Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
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 5991  
Subject: BI Dow30 Picks for VL Series Update May 2 2014 Date: 5/4/2014 3:15 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
Based on the latest VL results as of Monday’s data release. Cisco Systems is the only stock whose price is below its Downside price target. 
However, no companies qualify as a BI Long pick to buy.


Market Valuation (Dow 30): 
The estimated market overvaluation remained about the same as past months. 
The Dow30 currently stands at about 10% overvalued using the BI method, which is about the same level it was at the end of last month.
Downside: -26%
Upside:   +6%

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	105	TRUE	54	89	95%	82%	2%	 2.3 	100	145	16%	FALSE	Caterpillar Inc.
JNJ	21-Feb-14	99.96	FALSE	75	94	34%	38%	6%	 2.6 	105	125	15%	FALSE	Johnson & Johnson
MCD	28-Feb-14	99.84	TRUE	85	112	18%	25%	8%	 3.2 	115	145	30%	FALSE	McDonald's Corp.
CVX	7-Mar-14	124	TRUE	79	107	58%	47%	6%	 3.2 	125	155	12%	FALSE	Chevron Corp.
XOM	7-Mar-14	100	TRUE	69	92	46%	45%	6%	 2.6 	110	135	22%	FALSE	Exxon Mobil Corp.
BA	14-Mar-14	130	TRUE	76	104	71%	99%	17%	 2.3 	135	185	23%	FALSE	Boeing
TRV	14-Mar-14	88.59	TRUE	66	88	34%	39%	-17%	 2.5 	115	145	46%	FALSE	Travelers Cos.
UNH	14-Mar-14	76.59	TRUE	54	79	41%	55%	5%	 1.5 	95	130	46%	FALSE	UnitedHealth Group
T	21-Mar-14	34.5	TRUE	30	41	14%	20%	5%	 5.4 	45	55	44%	FALSE	AT&T Inc.
VZ	21-Mar-14	46.28	FALSE	21	29	120%	87%	20%	 4.6 	70	85	67%	FALSE	Verizon Communic.
CSCO	21-Mar-14	23.33	TRUE	24	36	-1%	-12%	0%	 3.3 	30	35	39%	FALSE	Cisco Systems
HD	28-Mar-14	79.77	FALSE	56	82	41%	69%	19%	 2.4 	95	115	31%	TRUE	Home Depot
PG	28-Mar-14	81.15	TRUE	63	80	30%	41%	11%	 3.2 	90	110	23%	FALSE	Procter & Gamble
INTC	4-Apr-14	26.75	TRUE	21	33	25%	17%	1%	 3.4 	40	45	58%	FALSE	Intel Corp.
IBM	4-Apr-14	190	TRUE	177	239	7%	15%	18%	 2.1 	255	315	49%	FALSE	Int'l Business Mach.
DD	11-Apr-14	67.11	TRUE	50	75	34%	41%	14%	 2.8 	80	100	34%	FALSE	Du Pont
MRK	11-Apr-14	57.53	TRUE	31	48	84%	80%	-3%	 3.1 	50	60	-4%	FALSE	Merck & Co.
PFE	11-Apr-14	30.71	TRUE	20	28	56%	8%	3%	 3.4 	35	40	22%	FALSE	Pfizer Inc.
GE	18-Apr-14	26.46	TRUE	23	32	17%	21%	9%	 3.3 	30	50	51%	FALSE	Gen'l Electric
MMM	18-Apr-14	137	TRUE	95	132	44%	52%	10%	 2.5 	150	185	22%	FALSE	3M Company
UTX	18-Apr-14	119	TRUE	85	117	40%	52%	15%	 2.0 	130	160	21%	FALSE	United Technologies
GS	18-Apr-14	161	TRUE	87	156	84%	79%	5%	 1.4 	220	295	60%	FALSE	Goldman Sachs
KO	25-Apr-14	40.7	TRUE	33	43	24%	23%	3%	 3.1 	50	60	35%	FALSE	Coca-Cola
WMT	2-May-14	78.31	TRUE	70	88	12%	8%	4%	 2.5 	110	135	56%	FALSE	Wal-Mart Stores
NKE	2-May-14	73.39	TRUE	49	71	51%	63%	9%	 1.3 	85	105	29%	TRUE	NIKE Inc. 'B'
DIS	7-Feb-14	79.59	TRUE	55	82	44%	57%	-21%	 1.1 	70	85	3%	FALSE	Disney (Walt)
JPM	14-Feb-14	56.19	TRUE	53	82	5%	20%	10%	 2.9 	65	95	42%	FALSE	JPMorgan Chase
AXP	14-Feb-14	87.41	TRUE	66	97	33%	45%	-24%	 1.2 	90	120	31%	FALSE	Amer. Express
V	14-Feb-14	209	TRUE	205	330	2%	32%	-21%	 0.8 	295	405	67%	TRUE	Visa Inc.
MSFT	14-Feb-14	39.86	TRUE	32	46	24%	20%	-100%	 2.8 	45	55	25%	FALSE	Microsoft Corp.

Dow30		        16,502	       12,227  17,532	                         2.6  19,459  24,885			Dow Jones Industrial Average
Appreciation Potential		  	 -26%	  +6%				        18%     51%     34%

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.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Considerable Headwinds for Profire Energy?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement