Portfolio Update: New Addition (AMGN; April 01, 2015)

by FI Fighter on April 1, 2015

in Stock Portfolio Updates

Screen Shot 2015-04-01 at 7.40.09 AM

Well, it’s been a few weeks since I last made any stock purchases, but with the markets down again today, I decided it was time to make another move. Although my last few buys could be classified as conservative (initiating positions in KO, EMR, T, TD, etc.), my underlying stock strategy features a blend of both defense and growth.

Today, it was time to focus on the growth aspect of the gameplan. I initiated a position with Amgen (AMGN) and picked up 35 shares at $154.91/share.

Here are some key stats from Morningstar, where AMGN is currently receiving a 4-star rating:

Screen Shot 2015-04-01 at 8.07.26 AM

http://www.morningstar.com/stocks/XNAS/AMGN/quote.html

P/E is currently 23.9 and Forward P/E is about 14.9 (not shown in the chart), which is not outrageous.

AMGN is a play in the growing biotech field and will complement my position in Gilead Sciences (GILD) rather nicely. The bonus? With Amgen, not only do you get to ride the biotech wave into the future, but you also get to collect a decent dividend in the process. AMGN is currently paying out $0.79/quarter, which represents a dividend yield of 2.04%.

This purchase will add $110.60/year in passive income.

Thoughts

Although I added 35 shares, ideally, I would have liked to have picked up a bit more AMGN during this most recent pullback. Capital is kind of tight at the moment, so I will have to be content with things as is. Some other stocks under consideration for this morning’s purchase included:

  • Union Pacific (UNP)
  • Starbucks (SBUX)
  • Under Armour (UA)

If I had more funds available, most definitely I would have initiated a position with UNP today. Union Pacific is a best-of-breed type of company that I would love to own in my portfolio.

Down the line, I would like to get into some shares of SBUX and UA for future growth. UA was not accounted for in my initial list of stocks to buy, but I love the growth prospects of this company.

My philosophy remains that it is preferable to invest for not only dividend growth, but also overall portfolio growth. I love a good mix of both defensive Core Holdings to weather any economic storms, and also some aggressive high-flyers that are dominating their respective industries.

I want my cake… and then I want to eat another one! 🙂

 

Happy Investing!

{ 12 comments… read them below or add one }

1 Roadmap2Retire April 1, 2015 at 8:35 am

Welcome as a fellow shareholder. I bought AMGN in Feb and now that I have some skin in the game, I pay closer attention to whats going in. I have to admit that there is a lot of like in the company – the cash flow is fantastic..and some analysts are suggesting that the dividend could easily double over the next few years. It seems like this year the div increase is going to be another big one….and I will be looking to add more shares before the div inc announcement.

cheers
R2R

Reply

2 FI Fighter April 1, 2015 at 8:58 am

R2R,

Thanks for stopping by! It was thanks to your article that first got me aware of AMGN, as I had never even considered the company up until that point.

Agreed, there’s a lot to like with this one. It’s for the patient investor, though, as this stock is prone to swinging wildly in both directions, in the short-term. Since my time horizon is very long with this one, I’m ok with that.

Cheers!

Reply

3 Gen Y Finance Guy April 1, 2015 at 10:28 am

Even with the market down a bit, I have a hard time committing new capital at near all time highs. I am sitting with over 50% cash patiently waiting for more attractive prices.

In the long term your buys will be great. However, I think there are better prices ahead and I will continue to build up the cash stash while I wait.

In the meantime I have been selling calls against long positions to get a little downside protection on any significant correction.

Cheers!

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4 FI Fighter April 1, 2015 at 10:48 am

Gen Y,

Your patience will be rewarded; the market is very frothy at the moment. I know I’m absolutely terrible with timing the market and in most cases the market will do the opposite of whatever it is that I’m doing.

Right now, I’m just trying to build back up my stock portfolio, so for me it’s enough to just buy the right companies. In my own case, I’m more concerned with the picks than the timing of purchase.

But if the market were to nosedive tomorrow, then yes, I will feel like an idiot for being too hasty with my capital 😉

Regardless, hopefully I’m buying the right stocks and things will work out in the future.

Take care!

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5 Gen Y Finance Guy April 1, 2015 at 10:51 am

And the market could also continue higher and finish the year up another 15% and I would be the one that looks like the idiot.

No one knows for sure 🙂

Cheers!

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6 FI Fighter April 1, 2015 at 10:58 am

Gen Y,

Good point! As investors with a long time horizon, I think we’ll both agree that a market pullback will be more welcomed at this point than the continuation of this bull run.

If so, time to load up!

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7 Zee April 1, 2015 at 11:15 am

I’ve had my eye on UA for a while now, I think it’s growth potential looks great. But it just seems like such an expensive stock at the moment that I can’t pull the trigger on it yet…. I’ve been hoping for at least a little more pullback on it, I think I would be a buyer at around $70-71 but I’m not sure if that’s going to happen or not.

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8 FI Fighter April 1, 2015 at 11:26 am

Zee,

Valuation of hyper growth stocks are always tricky, and with UA, it’s no different. On almost all accounts, UA will fail the standard screening that most investors use when they are doing their research.

Although it may not be the smartest or best idea, when it comes to hyper growth, I simply identify the companies that I think will succeed long term and continue to dominate their industry. With UA, I’m pretty convinced that they will keep growing and building the brand name. As a consumer, I probably prefer Under Armour products over even Nike, for most of my needs.

Even at the current price, I may be tempted to take a flyer and purchase a few shares. With riskier plays like UA, it’s a reason why I hedge and continue to invest in more stable, conservative companies as well.

All the best!

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9 FI Investor April 1, 2015 at 11:50 am

I have been watching AMGN and GILD for about two months now waiting to initiate a position in the biotech field but the fact that AMGN is paying a dividend might be the decision maker for me. As for UA I absolutely love this stock and I was smart enough to grab some shares back in 2012 which have since given me a return of 177% which is the exact reason why it is a good idea to throw some growth companies in along with dividend payers.

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10 FI Fighter April 3, 2015 at 1:23 pm

FI Investor,

AMGN pays a decent dividend at 2.0%, and GILD will soon pay one as well, so as an investment, that’s a wash at this point. GILD will also yield close to 2.0%, if the stock stays close to where it’s at right now.

UA has been a tremendous growth stock; I wish I was smart enough to get in earlier. The valuation is astronomical right now, but I don’t think this company will be done growing anytime soon.

Best wishes!

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11 Sundeep April 1, 2015 at 6:09 pm

Nice idea with AMGN, even moreso with the decent dividend, especially for a high growth stock. Will add it to the “list.”

Also thanks for the tip to look at UA. I’ve witnessed the rise of the company out in the public with their gear, but didn’t think to look into them as an investment. Maybe the next Nike, worth some due diligence at the least.

On a side note, do you or anyone of your other readers use the FAST Graphs Screening tool used by quite a few folks on the Seeking Alpha site. I’ve seen several articles use it and it seems to be pretty awesome…just wondering.

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12 FI Fighter April 3, 2015 at 1:26 pm

Sundeep,

For a blend of growth and divided yield, I don’t think there are many better options than AMGN, at the moment. Sort of like the biotech version of AAPL, I’m hoping.

Long term, I do think Under Armour has what it takes to compete with Nike, and if they can’t gain the lion’s share, then taking second place is nothing to be ashamed of either. Kind of like KO and PEP, who dominate the beverage industry.

I haven’t used FAST Graphs myself, but it looks like a very useful product. A few years ago, I wrote my own program to evaluate dividend stocks. Unfortunately, that was coded on a PC and I have since migrated to a Mac. It wasn’t as elegant but it did crunch numbers and print out key parameters I was interested in from various online sources (e.g. Morningstar, Google Finance, etc.).

All the best!

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