Fave Five (1/20/2017)

Fave Five (1/20/2017)

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 7.7%.

This week we place a little extra emphasis on companies with a strong long-term outlook from S&P. (See S&P Price-to-Fair Value, P/FV)

For more information on joining our 11th annual Groundhog Challenge, launching 2/2/2017, as either a group or an individual investor, drop a note to markr@manifestinvesting.com.

The Fave Five This Week

  • Affiliated Managers (AMG)
  • LKQ Corp (LKQ)
  • Michael Kors (KORS)
  • Mylan Labs (MYL)
  • Perrigo (PRGO)

The Long and Short of This Week’s Fave Five

The Long & Short. (January 20, 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 +3.0% since inception. 46.4% of selections have outperformed the Wilshire 5000 since original selection.

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

This Week at MANIFEST (7/31/2015)

A Wooden Anniversary!

It’s “one of those weeks” as we celebrate five years of monthly Round Table webcasts during our July session on Tuesday night, July 28th at 8:30 PM ET. Anyone and everyone is invited as we’ll take a look back at five years of selections and celebrate a tracking portfolio that is beating the overall stock market. Our intent is to share a few actionable ideas every month — and keep track while demonstrating a time-honored approach to stock analysis (discovery and selection) that has served our community of investors for more than 70 years.

Round Table Tracking Portfolio: https://www.manifestinvesting.com/dashboards/public/round-table

Event Registration: https://www.manifestinvesting.com/events/174-round-table-july-2015

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 5.3% — slightly higher than the 4.5% for the Value Line 1700.

Long term forecasts were relatively stable with very few material changes in outlook. Please be reminded that some “upgrades” move stocks from “consider selling” classifications to a “weak hold.” This is likely the case with Foot Locker, Ulta, American Eagle and Zoetis. Fundamentals strengthened but still remain potentially overvalued, just not as much.

Materially Stronger: Dollar Tree (DLTR), Sempra Energy (SRE), Foot Locker (FL), Ulta Salon (ULTA), American Eagle (AEO), Zoetis (ZTS)

Materially Weaker: Weight Watchers (WTW), Francesca’s (FRAN), Sears Holdings (SHLD)

Standard Coverage Initiated:

Discontinued: Mead Westvaco (MWV), Babcock & Wilcox (BWC), Family Dollar (FDO)

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 4.5%, up from 3.8% 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 (7/31/2015)

  • Fossil (FOSL) — Highest MANIFEST Rank
  • Weight Watchers (WTW) — Highest Low Return Forecast (VL)
  • Coach (COH) — Lowest P/FV (Morningstar)
  • Iconix Brands (ICON) — Lowest P/FV (S&P)
  • Kate Spade (KATE) — Best 1-Yr Outlook (ACE)
  • Kate Spade (KATE) — Best 1-Yr Outlook (S&P)
  • Sempra Energy (SRE) — Best 1-Yr Outlook (GS)

Note: The price targets from Goldman Sachs 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.

Stocks to Study (4/18/2015)

Screening Results (April 2015)

Shopping In Prairie Dog Mode

If you’ve been to Devil’s Tower, watched enough Animal Planet and/or visited your local zoo, you’ve seen vigilance. Think about the images or scenes of prairie dogs where a “town” or “clan” hears an unusual noise. Immediately, several of the critters will stand on their hind legs and they’ll generally look East, West, North and South as they collaborate to detect potential danger.

Vigilance in Context

Same thing here. Although we’re reluctant to refer to our community of investors as animals, we know that we’re well served when we remain vigilant.

In this case, we’re continually mindful of the parade of opinions from the rhinos that cover and exude/spew opinions on our companies. For this month’s screening results, we hit the ejector button on any qualifying companies that failed to exceed the averages of a number of forecasts.

“Ignore the words issued by analysts (buy/sell/hold) but heed their numbers and homework.” — Walter Kirchberger

The companies in the accompanying list are sorted by MANIFEST Rank Descending and therefore have strong return forecasts and quality rankings. Every week we check our update batch for drifts (downward and upward) in expectations — heeding their numbers. This is little different as we value consensus and elevated financial strength under these market conditions. For perspective, the average Value Line low total return forecast is 3.7%. The average P/FV at Morningstar is 104% and S&P checks in at 99%. The average 1-year total return expectation from ACE is 13.5%. S&P sees the year ahead at 9.5% and Goldman Sachs (GS) is a little more grumpy and pessimistic at 7.0%.

All of a sudden, this whole investing thing was no longer just a hobby. (grin)

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.


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:

Roman Candles & Cruise Missiles

Roman Candles & Cruise Missiles

Sometimes it can be rewarding to “play with fire” so long as you know when to let go or disembark. Yes, the accompanying image is Slim Pickens in the role of Major T.J. “King” Kong in his rocket-riding glory in the movie Dr. Strangelove.

In this screen, we take a look at some companies with the highest year-over-year percentage changes in earnings, specifically the 3-year period from 2012-2014. So it’s obviously dominated by earnings forecasts. Disclaimer/Disclosure: The fiscal 2014 EPS estimates for a number of companies are still filing in. A few of the companies in the screen are based on 2-out-of-3 reporting periods. In other words, they could change significantly when the analyst consensus estimates for 2014 take shape.

The results were also limited to companies with quality ratings of excellent (greater than 65) and good (55-65) … stopping any company that isn’t in the top two quality quintiles at the door.

Earnings Momentum Leaders

This set of five companies is pretty compelling. Most of them have been part of recent conversations and nudges to explore a little more. That’s cool. In the case of Michael Kors (KORS), the company is a credible threat to Coach (COH) and we’ve talked about relatively empty stores vs. standing-room-only at Coach. This serves as a reminder that your own personal experience is just a small part of a bigger picture. When I see empty KORS outlets, I need to remind myself and deflect the emotions of doubt … or at least, keep all of the information in proper perspective. This flies in the face of Peter Lynch’s famous advice about panty hose and packed parking lots. But do you really think his research stopped there? Really?

Liquidity Services (LQDT) showed up in many of our Groundhog (stock selection contest) entries for 2013 and we can see why. That said, there has been some turbulence of late and a little deeper digging might prove to be prudent.

During our January Round Table, I featured Body Central (BODY) but attendees also heard mention of Francesca’s (FRAN) — a Houston based specialty retailer that merits a closer look.

Tangoe (TNGO) is also compelling. I know very little of the company. TNGO provides communication lifecycle management software and services primarily to large and medium-sized businesses. With all of our attention to the information-based (CTSH) and communication companies (CSCO) and my recently-fried modem, TNGO is also worth a closer look to see if the EPS gold rush of 2012, 2013 and 2014 is a flash in the pan or a compelling opportunity that often accompanies a company/product life cycle emergence.

Attendees from the Orlando MoneyShow came back uttering a single word and it wasn’t Dustin Hoffman’s “plastic.” It was Energy. Energy. Energy. For that reason, a closer look at recent favorite Schlumberger (SLB) and companies like ENSCO (ESV) seems particularly and potentially energizing, too.

We’ll close with our long-held suggestion that an understanding of trailing stop losses for momentum-based companies is generally a good idea. (Think Apple and 2012) Do your best to understand and decide whether to use them. I can think of several roman candles (Peoplesoft) during my investing career whether they either helped or offered salvation. And if you latch on to the next 2012 Netflix, it’s prudent to have an exit strategy while continuing to ride that cruise missile to avoid ending up like Slim at the end of Dr. Strangelove.