Fave Five (7/28/2017)

Fave Five (7/28/2017)

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 average 1-year ACE total return forecast is 8.2%.

The Fave Five This Week

  • Dick’s Sporting Goods (DKS)
  • Five Below (FIVE)
  • KKR (KKR)
  • Lam Research (LCRX)
  • Western Digital (WDC)

The Long and Short of This Week’s Fave Five

The Long & Short. (July 28, 2017) 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.

Fave Five Legacy (Tracking Portfolio)

The relative/excess return for the Fave Five tracking portfolio is +0.6% since inception. 43.7% of selections have outperformed the Wilshire 5000 since original selection. The absolute annualized rate of return is 15.9%.

Tracking Dashboard: https://www.manifestinvesting.com/dashboards/public/fave-five

Happy Valentine’s Day, MANIFEST Nation!


Rolling Over … Watching 2015 Roll In

Happy Valentine’s Day, MANIFEST Nation!

With Issue 13 of the Value Line Investment Survey landing this week, we’ll soon be getting our first look at some of those 2015 sales and earnings forecast — likely starting next week.

We’d like to be able to say that the carnage has abated, but we can’t. The stealthy reductions in expectations continue and the 2014 forecasts are considerably weaker to start the year than we generally see. Keep in mind that these forecasts have historically eroded from optimistic starting gate positions that steadily get smaller as the calendar pages turn. It’s a pretty unusual year where this is not the case.

We also note the population of Materially Weaker companies continues to exceed the Materially Stronger based on quarter-over-quarter changes in the Value Line long-term forecasts. We would not have been surprised to see this slow down a bit, but as displayed below, the number of weakening situations continues to outpace opportunity.

Here’s a look at the Net Profitability profile and trend for the Value Line industrials as 2013 locks in (actual results) and readies for the 2015 roll call. It’s not horrific, but it is one of the reasons I still say that people who spoke and respected recessionary pressures during 2013 were at least partially right. The current economic recovery, although steady, is still quite lackluster.

Companies of Interest

We’ll do a quick profile of KKR (KKR) based on the Value Line low total return forecast and solid overall condition of the company. We also note that Cognizant Technology (CTSH) and Infosys Tech (INFY) continue to portend better days ahead.

Western Union (WU) is favored at both Morningstar and S&P in this week’s batch and it has served Kim Butcher quite well as a long-time Round Table selection.

Materially Stronger: LinkedIn (LNKD)

Materially Weaker: EZCorp (EZPW), Mantech International (MANT), Federated Investors (FII), Amazon (AMZN), Fusion-io (FIO)

Morningstar Price-to-Fair Value Nudges

The average P/FV for the companies in this week’s update according to Morningstar is 108%.

Standard & Poor’s P/FV Nudges

The average P/FV for the companies in this week’s update according to S&P is 100%.

Market Barometers

The Value Line low total return forecast is 3.2%, up from 3.0% last week.