Fave Five (7/1/2016)

Fave Five (7/1/2016)

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)
  • Air Lease (AL)
  • Biogen (BIIB)
  • Celgene (CELG)
  • Simulations Plus (SLP)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 14.6%. The median 5-year return forecast for $VLE is 7.1% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short. (July 1, 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.

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +1.8% since inception. 41.7% of selections have outperformed the Wilshire 5000 since original selection.

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

Fave Five (6/24/2016)

  British flag

We’re going Brexit shopping.  In the wake of the polling results, some European disruptions are inevitable but a 500-point drop in U.S. stock market indices is likely unwarranted.  Our weekly shopping list was restricted to the best long-term prospects this weekend — hoping for some outsized opportunities thanks to Mr. Market and pundit/media hand wringing.

Fave Five (6/24/2016)

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)
  • Celgene (CELG)
  • Polaris (PII)
  • Proto Labs (PRLB)
  • Synaptics (SYNA)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 10.8%. The median 5-year return forecast for $VLE is 5.6% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short.(June 24, 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.comS&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 +2.7% since inception. 55.6% of selections have outperformed the Wilshire 5000 since original selection.

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

Fave Five (4/8/2016)

The tracking portfolio has an excess return of +20.4% since inception and 60% of selections have outperformed the Wilshire 5000.

Fave Five (4/8/2016)

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

  • Celgene (CELG)
  • Raymond James (RJF)
  • Shire PLC (SHPG)
  • Stifel Financial (SF)
  • United Therapeutics (UTHR)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 9.3%. The median 5-year return forecast (MIPAR) is 7.4% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short. (April 8, 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 Rhino Outlook: 1-year total return forecast based on most recent price target issued by Goldman Sachs, Merrill Lynch, JP Morgan Chase or Morgan Stanley.

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +20.4% since inception. 60.0% of selections have outperformed the Wilshire 5000 since original selection.

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

  • Aaron’s (AAN)
  • Apple (AAPL)
  • Biogen (YouTube video: BIIB discussion starts at 21:45 of the session)
  • Forward Air (FWRD)
  • Stericycle (SRCL) Feb-2014 Round Table nomination by Nick Stratigos (starts at 18:33 of session)

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

Fave Five (4/1/2016)

Fave Five (4/1/2016)

No fooling!

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)
  • Biogen (BIIB)
  • Celgene (CELG)
  • Inteliquent (IQNT)
  • United Therapeutics (UTHR)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 13.3%. The median 5-year return forecast (MIPAR) is 6.9% (annualized).

The Long and Short of This Week’s Fave Five

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +5.1% since inception. 67.5% of selections have outperformed the Wilshire 5000 since original selection.

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

  • Aaron’s (AAN)
  • Apple (AAPL)
  • Biogen (YouTube video: BIIB discussion starts at 21:45 of the session)
  • Forward Air (FWRD)
  • Stericycle (SRCL) Feb-2014 Round Table nomination by Nick Stratigos (starts at 18:33 of session)

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

Round Table (March 2016)

Round Table (March 2016)

Stocks Featured

The audience selected Neogen (NEOG).

The performance (since inception) of the Round Table tracking portfolio is 11.8% annualized.

This is a relative return of +2.7% versus the Wilshire 5000.

52.2% of all nominations have outperformed the Wilshire 5000 since selection.

Top Ranked Stocks by Return Forecast AND Quality

The Long & Short. (March 29, 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 Rhino Outlook: 1-year total return forecast based on most recent price target issued by Goldman Sachs, Merrill Lynch, JP Morgan Chase or Morgan Stanley.

Channeling Hugh: Companies Near 52-Week Lows

The following screening results intrigued us. We were simply seeking higher quality companies with decent return forecasts that are hovering near their 52-week lows, very much in the spirit of Hugh McManus and his bargain hunting mode.

When the results were displayed, I had to go back and make sure I hadn’t accidentally limited the sector to “healthcare” — because this is one of the features.  But I didn’t.

I guess this confirms that healthcare stocks have had a rough first quarter.

Fave Five (3/18/2016)

Fave Five (3/18/2016)

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

  • Air Methods (AIRM)
  • Biogen (BIIB)
  • Celgene (CELG)
  • Inteliquent (IQNT)
  • Jazz Pharma (JAZZ)

Context: The median 1-year total return forecast (via ACE) for the Value Line 1700 is 18.9%. The median 5-year return forecast (MIPAR) is 6.8% (annualized).

The Long and Short of This Week’s Fave Five

Weekend Warriors

The relative return for the Weekend Warrior tracking portfolio is +5.1% since inception. 59.0% of selections have outperformed the Wilshire 5000 since original selection.

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

  • Aaron’s (AAN)
  • Apple (AAPL)
  • Biogen (YouTube video: BIIB discussion starts at 21:45 of the session)
  • Forward Air (FWRD)
  • Stericycle (SRCL) Feb-2014 Round Table nomination by Nick Stratigos (starts at 18:33 of session)

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

Booyah 38 For 2016

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!

Fave Five (11/27/2015)

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

Goldman Sachs: Buy and Avoid

This was a tangential subject of discussion during the March Round Table. We’ve added Goldman Sachs price targets and will be monitoring them versus ACE and S&P.

Nutshell: Might this be a way to gauge sentiment? In this case, these differentials could deliver influence or impact, providing a potentially meaningful sentiment indicator.

http://www.bloomberg.com/news/articles/2015-04-02/goldman-here-s-where-u-s-investors-should-put-their-money-for-the-rest-of-the-year

Gs buy avoid list 20150331

As a quick reminder to be careful out there, this is what this morning held for Garmin (GRMN).

That’s a reduction from $63 to $54.

Source: Benzinga.com

Grmn gs opinion 20150402

More Fun With Goldman Sachs

When they’re not doing “God’s work” or referring to retail investors as Muppets, Goldman Sachs (GS) makes some calls — long and short — that can be influential in the market. In some Wall Street circles, the legions of Goldman Sachs are playfully known as Masters of the Universe.

In addition to the two lists shared above, here’s a list of nineteen stocks that Goldman Sachs believes are headed for price swoons — a list of stocks to sell short.

Goldman Sachs offers three criteria on how to pick stocks to short:

  • Look for individual stocks with high valuations that have a tendency to underperform;
  • take hints from mutual funds as they do a good job of selecting shorts;
  • and look for stocks that are likely to move on company-specific factors and are less prone to moving with general market and sector trends.

Among the overvalued stocks Goldman thinks could drop are Celgene (CELG), OReilly Automotive (ORLY) and Red Hat (RHT). Stocks underweight by mutual funds that could fall are HST, CTL and EQR; and likely to deviate from the broad market and their sectors are KLAC, JEC and COH.

Rounding out Goldman’s 19 stock recommendations that could reward short sellers: ARG, DO, DISCA, FLS, KSS, MOS, NDAQ, NVDA, TDC, WU.

Tracking Dashboard: http://www.manifestinvesting.com/dashboards/public/goldman-shorts-20140414

Here are the tracking dashboards for the Goldman MOST UPSIDE and MOST DOWNSIDE stocks as of 3/31/2015:

Celgene (CELG)

Celgene (CELG)

Celgene seeks to deliver truly innovative and life-changing drugs for patients. This major pharmaceutical company focuses on the discovery, development and commercialization of products for the treatment of cancer and other severe immune inflammatory conditions.

This one is worth a closer look. Celgene (CELG) ranks at the top of the list for this week’s update batch based on the combination of return forecast (PAR) and quality rating.

But the long-term low total return forecast via Value Line is -5%! What gives?

This provides an opportunity for a closer look at the consensus aspect of what we do.

Weekly Update Summary (Stocks to Study). This listing accompanies every batch update on Monday morning. It represents the consensus-based forecast based on a number of favorite sources.

Thanks for the question. I was really hoping that someone would ask.

With any forecast, it really does come down to the three judgment milestones and your question can basically be framed by seeking differences between Value Line, your own personal study and perhaps the analyst consensus.

The three most influential factors are:

  • Sales Growth Forecast (%)
  • Expected Net Margin (%)
  • Projected Average P/E Ratio

The first place you can turn for these comparisons after the batch update is the Company Report page (excerpt/snapshot shown here).

Remember, these are the consensus estimates based on a number of sources.

The influences include: Value Line, Standard & Poor’s, Morningstar, the Analyst Consensus Estimates and to some degree, Goldman Sachs (although this is a work in progress, more on that in a minute).

The next step is to check them versus the Value Line assumptions to see if we can determine where the differences/variances are — because there’s a world of difference between a -5% forecast and a double-digit forecast.

The date on the Value Line company report and our batch update will say April 10, 2015. But the Value Line analysis was performed on 3/30/2015 — something we can determine by finding the date that corresponds with $120.02 here Keep in mind that the Value Line-based low total return forecast is adjusted for (1) change in price and (2) change in time horizon when published at MANIFEST.

Sales Growth Forecast: Although Value Line displays 13.5% in the Annual Rates box … the growth rate for the 3-5 year time horizon is (13000/9000)^(1/4)-1 = 9.6%. (Keep in mind that the Annual Rates box data can be greatly distorted by mergers, acquisitions and/or divestitures.) The growth rate displayed in the Business Model (visual analysis) is 13.7%. I think most of us would be comfortable with expectations of 10-12% for Celgene.

Profitability: These are identical. Nothing to see here.

Projected Average P/E Ratio: Here’s where the disparate opinions kick in. Value Line is using 26×. Morningstar sees the stock as currently relatively fairly valued at a P/E of 39.5x or 47.9x … and Standard & Poor’s actually sees CELG with a price-to-fair value of 78%.

This is the crux. And it’s probably the basis for Celgene (CELG) being massacred and being the stock with the worst (avoid like the plague) rating over at Goldman Sachs. Goldman probably has a lower projected P/E ratio than Value Line for their long-term forecast. It’s clear by their 1-year outlook that they think P/E decay could even come “home to roost” during the next year.

I realize that most of us are loathe to go above 30x … perhaps 35x … for a long-term P/E expectation — and this is good policy. For my own study, I’d avoid using 39x — but, for now, that does represent the consensus. Who’s right? Time will tell, but this company is successfully navigating and delivering in a challenging but promising and desperately needed environment.