What to write about when you have no money to invest?

Without any money to invest from January all I could do is screen and learn about some new stocks that came up this month.  It is my hope still to save enough where I can actually invest on a regular basis again.  Part of me wants to start using loyal3 or computershare.com.  Buy for free and sell for free on Loyal3 or for a fee on Computershare.  That way I can continue to invest in some of the strong dividend payers these companies allow you to buy.  The other part wants simplicity and is willing to pay the fee to keep all my money in one place with one tax document.   The third part just reminded me my goal is to first rebuild an emergency fund.  That part is such a downer and is no fun.  The fourth part is my wife who wants me to put any free money into home improvements.  I avoid that conversation at all costs.   The house will hold up and last longer than me.  My time is what I want not a nicer house.

I could go on all day about that stuff but you are probably more interested in what popped up in my screen this week.  It would have been a steal if I had picked it up at the beginning of the month.  Other people saw the bargain and thus the price is creeping back up again and the yield is dropping.

CARBO Ceramics (CRR) came in at #5 in my screen.  The other 4 above were all very interesting but ranged in 5-7 years of dividend increases.  Many had been paying increasing dividends before the financial crisis but cut them for a year before resuming increases.  The last dividend increase for CRR was back in July 2014 so we will see if they can keep the streak alive in 2015 and make it 15 years.  Why might this be at risk?

CARBO Ceramics you would think does pottery or something like that.  Not even close.  They fall under the Oil & Gas Equipment & Services sector.  They make ceramic proppant.  Proppant in terms I understand are a whole bunch of little beads that frackers inject into the cracks to keep them open.  This allows them to keep on widening and lengthening a crack to get to gas and oil reserves.  They also provide other services to the fracking industry which widens their moat (all in one stop and shop).

The risk is in the negative earnings estimates they are forcasting for the current quarter (-0.07).  That is a big difference from the last actual EPS of $.70 for the period ending 1/29/2015.  The other thing to worry about is the free cash flow.  Morningstar has the TTM at -7.  All the other TTM numbers look good regarding value, dividend growth, sales, etc.

Wells are being shut down.  For how long we don't know but oil is finite.  There will be a point when the oil will need to be extracted.  The other thing to point out is that CRR has survived and continued to raise the dividend in other years with cash flow dipping to -20 at times.  However if all wells shut down there isn't much business for Carbo.  On the other flip side the Chairman of the company continues to buy up shares.

I gander (haven't used that word in a long time) if I had some cash I would initiate a small position in CRR.  Since I don't I will keep my eye on it and hope A) the dividend doesn't get cut and B) the price remains near its 52 low so I can make a buy. 


Ever looked at this company?  To risky?

Comments

  1. Hi DFG,

    Didn't CRR's stock go from $150 a year ago to around $35 currently? I couldn't see any stock splits there so I was wondering what may have caused that drop?

    I'm not looking to add any Energy stocks for the next couple of weeks - I usually switch between CVX and XOM but I may consider a new company when I do get around to an Energy purchase.

    I got rid of my Computershare account for similar reasons of simplifying taxes and keeping track of what I own. Another low cost means of investing is with Schwab's mutual funds which allow minimum purchases of $1 commission-free (although you must purchase $100 worth to start).

    Anyway, sounds like the emergency fund is most important although not much fun. Perhaps your wife will support investing more when you can buy her chocolate with dividend income!

    Keep at it!

    Best wishes,
    -DL

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    Replies
    1. Lol, I like how you think (chocolate dividends.) Anyway yeah I would need to research the price drop before purchasing. The free cash flow that is all over the place over the years is also concerning.

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  2. CRR looks interesting. I don't really understand what they do so I passed on them a while back.

    ReplyDelete
    Replies
    1. They make pellets the frackers inject to widen the cracks. They also provide spill cleanup and contamination services. It is very focused so there is some risk there.

      Delete
  3. I had looked at a similar stock, SLCA. Only problem is that the dividend has not been paid for long and it is in the same industry so who knows what will happen in the future. Sometimes though I just like to go for the homerun to propel my portfolio higher and faster than if I would just pick a DG stock.

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    Replies
    1. Value/ten bagger vs. slow but rising dividends. Always a tough call.

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  4. It's hard for me to make a clear opinion on CRR cause I didn't see the numbers. However, from what I read here, it looks more like a stock to put on a watch list than a buy. Not being sure if they will keep their dividends is a good reason enough to wait for me.

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    Replies
    1. Agreed, definitely watchlist material until I see more numbers from this year.

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  5. DFG,

    I'm sorry to hear you don't have any spare capital to deploy. I hope you are able to invest again soon!

    Also, I've never heard of CRR before, so thank you for putting it on my radar. I'll have to do some research though, as I'm not familiar with their business model.

    Best wishes,
    NMW

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    Replies
    1. Thanks for the encouragement NMW. Keep my story in mind before you get married and have kids ;-)

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  6. Oh man, I feel the same way sometimes especially after spending my dividend money to reinvest in shares. I would immediately feel like there's still more good stocks to buy. I guess you just gotta build that portfolio, one stock at a time.

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