Five Big Buys by Avalon Advisors

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Avalon Advisors is an investment advisor and manager to wealthy families, foundations, endowments, and trusts. Avalon's most popular vehicles are the Avalon Core Equity Portfolio and Avalon Balanced Portfolio. The investment firm manages about $1.5 billion worth of assets as of the end of September 2012. In 2010, the firm ranked number 18 in RIA Giants based on discretionary assets under management. Last year, Carlyle Group made a minority investment in the asset manager.

As of the latest quarter, the firm's 13F filing shows that the company has a diversified portfolio of stocks. Service stocks constitute 18.72% of the portfolio, followed by financials (16.25%), and consumer stocks (12.83%). In the last quarter the firm initiated 27 new stock purchases and 22 sells. The company's biggest buys for the latest quarter are Google (NASDAQ: GOOG)AT&T (NYSE: T)General Electric (NYSE: GE)Coca-Cola (NYSE: KO), and Verizon Communications (NYSE: VZ).

<table> <tbody> <tr> <td> <p><strong>Stock</strong></p> </td> <td> <p><strong>Shares Held</strong></p> </td> <td> <p><strong>Market Value</strong></p> </td> <td> <p><strong>% of Portfolio</strong></p> </td> <td> <p><strong>% Change</strong></p> </td> </tr> <tr> <td> <p>Google</p> </td> <td> <p>34,883</p> </td> <td> <p>$26,319,224</p> </td> <td> <p>1.75%</p> </td> <td> <p>111%</p> </td> </tr> <tr> <td> <p>AT&T</p> </td> <td> <p>1,033,774</p> </td> <td> <p>$38,973,281</p> </td> <td> <p>2.60%</p> </td> <td> <p>45%</p> </td> </tr> <tr> <td> <p>General Electric</p> </td> <td> <p>1,860,429</p> </td> <td> <p>$42,250,341</p> </td> <td> <p>2.81%</p> </td> <td> <p>34%</p> </td> </tr> <tr> <td> <p>Coca-Cola</p> </td> <td> <p>692,786</p> </td> <td> <p>$26,277,373</p> </td> <td> <p>1.75%</p> </td> <td> <p>28%</p> </td> </tr> <tr> <td> <p>Verizon Communications</p> </td> <td> <p>731,247</p> </td> <td> <p>$33,322,926</p> </td> <td> <p>2.22%</p> </td> <td> <p>23%</p> </td> </tr> <tr> <td colspan="5"> <p>Source: whalewisdom.com; as of Nov. 9, 2012</p> </td> </tr> </tbody> </table>

Google, the giant technology company, is known worldwide as the operator of a set of websites and other online content, among which are Adwords, Adsense, and Chrome. The company also offers my favorite open source mobile operating system, Android. Google is set to face Microsoft soon in a trial that may impact the smartphone patent disputes. This, analysts say, may expose the two companies' closely guarded financial information. Google has just unveiled its Christmas offering - a new laptop made by Acer with a very competitive price of $199.

Avalon doubled its holdings in Google by the end of the latest quarter; 1.75% of its total portfolio is now on the giant company. Google has been on the 13F Filing of the asset manager in at least 9 quarters now. Avalon has sold portions of its holding in 6 out of the recent 9 quarters.

The stock has inched upward by a slight 2.65% from the previous year. Google has a high profit margin of 22.2%. Its sales have expanded by 29.01% annually in the last five years, and it is a highly favored stock with an EPS that is expected to grow immensely from a current $31.92 to $46.38 next year. This is not short-lived, as the EPS is estimated to grow by 16.47% per year in the next five years. The forward P/E is 14.21, significantly lower than the current one at 20.65.

AT&T is a leading telecommunications company that offers wireless voice and data communication services. Aside from its wireless segment, it also offers Wireline and advertising solutions. The Dallas-based company has just announced the price for the new Samsung Galaxy Camera that it is going on sale in a few days. The new Android-based offering will have a 4G connection and a point-and-shoot camera for a hefty price of $499.

The investment manager raised its holdings in the company by 45% in the latest quarter. AT&T now comprises 2.60% of Avalon's total portfolio. Avalon initiated its position in the company in the last quarter of 2010 and has since been continuously augmenting its holdings except for the first quarters of 2012.

The stock's year-to-date performance improved significantly from last year by 16.90%. The company is a top dividend stock of Avalon with a yield of 5.30%. Its sales grew at a high rate of 14.98% annually in the last five years, and the EPS is expected to grow by 6.51% in the long term. Meanwhile, the company's forward P/E is 13.26, much lower than the current ratio of 44.09.

General Electric, the leader in household appliances and technological innovation, has recently made a deal to sell equipment to Clean Energy Fuels Corp. The latter is said to build out liquefied natural gas fueling stations for truckers in the United States. It will buy two GE-produced Micro LNG plants to cater a network of 70 natural gas fueling stations it plans to open this year as part of the plan to expand the infrastructure for transporting natural gas in the US.

Avalon bought 475,240 shares of GE in the latest quarter, bringing the total holdings to over 1.860 million shares, or 2.81% of its total portfolio. The investment manager has doubled its shares in GE in the first quarter of this year and the quarter before that.

GE's stock rose by 20.21% from the previous year. The company has a good track record in paying dividends. Its current profit margin is at 9.90%, and the company has good prospective growth as its EPS is estimated to increase by 11.18% each year in the next five years. The forward P/E is 12.16, lower than the current figure of 15.32.

Coca-Cola is one of Avalon's biggest buys in the third quarter. The leading beverage company has just been reiterated by TheStreet as a buy, with a rating score of A. Its strength stems from revenue growth, good cash flow from operations, EPS growth, and a rise in the stock price in the past year. The company has recently created a new look for its website in its aim to reach its consumers better. The corporate website is to be named "Coca-Cola Journey."

The asset manager increased its shares in the beverage company by 28% in the third quarter. Though the firm has sold its shares several times, the amounts were negligible. Currently, Coca-Cola comprises 1.75% of the firm's total investments.

The stock's year-to-date performance went up by 5.93% compared to last year's price. The stock may be sliding down in the quarter, but its attractiveness stems from its profitability and potential for growth. The profit margin is at 18.63%, and the long term annual growth estimate is 8.16%. Coca-Cola is also a top dividend stock of the asset manager with its yield of 2.82%. The forward P/E ratio is 16.51, lower than the current at 18.83.

Verizon Communications is another communications company included in the big buys of Avalon in the latest quarter. Verizon is a provider of communications, information, and entertainment products and services around the world. The company has just partnered with Lowe's with the former to become the latter's exclusive provider of wireless connectivity.

Avalon bought 138,273 shares of Verizon Communications in the latest quarter. This increases the share of the company in Avalon's portfolio to 2.22%. Since the firm initiated its position in the company in the last quarter of 2010, it has increased its holdings five times.

The stock has remarkably improved by 11.54% compared to that of the previous performance. Its profitability is good with a 10.74% net profit margin. The EPS of Verizon is expected to grow at an annual rate of 9.03% in the long term. It is also one of the top dividend stocks at a yield of 4.84%. Meanwhile, the forward P/E is put at 14.87, which is significantly lower than the current ratio at 39.76.


ecofinstat has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric Company and Google. Motley Fool newsletter services recommend Google, The Coca-Cola Company, and AT&T.; Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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