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Sunday, 11/28/2004

Dripping with Equity
By Nich Sheldon
CBL - CBL & Assoc. Properties Inc

Company Description

CBL & Associates Properties, Inc. is one of the top five owners of shopping centers in North America and the largest owner of malls and shopping centers in the Southeast, ranked by GLA owned. CBL owns, holds interests in or manages 166 properties, including 69 enclosed regional malls. The properties are located in 28 states and total 71.5 million-square-feet including 2.0 million- square-feet of non-owned shopping centers managed for third parties. CBL has eight projects under construction totaling approximately 2.1 million-square-feet including one regional mall - Imperial Valley Mall in the Imperial Valley region of California, an open-air shopping center in Southaven, (Memphis, TN) MS, three community centers and three expansions. In addition to its office in Chattanooga, TN, CBL has a regional office in Boston (Waltham), MA. Additional information can be found at www.cblproperties.com.

[Source: Company Press Release]

Reasons to Invest:

Turkey day is over and my stomach is as bloated as our hypothetical portfolio. On top of that, December is just around the corner and the markets are continuing their upward momentum. If you can recall, last December the markets made major headway before the start of the New Year. If we can see a continuation of our current November 04 trend (3 out of 4 weeks closing higher) we could see our overall hypothetical portfolio reaching 18-20% before 2005.

This week's Drip of the Week has been growing its equity with vigor, climbing through a May 05 regression channel and posting new 10-year (all time) highs along the way. Over the first three quarters of this year revenues for CBL rose 11%, while net income from continuing operations and applicable to Common grew 18%. That's right, this self-managed real estate trust company has been pushing their hypothetical glass ceiling ever so higher over the past seven months.

CBL & Associates (NYSE:CBL) also boosted their quarterly dividend on November 4th, to $0.8125 from $0.725. With an annual absolute return of $3.25 per share owned per year (4.50% dividend yield), dividend investors can't go wrong with this investment opportunity.

If CBL does as well next year as it has this year, the next 52 weeks of trading may provide us with an additional 30% increase in price. The company has tacked on just over 17 dollars in the past 52 weeks, and I am hoping to see half of that much next year. If we can cash in on a 15% increase in price and an absolute return of 4.50% per share owned then we could see approximately 20% on this investment over the next year. Not to shabby, when you consider that Drip Advisor shoots for an annual gain of ten percent per DRIP, per year. Did you know that over half of our recommendations are well above the ten percent margin?

On November 22nd, CBL acquired two malls from affiliates of Enterprise Asset Management, for $249.4 million. A few weeks before this announcement, the company raised their fiscal year FFO guidance to $5.19 per share from $5.14 per share. This is pretty impressive when you consider that this is the second time the company raised their guidance, and then take into account that the average analyst expectation is $5.02. Should CBL make their expectations this would bode well for shareholders.

CBL & Associates opened new facilities in August, September, and October. This paints of picture of strength for the company, because it appears that each of these acquisitions are occurring in different states, helping CBL diversify their profitable regions of operation.

To boot, CBL has an earnings per share growth rate of 59.14 over the next year, 18.50 over the next three years, and 19.68 over the next five years. Sales percentage growth rates are projected to be 13.73 percent over the next year, 23.32 over the next three years, and 21.26 over the next five years. Dividend percentage growth rates are 15.95 percent for the next year, 9.66 over the next three years, and 7.66 over the next five years. With that in mind I have a low risk rating on new entries into their DRIP.

From a technical standpoint a few things are noteworthy. CBL's ascending regression channel is tighter than most of the channels that we have spotlighted on DripAdvisor. This means that support and resistance are closer together, which can mean two things. One, a few days of trend setting (either up or down) could cause CBL to break over or under its channel at a moments notice, ultimately leading to a sell-off. Two, if support and resistance continue to hold as true form support and resistance, their stock should continue to climb higher at a faster pace than a stock that is in a wider ranged channel.

Also noteworthy, is the fact that the stock just set a new all time high on Friday, despite the fact that the stock closed lower on the day. CBL's minor loses on Friday were to be expected, especially since the stock began the abbreviated trading session over the top bar of its channel. Moreover, the stock has tacked on more than four points over the past week of trading, extending CBL into overbought territory on the Stochastics indicator. Nonetheless, CBL's MACD indicator is still on a buy signal.

From a weekly standpoint, 20 of the past 29 weeks have closed in the green. The MACD and Stochastics indicator are both on buy signals. From a monthly perspective, 6 out of the past seven months have closed higher. Again both of the indicators we watch are on buy signals. CBL has a Point-and-Figure bullish price objective of 80.00, which in my opinion, will be revised to 95 in the next few months of trading.

Editor's Note: For those of you that added Nike to your portfolio last November, they just boosted their quarterly dividend to $0.25, from $0.20. Nike is currently up 27%, or +$17.84 since being added to the hypothetical portfolio on November 28th, 2003.

This ends another exciting episode of the DripAdvisor.com Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the DripAdvisor.com limelight.

Remember:
Plan your trade, and trade your plan.

Until Next Week,
Nich Sheldon
Editor In Chief
www.dripadvisor.com
questions@DripAdvisor.com

Broker Recommendations

Strong Buy         2
Buy                3
Hold               8
Sell               1
Strong Sell        0

Brokers Covering  14


DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $100-$5,000/quarter


Reinvestment Fees - 
Dividend investment fees: $0.00
Cash investment fees: $0.00
Auto reinvestment fees: N/A


Transfer Agent:
SunTrust Bank
800-568-3476


Corporate Headquarters:
CBL Center, 2030 Hamilton Place Blvd.
Chattanooga, TN 37421
Phone: (423) 855-0001
Fax: (423) 490-8662
 (410) 659-0080



 
 

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