Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Chris
I thought this was very interesting particularly in view of our discussion on the relative merits of EPS forward earnings.

http://lada.zacks.com/jmfr2/index.php3

The real value of the EPS estimate is not in the estimate itself but in the changes in the estimates. Theoretically, when analysts increase the EPS estimate, investors expectations of future earnings increase and the value of the company [and thus its' stock price] increases. These reported changes in earnings estimates are the most consistent leading indicator of the direction in which a stock price is going to move. This is critical in evaluating and deciding whether or not to buy or sell stock.

Regards
Harmy

PS Your spreadsheet gives a prediction of an 86% return for Ridley Corporation (as an example) but when using the method described in in your post 4834 I am unable to get this result. Am I missing something or is there a small step missed out ??

Print the post Back To Top
No. of Recommendations: 2
harmy,

Your spreadsheet gives a prediction of an 86% return for Ridley Corporation

The 86% (in the spreadsheets I sent you) was last years' return. Ridley was aroung $0.70 - $0.72 at end of July early August 2001. A year later it was around $1.30 to $1.35. It is included in the spreadsheets for statistical analysis only (to see how the method performed). The prediction for Ridley was $1.635 (15 times forecast EPS). It hasn't reached that yet, but it is still in this year's list. Incidentally, 15 times last years' earnings comes to $1.455 (15 x 9.7c). That's not far off the high in the 12 months -- $1.40 on the 12th of June.

Hope that helps.

I completely agree with your comments about direction of future earnings. That is why I pay attention to 2nd year forecasts as well. It is more promising if the second year forecasts predict further growth as well.

Anyone considering this method would be well advised to keep a close watch on earnings revisions, and do the numbers again. I would pay more attention to that than to the daily share price fluctuations.

Our little portfolio from post #4843 is up about 4% at the moment, but don't get too carried away yet. Lots of stocks have risen in the past week, probably due to increased confidence from those CEOs in the US who have signed off on their Annual Reports. What happens over the next six to twelve months will be more interesting.

Chris
Print the post Back To Top
No. of Recommendations: 2

Lots of stocks have risen in the past week

Yep the general market trend has been up.

I reckon you gotta make a consideration based on were the stock, sector & general market has rallied from & what trend they were in before the rally. Then of cause you gotta consider over head reistance etc.
Many stocks have a lot of overhead resistance & much to short bases to give them the needed fuel to break above those resistance bands.

After all many stocks have been sold down & from a TA reading are in downtrends, counter rallys to the downward trend are expected & considered just that until they break & hold above those downtrend lines.

Interesting posts!!!

EGL is one you might like to check out.

JR

Print the post Back To Top
No. of Recommendations: 1
Chris/JR
Just love this stuff you guys are posting !! Really makes the board come alive.
Bought CSL today at $25.37 - chart looked pretty sour but EPS trailing and forward are excellent. Considering it was selling for around $51 at the beginning of the year it hasn't got to rise that much to make my target of 30%. Did the same with CPU - trashed right down but still very profitable company. Bought at $1.54 and now up to around $1.80 - if it goes to $2 then that's the 30%.
Going to sell CEY at some stage - big aquisition recently and a big injection of equity to pay for it - as a result EPS goes down over the next year or two. I'm down around 22% on that one - hung on because it made three times profit last year - should have sold but that's the way it goes.
Regards
Harmy
Print the post Back To Top
No. of Recommendations: 1
The 86% (in the spreadsheets I sent you) was last years' return

Chris
Sorry I should have re-phrased that a little better !!
Method still looks good to me - could it be further refined to apply it using the average sector multiple. You could then apply it to miners for example who all seem to have extremely low p/e's (the ones I'm interested in anyway).
Cheers
Harmy
Print the post Back To Top
No. of Recommendations: 1


You could then apply it to miners for example who all seem to have extremely low p/e's (the ones I'm interested in anyway).

When I started following the oils(for example) 4 years ago PE's were not seen or so very high, now many as you noted have got PE's firstly & secondly many are very low, thats very notable IMO.

My firm thought is if you are fully invested in OZ market then you gotta look at the miners & I as time go's by I'm even more certain of it.


JR

Print the post Back To Top
No. of Recommendations: 0

CSL I reckon thats a good buy , but I also think that breaking above $33.00 & holding is going to be a real test. So that gives you 30% before tax anyways. I see CSL having to a least retest the recent lows before being confident that the sell off(long term) is over.

A number of Bio's look oversold & ready for a bounce I'm looking at trading them.
Some of those are,

QVL..PSX..PEP..MTR..IMI..GRO..CIR..BRC

I'm holding NRT & buying more.(looks good)Also a bit & I'd like more of SRX & CST.

EPT which is a crowd favorite broke above res yesterday.

The sector Health is looking good only thing I'm watching is that a fair % of the charts look bullish shorter term with the longer term outlook still not settled, riding with tight stops & pushing into my margin money.

Banks look weak but I'm not shorting them yet.

CML is another that looks oversold & ready to provide a nice bounce at least, I'm buying for a long account.

I'm doing some work on PSN(yet to decide) as again it looks very oversold & I'm looking for some exposure in the sector.

Sectors like FERTiliser also look interesting SYM..RHL..NUF.

Well thats enough waffling for one day.

JR

Print the post Back To Top
No. of Recommendations: 0
Well thats enough waffling for one day.

Good sort of waffling though !!
Going to have a look at CML. Still holding SRO - not sure what's happening to that one. Beach looking good - Woodside if the big driller strikes it should be a big one. Still holding AUO (lots !!) and MCC - both medium term prospects.
Think things are beginning to look up !!
Regards
Harmy

Print the post Back To Top
No. of Recommendations: 1


Still holding AUO (lots !!) and MCC - both medium term prospects

I'm thinking CHL , interesting exposure to the sector & very interesting looking chart.

I'm watching MCC but that fall below $1.20 is a concern. Mcc needs to break above & hold $1.20 quickly for me.

Woodside if the big driller strikes

Yep of cause it's no cert but the odds favour it & given the recent contracts with China you'd reckon long term Woody is a no brainer.

Think things are beginning to look up !!

The XAO is approaching a major res area so we will find out soon what the results of that test are.

One or two sectors are bullish & a couple more are looking like they want to at least bounce.

Many other sectors that have been in downtrend are about or are testing resistance so the verdict on those is yet in.

Gee I just should have said , yep Harmy things are starting to look up.

JR


Print the post Back To Top