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12/12/2012

Best Services Stock Picks For 2013 | A Selection Of Growth Stocks

Dividend income investors seeking for a high income stream from dividends. In addition, capital gains from stocks trades are a welcome bonus for a long-term investor like me. Over a long period, such capital gains are much higher than the amount of dividends. I personally have a ratio of 1:2. This means for every dollar in dividends I could generate additional two dollars of stock gains. Most of my capital gains are unrealized because I hold them for a very long time.

However, I started a new screen from the services sector. I wanted to know what stocks picks could be the best for next year. Last year’s picks gained 31.16 percent while the sector was up 23.16 percent compared to the previous year.

These are my criteria:

- Forward P/E under 15
- Past 5Y Sales growth over 10 percent
- Earnings per share growth for the next five years over 10 percent
- Operating Margin over 10 percent
- Market capitalization above USD 2 billion

Fourteen stocks fulfilled these criteria of which eight pay dividends and twelve are currently recommended to buy. The results are dominated by business services stocks and discount, variety store concepts. 

Here are the 3 best yielding stocks:
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Guess? (NYSE:GES) has a market capitalization of $2.10 billion. The company employs 14,300 people, generates revenue of $2.688 billion and has a net income of $270.65 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $476.52 million. The EBITDA margin is 17.73 percent (the operating margin is 14.78 percent and the net profit margin 10.07 percent).

Financial Analysis: The total debt represents 0.66 percent of the company’s assets and the total debt in relation to the equity amounts to 1.04 percent. Due to the financial situation, a return on equity of 23.62 percent was realized. Twelve trailing months earnings per share reached a value of $2.25. Last fiscal year, the company paid $0.80 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.97, the P/S ratio is 0.78 and the P/B ratio is finally 1.88. The dividend yield amounts to 3.25 percent and the beta ratio has a value of 1.66.


”Long-Term
Long-Term Stock History Chart Of Guess? (GES)
”Long-Term
Long-Term Dividends History of Guess? (GES)
”Long-Term
Long-Term Dividend Yield History of Guess? (GES)

Time Warner Cable (NYSE:TWC) has a market capitalization of $28.36 billion. The company employs 47,300 people, generates revenue of $19.675 billion and has a net income of $1.667 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7.096 billion. The EBITDA margin is 36.07 percent (the operating margin is 20.68 percent and the net profit margin 8.47 percent).

Financial Analysis: The total debt represents 55.39 percent of the company’s assets and the total debt in relation to the equity amounts to 355.14 percent. Due to the financial situation, a return on equity of 19.76 percent was realized. Twelve trailing months earnings per share reached a value of $6.94. Last fiscal year, the company paid $1.92 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.53, the P/S ratio is 1.44 and the P/B ratio is finally 3.93. The dividend yield amounts to 2.39 percent and the beta ratio has a value of 0.80.


”Long-Term
Long-Term Stock History Chart Of Time Warner Cable (TWC)
”Long-Term
Long-Term Dividends History of Time Warner Cable (TWC)
”Long-Term
Long-Term Dividend Yield History of Time Warner Cable (TWC)

Copa Holdings (NYSE:CPA) has a market capitalization of $4.22 billion. The company employs 7,527 people, generates revenue of $1.830 billion and has a net income of $310.42 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $460.44 million. The EBITDA margin is 25.15 percent (the operating margin is 21.03 percent and the net profit margin 16.95 percent).

Financial Analysis: The total debt represents 34.83 percent of the company’s assets and the total debt in relation to the equity amounts to 76.84 percent. Due to the financial situation, a return on equity of 24.50 percent was realized. Twelve trailing months earnings per share reached a value of $7.76. Last fiscal year, the company paid $1.64 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.28, the P/S ratio is 2.28 and the P/B ratio is finally 3.00. The dividend yield amounts to 2.37 percent and the beta ratio has a value of 1.09.


”Long-Term
Long-Term Stock History Chart Of Copa Holdings (CPA)
”Long-Term
Long-Term Dividends History of Copa Holdings (CPA)
”Long-Term
Long-Term Dividend Yield History of Copa Holdings (CPA)


Take a closer look at the full list of the best stock picks from the services sector for next year. The average P/E ratio amounts to 18.10 and forward P/E ratio is 11.08. The dividend yield has a value of 2.51 percent. Price to book ratio is 1.81 and price to sales ratio 2.90. The operating margin amounts to 24.97 percent. The average stock has a debt to equity ratio of 0.42.

Here is the full table with some fundamentals (TTM):

Best Services Stock Picks For 2013 (Click to enlarge)

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Related stock ticker symbols:
GES, TWC, CPA, FMCN, FIS, TW, AAN, GPN, DG, DLTR, RYAAY, DTV, WXS, ADS

Selected Articles:

* I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

1 comment:

  1. Anonymous12/14/2012

    While I am a dividend growth investor, I also require a minimum amount of entry yield. This would provide me with some level of adequate income should realized dividend growth fail to exceed my expectations. Over the past year, however, I have focused my attention on companies with relatively high current yields, which also provide the potential for strong distribution growth as well. The services sector is not in my focus.

    ReplyDelete

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