In the quarter ended March 31, 2013, T. Rowe Price's
purchased three new stocks for his fund: Apple (
), Western Union (
), Joy Global (
) and Hospira Inc. (
). The new equity adds came amidst a robust quarter for his
equity income fund, in which it returned 11.19% versus 10.61% for
the S&P 500.
Rogers, chairman of T. Rowe Price Group overseeing half a billion
dollars and with the company 30 years, explained his second
quarter economic outlook in his first quarter commentary:
"Considering the strong run in stocks during the past few
months, we would not be surprised to see a short-term correction.
That said, the positives outweigh the negatives in our view. The
U.S. economy should continue to expand at a moderate pace with
contained inflation, propelled by housing and growing strength in
the labor market. The U.S. is in a good position relative to
other developed markets. The industrials sector is performing
better, and Congress and the Obama administration appear less
contentious than at the end of last year. The Federal Reserve is
likely to keep its stimulus programs in place a while longer.
Eurozone risks remain, but they could decline in the months
ahead. We rarely make dramatic changes to our investment
strategies based on macroeconomic concerns. Rather, we prefer to
focus on individual companies whose price/earnings multiples and
dividend yields look attractive."
Below is a brief overview of Rogers' first quarter picks:
Rogers purchased 325,000 shares of new holding Apple at an
average price of $466 in the first quarter, giving it a 0.57%
weighting in his portfolio. After a more than three-year run,
Apple's stock has retreated almost 25% year to date, to trade for
$400.35 per share on Wednesday.
The Apple addition comes about a year after Rogers
quipped to Bloomberg
, "I figure there has to be someone in the world that doesn't
hold Apple and it might as well be me." He went on to say that
while T. Rowe Price was a big investor in Apple, the value funds
such as his did not as there was "a little bit of a disagreement
between price and valuation," so they "opted to invest in cheaper
Since the interview, however, Apple has become more attractive
from a valuation standpoint. While its price dropped to its
one-year low, its P/E ratio of 9.52 is close to a 10-year low,
its P/B ratio of 3.34 is close to a five-year low, and P/S ratio
of 2.41 is close to a five-year low.
In the quarter ended Dec. 29, 2012, Apple reported record
revenue, increased to $54.5 billion from $46.3 billion in the
year-ago period. Its net profit was also a record at $13.1
billion, or $13.81 per diluted share, compared to $13.1 billion,
or $13.87 per diluted share, in the year-ago period.
Apple sold a record 47.8 million iPhones during the quarter, and
a record 22.9 million iPads, while sales of Macs and iPods
declined from the year-ago quarter. The company declared a cash
dividend of $2.65 per share.
Apple's Board of Directors has declared a cash dividend of $2.65
per share of the Company's common stock.
After dispersing $10 billion of the $45 billion in cash it
pledged to return to it shareholders,
of hedge fund Greenlight Capital pressured the company to return
even more and issue preferred stock. Though Einhorn eventually
dropped a lawsuit against the company, Apple CEO Tim Cook called
the suit "silly" at its annual shareholder meeting in March, but
Silicon Valley's Mercury News reports he added, "I don't think
the issue of returning cash to shareholders is silly -- we're
seriously considering it."
Western Union (
Rogers purchased 5.5 million shares of Western Union for $14 per
share on average in the first quarter. It was the stock's lowest
average price since early 2009.
Western Union, a money-transfer provider for the underserved, saw
its stock plunge almost 30% from Oct. 26, 2012, to Oct. 31, 2012.
On Oct. 26, the company filed a document with the SEC announcing
that in 2011 and 2012, it received investigation demands from
state attorneys general into whether it took adequate steps to
prevent consumer fraud from 2010 to 2011. The company also that
day lowered its projected earnings estimates.
For 2012, its full-year revenue came in line with lowered
estimates, at a 3% increase from 2011 to $5.7 billion. It also
reported GAAP EPS of $1.69, compared to $1.84 in the prior year.
Western Union returned $772 million in the form of share
repurchases and $254 million in the form of dividends in 2012.
Its current dividend yield of 3% is close to a 10-year high.
Western Union has a P/E of 8.7, P/B of 9.1 and P/S of 1.6.
Joy Global (
Rogers purchased 750,000 shares of Joy Global for $63 per share
on average in the first quarter. The weighting of the new holding
is 0.18% of his portfolio.
Joy Global Inc. was incorporated in Delaware. The company is a
manufacturer and servicer of mining equipment for the extraction
of coal and other minerals and ores. Joy Global Inc. has a market
cap of $5.51 billion; its shares were traded at around $53.43
with a P/E ratio of 7.5 and P/S ratio of 1. The dividend yield of
Joy Global Inc. stocks is 1.3%. Joy Global Inc. had an annual
average earnings growth of 31% over the past 10 years. GuruFocus
rated Joy Global Inc.
the business predictability rank of 3.5-star
Hospira Inc. (
Rogers bought 1,168,700 shares of Hospira for $32 per share on
average in the first quarter. The size equals a 0.15% of his
Hospira Inc. was incorporated in Delaware on Sept. 16, 2003, as a
wholly owned subsidiary of Abbott Laboratories. Hospira Inc. has
a market cap of $5.13 billion; its shares were traded at around
$31.29 with a P/E ratio of 115.3 and P/S ratio of 1.3.
To see more of Brian Rogers' investing activity, see his
portfolio here. Also check out the Undervalued Stocks, Top Growth
Companies and High Yield stocks of Brian Rogers.About GuruFocus:
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