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Author: AllTooFoolish Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5980  
Subject: BI - Dow30 - April 2, 2012 Picks Date: 4/3/2012 8:22 AM
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Based on the latest results, VL Apr 6 2012 update, there are three  stocks in the DOW30 that meet the criteria for a Long-term hold according 
to the TTD methods. The companies meeting the TTD criteria for Long positions are CSCO, AA, and HPQ. Using the same valuation
technique in reverse, shows that BA and IBM are the most overvalued DOW stock and might be considered for a Short position. Also, the overall current
downside risk in the market seems to be about -15%,while the upside is +26%. This implies we have moved more toward the middle as of late, 
but remain in a slightly oversold position. 

I am using the following TTD rules:
1. Year-over-Year EPS growth must > 10%, which is the next 4Q / current quarter + previous 3 quarters earnings results
2. VL 3-5 Year price appreciation < average price appreciation of the market
3. When calculating ROE and BV figures, ignore years when are negative, but must have at least 7+ years of data to be included in final consideration
4. Avoid erratic ROE ratios, that is where they are > 2std deviations = Curr ROE > (10 Year Avg + 2 * Std Dev)



Summary of Results												
											
	VL	        Current	Down	Up	%<10Y	EPS	Div    3-5Y L 3-5Y H VL 3-5Y   ROE	
Ticker	Date	        Price	Price	Price	Down	Delta   Yield   VL $	VL $	% Chg	<2STD	Name
CAT	24-Feb-12	107	79.19	141	35%	20%	1.8	145	215	36%	FALSE	Caterpillar Inc.
JNJ	24-Feb-12	65.96	74.82	94.98	-12%	2%	3.5	90	105	36%	TRUE	Johnson & Johnson
MCD	2-Mar-12	98.1	81.65	117	20%	9%	2.9	110	130	12%	TRUE	McDonald's Corp.
CVX	9-Mar-12	107	117	167	-8%	5%	3.0	130	160	21%	FALSE	Chevron Corp.
XOM	9-Mar-12	86.73	80.8	112	7%	-2%	2.3	120	145	38%	FALSE	Exxon Mobil Corp.
BA	16-Mar-12	74.37	29.24	45.36	154%	-11%	2.4	90	125	21%	FALSE	Boeing
TRV	16-Mar-12	59.2	45.61	67.11	30%	77%	2.8	80	100	35%	FALSE	Travelers Cos.
T	23-Mar-12	31.23	22.97	33.31	36%	7%	5.7	40	50	28%	FALSE	AT&T Inc.
VZ	23-Mar-12	38.23	17.94	25.64	113%	16%	5.3	55	70	44%	FALSE	Verizon Communic.
CSCO	23-Mar-12	21.15	23.9	39.78	-12%	24%	1.5	30	35	42%	FALSE	Cisco Systems
HD	30-Mar-12	50.31	31.72	49.84	59%	14%	2.3	60	70	19%	FALSE	Home Depot
PG	30-Mar-12	67.21	56.31	72.41	19%	5%	3.1	90	110	34%	FALSE	Procter & Gamble
INTC	6-Apr-12	28.11	35.09	60.72	-20%	0%	3.0	45	55	60%	TRUE	Intel Corp.
HPQ	6-Apr-12	23.83	33.25	56.76	-28%	16%	2.3	55	75	131%	FALSE	Hewlett-Packard
IBM	6-Apr-12	209	129	188	62%	8%	1.5	235	285	13%	FALSE	Int'l Business Mach.
AA	13-Jan-12	10.02	12.58	23.84	-20%	34%	1.2	20	30	100%	FALSE	Alcoa Inc.
DD	13-Jan-12	52.9	37.15	55.4	42%	9%	3.2	95	120	80%	FALSE	Du Pont
MRK	13-Jan-12	38.4	39.99	66.59	-4%	3%	4.4	40	50	4%	FALSE	Merck & Co.
PFE	13-Jan-12	22.65	17.69	26.03	28%	44%	3.9	25	30	10%	FALSE	Pfizer Inc.
GE	20-Jan-12	20.07	18.44	28.69	9%	21%	3.4	30	50	49%	FALSE	Gen'l Electric
MMM	20-Jan-12	89.21	86.24	122	3%	6%	2.7	135	165	51%	FALSE	3M Company
UTX	20-Jan-12	82.94	65.73	97.62	26%	12%	2.3	110	135	33%	FALSE	United Technologies
KFT	27-Jan-12	38.01	33.3	43.72	14%	14%	3.1	50	60	32%	FALSE	Kraft Foods
KO	27-Jan-12	74.01	61.8	85.91	20%	9%	2.8	105	130	42%	FALSE	Coca-Cola
WMT	3-Feb-12	61.2	72.07	93.62	-15%	12%	2.6	80	95	31%	FALSE	Wal-Mart Stores
DIS	10-Feb-12	43.78	41.12	64.28	6%	18%	1.4	60	75	37%	FALSE	Disney (Walt)
BAC	17-Feb-12	9.57	5.25	7.93	82%	2600%	0.4	11	18	15%	FALSE	Bank of America
JPM	17-Feb-12	45.98	47.4	79.3	-3%	2%	2.6	60	85	30%	FALSE	JPMorgan Chase
AXP	17-Feb-12	57.86	57.4	91.63	1%	7%	1.4	70	95	21%	FALSE	Amer. Express
MSFT	17-Feb-12	32.26	33.26	50.73	-3%	-5%	2.5	45	55	39%	FALSE	Microsoft Corp.
												
Dow30	                 13,212 11,261 16,708 	                2.6	17,490 22,122 			Dow Jones Industrial Average
Appreciation Potential	          -15%	  26%			           32%	  67%

VL Date is the date of the last summary report update from Valueline.

Current Price is the closing price of the stock as of the time menthioned in the posting description.

10Yr Down is the 10 year downside price. The company must have at least 7 years of non-negative ROE data to qualify.

10Yr Up is the 10 year upside price. The company must have at least 7 years of non-negative ROE data to qualify.

Both upside and downside are calculated using method outlined in TTD book. 
Also a discussion of calculating the upside and downside can be found at http://boards.fool.com/Message.asp?mid=20916205&sort=who............

%<10Y Downside is the current price divided by the 10 Yr downside expressed as a percentage.

EPS Future Delta is the projected growth in EPS for the next 4 quarters versus the last four reported quarters. 
I use the latest EPS data from the VL spreadsheet which is updated as soon as new earnings are reported. 

Div Yield is the current % dividend payout ratio per share.

3-5 Y Low/Hi Price Est. is the downside/upside price estimate which is calculated using the projections of Book Value and ROE as discussed in TTD.

Min VL Price Appreciation is the expected change in price from current price to low end VL projected 3-5 year appreciation price.

ROE >2STD is part of my margin of safety consideration, which is briefly discussed in TTD on pg 70-71. 
I compare the current year's ROE versus the last 10 years of ROE data. If the current ROE is greater than average(10 Yr ROE) + (2 * stdev(10 Yr ROE)), 
than this column is TRUE, else it is FALSE. This tells me that the stock's ROE is much higher than it's historic average.
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