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Reaching for Yield

May 13, 2010

 

As we mentioned last Friday we viewed the correction in the market as a buying opportunity. One of the hardest hit sectors in the correction were the consumer discretionary stocks. As a result, we established a position in Genuine Parts Co. (GPC).

Why we like this company:
1. High quality dividend paying stock. 3.8% yield, 16% debt to total capital, strong cash flow.

2. 55% of the company is leverage to the auto parts segment. With the median vehicle age in the U.S. over nine years old, we believe there will be sufficient demand for GPC’s products (GPC owns NAPA warehouse distribution centers)

3. Strong cash flow has the opportunity to be used for dividend increases, share repurchases, modest acquisitions.





 
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