Fave Five (4/7/2017)

Fave Five (4/7/2017)

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 8.4%.

The stocks from the Finviz Week (3/24/2017) have been doing exceptionally well (relative return = +7.5% already) and we’ll make sure to visit that screening method again — and likely at least once/month.

The Fave Five This Week

  • AmTrust Financial Services (AFSI)
  • LKQ (LKQ)
  • LuLuLemon (LULU)
  • Synaptics (SYNA)
  • Under Armour (UA)

The Long and Short of This Week’s Fave Five

The Long & Short. (April, 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 +1.3% since inception. (The absolute rate of return is 17.0%.) 50.2% of selections have outperformed the Wilshire 5000 since original selection.

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

A Better Conspiracy

This Week at MANIFEST (1/27/2017)

A financial advisor I know describes the reality of investing money by saying, “Hope for the best and be prepared for the worst.” With almost every decision we make in life there is uncertainty about the outcome. Close. But my preference would be for “[Prepare With] the BEST to be prepared for the worst.” That’s a pretty good nutshell for quality-driven growth investing — WITH YOUR FRIENDS.

Better Conspiracy

One of the more powerful — and enabling — things that we do as a community is DISCOVER and share ideas that have the potential for better returns. Better returns enable better futures. These futures are often very altruistic and philanthropic and I love the generosity I’ve witnessed over the last few decades working with so many of you.

A new acquaintance recently asked me what I do. I thought for a moment and responded, “I conspire.” His eyebrows lifted and I continued, “I conspire with a community of successful long-term investors to experience (and share) the rewards of long-term investing with those who seek it.” “I conspire to reinforce patience and discipline where necessary because this journey is often challenging.” “Our cornerstone is over seven decades of doing this, learning from and leaning on each other, to pursue the methods and deploy them among friends and family.” “I conspire.” “Because there are legions of doubters who would tell us that this is not possible, too risky … and not worth the effort.” “I conspire.” “Because I know this is often false (or ignorant) and yes, I understand uncertainty and the reality that there are no guarantees” “But I’ve seen the contrary results from ordinary people displaying patience and deploying extraordinary discipline.”

“I conspire.” “Because WE CAN BEAT THE MARKET and experience successful investing.”

We’ll show you how to soar with turtles.

MANIFEST 40 Updates

  • 20. Coach (COH))
  • 38. Wal-Mart (WMT)
  • 40. Costco Wholesale (COST)

Round Table Stocks

  • Coach (COH)
  • Costco Wholesale (COST)
  • Dollar Tree Stores (DLTR)
  • Fossil (FOSL)
  • Hibbett Sporting Goods (HIBB)
  • Michael Kors (KORS)
  • Pricesmart (PSMT)
  • Ulta Salons (ULTA)
  • Vera Bradley (VRA)

Best Small Companies

  • 9. Five Below (FIVE)
  • 20. Francesca’s (FRAN)
  • 24. IMAX (IMAX)
  • 25. Nautilus (NLS)

Results, Remarks & References

Companies of Interest: Value Line (1/27/2017)

The average Value Line low total return forecast for the companies in this week’s update batch is 7.7% vs. 3.3% for the Value Line 1700 ($VLE).

Materially Stronger: J.C. Penney (JCP), Insight Enterprises (NSIT)
,
Materially Weaker: Abercrombie (ANF), Fossil (FOSL), Vera Bradley (VRA), G-III Apparel Group (GIII), Hertz Global (HTZ), Michael Kors (KORS), DSW (DSW), Finish Line (FINL), Sempra Energy (SRE)

Discontinued: Netsuite (N)

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 3.3%, unchanged from 3.3% 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 (1/27/2017)

Gone shopping. A few favorites bubbling near the top of the study list …

The Long & Short. (January 27, 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” Outlook: 1-year total return forecast based on most recent price target issued by Goldman Sachs.

This Week at MANIFEST (10/28/2016)

“Americans eat approximately 100 Acres of pizza every day. That’s about 350 slices per second.” Source: Pizza Fun Facts via Pizza.com

October is National Pizza Month. This observance began in October 1984, and was created by Gerry Durnell, the publisher of Pizza Today magazine. Some people observe National pizza month by consuming various types of pizzas or pizza slices, or going to various pizzerias. During the month, some pizzerias give away free pizzas or pizza slices to customers or offer reduced-price promotions. Some businesses run fundraising drives, donating proceeds of pizza sales to benefit various organizations or charities.

The acres of pizza mention took me back to a keynote speech by Ken “Mr. NAIC” Janke that he delivered to an audience of long-term investors in Chicago back in March 1996. It was entitled, The Janke Dozen and 75 Acres of Pizza (Per Day) and I saved his commentary under “Investment Club Lessons.”

At the time, our first grader did his part. Alex contributed to the national average for pizza consumption as often as we allowed him to. The staples of his diet were pizza, chicken sandwiches, pizza, macaroni & cheese, and pizza. Ken shared a number of observations including the statistic that Americans then consumed 75 acres of pizza per day. Twenty years later, we’ve apparently achieved the next digit, topping 100 acres.

Janke made another comment, in passing, that caught my attention. He pondered, thinking out loud, about the legacy of these investment education events and the various companies that he met over the years. “I became aware of some wonderful companies and investment opportunities. In fact, I suspect that a mutual fund built from the presenters and sponsoring companies would have done quite well in the long term scheme of things.”

He spent a few moments talking about the fact that the stock market had gone down a fairly significant amount on the preceding day. His point? The investment value of the four presenting companies at the event had actually gone up. He touched on one of his favorite subjects… the long-term perspective and “When to Buy Stocks.” The consistent response? “Now. Today. No, not just any stock, but solid reliable firms with solid business models, exceptional quality and good prices.”

Ken then proceeded to describe some of the companies that he found “interesting” as study candidates. The attending presenting companies (American Business Products, Libbey, Synovus and General Electric) were included by default. Ken described powerful business opportunities and excellence in management at Intel. Research and development at companies like 3M was something he always found valuable and desirable. ConAgra has positioned themselves well in their market and their management seemed to anticipate opportunity. (Think ethanol, ultimately.) Disney. Powerful franchise and solid brand recognition world wide. Their recent purchase of ABC television was an example of a well-considered delivery strategy. Motorola is a leadership company that faced some tough short-term challenges. Johnson & Johnson and Abbott Labs have good products, a good track record and good people. Hannaford Brothers, an east coast food supermarket chain, was featured in Better Investing magazine and delivered solid returns until ultimately acquired.

The S&P 500 increased by 16.6 percent in the subsequent five years. Over the same time frame, 8% of equity mutual fund managers managed to stay ahead of the market. How did the “Janke Dozen” perform? The twelve stocks gained some 35 percent.

Ken openly admitted that he had no idea how much pizza Americans would eat in the future. He did know that our analysis, patience, discipline and time-honored approach to investing would often lead us to rewarding opportunities.

Make it so. Engage the possibilities. Pass the deep dish. Shop well.

MANIFEST 40 Updates

  • 20. Coach (COH)
  • 38. Wal-Mart (WMT)
  • 40. Costco Wholesale (COST)

Round Table Stocks

  • Coach (COH)
  • Costco Wholesale (COST)
  • Dollar Tree Stores (DLTR)
  • Fossil (FOSL)
  • Hibbett Sporting Goods (HIBB)
  • Michael Kors (KORS)
  • Nordstrom J.W. (JWN)
  • Pricesmart (PSMT)
  • Ulta Salons (ULTA)
  • Vera Bradley (VRA)

Best Small Companies

  • 9. Monro Muffler (MNRO)
  • 20. Francesca’s (FRAN)
  • 22. IMAX (IMAX)
  • 27. TUMI Holdings (TUMI)
  • 39. Five Below (FIVE)

Results, Remarks & References

Companies of Interest: Value Line (10/28/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 7.8% vs. 4.5% for the Value Line 1700 ($VLE).

Materially Stronger: DSW (DSW), Iconix Brands (ICON), Ulta Salon (ULTA)

Materially Weaker: Express (EXPR), GNC Holdings (GNC), Fred’s (FRED), Rent-A-Center (RCII), Vitamin Shoppe (VSI), Perry Ellis (PERY), Monro Muffler (MNRO)

Discontinued: Mattress Firm (MFRM), Tumi Holdings (TUMI)

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%, 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 (10/28/2016)

The Long & Short. (October 28, 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” Outlook: 1-year total return forecast based on most recent price target issued by Goldman Sachs.

October Round Table October 25, 2016 at 8:30 PM ET ONLINE

Stocks Featured: TBD

The Round Table tracking portfolio has beaten the market by 3-4 percentage points over the last five years. Consider joining Ken Kavula, Hugh McManus and Mark Robertson as they share their current favorite stock study ideas.

We will be continuing the discussion of the relative return-based selling guideline for portfolio management.

Registration: https://www.manifestinvesting.com/events/201-round-table-october-2016

Investing: 2017 & Beyond October 29, 2016 at 9 AM ET Cincinnati, Ohio

  • Overview of Analysis (We’ll actually do a case study — walking through the analysis with exposure to our favorite resources and research.)
  • “Common Ground” – How investment clubs take care of a portfolio. We’ll review portfolio design and discuss management considerations. What is effective stock “watching?” How can we best be vigilant for opportunities and threats to our holdings?
  • “Discovery” – A demonstration of various screening resources with a look at some of our favorite resources.
  • “An Industry Study” – Taking a discovery and putting it through its paces to ensure that we’re considering (or accumulating and retaining the best of the best)
  • Let’s Talk Stocks – An interactive, audience-driven discussion of specific study ideas and case studies.

But not necessarily in that order … and we’ll likely add an emphasis on the 50 Best Small Company list.

Registration: https://www.manifestinvesting.com/events/202-cincinnati-investing-2017-and-beyond