and MS at this time.

DISCLAIMER:  I have no position in either of these companies.  That may change in the next few weeks, but this article is in no way a professional recommendation to purchase these shares, or any others.  
Dig?