NEW YORK (TheStreet) -- What a marvelous feeling to buy a stock and watch it rise in value.
I love checking my portfolio after I see a stock I own moving higher. Even more electrifying is when the stock is a dividend payer.
Historically, dividend stocks outperform non-dividend payers, but knowing which ones to buy is no easy task.
I spend a lot of time trying to help you avoid buying the dogs known as dividend traps. Dividend traps are the seemingly attractive high-yield, low-cost stocks that have a tendency to go even lower right after you buy them.
With careful research of sectors, costs in relation to earnings, technical analysis and spending time reading SEC filings, you can shift the odds.
Normally, I don't venture far from highly liquid names everyone knows. However, I'm finding other under-the-radar names that industry insiders know about, but the overall market doesn't. The potential gains are much greater if you're willing to sit and wait for others to discover the hidden value.
From a cost of earnings perspective, the stock isn't expensive relative to its growth. The pharmaceutical space is in full merger mania, and I wouldn't be shocked if it spills over onto Simulations Plus. That said, the bull thesis doesn't require takeover speculation and I'm not betting on it.
Two analysts track Simulations Plus. Both share my opinion that the stock is a buy, but only one proffers a price target of $6.10. During the last 12 months, the stock price has popped 52%.