Stocks

Fave Five (12/11/2015)

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Fave Five

Here are five stocks that could be studied going into the weekend. They essentially represent 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 Top One Percenters are Five Below (FIVE), Akamai Technologies (AKAM), Jazz Pharmaceuticals (JAZZ), Bank of Nova Scotia (BNS-TO) and Cognizant Technology (CTSH).

Context: The median 1-year total return forecast (via ACE) is 18.2%. The median 5-year return forecast (MIPAR) is 7.9% (annualized).

  • Five Below (FIVE) is a retailer that offers a broad range of merchandise targeted at the teen and pre-teen customer. All products are priced at $5 or below. Its products are in the following category worlds: Style, Room, Sports, Media, Crafts, Party, Candy, and Now. And here we pause to catch our breath because many investors are loathe to consider fad-sensitive apparel-related stocks. (1) We’ll only retain in the tracking portfolio for as long as it makes sense to do so. Consider it a prenuptial promise. (2) If you need a reminder about why this might make sense, see: And The Children Shall Lead Us… — note the returns to shareholders from some of these retail companies that we often avoid. (3) Five Below was featured prominently among our 50 Best Small Companies for 2016 holding down the #38 position.
  • Akamai Technologies (AKAM) provides cloud services for delivering, optimizing and securing online content and business applications. It provides its services to improve the delivery of content and applications over the Internet.
  • Cognizant Technology (CTSH) is an old friend to most of us by now. The company is a provider of information technology, consulting and business process outsourcing services. Its core competencies include Business, Process, Operations and IT Consulting, Application Development and Systems Integration, Enterprise… CTSH is the second most widely-followed company by our subscribers (AAPL is still #1) and was added to the MANIFEST 40 on 12/15/2008. (CTSH has beaten the market by +22.9% — annualized — since then.)

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +2.5% since inception.

Here are some links to fairly recent monthly stock features, Round Table discussions and/or analysis updates for companies in the tracking portfolio:

  • Apple (AAPL)
  • Stericycle (SRCL) Feb-2014 Round Table nomination by Nick Stratigos (starts at 18:33 of session)

Transactions

Skyworks Solutions (SWKS) was removed, or “sold” from the tracking portfolio after beating the market by 10 percentage points over the last few weeks. The SWKS PAR had dropped below our Sweet Spot.

Tracking Dashboard: https://www.manifestinvesting.com/dashboards/public/weekend-warriors

Create an account and launch a FREE, fully functional 30-day test drive at http://www.manifestinvesting.com today.  Explore features like the Stock Search, Dashboards and Sandboxes … and our weekly features that highlight threats and opportunities for stock watchers and shareholders. The weekly features present a number of actionable stock study ideas. We’d be happy to give you or a friend a FREE test drive. Let us know via manifest@manifestinvesting.com (All we need is name, email address and zip code to establish an account.) Discover Manifest Investing today for only $79/year.  Create your account today.  

Seek Stocks: All The Right Places

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Searching For Stocks … In All The Right Places

We’re leading with our stock screener in the Benzinga FinTech Awards because it’s a feature that is centered on the core of our long-term investing philosophy and method. Balanced on the lessons learned by the modern investment club movement, our stock screener (StockSearch) is the tip of the iceberg — but it’s a demonstration of what is possible when investors remain focused on what matters. Our StockSearch is one of the few tools where investors can screen based on return forecast and/or quality as defined by Benjamin Graham. It’s a powerful advantage. And it’s SIMPLE.

We seek to stack the probabilities of success in our favor. How? Keep it simple. Occam was right.

The two most important characteristics for any investment are its return forecast, or projected annual return (PAR) and quality. Our quality rankings are based on financial strength, consistency of profitability and relative comparisons (vs. peers/competitors) for growth and profitability expectations. (For the genesis and definition of the quality ranking, see: Quality Ranked — Excellence Measured.

Return Forecasts Built … Enables Powerful Screening

We use business model analysis and regressions to build long-term trends for sales and ultimately, earnings expectations for the companies that we follow. Analyst consensus estimates are continuously monitored for any impact (positive or negative) on the business models.

The method produces a return forecast, our projected annual return (PAR) that can be used to isolate opportunities for stocks to study. Audit and verify. Buy and own for as long as it makes sense to do so.

There are very few research/reference sites or publications that support screening based on return forecast — and this is a key differentiator, and advantage, for the long-term investors of our community.

Screening Results

The following display provides the screening results — and supports rapid comparisons of the major fundamentals and characteristics for the qualifying companies:

Screening Results. The list displays companies that survive the screen with a sufficient, or attractive, return forecast — narrowing the range to 13-16% growth forecast. Quality was limited to Excellent companies — those that rank in the 20% of all companies based on the industry/peer comparisons. We further limited the field by requiring Financial Strength > 80 — to deliver strong balance sheets and fields of opportunity and EPS Stability > 80 — to ensure consistency for core candidates.

Further Reading & Viewing

Keeping It Simple — The Best Solutions

Like we’ve said, Occam was right about this. Our decades of discovering the best stocks, world class leaders and assuming ownership when they’re “on sale” is based on attention to a few key factors. Those core characteristics lead to the formation of our return forecasts — enabling us to comparison shop and maintain vigilance. We own companies for as long as it makes sense to do so. The StockSearch tool supports other screens like shopping for companies near their 52-week lows … and try the Ivory Soap screen for yourself, entering MANIFEST Rank > 99.44 as the sole screening criterion. Set the growth forecast at 12% or greater to deliver some smaller, faster-growing companies with promise and potentially rewarding futures. See which companies may be worthy of purchase consideration.

There are many, many screening programs out there — many of them screening on stuff that probably doesn’t matter quite as much. We focus instead on results. StockSearch is a results-based tool designed to serve our quest for better returns. The ability to screen on return forecasts is nearly exclusive to Manifest Investing. We believe you’ll quickly discover the power, simplicity and potential to seek better relative returns.

Create An Account. Explore.

1. Start your account and launch a FREE, fully functional 30-day test drive. Explore features like the Stock Search, Dashboards and Sandboxes … and our weekly features that highlight threats and opportunities for stock watchers and shareholders. The weekly features present a number of actionable stock study ideas.

2. If you’re in a club or have friends and family that you’d like to share Manifest Investing with, share the message and we’d be happy to give them a FREE test drive also. Let us know via manifest@manifestinvesting.com(All we need is name, email address and zip code to establish an account.)

Discover Manifest Investing today for $79/year.  For clubs or groups with more than eight partners, contact us (manifest@manifestinvesting.com) for a custom order and group rate.

Create your account today.  

Best wishes and Better Investing!

Booyah 38 For 2016

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Fun With Dashboards

Booyah 38 for 2016

We take a look at the consensus outlooks (both short term, or 1-year, and the long term forecasts) for the best stocks for 2016 featured by Jim “Booyah” Cramer. We follow Jim for the educational slant that he often provides … and point out that his track record is better than most of his critics believe. Our community of investors may well remember the group book report that we shared via Get Rich Carefully (March 2015). Our favorites from the field would be Celgene (CELG), Biogen IDEC (BIIB), Under Armour (UA), Google (GOOG or GOOGL) and Starbucks (SBUX).

TheStreet’s Jim Cramer has a theory on what’s ailing the stock market these days.

The theory goes that there is a “scarcity” of investable stocks, with the exception of a handful of winners across sectors.

“I think we are stuck in an era where we are beginning to recognize that we have too many stocks, too many public companies, too many companies that don’t warrant our attention or our investment in,” Cramer said in prepared remarks for his keynote speech at The Deal Economy: Predictions and Perspectives for 2016 and featured at 38 Annointed Stocks To Add To Your 2016 Portfolio.

Booyah 38 For 2016 Dashboard

Cramer’s (38) stock selections are presented here, alphabetically and will be tracked on the dashboard at: Booyah 38. One of the first things we notice is that the overall average long-term forecast is a mere 5.2% when the average stock has a median long-term return forecast (MIPAR) of approximately 7.5%. This is some of what Cramer is getting at when he talks scarcity. Many of these stocks during a protracted recovery with persistent recessionary characteristics have already attracted a lot of attention from investors. Many of them can be considered defensive or protective measures against corrections or bears.

They’re largely from the S&P 500. In fact, only two hail (Palo Alto Networks & Ulta) from “outside the S&P 1500” with only one, Treehouse Foods (THS) from the S&P 400 Mid-Caps. But Cramer’s selections do manage to average a growth forecast of 10.3% due largely to what might be considered a first cousin of our Smoothie Investing portfolio. Recall that the Smoothie 20 was built from equal parts established blue chip companies and NASDAQ promising stars last summer. The Booyah 38 certainly displays some essence of this.

Quality (75.7) is also a little thin. If scarcity and low return forecasts are an issue — seeking high-quality companies is prudent protection and can be an effective oasis.

Booyah 38 For 2016: Dashboard.

Booyah 38: The Long Of It

Our “forensic review” of Cramer’s stock selections once again underscores some of the challenges and differences in the analyst community. As shown here, there’s a lot of red ink dripping in the Value Line and Morningstar columns. In fact the average long-term return forecast for the Booyah 38 is 0.1%. Fair value is another long-term measure — derived from a discounted cash flow analysis — as performed by Morningstar, S&P and others … The comparison of current price to fair value (P/FV) displays stocks that are attractive (<100%) versus those considered overvalued (P/FV > 100%).

The average P/FV (Morningstar) is 110% and S&P checks in a little more favorably at 104%.

Here’s the Booyah 38 ranked by MANIFEST Rank.

Booyah 38: The Short Of It

But this is really all about the next year, 2016. We gauge expectations using a number of resources including S&P, the analyst consensus estimates (ACE via finance.yahoo.com) and the most influential rhinos (Goldman Sachs, Merrill Lynch and any investment firm with Morgan embedded in the title). We do this with full awareness of the elusiveness, evolution and ebbing nature of forecasts. See: Ritholtz on Forecasting

The median 1-year total return forecast for the Value Line Standard Edition population ($VLE) for the three sources displayed here is:

  • Analyst Consensus Estimates (ACE) = 16.7%
  • Standard & Poor’s (S&P) = 13.4%
  • Goldman Sachs & Other Rhinos (‘GS’) = 14.6%

The average from the Booyah 38 checks in at 11-13% for the companies displayed here.

Closing Thoughts

As we mentioned, 35-of-the-38 stocks are in the S&P 500, so it’s worth wondering if this many stocks aren’t “designed” pretty much to track the S&P 500 (VFINX) for 2016 … and leaving out companies like Apple (AAPL) seems a little precarious.

Just for kicks the average 1-year total return outlook (ACE) for the S&P 500 is 15.6%.

Contrast this with Eddy Elfenbein’s Buy List efforts and our recent Gone Shopping With Eddy analysis of his 2016 selections (due out in a few days — we will let you know). We don’t know precisely how Crossing Wall Street hues their shopping list down to size but the evidence suggests some attention to quality … and the selections seem to have a dual short-term and long-term favorability that seems to have served Eddy well.

We hope everybody does well, shops carefully and experiences the best returns. Booyah!

Gone Shopping With Eddy (2016)

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If you’re not familiar with Eddy Elfenbein and http://www.crossingwallstreet.com, you should be. Eddy thinks like us and it looks like his “Buy List” of stock selections is well on track to beat the market for the 8th time in the last nine years!

This excerpt is from his Thursday update (blog … go ahead, subscribe for FREE) and we’ll rake these around the holiday coals … same thing we do every year, Pinky. See: CWS Market Review for 12/4/2015

Ten Possible Additions for Next Year’s Buy List

For next year’s Buy List, I’m going to add five new stocks. Here are ten stocks I’m strongly considering for next year’s Buy List:

  • Alliance Data Systems (ADS)
  • Cerner (CERN)
  • Church & Dwight (CHD)
  • FactSet Research Systems (FDS)
  • F5 Networks (FFIV)
  • Footlocker (FL)
  • HEICO (HEI)
  • Sherwin-Williams (SHW)
  • VF Corp. (VFC)
  • Zimmer Biomet (ZBH)

I still haven’t finalized my decision, but I wanted you to know some names that are under serious consideration.

 

Manifest Investing Analysis

We start with a snapshot of the dashboard for the ten nominees and the value of $100 invested five years ago — so we can see which stocks have been “naughty” and which ones have been “nice” for the last few years.

Eddy Elfenbein’s short list for 2016 Buy List additions as of 12/4/2015.

This dashboard is public and is available to view at:
https://www.manifestinvesting.com/dashboards/public/cws-buy-candidates-2016

Collectively, these ten candidates have been smokin’ hot with an annualized total return of 22.3% (vs. 13.5% for the S&P 500, VFINX). The only exception has been F5 Networks (FFIV) — checking in at a loss for the trailing five years.

Buy list shopping 20151204

The Long and Short of the CWS Shopping List

Note: The price targets from Goldman Sachs (GS) are from public releases and represent a partial sample. The price target is logged as of the most recent public analyst report. Although every effort is made to keep this information as current as possible, some of the ratings may not reflect more recent research and updates. Some of the older Goldman Sachs estimates (>6-9 months) have been adjusted using more recent price targets from Merrill Lynch, JP Morgan, Morgan Stanley etc.

If you were Eddy, which stocks would you select for your 2016 Buy List?

Do you have another stock or candidates that you feel are more worthy?

Bring it.

Fave Five (12/4/2015)

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Fave Five

Here are five stocks that could be studied going into the weekend. They essentially represent 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 Top One Percenters are Apple (AAPL), CVS Health (CVS), Jazz Pharmaceuticals (JAZZ), Atwood Oceanics (ATW) and Stericycle (SRCL).

The five all rank in the top percentile by Manifest Investing ranking — based on a combination of quality and return forecast. We were also nudged by former Groundhog Challenge Champion Anne Manning to limit the field to the top quartile when it comes to earnings stability. And yes, that tightens things down to a field that we’d generally consider more favorably.

Context: The median 1-year total return forecast (via ACE) is 19.0%. The median 5-year return forecast (MIPAR) is 7.2% (annualized).  PAR stands for Projected Annual Return and uses a constant 5-year time horizon.

Weekend Warriors

Here are some links to fairly recent monthly stock features, Round Table discussions and/or analysis updates for companies in the tracking portfolio:

Tracking Dashboard: https://www.manifestinvesting.com/dashboards/public/weekend-warriors

Fave five 20151204

Chicago: Successful Investing

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  Chicago banner 20160130

 

Experience Successful Investing based on decades of time-honored methods and philosophy — brought to life by the modern investment club movement …

You’re invited to a complimentary workshop where you’ll learn how to discover and study the best companies, how to determine if/when they are “on sale,” and prudent portfolio design & management principles using Manifest Investing web-based resources for long-term investors.

Registration: https://www.manifestinvesting.com/events/184-chicago-successful-investing

Note: This will be an on-location Simulcast event. If you’re attending in person in Chicago, please also RSVP to: manifest@manifestinvesting.com

WHAT WE’LL COVER

What are some of the most powerful lessons learned from multiple decades of successful long-term investing? We’ll explore best practices and examine key success factors based on working with the most successful investment clubs and individual investors.

  • The most important factors for selecting long term investments
  • The most important components of fundamental analysis: Defining Quality, Building A Return Forecast
  • Building and Maintaining Effective Portfolios: Dashboard Diagnostics & Sandboxes
  • Discovery: Some of our Favorite Sources of Information & The Manifest Investing/Forbes 50 Best Small Companies

TIME AND PLACE

January 30, 2016

9:00 AM: Registration starts … Green Room & Open Discussion
10:00 AM to 11:30 AM: Education Session
11:30 AM to 12:30 PM: Lunch

12:30 PM to 2:00 PM: Education Session continues, Questions & Answers

ITT Technical Institute
11551 184th Place
Orland Park, IL 60467

Round Table (November 2015)

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Round Table (November 2015)

What: Round Table Discussion of Favorite Stock Study Ideas

When: Monday, November 30 at 8:30 PM ET

Where: Online. Register via https://attendee.gotowebinar.com/register/5522647165700089346

Who: Kim Butcher, Ken Kavula, Hugh McManus and Mark Robertson

Why: Because we like to share ideas for successful investing. The selections made by Round Table participants have beaten the market over the last five years with a relative return of approximately +3.0%

Stocks Likely To Be Featured

  • Maximus (MMS)
  • Novo Nordisk (NVO)
  • PayPal (PYPL)
  • Proto Labs (PRLB)
  • TBD

The session (webcast) is FREE. Please invite your friends and family to attend.

If you’d like to be added to an email reminder list for this and all future (monthly) Round Tables, send a request to nkavula1@comcast.net

Here’s an Ivory Soap Screen snapshot (MANIFEST Rank > 99.44) for some Round Table candidates.

Ivory screen 20151127

I don’t know if Ken Kavula will be using the Mid-Michigan Market Beaters for some shopping ideas — but he should.

Here’s the tracking dashboard of their consensus selections for 2016.

Mid mich market beaters dash 20151130

Our Best One-Hit Wonders

It’s interesting that 29-of-50 One-Hit Wonders have positive relative returns. These companies represent single selections made over the course of the last 5 1/2 years. The choice could have been made by one of the Round Table knights, a guest damsel or guest knight. What is also true about these selections is they did not receive a “seconding” audience vote at the time of presentation.

Rt one hit wonders best 20151130

Our Worst One-Hit Wonders

All I can say for most of these (attributed to Robertson) is that “it’s early.” Only a couple of them are closed (sold) positions — so there’s plenty of work-in-progress here.

Rt one hit wonders worst 20151130a

 

Fave Five (11/27/2015)

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Fave Five

Here are five stocks that could be studied going into the weekend. They essentially represent a listing of stocks with favorable short term total return forecasts (1 year, according to Analyst Consensus Estimates, or ACE) combined with strong return forecasts and good/excellent quality rankings.

Context: The average 1-year total return forecast (via ACE) is approximately 23%.

Weekend Warriors

Tracking Dashboard: https://www.manifestinvesting.com/dashboards/public/weekend-warriors

Fave five 20151127

Happy Thanksgiving!

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This Week at MANIFEST (11/27/2015)

From All of Us to All of You, Happy Thanksgiving, Everybody!

Thanksgiving dinners take eighteen hours to prepare. They are consumed in twelve minutes. Half-times take twelve minutes. This is not coincidence. — Erma Bombeck

I can’t believe that I watched a Charlie Brown/Peanuts Thanksgiving for the first time last night. I’m not sure how that escaped me because a Charlie Brown Christmas is an annual event … and I’ve been known to spend some time in the Pumpkin Patch over the years.

It did serve as a reminder of the arduous voyage made by the Pilgrims across the Atlantic. In cramped quarters, the trip took three months on the Mayflower … and Charles Schultz laid out the cast in terms of crew, Pilgrims and “Strangers.” The term stranger was applied to those were “along for the ride” but not affiliated with the Pilgrim plight nor quest. Until recently, guests to the English Parliament were still referred to as strangers and their seating area known as the Stranger Gallery.

In our community, we celebrate those who invest with a true long-term perspective and frankly, everybody else seems a little strange. (Grin) As David Gardner pointed out recently, the phrase “long-term investing” is a tautology. It’s a mosh of redundancy because by definition, investing is long term.

Ken Kavula and I spent Monday night with another accomplished investment club of 26 years or more (and last Saturday with a couple of 55-year-old clubs) and we marvel at how most clubs welcome Strangers — those who seek the rewards and refuge from the storm … and they do “investing” with friends.

The journey is arduous and although we pay attention to short term influences on trends, we pay more attention to the long-term perspective and do all that we can do bolster the patience and discipline of the Pilgrims around us. As the holiday season approaches, and we all consume too much food on Thursday, we’re reminded that the survivors of the Atlantic crossing were largely children — steeped in optimism and certainly blessed with the most formidable long term expectations. Plymouth would be significantly influenced by the children. A foundation of optimism and sharing erupts when we invest like children.

And for that, we’re thankful. Happy Thanksgiving, Everybody!

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 5.1% — pretty much in line with the 5.6% for the Value Line 1700.

Materially Stronger: Southwest Airlines (LUV), Restaurant Brands (QSR), Cintas (CTAS)

Materially Weaker: Frontline (FRO), WestJet Airlines (WJA-TO), Bristow Group (BRS), Copa Holdings (CPA), U.S. Ecology (ECOL), Clean Harbors (CLH), Huron Consulting Group (HURN)

Discontinued: ConWay (CNW)

Market Barometers

Value Line Low Total Return (VLLTR) Forecast. The long-term low total return forecast for the 1700 companies featured in the Value Line Investment Survey is 5.6%, unchanged from last week. For context, this indicator has ranged from low single digits (when stocks are generally overvalued) to approximately 20% when stocks are in the teeth of bear markets like 2008-2009.

Stocks to Study (11/27/2015)

  • Chipotle Mexican Grill (CMG) & Buffalo Wild Wings (BWLD) — Highest MANIFEST Rank
  • Fiesta Restaurants (FRGI) — Highest Low Return Forecast (VL)
  • Darden Restaurants (DRI) & Union Pacific (UNP) — Lowest P/FV (Morningstar)
  • Huron Consulting Group (HURN) — Lowest P/FV (S&P)
  • Golar LNG (GLNG) — Best 1-Yr Outlook (ACE)
  • Copa Holdings (CPA) — Best 1-Yr Outlook (S&P)
  • Ryder System ( R ) — Best 1-Yr Outlook (GS)

Note: The price targets from Goldman Sachs (GS) are from public releases and represent a partial sample. The price target is logged as of the most recent public analyst report. Although every effort is made to keep this information as current as possible, some of the ratings may not reflect more recent research and updates. Some of the older Goldman Sachs estimates (>6-9 months) have been adjusted using more recent price targets from Merrill Lynch, JP Morgan, Morgan Stanley etc.

 

Black Friday: LIVE at the Forum

Avoid the Madness of Crowds and the arm bar take downs while jostling for those three dirt cheap (and soon to be out-of-stock) LCD displays and share some time with your investing friends instead.

Note: For Manifest Investing subscribers and trial participants. You can start a 30-day FREE trial by creating an account at http://www.manifestinvesting.com

We’ll “man” this folder continuously through the day — with a break for a Murder Mystery with the family at 1 PM ET — starting at 8 AM ET. It’ll be like “Open Microphone, Open Keyboard” but at a slower pace.

  • What’s On Your Mind?
  • What topic would you like to explore? Need some link references?
  • Is there a stock that we should we studying collectively?
  • Did you find the 50 Best Small Companies helpful? Did you study/buy any of them?

The format will be “almost live.” You may either post your questions in this folder or email topics/questions to manifest@manifestinvesting.com and we’ll post answers, links, follow up questions right here on the Forum.

You may also tweet questions and topic requests to: @manifestinvest “Follow me!”

Black Friday Event: Live At The Forum November 27, 2015 at 8 AM ET

Bring your questions and topics to the Forum on Black Friday. Any thoughts on the Best Small Companies or any stocks of interest that we should collectively be taking a look at? Click in and let us know what’s on your mind.  Note: For Manifest Investing subscribers and trial participants. You can start a 30-day FREE trial by creating an account at http://www.manifestinvesting.com

November Round Table November 30, 2015 at 8:30 PM ET ONLINE

Stocks likely to be discussed: TBD

Registration: https://attendee.gotowebinar.com/register/5522647165700089346

Mark your calendar and save the date for our monthly discussion of actionable stock ideas.

If you have a stock or topic for discussion, please let us know.

Skyworks Solutions (SWKS)

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This is an excerpt/example of one of our company reports and/or monthly stock selection feature at http://www.manifestinvesting.com.  For more information or to request a FREE 90-day test drive of the long-term investing tools and resources, email: manifest@manifestinvesting.com

Ken Kavula stole the show during our recent Round Table with his nomination of SWKS, a specialty semiconductor company.

The audience vote at the August Round Table was a landslide. The kind of landslide that takes no prisoners. Despite the presentation of a couple of worthy and formidable nominees, Ken Kavula stole the show with his nomination of Skywork Solutions (SWKS) … a specialty semiconductor company that has beaten a world class path into the Internet of Things.

Our monthly Round Table generally takes place on a Tuesday evening near the end of every month. We sometimes switch the session to a Saturday morning for some variety or to avoid Hugh’s robust travel schedule. The webcasts are FREE and you’re welcome to invite friends, family or any should-be long-term investor that you know. A handful of stocks are presented complete with analysis and a nudge toward favorite resources for further study, reinforcement and verification. We archive almost all of the sessions on the MANIFEST Forum. You can also use YouTube to track down recorded sessions and/or to share them with your fellow long-term investors. Here is a link to August Round Table starting at the SWKS segment.

Skyworks Solutions (SWKS): Business Model Analysis. Earnings “went positive” and stayed positive fpr Skyworks back in 2005. They’ve not looked back, continuing to develop and market scores of analog and mixed signal semiconductors worldwide. Growth appears to be capable of sustaining double digits and profitability has steadily strengthened. Depending on your outlook for these key characteristics, the return forecast is 10-15%.

Growth, Profitability, Valuation

The growth rate forecast (based on 2014-2019) is 14.7%. Value Line is using 17.5% for their 3-5 year forecast. Morningstar expects 8% growth over the next five years. Based on the visual analysis of the business model, 12-15% seems feasible.

2014 delivered a net margin of 20.0%. Value Line has an average net margin forecast of 26.8% for 2015, 2016 and 2019. This is probably the most influential assumption about the company and analysis. Since emerging and sustaining profitability less than ten years ago, net margin has advanced and is probably headed for a plateau. Based on industry and inherent company characteristics, what level of profitability do you believe is achievable and sustainable? Your answer will dictate whether this stock is in a “buy zone.”

Value Line is using 20x for the 3-5 year projection. The analyst consensus is a little more optimistic, checking in at 25×. At $83, the return forecast is approximately 15%. Phone home.