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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 5980  
Subject: Sep 7 2012 Picks Date: 9/4/2012 2:46 PM
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Based on the latest results as of today’s data release, no companies would qualify as a Long candidate. 
Although several stocks are significantly overvalued according to the BI valuation methods, none would qualify as a short candidate either.

Market Valuation: Data suggests we are at Parity valuation.
Downside -19%
Upside +19%

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)


Summary of Results												
											
	VL	        Current	Down	Up	%<10Y	EPS	Div    3-5Y L 3-5Y H VL 3-5Y   ROE	
Ticker	Date	        Price	Price	Price	Down	Delta   Yield   VL $	VL $	% Chg	<2STD	Name
CAT	24-Aug-12	 85.33 	81	144	5%	12%	2.5	140	210	107%	FALSE	Caterpillar Inc.
JNJ	24-Aug-12	 67.43 	64	81	6%	3%	3.6	80	100	33%	FALSE	Johnson & Johnson
MCD	31-Aug-12	 89.49 	64	91	41%	7%	3.2	110	130	35%	FALSE	McDonald's Corp.
CVX	7-Sep-12	 112 	87	124	30%	9%	3.2	130	160	30%	FALSE	Chevron Corp.
XOM	7-Sep-12	 87.30 	67	93	31%	7%	2.6	110	135	40%	FALSE	Exxon Mobil Corp.
BA	15-Jun-12	 71.40 	46	71	56%	-9%	2.5	90	125	51%	FALSE	Boeing
TRV	15-Jun-12	 64.74 	45	67	43%	12%	2.9	80	100	39%	FALSE	Travelers Cos.
T	22-Jun-12	 36.64 	26	38	40%	8%	4.9	40	50	22%	FALSE	AT&T Inc.
VZ	22-Jun-12	 42.94 	21	31	101%	13%	4.7	55	70	46%	FALSE	Verizon Communic.
CSCO	22-Jun-12	 19.08 	21	35	-8%	14%	3.0	30	35	71%	FALSE	Cisco Systems
HD	29-Jun-12	 56.75 	33	51	74%	11%	2.1	60	70	14%	FALSE	Home Depot
PG	29-Jun-12	 67.19 	50	64	34%	2%	3.4	90	110	49%	FALSE	Procter & Gamble
INTC	6-Jul-12	 24.83 	30	52	-17%	12%	3.7	45	55	106%	FALSE	Intel Corp.
HPQ	6-Jul-12	 16.88 	21	37	-21%	200%	3.2	40	60	197%	FALSE	Hewlett-Packard
IBM	6-Jul-12	 195 	138	200	42%	9%	1.8	235	285	34%	FALSE	Int'l Business Mach.
AA	13-Jul-12	 8.56 	9	18	-7%	248%	1.4	16	25	142%	FALSE	Alcoa Inc.
DD	13-Jul-12	 49.75 	50	75	-1%	9%	3.5	100	120	121%	FALSE	Du Pont
MRK	13-Jul-12	 43.05 	36	58	21%	-7%	3.9	45	55	15%	FALSE	Merck & Co.
PFE	13-Jul-12	 23.86 	15	22	58%	14%	3.7	25	30	15%	FALSE	Pfizer Inc.
GE	20-Jul-12	 20.71 	21	31	1%	17%	3.3	30	45	81%	FALSE	Gen'l Electric
MMM	20-Jul-12	 92.60 	80	113	15%	11%	2.6	135	165	63%	FALSE	3M Company
UTX	20-Jul-12	 79.85 	63	90	28%	0%	2.7	115	140	61%	FALSE	United Technologies
KFT	27-Jul-12	 41.51 	34	45	23%	9%	2.8	55	65	45%	FALSE	Kraft Foods
KO	27-Jul-12	 37.40 	30	40	25%	8%	2.8	50	60	48%	FALSE	Coca-Cola
WMT	3-Aug-12	 72.60 	66	84	10%	9%	2.2	95	115	45%	FALSE	Wal-Mart Stores
DIS	10-Aug-12	 49.47 	41	63	20%	7%	1.2	60	75	36%	FALSE	Disney (Walt)
BAC	17-Aug-12	 7.99 	8	12	5%	-17%	0.5	10	17	70%	FALSE	Bank of America
JPM	17-Aug-12	 37.14 	38	62	-2%	10%	3.3	55	85	89%	FALSE	JPMorgan Chase
AXP	17-Aug-12	 58.30 	50	75	17%	9%	1.4	75	105	57%	FALSE	Amer. Express
MSFT	17-Aug-12	 30.82 	31	46	-2%	12%	3.2	50	60	81%	FALSE	Microsoft Corp.


												
Dow30		        12,795  10,324  15,232 	               2.9	17,036 21,623 			Dow Jones Industrial Average
Appreciation Potential		   -19%	   19%				   33%	   69%	 61%

VL Date is the date of the last summary report update from Valueline.

Current Price is the closing price of the stock as of the time mentioned in the posting description.

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

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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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: 5929 of 5980
Subject: Re: Sep 7 2012 Picks Date: 9/4/2012 2:59 PM
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One correction to this month's post. There is actually one company that would qualify as a Long position. HPQ would qualify. It meets all the required criteria. Although, something doesn't seem right with its EPS reading of +200%. This is driven by a really bad recent quarter and an estimate of a more rosey future.

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