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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 5986  
Subject: BI Dow30 Picks for VL Series Update Apr 4 2014 Date: 3/31/2014 5:23 PM
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Based on the latest VL results as of Monday’s data release, no companies currently qualify as BI Long candidates.

Market Valuation (Dow 30): 
The estimated market overvaluation remained about the same as past months. 
The Dow30 currently stands at about 9% overvalued using the BI method.
Downside: -25%
Upside:   +7%

Long Buy Rules: 
I am using the following TTD rules for Long position considerations:
1. Year-over-Year EPS growth must > 10%, which are 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)
5. ROE and BV current figures must be updated by VL to be considered.

There is a separate tracking post that I post to tack the annual hold selection for the remainder of the year. 
I also added two new columns to this worksheet. They are: 1. An indication if VL has updated the current year’s 
BV and ROE. If yes, then the column will indicate TRUE, if not then FALSE. 2. An average of the previous 4 VL 
update’s Downside Price, showing the price’s discount to this value. This is a simple average of the past
four updates in the Downside price. This new metric was never mentioned in the TTD book, but it might be of  
use to consider in case baseline valuations swing in one period during the evaluation time frame.  

Evaluation time frame: 
Current = 2014
Benchmark = 2004 thru 2013

Summary of Results


	VL	        Current	ROE/BV	Down	Up     %<10Y   %<10Y	EPS	Div    3-5Y L 3-5Y H VL 3-5Y   ROE	
Ticker	Date	        Price	Updated	Price	Price	Down	Down4Qs	Delta   Yield   VL $	VL $	% Chg	<2STD	Name
CAT	21-Feb-14	99.55	TRUE	54	89	84%	72%	0%	 2.4 	100	145	24%	FALSE	Caterpillar Inc.
JNJ	21-Feb-14	98.04	FALSE	75	94	31%	35%	6%	 2.7 	105	125	18%	FALSE	Johnson & Johnson
MCD	28-Feb-14	98.4	FALSE	84	111	17%	23%	5%	 3.4 	115	145	35%	FALSE	McDonald's Corp.
CVX	7-Mar-14	119	TRUE	79	108	50%	41%	6%	 3.4 	125	155	18%	FALSE	Chevron Corp.
XOM	7-Mar-14	97.6	TRUE	69	92	42%	41%	6%	 2.7 	110	135	27%	FALSE	Exxon Mobil Corp.
BA	14-Mar-14	126	TRUE	76	104	65%	93%	10%	 2.4 	135	185	29%	FALSE	Boeing
TRV	14-Mar-14	84.75	TRUE	67	89	27%	33%	-12%	 2.4 	115	145	55%	FALSE	Travelers Cos.
UNH	14-Mar-14	81.85	TRUE	54	79	50%	66%	2%	 1.4 	95	130	38%	FALSE	UnitedHealth Group
T	21-Mar-14	35.12	TRUE	30	41	16%	23%	6%	 5.3 	45	55	43%	FALSE	AT&T Inc.
VZ	21-Mar-14	47.62	FALSE	21	29	127%	92%	23%	 4.5 	70	85	62%	FALSE	Verizon Communic.
CSCO	21-Mar-14	22.59	TRUE	24	36	-4%	-15%	0%	 3.5 	30	35	47%	FALSE	Cisco Systems
HD	28-Mar-14	79.11	FALSE	56	82	40%	67%	19%	 2.4 	95	115	33%	TRUE	Home Depot
PG	28-Mar-14	80.28	TRUE	63	80	28%	39%	10%	 3.0 	90	110	25%	FALSE	Procter & Gamble
INTC	4-Apr-14	26.04	TRUE	21	33	22%	13%	-2%	 3.6 	40	45	67%	FALSE	Intel Corp.
IBM	4-Apr-14	193	TRUE	177	239	9%	17%	10%	 2.1 	255	315	50%	FALSE	Int'l Business Mach.
DD	10-Jan-14	67.22	TRUE	48	72	40%	43%	40%	 2.8 	75	90	31%	FALSE	Du Pont
MRK	10-Jan-14	56.46	TRUE	31	49	83%	77%	-3%	 3.2 	50	60	-1%	FALSE	Merck & Co.
PFE	10-Jan-14	32.03	FALSE	19	28	64%	3%	-41%	 3.2 	30	35	1%	FALSE	Pfizer Inc.
GE	17-Jan-14	25.9	TRUE	23	33	13%	20%	7%	 3.4 	30	45	64%	FALSE	Gen'l Electric
MMM	17-Jan-14	136	FALSE	91	125	49%	54%	11%	 2.6 	130	160	12%	FALSE	3M Company
UTX	17-Jan-14	116	FALSE	83	114	41%	53%	10%	 2.1 	130	155	34%	FALSE	United Technologies
GS	17-Jan-14	163	FALSE	94	173	74%	80%	3%	 1.4 	205	310	75%	FALSE	Goldman Sachs
KO	24-Jan-14	38.97	FALSE	35	45	12%	17%	8%	 3.1 	50	60	54%	FALSE	Coca-Cola
WMT	31-Jan-14	76.61	FALSE	75	95	2%	5%	10%	 2.6 	95	115	44%	FALSE	Wal-Mart Stores
NKE	31-Jan-14	73.88	TRUE	48	71	53%	68%	-100%	 1.3 	80	100	29%	FALSE	NIKE Inc. 'B'
DIS	7-Feb-14	79.83	TRUE	55	82	45%	57%	-21%	 1.1 	70	85	5%	FALSE	Disney (Walt)
JPM	14-Feb-14	60.82	TRUE	53	82	14%	30%	39%	 2.7 	65	95	33%	FALSE	JPMorgan Chase
AXP	14-Feb-14	90.88	TRUE	66	97	38%	51%	13%	 1.1 	90	120	27%	FALSE	Amer. Express
V	14-Feb-14	215	TRUE	205	330	5%	36%	-21%	 0.8 	295	405	62%	TRUE	Visa Inc.
MSFT	14-Feb-14	41.35	TRUE	32	46	29%	24%	-100%	 2.9 	45	55	27%	FALSE	Microsoft Corp.

Dow30		        16,460	       12,263  17,636	                         2.7  19,041  24,500			Dow Jones Industrial Average
Appreciation Potential		  	-25%	   +7%				        16%     49%     36%

Disclosures and Useful Terms
VL Date is the date of the last summary report update from Valueline as indicated in the post’s subject line.
All data sources from Valueline Dow30 reports made publically available on the VL website. http://www.valueline.com/Dow30/index.aspx

Current Price is the closing price of the stock as reported by VL, which is usually a few days behind the date 
of the time period mentioned in the posting subject line.

ROE/BV Updated is an indication if the stock’s BV and ROE have been updated through the end of the Benchmark 
evaluation time frame.

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

10Yr Down4Qs is the 10 year downside price averaged over the previous 4 quarter’s valuation price.

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 here:
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 are 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 a 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 its historic average and should therefore be avoided.
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