Year: 2013

Heavy Hogs (2012): Groundhog VI Results

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Groundhog Frigid

The Heavy Hogs for 2012 (the most frequently selected stocks one year ago) struggled a bit during Groundhog VI — checking in at 6.3% while the Wilshire 5000 gained 16.4%.

This doesn’t bode well for the Groundhog field as our accountants continue to tally the final results. Chances are if you had Portfolio Recovery (PRAA), ResMed (RMD), Google (GOOG), Bio-Reference Labs (BRLI), Oracle (ORCL) or Walgreen (WAG) — you’re smiling. These were the only six out of the seventeen heavy hogs to outperform the market, or 35.3%. (Values shown in the accompanying table are $100 invested on 2/2/2012)

We’re accustomed to a higher number than 35.3%.

Heavy hogs dash 20130201

Our Groundhog VII Stock Selection Contest

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We hold certain truths to be self-evident.

That most of us like to sleep at night.

That most of us believe in Occam’s Razor.

Most of us marvel at the performance of a relatively-passive model portfolio like our Bare Naked Million

We’ve also paid homage to Eddy Elfenbein and his six year winning streak of beating the S&P 500 with his Buy List at Crossing Wall Street.

Therefore, we’ll keep it even simpler for Groundhog VII (2013).

1. Enter by selecting a minimum of five (5) investments and a maximum of twenty (20) positions.

2. Participants will receive $1,000,000 in Groundhog dollars. The cool million will be divided evenly amongst the number of positions you decide to use. In other words, if you pick (5) stocks … we’ll divide the $1,000,000 evenly, creating a public dashboard with $200,000 each.

3. No transactions will be permitted between February 4, 2013 and February 2, 2014.

4. Entries can be made all weekend and will be accepted until the market opens on Wednesday, February 6.

Entries can be submitted by emailing manifest@manifestinvesting.com or by posting in the Groundhog Challenge forum folder at http://www.manifestinvesting.com. (Subscription or FREE trial accounts)

5. Stocks under $1 not permitted.

S&P 500 Monthly Returns (2005-Present)

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Yes, January 2013 was a good month, a special month in the context of returns.

But there have been several months since March 2009 that have been even better.

In this graphic the red-shaded months are the months when the median return forecast was below average … and the green-shaded months when the return forecasts were outsized.

I was surprised to see the dispersion for above-average return forecasts, while the monthly returns during our “return forecast plateau” (2005-2007) are pretty tightly grouped. Hmmmmm.

Qualcomm (QCOM)

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Qcom banner 20130201

In the realm of mobile communications, it’s clearly a jungle out there. The battle among the major providers is in full gear and profit margins (for most participants) show the impact. Enter Qualcomm (QCOM). QCOM has the #1 market share in application and graphics processing chips and 3G/4G/LTE modems used in smart phones. Let that sink in for a minute.

Qualcomm has revolutionized the mobile phone industry. Through a commitment to research and development and via a wide berth of partnerships with other firms, innovative solutions are built and distributed across the entire wireless industry.

Growth, Profitability, Valuation

The Manifest Investing sales growth forecast for QCOM is 11%. We’re using 33% for the projected net margin. The median P/E for the period 2006-2013 is 16.8×. We’re using 18x for the projected average P/E.

Qcom model 20130131
QCOM Business Model Analysis: The products are literally ubiquitous and although innovation continues (commitment to R&D) Qualcomm is somewhat mature with respect to life cycle … and naturally lower (but still blue chip leadership) growth rates lie ahead.

Qcom profitability 20130201

Qcom pe 20130201

At the time of selection, the stock price is $62.53, the projected annual return is 18-19%. The quality rating is 91.8 (Excellent, Top Shelf) and the financial strength rating is 98 (A++). The company has no debt.

The company is now ranked #38 in the MANIFEST 40 and although a newcomer to our 40 most widely-followed stocks, investors in our community have studied, owned and profited from QCOM over the years.

And we close with an echo of last month’s closing remarks on Atwood Oceanics — only this time we’re talking QCOM: globally diversified and serving a host of wireless companies … feels like a pretty good hedge vs. geo-risk and a little like 1960s Corning, they sold the tubes to all the dueling TV makers. Placing a bet on red, black and green?

Mainly Gray Manes?

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Don’t get me wrong, I have nothing against gray hair — the invasion has begun at my own follicles (much more cost-effective than my spouse’s highlighting) but as this image from the MoneyShow (and Louis Navellier) shows, it’d be nice to see some hair color diversification in this audience.

We have much to do to engage a nation of investors, including the young people who want to secure better futures with long-term successful investing.

Money show navellier 20130131

This Time It’s Different

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$vle new normal 20130131

Mohamed El-Erian is credited with coining the phrase and concept of a New Normal following the Great Recession of 2008-2009. In a nutshell, it’s the current form of “This Time It’s Different” and — at least for now — he’s right.

Here’s a look at the Value Line Arithmetic Average with a couple of recessions superimposed. The blue line is the long-term (5-year) trailing average. Looking at the slope of this trend line, we see three different periods (between recessions) with fairly conspicuous shifts in slope (basically rate of price appreciation.)

Strong Fundamentals: Ready To Be Loved?

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This month features the top percentile of all stocks covered at MANIFEST on the basis of a combination of strong fundamentals (return forecast and quality) and some key technical factors (relative strength index, sentiment and momentum).

Overall Market Expectations

The median projected annual return (MIPAR) for all 2400+ stocks followed by MANIFEST (Solomon database) is 7.2% (1/31/2013). The multi-decade range for this indicator is 0-20% and an average reading since 1999 is 8.5%.

O Cupid, Doth Thy Arrow Sting?

Only when it misses.

With Valentine’s Day around the corner, Body Central (BODY) a specialty retailer for ladies from 18-35 might be worth a closer look. Be diligent. This one is down to $8 from $30 and has recently changed management while harvesting a weak quarter or two. It could be a value trap … or an oversold opportunity. From our vantage, we’re hoping it’s Chicos II.

Qualcomm (QCOM) is always a worthy study and a well-diversified supplier to a number of the combatants in the smart phone and tablet wars. I still remember Christmas break 1999 when our largest holding at the time, QCOM, soared at an incredible rate.

The January Round Table audience selected AeroVironment (AVAV) following a brief summary and nomination by Ken Kavula — one of our leading knights on a relative return basis since inception.

Super Bowl weekend. Do you know where the remote is? Study Universal Electronics (UEIC). You can order a new one if needed.

Synaptics (SYNA)

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The Round Table knights decided to “sell” Synaptics (SYNA) from the Round Table tracking portfolio at the January session.  As shown, Synaptics was added to the portfolio back in October 2010 — and has outperformed the Wilshire 5000 since then.

Syna model 20130129

The stock price has moved from $22 to $36 over the last few months and in the absence of any large fundamental upgrades (growth or profitability forecasts) the return forecast has dropped to low single digits.  We also note substantial potential resistance near current price levels. Note the substantial price move over the last three months.
Syna chart 20130129

CNBC Stock Draft 2012 (Lead Change)

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3 1/2 days until the checkered flag and Research in Motion (RIMM) is doing a pretty good imitation of Joe Frazier in the swimming pool.

See also: CNBC Stock Draft 2012: Photo Finish?

Josh Brown gurgled, “I told you five days is a long time in the stock market. This is painful. It’s like leaving too much time on the clock for Peyton Manning or Tom Brady. Ugh.”

And somewhere, Reggie Middleton flashed a googlish grin.

And Herb Greenberg was figuring out what to be testy about.

http://www.manifestinvesting.com/dashboards/public/cnbc-stockdraft-2012