Morningstar Fair Value Screen

Screening Results (June 2016)

Best Prices Vs. Fair Value: Morningstar

by Mark Robertson

Is the market cheap or expensive? We don’t really pay much attention to this, instead rendering that same opinion on a stock-by-stock basis as we hunt for quality companies at bargain prices. This month, we display a baker’s dozen of good/excellent quality companies with the lowest price-to-fair value ratios in the Morningstar coverage universe.

Good or Excellent — At A Discount

The only exception is Fiat Chrysler (FCAU) because this one is very close to home. The low quality may be off set by a continuing strong vehicle market where the sale of Jeeps and minivans continues to persist. The other potential is a buyout by Volkswagen or some other multi-national entrant and Morningstar’s red tag sale (46%) on Chrysler is echoed by the likes of ACE, S&P and Goldman Sachs.

There are a number of retailers that have hammered into red tag status by stock shoppers over the last few months. Swatch (SWGAY) is relatively uncovered and worth a closer look for many of the same reasons. Recent selections Allergan (AGN), Gilead (GILD), Polaris (PII) and Skyworks (SWKS) continue to be worthy study. Take a Bayer (BAYRY) and call your broker in the morning.

Morningstar P/FV Study Candidates. (June 6, 2016) The companies displayed are ranked by Price/Fair Value (Ascending). Projected Annual Return (PAR): Consensus based return forecast based on 5-year time horizon. Quality Ranking: Percentile ranking of composite that includes financial strength, earnings stability and relative growth & profitability. Value Line Low Total Return (VLLTR) Forecast: Total Return based on low price forecast for 3-5 year time horizon. Morningstar Fair Value: Estimated price of stock, based on discounted cash flow, that would fully reflect all assumptions about enterprise value. Morning Stars: Based predominantly on return forecast, stocks are rated from 1-to-5 Stars (high returns). S&P P/V: Standard & Poor’s price-to-fair value. ACE: Analyst consensus estimates. GS: Goldman Sachs, 1-year price targets based on most recent research. Sources: Value Line Investment Survey, Morningstar, S&P Capital IQ,, Manifest Investing

Fave Five (6/3/2016)

Fave Five (6/3/2016)

Our Fave Five essentially represents a listing of stocks with favorable short term total return forecasts (1 year, according to Analyst Consensus Estimates, or ACE) combined with strong long-term return forecasts and good/excellent quality rankings.

The Fave Five This Week

  • Aaron’s (AAN)
  • Ensign Group (ENSG)
  • Gentherm (THRM)
  • Simulations Plus (SLP)
  • Under Armour (UA)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 10.4%. The median 5-year return forecast for $VLE is 6.4% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short. (June 3, 2016) Projected Annual Return (PAR): Long term return forecast based on fundamental analysis and five year time horizon. Quality Ranking: Percentile ranking of composite that includes financial strength, earnings stability and relative growth & profitability. VL Low Total Return (VLLTR): Low total return forecast based on 3-5 year price targets via Value Line Investment Survey. Morningstar P/FV: Ratio of current price to fundamentally-based fair value via S&P P/FV: Current price-to-fair value ratio via Standard & Poor’s. 1-Year ACE Outlook: Total return forecast based on analyst consensus estimates for 1-year target price combined with current yield. The data is ranked (descending order) based on this criterion. 1-Year S&P Outlook: 1-year total return forecast based on S&P 1-year price target. 1-Yr GS: 1-year total return forecast based on most recent price target issued by Goldman Sachs.

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +6.7% since inception. 66.0% of selections have outperformed the Wilshire 5000 since original selection.

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