Sunday, August 31, 2014
Thursday, August 21, 2014
I have been looking at Home Depot (HD). Look at how it has run these past few days. Indeed, look at how it has run over the longer-term too. On April 1, 2009 the stock closed at $25. Last night it closed at $90.75. That provides an annualized return of 27.08%. And that is not all for the company has paid a big bunch of dividends over the years. The past five years have been spectacular, but even looking at just over ten and fifteen years annualized return (excluding returns) is a satisfying experience: the stock delivered an annualized return of 11.65% since 4/1/2004, and 7.19% since 4/1/1999. That is plenty better than the market and the result is even more impressive when we look at total return (including dividends).
Normally after well over normal long and short-term returns, I get very skeptical about future performance.
Posted by Shiv Kapoor at 1:27 PM
Tuesday, August 19, 2014
I am looking at the Dow Tech Titans at present. I have looked at Microsoft (MSFT), Intel (INTC), and Cisco (CSCO) on several occasions in the recent past: the most recent look is linked to the company name. Since I last looked at them, they have risen significantly: Microsoft and Intel have gone from being “Yes, Wow” stocks, to simple “Yes” stocks. Cisco still remains a “Yes, Wow” stock. But it is IBM (IBM) that comes with a “Yes, WOW” factor.
Posted by Shiv Kapoor at 5:14 PM
Monday, August 18, 2014
Friday, August 15, 2014
Value Line research awards Verizon top marks for safety, timeliness and financial strength. You can download their report here. They set their 2017-2019 price target range at $70 to $85.
Value Line awards Verizon a safety rank of 1. This means that the total risk of the stock relative to the approximately 1,700 other stocks covered by them in The Value Line Investment Survey®, is low.
They award the stock a timeliness rank of 1. This means that the probable price performance of the stock relative to the approximately 1,700 other stocks covered by The Value Line Investment Survey® during the next six to twelve months can be expected to be favorable.
They also assign the stock a top financial strength rating of A++. Value Line classifies 1,700 companies' Financial Strength ratings from A++ to C, in nine steps. The lowest grade is reserved for companies experiencing serious financial difficulty. Balance sheet leverage, business risk, the level and direction of profits, cash flow, earned returns, cash, corporate size, and stock price, all contribute to a company's relative position on the scale. The amount of cash on hand, net of debt, is also an important consideration.
The technical rank for Verizon was 3, which implies that the technical prospects are no better or worse than the broad market. The stock was downgraded to 3 from 1 on July 25, 2014. For now, it remains at the top end of the "3" band. And I believe the weakening technicals have presented an interesting buy opportunity for long-term investors.
With Verizon, we are looking at a company with low risk and high financial strength, with an expectation of out-performance over the coming six to twelve months, with a slight recent deterioration in the technical condition.
Posted by Shiv Kapoor at 9:10 AM
Wednesday, August 13, 2014
Tuesday, August 12, 2014
Sunday, August 10, 2014
Tuesday, August 5, 2014
Monday, August 4, 2014
Friday, August 1, 2014
Tuesday, July 22, 2014
The markets are expensive, but several Dow stocks still offer very decent return potential, together with a considerable alpha opportunity. The column titles marked (1) on this table come from Value Line Research. The rest of the column titles are simple arithmetic.
Using the mid-point of the Value Line price targets, twenty-three of thirty Dow stocks offer alpha, or excess return as priced. Using the mid-point of the Value Line price targets, the annualized average total return expectation from the 23 stocks offering alpha or excess returns equal weighted is generous at 13.27%. There are seven stocks offering a total return potential of over 15% using the mid-point of Value Line's target prices.
Posted by Shiv Kapoor at 4:58 PM
Friday, June 27, 2014
In glass, Corning represents class. It is a good stock, but it is not presently an attractive buy candidate for new capital being deployed. Nonetheless, if owned, it is a good stock to own for the present time. There is price support as a result of the buyback program. There is upside to per-share estimates on account of buybacks. And as time passes and earnings grow, it is likely that the share will grow to be well valued, even cheap at $22.
Posted by Shiv Kapoor at 4:17 PM
Thursday, June 26, 2014
I conclude by saying that Avery Dennison is far from an attractive buy candidate. In fact, I would go so far as saying it is distinctly unattractive as priced, and is particularly unattractive for the present time.
Posted by Shiv Kapoor at 9:48 PM
I conclude by saying that Aetna is an attractive buy candidate as priced for those comfortable with a risk-adjusted return expectation of 10.25% or lower. It is also an attractive buy for those with conviction that this expensive market shall continue to trade with a bullish bias for a while yet. However, in my view, Aetna is worth keeping an eye on for a decent entry opportunity at $76 or less - at present, it is too pricey for me.
Posted by Shiv Kapoor at 7:41 AM
Tuesday, June 24, 2014
Monday, June 23, 2014
Friday, June 20, 2014
I conclude, saying that while Intel remains well valued for the alpha hunter, for those of you who took aggressive over-allocations to Intel when it represented value hidden in plain sight, the time to eliminate those aggressive over-weights and return to allocation is near, if not here. The easy money has been made.
Posted by Shiv Kapoor at 9:46 AM
I conclude that Cisco remains well valued for the alpha hunter. For those of you who took aggressive over-allocations to Cisco when it represented value hidden in plain sight, it may be well worth holding on a while longer. In my view, only part of the easy money has been made, more remains.
Posted by Shiv Kapoor at 6:16 AM
Thursday, June 12, 2014
Saturday, May 10, 2014
Tuesday, May 6, 2014
Something odd is happening with prices at Wayside Technology (WSTG). I will let this chart speak for me. We have seen weekly returns of 25.94% during the week commencing 3/24/14, and a weekly return of 9.45% for the week commencing 4/7/14. This compares with an average weekly movement over the past five years of 0.406% (median 0.347%), with a standard deviation of 4.73%. Thus it is clear the bullish moves of 3/24/14 and 4/7/14 are exceptional. Then we had the week commencing 4/14/14 when the weekly return was (15.12%) followed by the week commencing 4/28/14 when the weekly return was (8.14%): these bearish moves were also statistical oddities. A similar bullish move has been seen only twice in the past five years, while a bearish move of that magnitude has been seen only three times over the past five years.
Posted by Shiv Kapoor at 1:30 PM
Wednesday, April 23, 2014
Tuesday, April 22, 2014
Posted by Shiv Kapoor at 6:49 AM
Monday, April 21, 2014
This screener selects stocks with the best value in comparison with industry peers. I ran the screen to select value leaders at industry level. I could have decided to select the best value available in comparison with the market, but today I am more interested in industry value leadership. When the markets are in abject terror hunkering down in market value leaders might make sense, but at present, I'd like to believe that stocks in different industries can represent good value with very different ratios. For instance and oil and gas major with a PE of 10 is not necessarily cheaper than a technology company with a PE of 15: it trades lower simply because it is worth less because the industry requires higher re-investment and commands lower return on equity.
Posted by Shiv Kapoor at 9:29 AM
Friday, April 18, 2014
Thursday, April 17, 2014
Tuesday, April 15, 2014
Monday, April 14, 2014
Sunday, April 13, 2014
Saturday, April 12, 2014
Thursday, April 10, 2014
Wednesday, April 9, 2014
The growth estimate implied by the current market price of 5.3% is ridiculously low. If Apple grows at a long-term rate of 8%, in-line with nominal global growth expectations, we have growth alpha of 2.7%. And an investor buying at present levels can expect a long-term return of 13.18%. On the other hand, broad markets are priced to deliver negative alpha or 0.44% to 0.74%.
Posted by Shiv Kapoor at 11:40 PM