Tuesday, September 20, 2011

T Rowe Price (TROW, Dividend Growth and High Yield Portfolios)

T. Rowe Price Group Inc (TROW) provides investment advisory and administrative services to an assortment of no load funds, sponsored investment products and private accounts. The company has generated a 15-20%+ return on equity and a 9-15% growth rate in earnings and dividends over the 10 years. While TROW suffered a decline in assets under management due primarily to the late 2008-early 2009 decline in stock prices, a recovery should occurred in 2010 and should continue as a result of:

(1) the excellent track record of its funds which increases the value of current assets under management as well as attracting new customers,

(2) expansion of its retirement planning services as baby boomers near retirement,

(3) the introduction of new products such as country funds,

(4) niche acquisitions,

(5) an aggressive cost cutting program.

The primary negative is the ongoing investor uncertainty over the debt situation in Europe and the economic recovery in the US that lead them to keep their assets in cash and equivalents.

TROW is rated A+ by Value Line, has no debt and its stock yields 2.5%.


Note: TROW stock made good initial progress off its March 2009 low, quickly surpassing the down trend off its September 2008 high (red line) and the November 2008 trading high (green line). TROW is in a long term up trend; the straight blue line is the lower boundary. Earlier this year, the stock broke an intermediate term up trend and then re-set into an intermediate term trading range (purple lines). The wiggly blue line is on balance volume. The Dividend Growth and High Yield Portfolios own one half positions in TROW by virtue having made a trading Sale of the stock at higher levels ($58). Shares could be Added on a trading Buy at $46 and a long term value basis at $35. The lower boundary of its Sell Half Range is $105.