Dr. Pepper Snapple, DPS,  emerged in its present form as a stock spin-off in May of 2008.  

It has been noted that spin-off stocks often make their best moves in their second year.  This could be taken to suggest that during its first year a spin-off stock is likely to be a good value.

Looking at its chart with 20/20 hindsight, Dr. Pepper Snapple is a spin-off stock that could have been viewed as undervalued to varying degrees during most of its first year.

I believe it is Preston James, a guy who does workshops on trading stocks that have pre-announced higher earnings ahead, who recounts a story in which a man said to him “all I need to know is when to get in and when to get out.”  The story apparently gets a pretty consistent laugh, and yet . . . .  this is it, isn’t it?  When do we get in?  When do we get out?  DPS spent all of its first year lower in price than it is today near the end of its second year.  When “should” you have gotten in?  And when should you get out?

Given that the one thing we know about when this train leaves the station and when it gets to its destination is that it tends to happen when the largest number of riders aren’t prepared, what do we do?  Not really a cute or funny question when it’s your money.

In a general sense, this is a personal, psychological challenge related to how you deal with uncertainty and that is another whole topic.  In its most specific sense, it a challenge of looking for clues, tendencies, correlations, averages; your standard fuzzy types of stuff.

The “second year” observation may have something in it.  Any observations?   thoughts?   ideas?

From Yahoo Finance:  ”Dr Pepper Snapple Group, Inc. operates as a brand owner, manufacturer, and distributor of non-alcoholic beverages in the United States, Canada, Mexico, and the Caribbean. It offers flavored carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks, and mixers.”

Tags: DPS, fear, greed, investing, psychology, psykchological, spin-off stock, Value Investing

Dr. Pepper Snapple Group reported a loss that was not as bad as analysts had expected and a forecast that was a bit better and and the recent spin-off stock’s share price advanced over 10% today.

The Wall Street Journal reported that investors were encouraged by the numbers in an article on the DPS 4th Quarter 2008 earnings report .

The advance came on volume that was more than double its 30 day average. The price was gap up on the day. The close at $17.86 today is an impressive rise from the low of $11.83 made on March 6, 2009. All positives.

Could this mark the beginning of the spin-off company’s advance?

It is time to look at the entry criteria in your trading plan to make your own decision of if and when to enter DPS, but this one is showing signs of life.

Of course with news above and beyond the fundamentals and/or technicals of any particular company coming out every day, keeping a tight rein on the potential downside is especially important. The advantages that spin-off stocks have displayed in the past don’t lessen the need for that . . . ever, and certainly not right now.

Tags: Add new tag, DPS, Dr. Pepper Snapple, spin-off stock