issue 13 pages 1881-1892

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© 2019 Value line, inc. all rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. The PublisheR is nOT ResPOnsible FOR anY eRRORs OR OMissiOns heRein. This publication is strictly for each subscriber’s own, non-commercial, internal use. no part of this publication may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. Officers, directors, employees and affiliates of Value line, inc. (“Vli”) and eulaV asset Management, llC (“eulaV”), may own stocks that are reviewed or recommended in this publication. nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.see back cover for important disclosures.

The Selection & Opinion Index appears in the November 16, 2018 issue on page 2032.

In Three Parts: Part 1 is the Summary & Index. This is Part 2, Selection & Opinion. Part 3 is Ratings & Reports. Volume LXXIV, Number 26.

February 8, 2019

ISSUE 13Pages 1881-1892

CLOSING StOCk Market aVeraGeS aS OF PreSS tIMe

1/23/2019 1/30/2019%Change 1 week

%Change 12 months

Dow Jones Industrial Average 24575.62 25014.86 +1.8% -4.1%Standard & Poor’s 500 2638.70 2681.05 +1.6% -5.0%N.Y. Stock Exchange Composite 12020.93 12222.39 +1.7% -8.6%NASDAQ Composite 7025.77 7183.08 +2.2% -3.0%NASDAQ 100 6658.76 6807.91 +2.2% -1.8%Amex Major Market Index 2437.64 2524.25 +3.6% -5.0%Value Line (Geometric) 507.16 519.38 +2.4% -10.3%Value Line (Arithmetic) 5801.52 5947.29 +2.5% -5.5%London (FT-SE 100) 6842.88 6941.63 +1.4% -8.5%Tokyo (Nikkei) 20593.72 20556.54 -0.2% -11.7%Russell 2000 1454.26 1486.94 +2.2% -6.1%

Dear Subscribers,

As part of our ongoing efforts to keep The Value Line Investment Survey the most valuable investment resource for our subscribers, all updated Ranks are now being released on the Value Line Web Site by 8:00 A.M. Eastern Time on Mondays. You can access all the Ranks each week at www.valueline.com by entering your user name and password. We look forward to continuing to provide you with accurate and timely investment research. Thank you.

The Value Line ViewIn this Issue

The Value Line View 1881Model Portfolios: Recent Developments 1882Model Portfolios: Company Snapshots 1885Income Stocks with Worthwhile Total Return Potential 1886Stocks for Long-Term Gains 1887Stocks for Dividend Growth with Low Risk 1888Selected Yields 1889Federal Reserve Data 1889Tracking the Economy 1890Major Insider Transactions 1890Market Monitor 1891Value Line Asset Allocation Model 1891Industry Price Performance 1891Changes in Financial Strength Ratings 1891Stock Market Averages 1892

Concerns linger on the economic front. For starters, there are the residual effects from the recent government shutdown, with disposable income still being pressured for many. That impasse had been in its second month when a deal was put in place to reopen the government for three weeks, while a long-term solution was sought. Prior to that truce, the shutdown’s impact had been growing, with airlines and airports announcing delays and cancellations, and with businesses and contractors facing lost revenues. Elsewhere, we have seen declines in the leading indicators, consumer confi-dence, and existing home sales. In all, GDP may feature just modest growth this quar-ter—even if the government’s reopening proves long-term in nature.

Some of this lost business should be made up, which is often the case when early year disruptions (often weather related) occur. However, some lost business (especially on the consumer end) may not be recaptured. Still, we think GDP growth will move back into the 2.0%-2.5% range as 2019 progresses, assuming a level of economic stability returns.

Meanwhile, the Federal Reserve appears set to follow a patient, data-driven course. Specifically, the bank voted to keep interest rates unchanged at its late-January FOMC

meeting. It also seems poised to adhere to a go-slow approach amid concerns that selectively moderating GDP growth—even assuming there’s no resumption of the earlier partial government shutdown when the temporary truce concludes—likely lies ahead.

More ominously, storm clouds are gath-ering offshore. For example, economic growth continues to slow in China; trade disputes linger between that nation and the United States; Great Britain must still resolve its Brexit standoff; and there are emerging problems in our own hemisphere, most notably with Venezuela. These trou-bling issues could raise red flags on our shores. Encouragingly, though,

Investors remain resilient, as Wall Street recently concluded its best January in decades. That comeback was particularly welcome after the market’s late-2018 melt-down and the troubled news cycle globally.

Conclusion: The bull market’s durability in the face of these myriad problems augurs well for the months ahead, assuming that the economy’s early year struggles are short lived. Please refer to the inside back cover of Selection & Opinion for our statistically- based Asset Allocation Model’s current reading. ■

eCONOMIC aND StOCk Market COMMeNtarY

1 8 8 2 VaLue Line SeLection & opinion F e b r u a r Y 8 , 2 0 1 9

© 2019 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. the pubLIsher Is not responsIbLe For Any errors or omIssIons hereIn. this publication is strictly for subscriber’s own, non-commercial, internal use. no part of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

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POrtFOLIO IA couple Portfolio I’s selections have reported December-quarter results so far this earnings season. Union Pacific posted revenue of $5.8 billion, an increase of 6% on a year-over-year basis. Volumes were up 3%, as strong growth in industrial and premium shipments more than offset declines in agricultural products and en-ergy. The railroad operator also benefited from core pricing gains and improved productivity. Since the commencement of its Unified Plan 2020 in October, Union Pacific has improved on-time service for its customers, eliminated excess costs, and increased the utilization of network resources. Earnings per share of $2.12 marked a 39% improvement over the year-ago tally of $1.53.

Meanwhile, Sherwin-Williams reported sales of about $4.1 billion, an increase of 2%. This was primarily due to greater paint volumes in The Americas Group and higher prices. Adjusted for nonrecurring items, earnings per share came in at $3.54. This marked a nice improvement from the prior-year figure of $3.12. Looking forward, macroeconomic unevenness may well impact results here going forward. Still, the company remains well positioned in its markets, and we expect moderate growth in the coming years. We are mak-ing no changes to Portfolio I this week.

POrtFOLIO II Earnings season is in full swing, and a number of Portfolio II’s holdings have already reported. So far, results for our portfolio, though mixed, have included more positive than negative surprises. As expected, the release from AT&T was a mixed bag. The company reported fourth-quarter share net of $0.86, in line with the consensus. Its media business, though, continued to struggle, which led to stock-price weakness. Even so, manage-ment stated that it expects low single-digit earnings growth this year, implying a range of $3.55 - $3.65, which is consistent with Wall Street’s expectations. Debt reduction remains a focus for the company, as well as consolidating Time Warner and delivering on its projected synergies.

Model portfolios: Recent Developments

Elsewhere, Royal Caribbean Cruises re-ported strong fourth-quarter share net of $1.53, $0.02 better than the consensus. Looking ahead, the company noted that the cruise season started on a strong note, and its overall booked position for 2019 is better than last year’s record high and at higher rates. For the full year, management guided earnings to a range of $9.75-$10.00 a share. The consensus stands at $9.92.

Finally, Mondelez International reported fourth-quarter earnings of $0.63 a share, in line with the Wall Street average. Revenue of $6.8 billion fell 2.8% year over year, due to currency translation. Otherwise, organic revenue increased 2.5%. Management expects 2019 share net to finish between $2.43 and $2.48. The consensus stands at $2.48. We are making no changes to Portfolio II this week.

POrtFOLIO IIIPortfolio III and the broader market continue to regain their footing after stumbling during the latter stages of 2018. Investor concerns remain, particularly with regard to the global economy, which has been hampered by the trade dispute between the U.S. and China. But hopes abound that the trade issues can soon be worked out. And stocks are looking more attractive in light of the Fed’s more dovish stance, with the central bank recently confirming that it will exercise patience when deciding whether to pursue further monetary tightening.

Earnings season, meanwhile, has been pretty solid thus far. The big banks started things off on a positive note, and many of the tech heavyweights have followed up with good, or at least better-than-feared, numbers. Apple, for one, posted Decem-ber-interim results that were in-line with lowered expectations, but provided guid-ance for the March quarter that implies the tough times may be coming to an end soon. Indeed, the company appears poised to return to a healthy growth mode before too long, as it further expands its high-mar-gined services business and leverages its massive installed base of iPhones and other products. A gradual improvement in

conditions in China should also be a plus.

Elsewhere, Facebook registered a strong fourth-quarter performance, prompting investors to rush back into the beat-en-down social media issue. While earn-ings growth seems poised to slow in 2019, particularly as safety and security spending ramps, user trends look to have stabilized, and the company should find good success monetizing its messaging and Stories ad platforms. We are also optimistic about e-commerce opportunities via the Insta-gram app. We are making no changes to Portfolio III this week.

POrtFOLIO IVThe U.S. stock market performed nicely in January. While traders still have numerous macro-economic concerns, fourth-quarter earnings season has been shaping up well and seems to be providing some support for equity prices.

At Portfolio IV, which is composed of high yielding issues, a number of our companies recently released their results. Among the more notable reports, Boeing posted solid quarterly numbers, with revenues and earnings coming in well ahead of expec-tations. The company made considerable progress at both its commercial aircraft and defense businesses. Too, it has a healthy backlog of orders and provided favorable year-ahead guidance, despite a somewhat challenging global landscape. Boeing stock has staged a massive run-up in price over the past few years, and has made solid contributions to our portfolio. And we are cautiously holding onto this neutrally ranked issue, for now.

Elsewhere, we also received encouraging news from McDonald ’s. The restaurant operator delivered somewhat muted quarterly revenues, but the bottom line showed a notable improvement. More-over, the outlook for 2019 remains bright, and business should get a lift from various initiatives, such as the remodeling of some locations, enhancing the delivery service, and upgrading the menu to keep custom-ers engaged. We are making no trades in Portfolio IV this week. ■

F e b r u a r Y 8 , 2 0 1 9 VaLue Line SeLection & opinion 1 8 8 3



POrtFOLIO I: StOCkS WIth abOVe-aVeraGe Year-aheaD PrICe POteNtIaLPrimarily suitable for more aggressive investors

Ratings & Reports

Page Ticker CompanyRecent Price Timeliness Safety P/E Yield% Beta

Financial Strength Industry Name

973 ALSN Allison Transmission 48.75 2 3 10.2 1.2 1.05 B+ Auto Parts757 ALL Allstate Corp. 86.78 2 1 10.1 2.1 0.80 A+ Insurance (Prop/Cas.)

2632 GOOG Alphabet Inc. 1060.62 2 1 21.8 Nil 1.10 A++ Internet1351 ADI Analog Devices 97.01 2 2 17.3 2.0 1.15 A+ Semiconductor2635 BKNG Booking Holdings 1808.80 2 3 19.2 Nil 1.20 A+ Internet764 CB Chubb Ltd. 131.40 2 1 11.8 2.2 0.90 A+ Insurance (Prop/Cas.)441 IT Gartner Inc. 131.97 2 3 32.6 Nil 0.95 B++ Information Services

1139 HD Home Depot 179.69 2 1 17.8 2.6 1.05 A++ Retail Building Supply1918 HRL Hormel Foods 41.75 1 2 22.9 2.0 0.65 A Food Processing442 INFO IHS Markit 50.60 2 3 21.3 Nil 1.00 B++ Information Services808 IQV IQVIA Holdings 124.89 1 3 20.7 Nil 0.90 B+ Medical Services

1800 ICE Intercontinental Exch. 75.35 1 2 19.8 1.3 0.80 A Brokers & Exchanges2125 KAR KAR Auction Svcs. 51.68 2 3 20.3 2.7 0.95 B+ Retail Automotive185 MDT Medtronic plc 86.47 1 1 16.5 2.3 0.90 A++ Med Supp Invasive955 MSI Motorola Solutions 115.72 1 2 16.0 2.0 0.95 B++ Telecom. Equipment

1981 PEP PepsiCo, Inc. 109.00 2 1 18.5 3.4 0.75 A++ Beverage1842 SCI Service Corp. Int’l 43.00 1 3 22.8 1.6 1.00 B+ Funeral Services1142 SHW Sherwin-Williams 403.00 2 2 19.8 0.9 1.10 A+ Retail Building Supply350 UNP Union Pacific 160.17 2 1 19.3 2.0 1.10 A++ Railroad792 USB U.S. Bancorp 51.05 2 1 12.1 3.0 1.00 A Bank (Midwest)

To qualify for purchase in the above portfolio, a stock must have a Timeliness Rank of 1 or 2 and a Financial Strength Rating of at least B+. If a stock’s Timeliness rank falls to 3, or lower, it will be automatically removed. Stocks in the above portfolio are selected and monitored by Michael F. Napoli, Senior Analyst.

POrtFOLIO II: StOCkS FOr INCOMe aND POteNtIaL PrICe aPPreCIatIONPrimarily suitable for more conservative investors

Ratings & Reports



918 T AT&T Inc. 30.70 2 1 8.6 6.6 0.75 A++ Telecom. Services1583 ARLP Alliance Resource 19.45 1 3 7.3 11.1 1.15 B+ Metals & Mining (Div.)2510 CM.TO Can. Imperial Bank 111.05 2 1 9.2 5.0 0.85 A+ Bank506 CVX Chevron Corp. 111.83 3 1 13.6 4.1 1.25 A++ Petroleum (Integrated)357 CBRL Cracker Barrel 168.96 1 2 18.5 3.0 0.75 A Restaurant308 DAL Delta Air Lines 48.22 3 3 8.1 2.9 1.20 B+ Air Transport

1975 DEO Diageo plc 143.48 3 1 22.6 2.4 0.95 A+ Beverage630 EPD Enterprise Products 27.93 1 3 12.5 6.3 1.30 B++ Pipeline MLPs575 IFF Int’l Flavors & Frag. 138.94 1 1 21.5 2.1 0.90 A+ Chemical (Specialty)215 JNJ Johnson & Johnson 130.33 2 1 18.2 2.9 0.85 A++ Med Supp Non-Invasive

1923 KHC Kraft Heinz Co. 46.88 4 2 13.0 5.3 0.90 A+ Food Processing717 LMT Lockheed Martin 292.05 3 1 15.4 3.2 0.75 A++ Aerospace/Defense

1140 LOW Lowe’s Cos. 93.43 3 2 17.3 2.2 1.05 A+ Retail Building Supply1929 MDLZ Mondelez Int’l 43.43 3 2 17.2 2.5 1.00 A Food Processing957 NOK Nokia Corp. ADR 6.55 3 3 21.1 3.7 1.05 B+ Telecom. Equipment

1540 O Realty Income Corp. 66.68 1 2 51.3 4.1 0.60 A R.E.I.T.2319 RCL Royal Caribbean 112.05 3 3 11.8 2.5 1.10 B++ Recreation316 UPS United Parcel Serv. 101.30 3 1 13.7 3.8 0.90 A Air Transport970 WBA Walgreens Boots 71.50 2 2 11.1 2.5 0.85 A+ Pharmacy Services418 WM Waste Management 94.76 1 1 21.9 2.0 0.75 A Environmental

To qualify for purchase in the above portfolio, a stock must have a yield that is in the top half of the Value Line universe and a Safety Rank of 3 or better. Stocks are selected and monitored by Wayne Nef, Senior Analyst.




POrtFOLIO III: StOCkS WIth LONG-terM PrICe GrOWth POteNtIaLPrimarily suitable for investors with a 3- to 5-year horizon

Ratings & Reports


3- to 5-Yr. Apprec.

Potential Industry Name

2588 ADBE Adobe Systems 238.27 2 2 45.3 Nil 1.15 20-65% Computer Software

757 ALL Allstate Corp. 86.78 2 1 10.1 2.1 0.80 75-105 Insurance (Prop/Cas.)

1991 MO Altria Group 45.91 3 2 11.0 7.0 0.65 75-140 Tobacco

1396 AAPL Apple Inc. 154.68 3 2 11.6 2.1 1.00 80-145 Computers/Peripherals2119 AN AutoNation, Inc. 36.95 4 3 7.7 Nil 1.10 115-225 Retail Automotive2508 BK Bank of NY Mellon 52.61 4 2 13.3 2.1 1.10 50-110 Bank

436 CSGP CoStar Group 379.94 3 3 43.0 Nil 1.15 25-90 Information Services

2330 DIS Disney (Walt) 110.90 1 1 13.8 1.6 0.95 35-60 Entertainment2010 EA Electronic Arts 87.24 3 3 22.7 Nil 1.00 45-110 Entertainment Tech2639 FB Facebook Inc. 144.19 3 3 18.0 Nil 1.00 125-235 Internet309 FDX FedEx Corp. 173.58 3 1 9.9 1.5 1.15 75-115 Air Transport

1918 HRL Hormel Foods 41.75 1 2 22.9 2.0 0.65 10-45 Food Processing

1360 INTC Intel Corp. 46.54 2 1 10.4 2.7 1.05 70-105 Semiconductor1164 IP Int’l Paper 47.33 3 3 8.8 4.2 1.20 80-165 Paper/Forest Products

2111 PVH PVH Corp. 108.25 3 3 10.9 0.1 1.10 50-125 Apparel

413 RSG Republic Services 76.04 1 2 24.1 2.0 0.75 10-50 Environmental

313 LUV Southwest Airlines 56.37 3 3 12.7 1.1 1.15 25-85 Air Transport

373 SBUX Starbucks Corp. 67.04 1 1 26.4 2.3 0.90 40-70 Restaurant

818 UNH UnitedHealth Group 267.34 3 1 19.6 1.3 1.00 0-20 Medical Services

2581 V Visa Inc. 135.00 2 1 26.2 0.8 0.95 15-35 Financial Svcs. (Div.)

To qualify for purchase in the above portfolio, a stock must have above-average 3- to 5-year price-appreciation potential. As the price of a stock in this Portfolio rises, the computed appreciation potential may fall; it may still be held. This portfolio is most appropriate for investors focused on long-term capital gains. Stocks in the above portfolio are selected and monitored by Justin Hellman, Editorial Analyst.

POrtFOLIO IV: StOCkS WIth abOVe-aVeraGe DIVIDeND YIeLDSPrimarily suitable for investors interested in current income

Ratings & Reports



918 T AT&T Inc. 30.70 2 1 8.6 6.6 0.75 A++ Telecom. Services903 LNT Alliant Energy 43.04 1 2 19.7 3.3 0.60 A Electric Util. (Central)

2658 BX Blackstone Group LP 33.16 NR 3 14.0 7.7 1.30 B++ Public/Private Equity706 BA Boeing 364.91 3 1 20.7 2.3 1.10 A++ Aerospace/Defense

1992 BTI Brit. Am. Tobacco ADR 33.29 3 2 7.2 7.7 1.00 B++ Tobacco153 CAT Caterpillar Inc. 126.53 3 2 10.5 2.7 1.30 A+ Heavy Truck & Equip

1969 KO Coca-Cola 47.40 3 1 21.6 3.5 0.70 A++ Beverage138 ED Consol. Edison 75.89 2 1 17.7 3.9 0.40 A+ Electric Utility (East)984 ETN Eaton Corp. plc 71.11 2 2 12.7 3.7 1.20 A+ Auto Parts

1360 INTC Intel Corp. 46.54 2 1 10.4 2.7 1.05 A++ Semiconductor1193 KMB Kimberly-Clark 108.15 3 1 16.0 3.8 0.75 A+ Household Products578 LYB LyondellBasell Inds. 87.09 2 3 8.2 4.6 1.40 A Chemical (Specialty)366 MCD McDonald’s Corp. 182.17 3 1 23.0 2.5 0.80 A++ Restaurant

1624 MRK Merck & Co. 73.23 1 1 16.3 3.0 0.95 A++ Drug2626 PAYX Paychex, Inc. 69.73 1 1 24.5 3.6 1.00 A IT Services1632 PFE Pfizer, Inc. 40.77 2 1 17.3 3.5 0.90 A++ Drug1561 PRU Prudential Fin’l 91.08 3 3 7.3 4.0 1.30 B++ Insurance (Life)148 SO Southern Co. 47.58 3 2 16.5 5.2 0.50 A Electric Utility (East)316 UPS United Parcel Serv. 101.30 3 1 13.7 3.8 0.90 A Air Transport418 WM Waste Management 94.76 1 1 21.9 2.0 0.75 A Environmental

To qualify for purchase in the above portfolio, a stock must have a yield that is at least 1% above the median for the Value Line universe, and a Financial Strength Rating of at least B+. Stocks are selected and monitored by Adam Rosner, Editorial Analyst.




Some of the holdings in the Model Port-folios, though integral to each group of 20 stocks, may have held their positions

for some time without receiving attention. To bring interested subscribers up to date, a handful of these less visible contributors are now featured in the Model Portfolios: Company Snapshots page, which appears on an occasional basis in Selection & Opinion.

The rationale for making any trades in the portfolios, along with a brief analysis of the salient factors that are currently affecting each group’s performance, continues to be found in the Model Portfolios: Recent Developments page included in this and every issue of Selection & Opinion.

Service Corp. International (SCI)Held In: Portfolio IRecent Price: $43.00

Service Corporation International, founded in 1962, is North America’s largest pro-vider of death care products and services. The company, with a $3 billion-plus top line and its leading Dignity Memorial brand, operates funeral homes, cemeteries, and crematoria. And it sells prearranged funeral services in most of its domestic territories.

The stock has been a relative standout over the past several months, appreciating nicely while the broader market has pulled back. Service Corp., owing to its stable and defensive business, has also been able to increase its earnings profile over time. In fact, share net probably rose more than 15% last year, to around $1.80. And earn-ings prospects appear quite strong through 2019 and beyond, considering the aging of America’s population and a likely uptick in the national death rate. The company should also be able to wrest market share from smaller rivals, partially with the help of acquisitions.

We purchased SCI shares for Portfolio I this past July in the $37 area, and already have a roughly 15% gain on the position.

Model portfolios: company Snapshots

We continue to like the timely issue, too, given the company’s formidable market position and the likelihood that the current earnings momentum will persist. It’s also a great stock to own, we believe, in a choppy climate for equities.

AutoNation, Inc. (AN)Held In: Portfolio IIIRecent Price: $36.95

AutoNation is the largest automotive retailer in the country, with roughly 325 owned and operated dealerships from coast to coast (though most units are located in the Sunbelt region). Its stores sell over 30 different vehicle brands, highlighted by Toyota, Honda, Ford, General Motors, Mercedes-Benz, Nissan, BMW, and Volkswagen. The company also maintains a network of several dozen collision centers. And it has a financing wing that helps consumers secure car loans.

Shares of AutoNation have been lagging the wider equity benchmarks, as the new-vehicle market has shown signs of weakening, and as prices for new cars have continued to soften (hurting gross margins). But this well-managed retailer still has plenty going for it, and should remain in a healthy growth mode in spite of the challenging operating environment. While new-vehicle comps are apt to stay sluggish, growth ought to come from market-share gains in used cars and the expansion of ancillary businesses, most notably parts & service. The opening of more collision shops should also be a plus, along with the rollout of branded repair parts.

AN shares have been moderate under-achievers since first being added to Port-folio III in mid-2017. We still like the name for the long haul, however, and see considerable upside over the pull to early next decade. Indeed, in view of the compa-ny’s cost advantages and vast opportunities beyond new cars, we think that the stock can climb to the $100 area by 2021-2023. As such, we intend to stand pat.

Kimberly-Clark (KMB)Held In: Portfolio IVRecent Price: $108.15

Kimberly-Clark, headquartered in Dallas, Texas and with roots dating back nearly 150 years, is a leading marketer of per-sonal care and consumer tissue products, with over 40,000 employees and annual sales north of $18 billion. Its portfolio of brands includes Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Neve, Plenitud, Viva, and WypAll. These well-known labels hold No. 1 or No. 2 share positions in about 80 countries, and are responsible for the lion’s share of the top-line mix.

Recent results at the company have been on the uneven side, hampered by currency headwinds (i.e., a strong U.S. dollar) and stiff competition in important emerging geographies. But the large-cap consumer issue has held up relatively well, as market volatility has prompted jittery investors to seek out more defensive-oriented names. Moreover, organic sales growth in the low single-digits is still likely over the next few years, thanks to product innovation, strategic price hikes, and efforts to expand the e-commerce platform. And restruc-turing-related savings, along with regular stock buybacks, ought to lend some sup-port to share earnings.

We added Kimberly-Clark to Portfolio IV in early 2013, and have done decently on the position on a risk-adjusted, total- return basis. We plan to maintain our KMB stake, too, given the 3.5%-plus dividend yield and prospects for greater capital returns down the road. The high-quality equity (Safety: 1) should also be a standout in the event that the broader market takes a deeper tumble. ■




income Stocks with Worthwhile total Return potential

This screen focuses on stocks with good current dividend yields that have favor-able prospects for relative price perfor-mance over the next three to five years. This combination should result in a group of stocks with worthwhile total return potential.

In the first steps of the selection process, we limited the field to equities with Safety ranks of at least 2 (Above Average). Next, we pared our universe with respect to in-come generation. We selected issues with current dividend yields of at least 3.5%,

120 basis points (1.2%) above the current median of 2.3% for all dividend-paying stocks under Value Line’s review. We then required that equities with three- to five-year projected price appreciation of less than 65% to be cast aside (the current me-dian is 55%). From this group, we selected issues with a projected average annual total return to 2021-2023 (price gains plus dividends) of at least 16%, which is quite favorable in light of the fact that we may experience a period of reduced investment returns in the wake of the strong gains of the last few years.

Conservative investors seeking good cur-rent income, along with healthy, risk-ad-justed three- to five-year total return po-tential, may find these equities of interest. That said, this roster includes stocks from a range of industries, so further research is most likely warranted. Accordingly, we would encourage subscribers to consult each company’s most recent review in Rating & Reports before making new commitments. ■

INCOMe StOCkS WIth WOrthWhILe tOtaL returN POteNtIaL

Ratings & Reports

Page Ticker Company Recent Price Safety Current Yield, %3–5 Year

Est. Yield, %

3–5 Year Appreciation Potential, %

3–5 Year Avg. Total Return, %

1740 ABB ABB Ltd. ADR 19.02 2 4.4 3.1 85 20

918 T AT&T Inc. 30.70 1 6.6 4.6 80 20

1991 MO Altria Group 45.91 2 7.0 4.5 105 24

1992 BTI Brit. Am. Tobacco ADR 33.29 2 7.7 3.1 185 34

984 ETN Eaton Corp. plc 71.11 2 3.7 2.6 70 17

1193 KMB Kimberly-Clark 108.15 1 3.8 2.5 70 17

1155 LEG Leggett & Platt 40.28 2 3.8 2.8 85 20

1560 PWF.TO Power Financial 26.93 2 6.4 3.9 95 22

520 RDSB Royal Dutch Shell 'B' 59.98 2 6.3 4.4 65 18

522 TOT Total ADR 54.07 1 5.5 4.2 65 18

1550 WPC W.P. Carey Inc. 73.48 2 5.6 2.8 125 26

2399 WPP WPP PLC ADR 58.01 2 6.8 3.6 185 34




Stocks for Long-term Gains

Each week, the Summary & Index in-cludes a screen titled “High 3- to 5-year Appreciation Potential” that lists 100 equities under our review with the high-est projected capital gains through 2021-2023. Within this list, however, are some very risky issues whose forecasted prog-ress is based on the success of projected turnarounds, which, of course, cannot be assured.

Although purchase decisions are often premised on the prospects for the near term, stock investment is inherently a

long-term exercise. So, even though it is desirable for an investment to have re-spectable prospects for the year ahead, the potential returns projected for the longer term should not be neglected, in our view. Accordingly, this week we’ve prepared a screen that focuses on long-term gains, but in a rigorous fashion and with an eye to maintaining relatively low risk.

First, we limited our roster to stocks whose price appreciation potential through 2021-2023, calculated by using the mid-point of each stock’s target price range, is at least

60%, versus the current median of 55% for the Value Line universe. We also restricted our selections to companies whose per-share earnings have grown at an annualized rate of at least 11% over the last five years and whose Safety rank is 2 (Above Aver-age), or better. The equities that survived these cuts are listed in descending order of projected long-term appreciation.

As always, we advise investors to consult the most recent stock analyses in Ratings & Reports before investing in any of these issues. ■

StOCkS FOr LONG-terM GaINS

Ratings & Reports

Page Ticker CompanyRecentPrice

3-5 YearAppreciationPotential, %

E.P.S.Growth

Past 5 Years, % Safety P/E Ratio

2399 WPP WPP PLC ADR 58.01 185 12.0 2 9.4

217 MCK McKesson Corp. 125.29 160 14.5 2 8.9

1396 AAPL Apple Inc. 154.68 115 13.0 2 11.6

1022 CMCSA Comcast Corp. 36.08 95 16.0 2 13.6

309 FDX FedEx Corp. 173.58 95 16.5 1 9.9

757 ALL Allstate Corp. 86.78 90 14.5 1 10.1

965 CVS CVS Health 65.54 85 13.5 1 9.2

2551 DFS Discover Fin'l Svcs. 66.78 85 11.5 2 8.2

1155 LEG Leggett & Platt 40.28 85 14.0 2 14.1

390 G Genpact Limited 29.24 80 13.5 2 16.2

2627 SEIC SEI Investments 48.70 70 13.0 2 16.2

2632 GOOG Alphabet Inc. 1060.62 65 14.5 1 21.8

934 VZ Verizon Communic. 53.28 65 11.5 1 11.4

970 WBA Walgreens Boots 71.50 65 13.0 2 11.1

2575 TROW Price (T. Rowe) Group 92.75 60 12.0 1 13.1




Stocks for Dividend Growth with Low Risk

In this screen, we turned our attention to low-risk stocks that have good records for dividend growth. In addition, our selec-tion criteria focused on those issues that our analysts project to continue providing investors with dividends that are likely to increase at above-average rates.

We began our search with stocks whose dividends have advanced at a compound annual rate of at least 6% over the last five years. Similarly, we next narrowed the list to equities with projected annual dividend growth rates of at least 6% over the next three to five years. We also set a minimum estimated yield for the year ahead of 3.5%, which is 120 basis points (100 basis points

is equivalent to one percentage point) higher than the current median of 2.3% for all dividend-paying stocks under our review. For comparative purposes, we also show payout ratios (all dividends as a per-centage of net profit) for the most recent fiscal year.

We then restricted our search to stocks with Safety ranks of at least 2 (Above Average), and Financial Strength Ratings of B++ or better (B+ is Average). Companies whose shares earn high marks for these metrics generally will fare better in volatile markets than the typical stock under our review. That said, their low-risk profile may cause them to underperform in a rising market.

The set of stocks that made the final cut are not only judged to be safer than most, but also possess proven and prospective dividend growth rates that have and are likely to advance at a rate exceeding the average rate of inflation under the time periods chosen under this review. Unlike some of our recent screens, this roster includes a somewhat wider range of equities, though bank and utility stocks still make up a meaningful portion of the total. As usual, we advise investors to carefully review both full-page and supplementary analyses in our Ratings & Reports before making commitments to any of the equities on the list of stocks below. ■

StOCkS FOr DIVIDeND GrOWth WIth LOW rISkRatings & Reports

Page Ticker CompanyDividend Yield, % Safety

Payout Ratio,%

Last 5 Years, %

Next 3-5 Years, %

Financial StrengthRating Industry

1991 MO Altria Group 7.0 2 74 9 11% B++ Tobacco

1746 BIP Brookfield Infrastruc. 4.9 2 NMF 13 9 B++ Diversified Co.

139 D Dominion Energy 5.4 2 86 8 9 B++ Electric Utility (East)

911 FTS.TO Fortis Inc. 3.9 2 41 6 6 B++ Electric Util. (Central)

2521 NA.TO Nat'l Bank of Canada 4.4 2 44 9 7 B++ Bank

913 OGE OGE Energy 3.7 2 64 9 8 A Electric Util. (Central)

2626 PAYX Paychex, Inc. 3.6 1 82 8 11 A IT Services

1632 PFE Pfizer, Inc. 3.5 1 72 9 6 A++ Drug

2525 RY.TO Royal Bank of Canada 4.1 1 45 9 7 A Bank

1545 SPG Simon Property Group 4.7 2 99 14 8 A R.E.I.T.

932 T.TO TELUS Corporation 4.9 2 73 11 7 B++ Telecom. Services

2531 TD.TO Toronto-Dominion 3.9 1 40 11 8 A Bank

316 UPS United Parcel Serv. 3.8 1 53 8 8 A Air Transport

2399 WPP WPP PLC ADR 6.8 2 41 17 10 A+ Advertising

1145 WSO Watsco, Inc. 4.3 2 82 11 14 A Retail Building Supply




Selected Yields

taxabLeRecent

(1/30/19)3 Months Ago

(10/31/18)Year Ago (1/31/18)

Market RatesDiscount Rate 3.00 2.75 2.00Federal Funds 2.25-2.50 2.00-2.25 1.25-1.50Prime Rate 5.50 5.25 4.5030-day CP (A1/P1) 2.48 2.22 1.543-month LIBOR 2.74 2.54 1.77U.S. Treasury Securities3-month 2.41 2.33 1.466-month 2.49 2.49 1.651-year 2.57 2.66 1.885-year 2.48 2.98 2.5110-year 2.68 3.14 2.7110-year (inflation-protected) 0.87 1.13 0.6130-year 3.03 3.39 2.9430-year Zero 3.09 3.42 2.97

Common StocksVL Stocks (Median) 2.30 2.30 1.90DJ Industrials (12-mo. est.) 2.40 2.40 2.10VL Utilities 3.50 3.30 3.60

taxabLeRecent

(1/30/19)3 Months Ago

(10/31/18)Year Ago (1/31/18)

Corporate BondsFinancial (10-year) A 3.80 4.19 3.62Industrial (25/30-year) A 4.22 4.53 3.85Utility (25/30-year) A 4.34 4.55 3.92Utility (25/30-year) Baa/BBB 4.73 5.04 4.19S&P 500 High Yield Corp. Bond Index 5.35 5.45 4.67Foreign Bonds (10-Year)Canada 1.91 2.49 2.29Germany 0.19 0.39 0.70Japan 0.01 0.13 0.09United Kingdom 1.26 1.44 1.51Mortgage-Backed SecuritiesGNMA 5.5% 4.02 3.83 3.11FHLMC 5.5% (Gold) 3.89 3.99 3.31FNMA 5.5% 3.79 3.91 3.18Preferred StockUtility A 6.02 6.12 6.01Financial BBB 5.96 6.07 5.96Financial Adjustable A 5.50 5.50 5.50

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Current

Year-Ago

30 Year

Mos. Years

Treasury Security Yield Curve

3 5 10 306 2 31

Federal Reserve Data

baNk reSerVeS (Two-Week Period; in Millions, Not Seasonally Adjusted)

Recent Levels Average Level Over the Last...

1/16/19 1/2/19 Change 12 Wks. 26 Wks. 52 Wks.Excess Reserves 1536316 1510096 26220 1613726 1695843 1836977Borrowed Reserves 11 83 -72 95 179 125Net Free/Borrowed Reserves 1536305 1510013 26292 1613631 1695664 1836852

MONeY SuPPLY (One-Week Period; in Billions, Seasonally Adjusted)

Recent Levels Annual Growth Rates Over the Last...

1/14/19 1/7/19 Change 3 mos. 6 mos. 12 mos.M1 (Currency+demand deposits) 3764.4 3755.6 8.8 6.0% 6.0% 4.3%M2 (M1+savings+small time deposits) 14520.9 14504.7 16.2 7.5% 5.3% 4.9%

Source: United States Federal Reserve Bank

tax-exeMPt

Bond Buyer Indexes20-Bond Index (GOs) 4.23 4.30 3.5925-Bond Index (Revs) 4.70 4.80 4.08General Obligation Bonds (GOs)1-year AAA 1.67 1.95 1.411-year A 1.75 2.10 1.425-year AAA 1.81 2.30 1.845-year A 1.97 2.66 2.1010-year AAA 2.22 2.74 2.3810-year A 2.56 3.23 2.8125/30-year AAA 3.04 3.34 2.9125/30-year A 3.41 3.85 3.77Revenue Bonds (Revs) (15 Years)Education AA 2.92 3.31 2.96Electric AA 2.93 3.40 2.96Water/Sewer AA 2.94 3.28 2.99Hospital AA 3.12 3.47 3.14Toll Road AA 2.90 3.34 3.11

Source: Bloomberg Finance L.P.




tracking the economy

Major insider transactions†

PurChaSeS

Latest Full-Page Report Company Insider, Title Date Shares Traded Shares Held Price Range Recent Price

1023 Dish Network ‘A’ J. DeFranco, Dir. 1/22/19-1/23/19 20,000 1,473,529 $28.99-$29.59 29.75

2341 Scripps (E.W.) ‘A’ E. M. Scripps* 1/24/19-1/25/19 25,356 1,234,605 $18.60-$18.77 18.79

2341 Scripps (E.W.) ‘A’ M. Peirce* 1/23/2019 12,678 529,535 $18.44 18.79

SaLeS

Latest Full-Page Report Company Insider, Title Date Shares Traded Shares Held Price Range Recent Price

2611 Accenture Plc D. Rowland, CFO 1/18/19-1/25/19 5,799 27,367 $150.00-$151.75 152.021820 Cornerstone OnDemand A. L. Miller, Dir. 1/23/19-1/24/19 16,000 2,428,434 $54.17-$55.02 54.502157 Genesco Inc. R. J. Dennis, Chair. 1/23/19-1/24/19 22,760 249,981 $47.14-$47.29 49.14212 Illumina Inc. J. T. Flatley, Dir. 1/23/2019 3,300 329,979 $303.53 285.26

2599 PTC Inc. M. L. Cohen, EVP 1/22/2019 15,000 42,934 $86.20-$87.29 82.221831 salesforce.com M. Benioff, Chair. 1/17/19-1/24/19 25,000 31,705,800 $147.34-$152.85 145.18818 UnitedHealth Group R. T. Burke, Dir. 1/23/2019 11,500 182,372 $268.00 267.34

Consumer Confidence

30

60

90

120

150

180

Source: Conference Board2014 2015 2016 2017 2018

Index: 1985 = 100 (Seasonally Adjusted)

2013 2019

Industrial Production

80

90

100

110

120

Source: Federal Reserve Board2013 2014 2015 2016 2017 2018 2019

Index: 2012 = 100

Money Supply (M2)

0%

2%

4%

6%

8%

10%

Source: Federal Reserve Board2013 2014 201720162015

Year-to-Year Percent Change (Monthly Average)

2018 2019

Selected Interest Rates

0

2

4

6

8

Federal Funds 10-Yr. Treasury Note 3-Mo. Treasury Bill

Source: Federal Reserve Board

(In Percent)

2016201520142013 2017 2018 2019

* Beneficial owner of more than 10% of common stock † Includes only large transactions in U.S.-traded stocks; excludes shares held in the form of limited partnerships, excludes options & family trusts




Market Monitor

Valuations and Yields 1/30 1/23 13-week range 50-week rangeLast market top

(9-20-2018)Last market bottom

(3-9-2009)Median price-earnings ratio of VL stocks 16.7 16.4 14.3 - 16.7 14.3 - 19.2 18.2 10.3P/E (using 12-mo. est’d EPS) of DJ Industrials 15.4 15.1 14.1 - 16.1 14.1 - 19.0 16.8 17.3Median dividend yield of VL stocks 2.3% 2.3% 2.2 - 2.6% 2.0 - 2.6% 2.0% 4.0%Div’d yld. (12-mo. est.) of DJ Industrials 2.4% 2.5% 2.3 - 2.7% 2.2 - 2.7% 2.3% 4.0%Prime Rate 5.5% 5.5% 5.3 - 5.5% 4.5 - 5.5% 5.3% 3.3%Fed Funds 2.4% 2.4% 2.2 - 2.4% 1.4 - 2.4% 1.9% 0.2%91-day T-bill rate 2.4% 2.4% 2.4 - 2.4% 1.6 - 2.4% 2.2% 0.3%AAA Corporate bond yield 3.9% 3.9% 3.9 - 4.2% 3.8 - 4.2% 4.0% 5.5%30-year Treasury bond yield 3.0% 3.1% 3.0 - 3.4% 3.0 - 3.4% 3.2% 3.7%Bond yield minus average earnings yield -2.1% -2.2% -3.0 - -1.7% -3.0 - -1.3% -1.5% -4.3%

Short interest/avg. daily volume (5 weeks)Short interest/avg. daily volume (5 weeks) 15.1 13.1 11.8 - 15.1 11.8 - 19.1 16.5 8.6CBOE put volume/call volume .88 .91 .84 - 1.41 .67 - 1.41 .92 .93

VaLue LINe aSSet aLLOCatION MODeL (Based only on economic and financial factors)

Current (last adjusted at market open 2/20/18)

Previous (before 2/20/18)

Common Stocks 55%–65% 60%–70%Cash and Treasury Issues 45%–35% 40%–30%

INDuStrY PrICe PerFOrMaNCe LaSt SIx WeekS eNDING 1/29/2019

7 Best Performing IndustriesOffice Equip/Supplies +15.6%Natural Gas (Div.) +14.2%Auto Parts +13.6%Investment Banking +13.6%Semiconductor Equip +13.4%Oilfield Svcs/Equip +13.3%Metal Fabricating +13.1%

7 Worst Performing IndustriesElectric Utility (West) -9.6%Telecom. Utility -4.6%Maritime -2.2%Pharmacy Services -2.2%Electric Util. (Central) -0.9%Natural Gas Utility -0.6%Electric Utility (East) -0.5%

The corresponding change in the Value Line Arithmetic Average* is +7.2%

INtereSt rateS

RecentPrevious

WeekPrime Rate 5.5% 5.5%30-Yr. Treasury 3.0% 3.1%Fed Funds 2.4% 2.4%

VaLue LINe uNIVerSe

RecentPrevious

WeekNew Highs 59 35New Lows 18 16

VaLue LINe uNIVerSe

RecentPrevious

WeekAdvances 1143 1156Declines 557 542Issues Covered 1707 1708Market Value ($ Trillion) 33.497 33.352

Q3 2018Q2 2018 Q4 2018 Q1 2019Q1 20180%

5%

7%

8%

6%

4%

3%

2%

1%

Q3 2018Q2 2018 Q4 2018 Q1 2019Q1 2018

136

142

Index: 12/30/1988 = 100148

130

Q3 2018Q2 2018 Q4 2018 Q1 2019Q1 2018

800

1200

1000

0

400

200

600

Prime Rate

30-Yr. Treasury

Fed Funds

New Highs

New Lows

ChaNGeS IN FINaNCIaL StreNGth ratINGS

Company Prior Rating

New Rating

Ratings & Reports

PageBlock (H&R) B+ B 2546

Tupperware Brands B+ B 1197*

Vale S.A. ADR C++ C+ 1595*

*Supplementary report in this week’s Ratings & Reports




Stock Market averages

1

64

2

10

6040

20

100

200

2003 20152005 2007 2009 2011 2013 2017 2019

Dow Jones Industrials(Right Scale)

Estimated P/E(Left Scale)

Estimated Appreciation Potential(Left Scale)

Estimated Yield(Left Scale)

66004200

24001800

32000

18000

400

450

500

550

600

650

700

750

800

Composite

Q4 2018Q2 2018 Q3 2018 Q1 2019Q1 2018

0

50

100

150

200

250

300

350

400

450

500

550

600

Industrials

Q3 2018Q1 2018 Q2 2018 Q4 2018 Q1 2019

5200

6000

6800

7600

8400

9200

10000

10800

11600

12400

Rails

Q3 2018Q1 2018 Q2 2018 Q4 2018 Q1 2019

300

340

380

420

460

500

Utilities

Q3 2018Q1 2018 Q2 2018 Q4 2018 Q1 2019

VaLue LINe eStIMateD P/e, YIeLD, aPPreCIatION POteNtIaL VerSuS DOW JONeS INDuStrIaLS (January 2, 2003–January 29, 2019)

WeekLY VaLue LINe GeOMetrIC aVeraGeS* (January 2, 2018–January 30, 2019)

the VaLue LINe GeOMetrIC aVeraGeS the DOW JONeS aVeraGeS

Composite 1681 stocks

Industrials 1604 stocks

Rails 10 stocks

Utilities 67 stocks

Arithmetic* Composite 1681 stocks

Composite 65 stocks

Industrials 30 stocks

Transportation 20 stocks

Utilities 15 stocks

1/24/2019 510.93 385.71 9871.50 364.54 5845.96 8103.86 24553.24 9842.52 717.961/25/2019 517.03 390.70 9995.19 360.59 5916.88 8137.99 24737.20 9921.78 708.201/28/2019 514.33 388.64 10033.06 358.76 5887.14 8091.24 24528.22 9921.59 704.511/29/2019 514.30 388.58 10054.24 359.27 5887.87 8115.68 24579.96 9967.32 707.15

1/30/2019 519.38 392.48 10128.90 361.89 5947.29 8231.60 25014.86 10078.70 712.10

% Change last 4 weeks +9.4% +9.6% +10.8% +2.9% +9.8% +6.9% +7.1% +9.5% +1.6%

officers, directors, employees and affiliates of Value Line, Inc. (“VLI”), the parent company of Value Line publishing LLC (“VLp”) and euLAV Asset management (“euLAV”), may hold stocks that are reviewed or recommended in this publication. euLAV also manages investment com-panies and other accounts that use the rankings and recommendations in this publication as part of their investment strategies. these accounts, as well as the officers, directors, employees and affiliates of VLI, may dispose of a security notwithstanding the fact that the Value Line Investment survey (the “survey”) ranks the issuer favorably; conversely, such accounts or persons may purchase or hold a security that is poorly ranked by the survey. some of the investment companies managed by euLAV only hold securities with a specified minimum timeliness rank by the survey and dispose of those positions when the timeliness rank declines or is suspended. subscribers to the survey and its related publications as well as some institutional customers of VLp will have access to all updated ranks in the survey by 8:00 Am each monday. At the same time, portfolio managers for euLAV will receive reports providing timeliness ranking information. euLAV’s portfolio managers also may have access to publicly available information that may ultimately result in or influence a change in rankings or recommendations, such as earnings releases, changes in market value or disclosure of corporate transactions. the investment companies or accounts may trade upon such information prior to a change in ranking. While the rankings in the survey are intended to be predictive of future relative performance of an issuer’s securities, the survey is not intended to constitute a recommendation of any specific security. Any investment decision with respect to any issuer covered by the survey should be made as part of a diversified portfolio of equity securities and in light of an investor’s particular investment objectives and circumstances. Value Line, Value Line logo, the Value Line Investment survey, timeliness are trademarks of Value Line, Inc. *Value Line Arithmetic & Geometric Indices calculated by thomson reuters. Information supplied by thomson reuters.

issue 13 pages 1881-1892

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