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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 5989  
Subject: BI Dow30 Picks for VL Series Update Jun 6 2014 Date: 6/2/2014 10:08 AM
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Based on the latest VL results as of Monday’s data release. At this time there is not a single stock that is below the Downside target price. 
As a result no companies qualify as a BI Long pick to buy.

Market Valuation (Dow 30): 
The estimated market overvaluation turned for the worse in May as the market advanced further. 
The Dow30 currently stands at about 16% overvalued using the BI method.
Downside: -29%
Upside:   +2%

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	23-May-14	102	TRUE	58	95	76%	76%	6%	 2.3 	100	145	18%	FALSE	Caterpillar Inc.
JNJ	23-May-14	101	TRUE	74	93	37%	40%	6%	 2.8 	105	125	14%	FALSE	Johnson & Johnson
MCD	30-May-14	101	TRUE	82	109	23%	27%	7%	 3.2 	115	145	28%	FALSE	McDonald's Corp.
CVX	6-Jun-14	123	TRUE	74	101	66%	45%	13%	 3.5 	125	155	14%	FALSE	Chevron Corp.
XOM	6-Jun-14	101	TRUE	71	95	42%	45%	7%	 2.7 	115	140	25%	FALSE	Exxon Mobil Corp.
BA	14-Mar-14	135	TRUE	76	104	78%	108%	17%	 2.2 	135	185	18%	FALSE	Boeing
TRV	14-Mar-14	93.45	TRUE	66	88	41%	46%	-17%	 2.3 	115	145	38%	FALSE	Travelers Cos.
UNH	14-Mar-14	79.63	TRUE	54	79	46%	61%	5%	 1.4 	95	130	41%	FALSE	UnitedHealth Group
T	21-Mar-14	35.47	TRUE	30	41	17%	24%	5%	 5.2 	45	55	41%	FALSE	AT&T Inc.
VZ	21-Mar-14	49.96	FALSE	21	29	138%	102%	20%	 4.3 	70	85	55%	FALSE	Verizon Communic.
CSCO	21-Mar-14	24.62	TRUE	24	36	4%	-7%	2%	 3.1 	30	35	31%	FALSE	Cisco Systems
HD	28-Mar-14	80.23	FALSE	56	82	42%	70%	19%	 2.4 	95	115	31%	TRUE	Home Depot
PG	28-Mar-14	80.79	TRUE	63	80	29%	40%	11%	 3.2 	90	110	24%	FALSE	Procter & Gamble
INTC	4-Apr-14	27.32	TRUE	21	33	28%	19%	1%	 3.3 	40	45	57%	FALSE	Intel Corp.
IBM	4-Apr-14	184	TRUE	177	239	4%	11%	18%	 2.4 	255	315	55%	FALSE	Int'l Business Mach.
DD	11-Apr-14	69.31	TRUE	50	75	38%	45%	14%	 2.7 	80	100	30%	FALSE	Du Pont
MRK	11-Apr-14	57.86	TRUE	31	48	85%	81%	-2%	 3.1 	50	60	-4%	FALSE	Merck & Co.
PFE	11-Apr-14	29.63	TRUE	20	28	51%	4%	6%	 3.5 	35	40	26%	FALSE	Pfizer Inc.
GE	18-Apr-14	26.79	TRUE	23	32	19%	23%	9%	 3.3 	30	50	49%	FALSE	Gen'l Electric
MMM	18-Apr-14	143	TRUE	95	132	50%	59%	10%	 2.4 	150	185	17%	FALSE	3M Company
UTX	18-Apr-14	116	TRUE	85	117	37%	48%	15%	 2.0 	130	160	24%	FALSE	United Technologies
GS	18-Apr-14	160	TRUE	87	156	83%	78%	5%	 1.4 	220	295	60%	FALSE	Goldman Sachs
KO	25-Apr-14	40.91	TRUE	33	43	24%	23%	3%	 3.1 	50	60	35%	FALSE	Coca-Cola
WMT	2-May-14	76.77	TRUE	70	88	10%	6%	7%	 2.5 	110	135	61%	FALSE	Wal-Mart Stores
NKE	2-May-14	76.91	TRUE	49	71	58%	71%	9%	 1.3 	85	105	24%	TRUE	NIKE Inc. 'B'
DIS	9-May-14	84.01	TRUE	57	85	47%	60%	8%	 1.0 	85	100	10%	TRUE	Disney (Walt)
JPM	16-May-14	55.57	TRUE	47	72	18%	18%	35%	 2.9 	65	95	43%	FALSE	JPMorgan Chase
AXP	16-May-14	91.5	TRUE	66	97	39%	49%	12%	 1.1 	95	125	20%	FALSE	Amer. Express
V	16-May-14	215	TRUE	164	264	31%	35%	22%	 0.8 	330	400	70%	FALSE	Visa Inc.
MSFT	16-May-14	40.94	TRUE	31	45	31%	25%	2%	 3.0 	45	55	23%	FALSE	Microsoft Corp.

Dow30		        16,717	       11,922  17,055	                         2.7  19,844  25,014			Dow Jones Industrial Average
Appreciation Potential		  	 -29%	   +2%				        19%     50%     33%

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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