No. of Recommendations: 7
So I decided to look through all of the Dow30 for potential buys.

If I use BMW as screen, three stocks stand out:

AA
BAC
HPQ

and a couple of others appear as possibilities:
GE
and possibly UTX

However, to me each of these has a major downside:
BAC
I won't touch banks aka BAC until I'm convinced their finished unwinding - and I'm not convinced.

HPQ
is bleeding cash and does not seem to have gotten a tourniquet on the wound.

AA
I like AA but their earnings is anemic (still investigating though).

GE
I think is partially depressed due to their financials division and to me UTX looks a bit more attractive.

UTX
looks like an OK investment except it does not look like it's time to buy.
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No. of Recommendations: 1
Sorry about replying to my own post, but it looks like AA's primary (or possibly even exclusive) problem with earnings is the low aluminum price. This low price is driven by both current and projected low demand for aluminum.

We know that commodities are cyclical and we know that cyclicals eventually recover.

The problem is that Europe, North America, and Asia all suffer from fundamental economic issues. The market thinks the world won't begin the recovery in the near future - thus the low price for AA.

If you are a contrarian this may a good point to buy some AA (I already own some). I haven't decided whether to buy more yet or not.

Jim
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No. of Recommendations: 2
The problem with cyclicals is picking the bottom. Usually investors will anticipate recovery and bid the stock up, and then see it fall again if the earnings fail to improve. Hence, your best shot at getting the bottom is to accumulate the stock in a series of purchases.

I see that Alcoa has a reported PE of 132 on Yahoo Finance. An indication of how bad the earnings are so far. And on Google Finance, the earnings seem to be continuing to decline. At least they are showing a profit for the last quarter.

Whenever the recovery gets here, they have lots of recovering to do. But the recovery is slow, and Europe and China have a long way to go. And that is not to mention the US austerity program that begins next year according to some.
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No. of Recommendations: 3
FWIW I use a quantitative approach for screening the DOW30. This should at least give you a place to start your selection.

A modified ValueRatio Screen

Dow30
Current Divident Yield*Current Earnings Yield*Projected Earnings Growth
Final sort by momentum(1yr)

  Date    Ticker    PRI    CES   CDY    CEY     VR    PEG   VR X PEG  TR1Y
20121004 CAT 85.43 10.03 2.42 11.74 28.41 21.50 610.86 18.92
20121004 INTC 22.68 2.18 4.00 9.61 38.45 12.00 461.38 9.68
20121004 CVX 117.50 14.48 3.07 12.32 37.83 10.50 397.24 30.06
20121004 MSFT 29.85 2.96 3.19 9.92 31.63 11.00 347.96 22.87
20121004 DD 50.35 4.29 3.49 8.52 29.74 11.50 341.96 30.05
20121004 JPM 41.71 4.66 2.86 11.17 31.95 10.00 319.53 38.53
20121004 GE 23.12 1.59 2.96 6.88 20.36 14.50 295.17 54.43
20121004 CSCO 18.86 1.63 2.96 8.64 25.58 11.50 294.20 25.09
20121004 PFE 25.52 1.46 3.47 5.72 19.85 12.00 238.22 46.16
20121004 T 37.86 2.54 4.66 6.71 31.26 7.00 218.85 39.84


gdm
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No. of Recommendations: 0
Out of curiosity I checked out these stocks Morningstar ratings.

They consider AA the most undervalued of the bunch and in "consider buying" territory (a 5 star rating).

UTX: Morningstar considers the stock to be "below fair value" but not cheap enough to consider buying (a 4 star rating).

BAC and GE: they consider both stocks to be "fairly valued" (a 3 star rating).

At present, Morningstar is not rating HPQ.

kelbon
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GDM,

Would you provide a summary of your column headers?

I recognize PEG but am not sure about the others.

Jim
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No. of Recommendations: 1
Regardless of whether I purchase more AA, I think (in the short run) hanging onto some cash may be a good idea.
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No. of Recommendations: 2
Would you provide a summary of your column headers?

Not the original poster, but I think the headers are:

PRI = price
CES = current earnings/share
CDY = current dividend yield
CEY = current earnings yield (inverse of P/E ratio) = CES/PRI
VR = "value ratio" = CEY*CDY
PEG = projected earnings/share growth rate
TR1Y = total return 1 year
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No. of Recommendations: 0
Thank you!
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No. of Recommendations: 2
Would you provide a summary of your column headers?

  Date    Ticker    PRI    CES   CDY    CEY     VR    PEG   VR X PEG  TR1Y
20121011 CAT 82.82 10.03 2.51 12.11 30.40 21.50 653.55 18.92
20121011 INTC 21.48 2.18 4.15 10.15 42.12 12.00 505.42 9.68
20121011 CVX 112.07 14.48 3.18 12.92 41.09 10.50 431.42 30.06
20121011 MSFT 29.20 2.96 3.31 10.14 33.55 11.00 369.09 22.87
20121011 DD 48.69 4.29 3.56 8.81 31.37 11.50 360.72 30.05
20121011 JPM 41.62 4.66 2.85 11.20 31.91 10.00 319.10 38.53
20121011 CSCO 18.41 1.63 3.06 8.85 27.09 11.50 311.57 25.09
20121011 GE 22.48 1.57 3.02 6.98 21.09 13.50 284.74 54.43
20121011 T 35.63 2.54 4.93 7.13 35.15 7.00 246.02 39.84
20121011 PFE 25.12 1.46 3.50 5.81 20.34 12.00 244.11 46.16


PRI - LAST PRICE
CES - CURRENT EARNINGS PER SHARE
CDY - %CURRENT DIVIDEND YEILD
CEY - %CURRENT EARNINGS YIELD
VR - VALUERATIO (CDY*CEY)
PEG - PROJ EARNINGS GROWTH 3-5YR
VR X PEG - TOP TEN SORT
TR1Y - TOTAL RETURN ONE YEAR (FINAL SORT)

GDM
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