I love playing around with screeners–to me it’s like sieving for gold. I love plugging data into the Motley Fool.com screener (under the CAPS community tab) and finding treasure. After looking around for mid and large caps with decent yields over 3%, double digit earnings and revenue growth, and low short interest, only three companies came up: Terra Nitrogen Company, L.P. (NYSE:TNH), Wynn Resorts, Limited (NASDAQ:WYNN), and Erie Indemnity Company (NASDAQ:ERIE).
It’s somewhat of a strange brew with a casino, an insurance company, and a fertilizer play, but not a bad beginning for a diversified portfolio with a good amount of yield.
Growing your portfolio
Terra Nitrogen Company, L.P. (NYSE:TNH) is off some 25% from its 52 week high of $298.00, but at a 12.94 P/E and a 6.60% yield, this nitrogen fertilizer limited partnership out of Deerfield, IL is a good long term hold for a portfolio. With a profit margin of 41.16% and operating margin of 71.89%, it’s practically growing money.
Over the last three years the earnings growth rate has been 50.68% and the revenue growth rate has been 17.77%. The company has no debt, and it’s in an industry in which demand keeps growing. The company has a parental relationship with CF Industries Holdings, Inc. (NYSE:CF), which has a 75% stake in Terra Nitrogen.
As a domestic producer Terra Nitrogen Company, L.P. (NYSE:TNH) benefits from US demand because the majority of nitrogen used agriculturally must be imported. The company also benefits from low natural gas prices as an input cost. Nitrogen is a critical component for improving yield on fields that aren’t irrigated, i.e. good for drought-threatened crops. Also, Terra Nitrogen is positioning itself for increasing specialty nutrient demand by expending some capital (double the amount of 2011) to upgrade its facilities.
Doubling down on your holdings
The casino stocks have long been a favorite of mine, and Wynn Resorts, Limited (NASDAQ:WYNN), with a current yield of 3.3% and a P/E of 25.49, was one company that came up for its three year growth rates for revenue of 22.32% and EPS growth of 211.57%. Wynn also gives special dividends every so often, similar to what casino hosts call show-up money–a little cash just for patronizing their tables. Wynn’s return on equity is an impressive 49.53%, and its operating margin is 19.97%.
With just two properties in Asia Wynn Resorts, Limited (NASDAQ:WYNN) is at a disadvantage to rival Las Vegas Sands Corp. (NYSE:LVS), and is just beginning a project on the Cotai strip. Las Vegas Sands has three casinos in Macau and one in Singapore. MGM Resorts has the one Asian property, MGM China, but they will open another on the Cotai Strip in 2016.
Caveats for Wynn are that it has almost twice as much total debt to total cash. The company reported a net revenue decline in the Feb. 4 earnings release for Q4 and most of that revenue decline was from Macau. Also of concern was the decline in EPS from $4.88 in 2011 to $4.82 in 2012.
One other concern with Wynn is that the company is tied to namesake and CEO Steve Wynn, and his vision that a succession plan is always an issue. Elaine Wynn holds 9,659,355 shares as the second largest stakeholder behind Waddell & Reed Financial’s 14.89% stake of 15,039,402 shares, and is the likely reason for the high risk corporate governance rating for shareholders’ rights. All that said, Wynn Resorts, Limited (NASDAQ:WYNN) is the best bet of the three casino stocks.
