Fave Five (8/19/2016)
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. This week’s batch is a nod to Cy Lynch and Anne Manning who prefer considerable financial strength when return forecasts ebb lower. We also required top quintile EPS Stability — for dividend lovers, a bedrock of EPS is the source of dividends (along with the company check book.) Some of these are flying at lower altitudes — an acceptable condition for core positions but Morningstar believes all five have the potential to outperform the market over the long term.
The Fave Five This Week
- Alphabet/Google (GOOG)
- Cognizant Technology (CTSH)
- Granger, W.W. (GWW)
- Microsoft (MSFT)
- Novartis (NVS)
Context: The average 1-year total return forecast (via ACE) for the Value Line 1700 is 14.2%. The average 5-year return forecast for $VLE is 6.6% (annualized).
The Long and Short of This Week’s Fave Five
The Long & Short. (August 19, 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 www.morningstar.com 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.
The return for the Weekend Warrior tracking portfolio is 11.6% since inception. 43.2% of selections have outperformed the Wilshire 5000 since original selection.
Tracking Dashboard: https://www.manifestinvesting.com/dashboards/public/weekend-warriors