This week, the Alpha Algorithm generated another indirect bet profiting from the U.S. housing rebound: the paint maker Sherwin-Williams (SHW).
Founded in 1866 and headquartered in Cleveland, Ohio, The Sherwin-Williams Company develops, manufactures, distributes and sells paints, coatings and related products to customers primarily in North and South America, the Caribbean, Europe and Asia. As of Dec. 31, 2015, it operated 4,086 company-run specialty paint stores.
In March, Sherwin-Williams bought rival paint maker Valspar in a deal worth about $11.3 billion — a big bite for a company with a market cap of $26.6 billion. This game-changing acquisition will solidify Sherwin-Williams’ position as the leading global paint and coatings provider.
The Sherwin-Williams Company (SHW) vs. the S&P 500 Year to Date
Seven Top Investment Strategies Betting on The Sherwin-Williams Company (SHW)
- Dividend Aristocrat
The stock is among those in the S&P 500 that have increased dividends for at least 25 consecutive years.
- High-Quality Stock
The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.
- Hedge Fund Alpha
Based on publicly available disclosures, successful hedge fund managers are investing in the stock.
- Momentum Factor
The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which historically has driven a significant part of companies’ risk and return.
- Insider and Analyst Sentiment
It is one of 100 top stocks out of 5,000 U.S. stocks of which a corporate insider (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) is buying the shares and Wall Street analysts recently have increased earnings estimates.
- Large Cap Growth
The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.
- Market Legends’ Pick
Stock is part of a strategy that replicates methods of a handful of legendary investors using 20-plus models built on fundamental valuation metrics, rather than technical factors.
Recommendation
Buy The Sherwin-Williams Company (SHW) at market today. Place your initial stop at $267.00.
Options
I am holding off on recommending options on this position for now.
Portfolio Update
Raise your stop in Aflac Incorporated (AFL) to $69.85 to lock in at least a 10% gain in the stock.
Sincerely,
Nicholas A. Vardy
