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No. of Recommendations: 3
Based on the latest VL results as of Monday’s data release, it looks like we finally have a company that 
qualifies as a BI Long candidate. That company is Microsoft [MSFT].

Although several stocks are significantly overvalued, according to the BI valuation methods, 
none would qualify as a short candidate either.

Market Valuation: 
Downside: -16%
Upside:   +22%

I am using the following TTD rules for Long position considerations:
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)
5. New rule: ROE and BV must have been updated by VL to be considered.

I am adding two new columns to this monthly report on an ongoing basis. 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 might be 
of use to consider in case baseline valuations swing in one period during the evaluation time frame.  

Evaluation time frame:
Current = 2013
Benchmark = 2003 thru 2012

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	22-Feb-13	90.63	TRUE	78	135	16%	20%	-12%	 2.3 	130	190	74%	FALSE	Caterpillar Inc.
JNJ	22-Feb-13	75.95	FALSE	70	87	8%	14%	6%	 3.2 	90	110	30%	FALSE	Johnson & Johnson
MCD	1-Mar-13	96.05	FALSE	80	110	20%	37%	8%	 3.3 	115	140	35%	FALSE	McDonald's Corp.
CVX	7-Dec-12	115	FALSE	96	137	20%	22%	12%	 3.1 	130	160	26%	FALSE	Chevron Corp.
XOM	7-Dec-12	88.79	FALSE	71	99	24%	26%	1%	 2.6 	110	135	38%	FALSE	Exxon Mobil Corp.
BA	14-Dec-12	75.54	FALSE	59	91	28%	94%	9%	 2.6 	90	125	54%	FALSE	Boeing
TRV	14-Dec-12	80	FALSE	52	74	54%	78%	10%	 2.3 	80	100	11%	FALSE	Travelers Cos.
UNH	14-Dec-12	53.94	FALSE	46	75	18%	27%	6%	 1.5 	95	125	108%	FALSE	UnitedHealth Group
T	21-Dec-12	35.65	FALSE	28	40	25%	42%	9%	 5.1 	40	50	41%	FALSE	AT&T Inc.
VZ	21-Dec-12	45.8	FALSE	25	35	80%	125%	21%	 4.6 	55	70	49%	FALSE	Verizon Communic.
CSCO	21-Dec-12	20.94	TRUE	27	44	-24%	-7%	8%	 2.7 	25	30	56%	FALSE	Cisco Systems
HD	28-Dec-12	65.56	FALSE	39	58	69%	99%	16%	 1.8 	65	75	16%	TRUE	Home Depot
PG	28-Dec-12	76.59	TRUE	51	66	49%	53%	1%	 2.9 	90	110	29%	FALSE	Procter & Gamble
INTC	4-Jan-13	20.51	FALSE	25	41	-18%	-28%	-6%	 4.4 	35	45	97%	FALSE	Intel Corp.
HPQ	4-Jan-13	19.25	TRUE	20	34	-5%	-19%	130%	 3.1 	30	45	119%	FALSE	Hewlett-Packard
IBM	4-Jan-13	200	FALSE	153	214	30%	55%	8%	 1.8 	235	285	31%	FALSE	Int'l Business Mach.
AA	11-Jan-13	8.55	FALSE	12	22	-27%	52%	3900%	 1.4 	15	25	130%	FALSE	Alcoa Inc.
DD	11-Jan-13	47.08	TRUE	47	70	1%	-2%	15%	 3.8 	85	105	104%	FALSE	Du Pont
MRK	11-Jan-13	42.67	FALSE	33	54	27%	17%	-3%	 4.1 	45	55	17%	FALSE	Merck & Co.
PFE	11-Jan-13	27.02	FALSE	20	29	36%	85%	33%	 3.5 	30	35	0%	FALSE	Pfizer Inc.
GE	18-Jan-13	23.16	FALSE	23	33	1%	15%	12%	 3.3 	30	45	82%	FALSE	Gen'l Electric
MMM	18-Jan-13	103	FALSE	86	122	19%	33%	9%	 2.5 	120	150	31%	FALSE	3M Company
UTX	18-Jan-13	89.46	FALSE	73	104	23%	44%	14%	 2.4 	115	140	48%	FALSE	United Technologies
KO	25-Jan-13	38.01	FALSE	33	44	17%	-1%	10%	 3.0 	50	60	45%	FALSE	Coca-Cola
WMT	1-Feb-13	70.95	FALSE	72	91	-2%	8%	9%	 2.4 	95	115	42%	FALSE	Wal-Mart Stores
DIS	8-Feb-13	54.2	TRUE	48	72	12%	24%	12%	 1.4 	60	75	33%	TRUE	Disney (Walt)
BAC	15-Feb-13	11.21	TRUE	10	16	11%	52%	240%	 0.4 	11	17	22%	FALSE	Bank of America
JPM	15-Feb-13	48.49	TRUE	48	77	1%	18%	8%	 2.9 	55	85	45%	FALSE	JPMorgan Chase
AXP	15-Feb-13	62.74	FALSE	58	87	7%	33%	10%	 1.3 	70	95	58%	FALSE	Amer. Express
MSFT	15-Feb-13	27.73	TRUE	35	51	-22%	-8%	23%	 3.4 	40	50	63%	FALSE	Microsoft Corp.												

Dow30		        13,934  	11,679  16,984 	                     2.8	17,171  21,864 			Dow Jones Industrial Average
Appreciation Potential		  	-16%	   22%				           23%    57%    51%

VL Date is the date of the last summary report update from Valueline.
All data sources from Valueline Dow30 reports as made publically available on their website. http://www.valueline.com/Dow30/index.aspx

Current Price is the closing price of the stock as of the time mentioned in the posting description.
ROE/BV UpToDate 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.
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