My July watchlist

For the last couple of months I have been working on a nice spreadsheet on Google Sheets to help me model the fair price for a my stock watch list and, combining this to several criteria, tell me when some of the names in my basket have reached a buying point.

During the last couple of weeks I have been keeping a close eye on:

• GAP (GPS)
• Target (TGT)
• LVMH Moet Hennessy Louis Vuitton SE (EPA:MC)
• Cisco (CSCO)
• Virgin Money (LON:VM)

As you know, I already hold a position in Virgin Money but the recent developments with Brexit have improved greatly its share price. At current price I may be able to add more shares to my portfolio and considerably lower my cost basis.

However, I have decided to wait in order to increase my position in VM as Brexit will likely have deep longer term effects on the housing market in the UK.
The level of exposure of VM to the mortgage market is worrying and, with a possible drop in the house prices driven by lower demand, Virgin Money's business model may be put under further pressure in the future.

I am sure the future months will offer me great opportunities to increase my position in this company. 

Stock analysis 

Below are the P/E values based on last Friday's close for the stocks considered:

GPS x11.46
TGT x13.48
MC x18.99
CSCO x14.56
VM x8.65 (!!)

• Virgin Money and GAP are very attractive at current evaluations. 
• In both cases the dividend payout ratio is below 50%, which means they can easily cover the future dividends. 
• GAP's dividend yield is particularly interesting (4.1%). 
• TGT and CSCO are also relatively cheap based on general rules and both offer very generous dividend yields
• MC has a higher valuation multiple which is common in the luxury market; this investment would help me further diversifying my portfolio

I will keep monitoring the above stocks during July.

Yours,

The Gentleman Investor