The most wonderful time of the year

Ninety-five years of data show that September and October are, on average, the two worst months of the year. The scary duo were inconsistent this time, offering both tricks and treats, but when all was said and done, the period ended with little progress.

However, we are glad that the month of Thanksgiving has arrived on the calendar and the start of a seasonally favorable half of the year. Indeed, Halloween through May Day saw amazing results on average from 1990 until 1929. And value stocks have historically asserted their dominance during this period, even as dividend payers have lagged behind non-dividend payers. Fortunately, despite the war in Ukraine, hostilities in the Middle East, the usual economic concerns and questions about potential actions by the Federal Reserve, the latest total return for the November-April period more than lived up to its positive precedent in the Russell 3000 Value Index. grew by 18.37%.

Because the other six months didn’t perform as well, some might argue to “sell in May and get out,” but the less favorable period was also positive on average, with the Russell 3000 Value Index jumping 10.16 in the period just completed. % from April 30 to October 31. We also note that while trading commissions are now generally zero, profits made from short-term trading strategies will be taxed at a higher ordinary income rate, so we believe it is far better to focus on the long-term prospects of our stocks and not on the calendar. However, we don’t mind that the period from November to January has historically been the most wonderful time of the year!

This month we’ve added two items to our newsletter portfolio.

MetLife (MET)

MetLife is one of the largest life insurance companies, generating the lion’s share of its revenue from its U.S. businesses, including pensions, group benefits, property and casualty insurance, and its international division. After strong gains over the past year and a half, the stock recently fell as MET’s third-quarter financial results fell below analysts’ consensus estimates. Adjusted earnings per share of $1.95 missed expectations by 10%, weighed down by underperforming Group Benefits and its Asia business and rising operating expenses. CEO Michel Khalaf commented, “Despite lower variable investment income, MetLife demonstrated the financial strength of our business in the third quarter, including an adjusted return on equity of 14.6%. Our relentless focus on execution continues to provide strong momentum to the growth of our market-leading businesses.” We like the company’s competitive position within group benefits, where new acquisitions will expand market share, and we believe the market has not fully priced in MET’s improved business structure. MET trades at 8.3 times NTM-adjusted earnings per share and yields 2.8%.

Regency Centers (REG)

Regency Centers is a national owner, operator and developer of neighborhood and community shopping centers. The company has been in business for over 50 years and its portfolio primarily consists of productive grocery stores located in affluent, attractive and densely populated urban areas. Regency reported strong third-quarter results, with revenue of $360.3 million (versus $354.9 million forecast) and funds from operations (FFO) of $1.07 (versus $1.04 forecast). Net operating income from the same properties (excluding contract terminations) grew 4.4% year over year, with base rents at 2.7%. Property occupancy of 96.1% increased 80 basis points. Major store occupancy increased 1% to 97.6%, while smaller store occupancy stood at 93.7%. Management raised its full-year FFO guidance to $4.29 from $4.27. Since the beginning of the year, REG has launched $200 million in new redevelopment projects and recently acquired two grocery-focused shopping centers. We like that Regency is conservatively financed, with debt spread out to 2049 with an average coupon of 4.2%. Analysts expect REG to increase FFO to $4.83 in 2027, adding to the attractiveness of its 3.8% dividend yield.

This report is an excerpt from Prudent Speculator investment newsletter of which I am the editor. For more in-depth analysis and exclusive insights like those featured in this article, consider joining Prudent Speculator Here.

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