Be Prepared with a Solid Watch List

 | Mar 10, 2014 | 5:30 PM EDT
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For a value investor, it has been a quiet investing climate the past several months. Stock prices are not screamingly attractive, yet they continue to climb higher. Only the most patient of investors have the fortitude to sit still during this environment.

No one likes to play smart investor while everyone around you is booking gains. But investing is full of phrases and in order to look smart in the long run, you may have to look dumb in the short run.

The stock market is on a high and folks have all but forgotten what happened in 2008. I agree, it's time to move on and stop being so pessimistic about the U.S., but Mark Twain was on to something when he said "history doesn't repeat itself, but it does rhyme." Do what you wish during this roaring bull.

For me, I'm always looking for something attractive to buy, but I don't have a time limit either. Obviously, more astute investors than I are buying things here and there and I certainly follow the best after I do my own sanity check.

But if I'm not buying, I'm still definitely watching and waiting for some names I like to be offered at prices I can stomach. Yesterday, I was grocery shopping at Whole Foods (WFM). Every time I go in, I'm reminding of the days when I was seeing Mr. Market serve up shares for less than $5 in 2009 and simply passing on the stock. At $53 a share today, I could have guaranteed myself a lifetime of Whole Foods shopping by buying five years ago. While I don't think that stock price will show up anytime soon, shares at $53 are off from $63. Were the shares to fall to the mid $30s, I may look closer. I would gladly pay 20x earning for this company.

Taylor Devices (TAYD) is a microcap that also on the watch list. Since 1955, Taylor has been supplying shock absorbers to end users like railroads, machinery and other industrial markets. The company has a market cap of $29 million, no debt and $1.3 million in cash. The company has not lost money in nine years and profits have been steadily growing. Trading at $8.66, the shares trade for 1.3x book. A drop below book value will be an opportunity to own a very profitable niche business that does what it does very well.

MWI Veterinary Supply  (MWIV) is $2.1 billion supplier of animal health products. Lately, I've become very intrigued by the pet market. There are very few pet owners who will not spend whatever it takes to keep the family pet happy and healthy. At $166 a share, MWIV trades for 25x forward earnings. Revenues over the past three years have grown from $1.5 billion to more than $2.3 billion, while net income has climbed by 50% to $62 million from $42 between fiscal 2011 and 2013. A stock market correction that makes MWIV 20-30% cheaper may be just the medicine for a tidy return.

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