Monday, October 15, 2012

Harris Corporation Pullback

Harris Corporation (HRS) has seen it's share price dip from it's recent high of $51.97 to around $46.80, a 10% drop.  I last purchased shares of Harris around this price level and if it dips further it will be high on my list of potential next buy candidates.  I posted my stock analysis on Harris back in April of this year and while it's a little out of date, most of the changes for the company have been positive.  For example, they've increased their dividend twice in 2012, once by almost 18% and once by 12% for a total increase this year of 32%.  While this level of dividend growth can't continue for too long, an annual 10-12% growth is very attainable.

According to my stock analysis, which as I said is a little out of date and hasn't been updated thoroughly since the April posting, the shares are undervalued by approximately 15% at the $46.80 mark.  If there is a further pullback in price to the $45's it might be time to pick up some more shares in order to average down my position.  At the current price, it's yield is 3.16%.


  1. PIP,

    I noticed this too as it was one of the only companies in my portfolio showing red today, and significant at that.

    I think the downgrades recently were probably deserved as this stock has had such a monster run this year. Even with this recent dip they are still up 30% YTD, more than double the S&P 500. I picked up HRS in the mid-$30's and would be more than happy to pick up more if they continue down below $45.

    They've been picking up orders and as far as stock fundamentals there is not much to dislike here. Low payout ratio, huge dividend growth rate, great entry yield and low valuation. The questions regarding DOD spending hurt this stock along with others like GD, RTN, LMT, but that just makes it ripe for the long-term picking.

    Best wishes!

    1. I fully expected a pullback. It's been pretty quick in the making too. That 10% was over about a week. And what's funny is that it seems like every other day I see a new article about a new order contract that Harris has been getting. I'm fine with market noise. My current cost basis is $46.87 and if I add more it needs to be around $45 or less. That'd be almost a 4% discount to my current basis.

      I agree with you as far as the fundamentals for future dividend growth. Their prospects are definitely good with increasing orders, low payout ratio, good yield and a history of rewarding shareholders with solid dividend growth.

      I'm still jealous of your mid-$30's cost basis.

      Thanks for stopping by!