I initially purchased UVV (Universal Corp) in the Value Stock Guide portfolio on Oct 13, 2011 at an average cost of $41.03/share and sold out of the entire position on May 10, 2012 at $45.72/share. Including commissions, the average capital gains amounted to 10.94%.
UVV has also paid $0.98/share in dividends in the interim. Including dividends, the total returns were 13.33%.
With 4.3% dividend yield and a reasonable valuation, the company remains a good stock for the long term income and capital growth. There are some headwinds for the leaf merchants such as Universal. Large tobacco buyers continue to side step the middlemen and make deals directly with the farmers. Revenues have also been affected due to the supply glut of the leaf tobacco. Although the glut will eventually work out, and the level of vertical integration is not too worrisome, the stock will likely be a slow grower for the near future.
UVV was one of the key stocks in the portfolio helping keep the portfolio volatility down. The stock was sold to make way for a new acquisition that has since been completed. Details of the new stock purchase has been sent to the premium subscribers.