Redwood trust inc 030 025 087 096 140 380 142 005 200

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Unformatted text preview: 2.52 $2.94 $6.32 $2.31 $0.08 $3.11 $0.85 $1.33 $3.20 $2.51 $1.04 $1.58 $0.95 $3.77 $1.62 $3.18 20.55% 21.37% 29.69% 38.10% 47.62% 60.13% 61.47% 62.50% 64.31% 65.88% 66.17% 67.50% 68.53% 69.23% 70.89% 73.68% 76.39% 78.40% 79.25% Even within this sample, there are some warning signals that should be heeded. First, consider the numerous energy companies that make the list. Since this portfolio was constructed in the aftermath of the accounting debacle at Enron, the possibility that the stated earnings at these firms may also be contaminated is one reason why stock prices are depressed. If the earnings at these companies are over stated, their dividends will have to be cut in future periods. Second, note that there are a couple of tobacco companies that also make the list. For these firms, the specter of large judgments in lawsuits overhangs the earnings; a few such judgments may very well result in the elimination or reduction of dividends. Note, though, that you are not arguing that these stocks should be avoided but that you need to do your homework before buying these stocks. In practical t...
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