Three stocks we are warming up to again.

Altria, symbol MO, was deleted from our portfolio last month when it reached valuations that were over our limits for tobacco stocks. We have opined constantly about MO being nothing more than a government sanctioned monopoly, but even those get too high for our liking.  In recent trading sessions MO has backed off breaking the $30 per share barrier and moved back down near $28.50 which could again make this stock a holding to consider. The current yield of about 5.75% is better than the under 5.5% that over $30 per share brought. I know that is a small number, but when we are looking at a stock for basically dividend and derivative income that small amount matters.  Being closer to $28 per share matters too since this security offers little capital gain wise and getting caught in a stock at $30 versus $28 is significant when one is dealing with 2000 or more shares. There is also the obvious fact it is a tobacco stock and being based in the US where cigarette smoking is declining, albeit slowly, the business model does have some limitations. If MO drops down another 25 to 50 cents per share we will again consider moving into it again. 

Ares Capital, a business development company, after dropping into the $13 to $14 dollar range late last year, seems to have regained it's footing around $15. The reason for the drop off was concern about the economy going forward and thus as a BDC which loans money to emerging small business companies there was real worries about pay back of principal and interest. Those worries have abated for awhile and we are again taking a look at ARCC.  I would not go as far to say we are including it in our portfolio again, but if you are looking for a nice 9% plus yield that is fairly secure with some capital gain potential this might be a good choice. ARCC is best of breed here and has done well throughout the economic downturn. I would advise a position below $15 would be appropriate. 

Stifel Nicolaus, symbol SF, continues to intrigue me as well. SF got into some legal trouble last year when it was trading at near $50 per share. I will leave it to you to do your due diligence on that news, but it's stock price got hammered down to near $25 then.  In recent months it has quietly moved back up to the low $30's or so. SF is a conservatively managed broker from the midwest that has been buying some smaller brokerages of late.  However it has not been overpaying for assets and has a good reputation for keeping to it's knitting. In the last month there was talk of a buy out of Morgan Keegan,  but yesterday Raymond James finally bought Morgan.  What I feel good about is that as banks exit some of their stock trading units via Dodd Frank this firm might be getting some bargains in upsizing their business.  Stifel is making what should be considered a fair offers for what is basically the customer accounts of the other broker. If Stifel continues to make these kinds of assets purchases as they have done in the past few years this stock might have some good upside of about 50% increase in price. Might be worth your attention going forward. 

We do not own any of the stocks listed here either as a option or long. We currently do business with Stifel as a broker, but have no inside information.