Enhanced Income — New Flyer and their comrades

By Travis Johnson, Stock Gumshoe, February 26, 2010

Before I get into today’s thoughts about New Flyer and some similar income securities, I should just mention that two of the stocks I’ve profiled as “Idea of the Month” picks reported news-heavy earnings today — one spectacular and including a dividend increase and a 10% jump in the share price, one terrible, including a lower-than-expected forecast for earnings this year and a 10% fall in the share price.  The good news was from Seadrill (SDRLF), the bad from FTI Consulting (FCN), both of which are stocks that I also own myself.

I’m not doing anything with my personal holdings right now as a result, though I’m disappointed that FCN’s forecasts were low (they’re telling us to expect $3-3.25 in 2010 earnings before special charges, analysts were expecting $3.35, not sure if they “expected” the “special” charges), but I imagine those who invested in FCN when I wrote about them, or later when I bought shares personally, have probably been stopped out of the shares if they use trailing stops.

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For FCN the earnings report is here, and the list of comments I’ve shared on the stock is here. I’ve urged people to look at these shares several times over the past year, including a little while before I added the stock to my portfolio last fall, so I certainly regret giving this attention to a stock that has done so poorly, not only in nominal terms but, more important, versus the benchmark S&P 500 index. The shares are likely to be pretty countercyclical from here, I expect, if markets fall or fears of bankruptcy heat up the attention could easily return to FCN as a likely beneficiary due to their large bankruptcy and restructuring consulting business.

For Seadrill the earnings report is here and my previous writing about Seadrill can be found here. I’m cheered that Seadrill’s profits continue to climb, as expected and as they have more rigs in the water, and that they’re focusing on increasing the dividend, always a hallmark of a Fredriksen company. Perhaps a chance for them to begin outfperforming peers like Transocean, which dipped this week after reporting a disappointing quarter.

But now, on to the point of today’s writeup:

One of the most popular investment ideas that I’ve profiled in my “Idea of the Month” articles was New Flyer Industries, the ...

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