QCOM

Round Table (January 2015)

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The stocks featured during the January Round Table:

  • Caterpillar (CAT)
  • Google (GOOG)
  • MSC Industrial (MSM)
  • QUALCOMM (QCOM)

The audience selected QUALCOMM (QCOM) from the candidates.

Sell Transaction

MWI Veterinary Supply (MWIV) was “sold” from the tracking portfolio during the session. MWIV is being acquired by Amerisource (ABC) for $190. Ken Kavula selected MWIV back on 11/29/2011 for $64.79, so $1000 became $2969 — an annualized return of 40.5% and a relative return of +22.9% versus the Wilshire 5000.

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Dipped In Magic Waters of Technology

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Dipped In The Magic Waters of Technology

With certain apologies to Field of Dreams and Terence Mann (James Earl Jones)

Terence Mann: People will come. They’ll come to Las Vegas for reasons they can’t even dream (yet). They’ll land at McCarran not knowing for sure why they’re doing it. They’ll arrive at the Convention Center as innocent as children, in a childish (but pure) quest. It is money they have and solutions they seek. They’ll wander and discover. They’ll find geeks and gizmos and remember days before the Star Trek stuff started taking shape and forming reality. They’ll cheer their heroes. It’ll be as if they dipped themselves in magic waters. The memories and dreams will be so thick they’ll have to brush them away from their faces. People will come. The one constant through all the years has been technology. America has rolled by like an army of steamrollers fueled by the next generation of locomotive engine. Technology has transformed time. It’s a part of our past — and a glimpse of our future. It reminds of us of all that once was good and things yet to come. People will come. People will most definitely come.

For those less familiar, this week is the Consumer Electronics Show in Las Vegas. It is the world’s largest trade show of its kind. The International CES (Consumer Electronics Show®) is the world’s gathering place for all who thrive on the business of consumer technologies. It’s where business gets done: on the show floor, in and around our conference program, in impromptu connections and in planned meetings and special events. Follow on Twitter via #CES2015.

We’ll be covering the show and providing investment-related feedback on a number of companies, including but not limited to: QUALCOMM (QCOM), Masimo (MASI), 3D Systems (DDD) and many more …

Coming Events and Attractions

Our expanded coverage of the update stocks this month continues as part of our quarter long test drive of this feature and the studies and shared ideas it delivers. Please tell us what you think and feel free to join in the Forum discussions for the deeper dives on some of the stocks.

We’re working to schedule the January Round Table. It will likely be on Saturday morning, January 31 at 10:30 AM ET. The January Round Table will be part of a series of webcasts during Groundhog Weekend — more information to follow.

Speaking of our 10-year anniversary and ALL THINGS GROUNDHOG, we’ll be firing up another year of superior stock selection as we launch Groundhog Challenge 2015 on February 2, 2015. It’s not too early to start thinking about your winners for 2015. Remember we welcome both individual investors and groups (investment clubs) … the ground rules are simple pick a minimum of FIVE and a maximum of TWENTY investments and we lock them in from 2/2/2015 through 2/2/2016.

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 5.0% — a little higher than we’ve seen in the last few weeks.

Fundamentals continue to erode slightly. This update did have a slight exception, with modest boosts to expectations for companies like Bristol-Myers (BMY), Lilly (LLY), Merck (MRK) and Teva Pharma (TEVA) along with various other drug-related stocks. Pfizer (PFE) was a notable exception — with a slightly reduced long-term forecast.

Materially Stronger: Abbvie (ABBV), Lilly Eli (LLY)

Materially Weaker: Cameco (CCJ), Genworth Financial (GNW), Pan American Silver (PAAS), Barrick Gold (ABX)

Pfizer (PFE) dropped from $35 to $30 for the 3-5 year low price forecast.

Teva Pharma (TEVA) went from $55 to $60 for the 3-5 year low price forecast.

Standard Coverage Initiated:

Discontinued:

Stocks to Study

The following update stocks are ranked in the top 10th percentile of all companies we follow (MANIFEST Rank > 90)

MANIFEST 40 (December 2013)

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The Stocks You Follow: December 2013 Update. 8 1/4 years. We’ve continuously monitored the 40 most-widely followed stocks by our community of subscribers at Manifest Investing for that long. We think it’s more than a fair assumption that many of these are in your real money portfolios … and for that, we’re optimistic and grateful. This managed “tracking collection” of your collective favorites has outperformed the Wilshire 5000 by +3.1% (relative rate of return, percentage points). The aggregate absolute return has been 9.0% during a period when the annualized total return for the general stock market has been 5.9%. With 8.25 years in the can, the average holding period is 5.7 years.

Peak Performance

Our MANIFEST 40 is a celebration of collective excellence in stock selection, strategy and disciplined patience.

With an average holding period of 5.7 years, the annualized relative return of the current tracking portfolio is approximately +3% versus the Wilshire 5000, approaching our long-term objective. With above average growth (8.5%) and a return forecast of 8.9% (vs. 5.3% for the general market) we see continuing solid performance ahead …

“We have always believed that the collective
decisions made by our community of
like-minded, long-term investors
are worth huddling over …
a place where ideas are born.”

A little over eight years. We established and have been tracking your most widely-followed stocks for more than eight years. Many of the original “40” are still on the list. There have been relative few kings-of-the-hill, including Bed Bath & Beyond (BBBY), Stryker (SYK) and current pole position and community favorite, Apple (AAPL).

Bottom Line(s)

The annualized rate of return for this tracking portfolio is 9.0%. The Wilshire 5000 has gained approximately 6.0% (annualized) since inception … so the relative return (alpha) of these community favorites is a stellar +3.0%.

The relative return of the ACTIVE, current 40 positions, in the tracking portfolio is also +3.1% annualized.

21-of-38 active entries have outperformed the Wilshire 5000 since selection for an accuracy rating of 55.3% compared to 62.5% in September 2013. 62.5% is well above “average” for selecting “winners” by the overall universe of investors and traders.

MANIFEST 40 (December 27, 2013). These are the most widely-followed stocks by subscribers at Manifest Investing. Current leader Apple (AAPL) was added to the list back on September 24, 2009 and steadily climbed the ranks while generating a relative return of +21.3% (annualized) over the trailing three years despite the swoon of 2013. Figures in parentheses are the ranking back on September 30, 2013.

Chargers

Qualcomm (QCOM) has, once again, continued to move up the charts, going from #16 to #12 over the last three months. QCOM had the greatest percentage gain in dashboard appearances. Other companies making strong showings of interest include recent Solomon Select feature Cognizant Technology (CTSH) and Portfolio Recovery (PRAA).

The results of $100 positions investing in any of the Top 40 companies can be viewed at any time at:

http://www.manifestinvesting.com/dashboards/public/manifest-40

Strongest Performers

The three top performers in the MANIFEST 40 since inception — based on annualized relative return — are Portfolio Recovery (+40.3%), Cognizant Technology (33.7%) and Buffalo Wild Wings (30.6%). $100 invested in Cognizant Technology (CTSH) on 12/15/2008 is now worth $572

Newcomers

We pay considerable attention to the chargers and new additions to the list. Apple was a new addition back on 9/24/2009 and $100 invested then is now worth $564 (relative return = +21.3%).The two newcomers are actually returning former residents: Intuitive Surgical (ISRG) and Gilead Sciences (GILD).

Hallowed Round Table (October 2013)

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Join us tonight (8:30 ET) for the October 2013 Round Table as we explore, discover and CELEBRATE the performance results of the tracking portfolio. Yes, it appears that the armored hound can hunt!

FREE webcast! Register at: http://www.manifestinvesting.com/events/131-round-table-october-29-2013

There’s no truth to the rumor that Ken, Cy, Hugh and Mark have joined the legions of “Walkers” even if they look a little pale this month. We’ll take a look back at Halloween selections of Yore — unless it’s too spooky. Speaking of spooky, we’re certain to spend some time with the Forbes Best Small Companies for 2013 during the session. Ken will spend some time “off the radar” with some compelling smaller companies.

Companies Likely To Be Studied/Presented:

  • Mesa Labs (MLAB)
  • Qualcomm (QCOM)
  • Schlumberger (SLB)

References:

Round Table Tracking Dashboard

Red October: Forbes Best Small Companies for 2013

Value Line Low Total Return Screen (6/21/2013)

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Companies of Interest

Both CVS (CVS) and Walgreen (WAG) have low total return forecasts of 8.5% during this week’s update. But this week’s nod/tribute is to those of you who have suggested that it was feasible that Rite-Aid (RAD) with its lowest-in-field quality ranking had a viable chance of recovering and cited a change in management that has steadily been working to improve conditions over the last few years. Although still a work in progress, profitability appears to have found thin black ink. Rite-Aid is now at $3.00 up from lows of $0.20 (+1400% since 2009) and some turnaround speculators have been rewarded.

The three companies with the highest fundamental and technical rankings are; Telefonica (TEF), Gentex (GNTX) and Qualcomm (QCOM).

Materially Stronger: Arris Group (ARRS), LKQ (LKQ), Rite Aid (RAD)

Materially Weaker: F5 Networks (FFIV), Nokia (NOK), Frontier (FTR), Cincinnati Bell (CBB), Telephone & Data Systems (TDS), U.S. Cellular (USM)

Market Barometers

The median Value Line low total return (VLLTR) forecast is now 6.2%, down from 6.3% last week.

In a normal distribution, the mean plus or minus one standard deviation covers 68.2% of the data. If you use two standard deviations, then you will cover approx. 95.5%, and three will earn you 99.7% coverage. The median low total return forecast since 1999 is 8.5% with a standard deviation of 3.5%. This means that approximately 70% of the time the low total return forecast will be between 5-12%. 96% of the time, the overall low total return forecast will be between a low of 1.5% and a high of 15.5%.

The excursions “north” of 20% (i.e. March 2009) lie outside the 99.5% probability range, because a three standard deviation swing to the upside would be 19%. This is one of the reasons that March 2009 was a back-up-the-truck, perhaps once in a lifetime buying opportunity.

Tin Cup (May 2013)

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Tin Cup Model Portfolio: May 2013

Sell STRA, Buy CHRW. Accumulate QCOM

This demonstration portfolio invests the maximum allowable 401(k) in stocks. In the absence of choices within the portfolio, we shop outside the portfolio using the combination of return forecast and quality rating to identify candidates to be added to the portfolio. Total assets reached $1,000,000 in 17 years.

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Total assets are $1,092,174 (4/30/13) and the net asset value is $244.09. The model portfolio gained +3.01% during April 2013. The S&P 500 checked in at +1.70% for the month. Tin Cup has generated a 6.1% annualized total return over the trailing five years vs. 5.8% for the S&P 500 for a trailing 5-year relative return of +0.3%.

Tin Cup has outperformed the S&P 500 over the trailing ten years by +0.7% and the annualized total return since 1995 is now 19.0%.

Portfolio Characteristics

With MIPAR at 6.6%, our target for the minimum overall portfolio PAR is at least 11.6%. The overall portfolio PAR is 11.3% on 4/30/2013. Quality and financial strength are sufficient at the current levels of 92.4 (Excellent) and 92%. EPS Stability is 85 for the portfolio. Sales growth is a little “light” at 9.1%.

Decisions

We challenge the lowest MANIFEST rank (return forecast + quality) holding, Strayer (STRA) and replace it with C.H. Robinson, the Solomon Select featured stock for May — taking advantage of the higher quality and return forecast. Our $1917 and dividends for May are destined for Qualcomm (QCOM) based on the higher MANIFEST rank for the company. Looking at the companies at the top of the sweet spot, there’s a group concentrated at a return forecast of approximately 15%. The nod goes to QCOM on the strength of its quality ranking.

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April Round Table Highlights

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As Ann mentions here, the April Round Table was challenged by barking dogs and thick thunder/lightning in Houston — but we persisted. In a subtle shift, we’re going to move Round Table highlights to the Stocks folder. Why? Although the portfolio design & management, and Round Table tracking portfolio are important, we do want to emphasize that the program core is centered on identifying stock study opportunities. We can do that and still stay focused on achieving those long-term superior relative returns.

Sorry to everyone I had to end my Round Table presentation so quickly. I am not sure any of what I said made sense. It’s hard to concentrate when you are being bombarded by lightning. The worst of the thunderstorm lasted about 45 minutes and we did lose power for a little while. Hope the rest of the Round Table went well.

Qualcomm (QCOM)

As for Qualcomm, I believe it is definitely a stock you should research. For a company of its size (24.12B estimated revenue for 2013), it continues to show signs of growth. I estimated the future growth sales at 13% and the future earnings per share at 11.5%. This results in a future eps of $6.12 which is a little higher than Value Line and a little lower than MI.

Qualcomm leads the list of companies that produce mobile chip sets for phones. It has a large amount of patents and they receive royalties from millions of mobile devices each year that should continue over the next 5-10 years.

Their chip sets are found in the current popular mobile devices from Apple, Samsung, Blackberry and Nokia.

The only concern that I could find was that some investors and analysts did not like that management has increased their spending (21% this past year). To me Qualcomm’s management appears to be doing a good job. They have no debt, their pre-tax profit is high and their return on equity is good. Sometimes you have to spend money to make money.

The recent drop in price offers a good opportunity to pick up the stock.

Anne

Polaris Industries (PII)

Ken Kavula’s presentation can be summed up pretty quickly.

“Polaris? You mean that snow mobile company???”

“Not exactly.” “Study it and see that there’s more, a lot more, to this story.”

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Caterpillar (CAT)

Hugh McManus described one of his favorite shopping methods, the quest for stocks that are trading near their 52-week low. In fact, we’ll probably spend more time with this notion because as he said, “One of the things we’ve witnessed over the years is that long-term investors, particularly those getting started, tend to purchase at stock prices which prove to be too high. We know that the typical stock will often trade at a low during a given year that is on the order of 50% of its 52-week high … so it makes sense (with patience and discipline) to watch for good companies trading at low prices.”

He also shared an intriguing tidbit about different treatment of large, higher-quality stocks versus vs. promising, emerging companies in that he’ll settle for 1-year lows for the larger companies … while demanding multi-year lows for the others. Fascinating and worthy of further exploration, in my opinion.

Buy low

C.H. Robinson (CHRW)

Mark doubled down on Cy Lynch’s fairly recent selection of C.H. Robinson (CHRW) — the transportation and logistics company. CHRW is the Solomon Select stock feature for May — so we’ll cover it “there.”

The audience seconded (thirded?) CHRW by choosing it from the alternatives.

There was some concern expressed during the polling about the potential for continued price “sag” in Caterpillar (CAT). Hugh’s response? “I hope so. I prefer a little sag while I’m accumulating.” (Grin)

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Finding The Best 4-Year Forecast Method

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Mark Hulbert and I compare notes again on using Value Line for long-term forecasting for individual stocks and markets.  As Hulbert points out, the Value Line Median Appreciation Projection (VLMAP) has a pretty solid track record.

We agree — and side with the likes of Walter Schloss and pure discipline itself — when we use our own version of VLMAP, specifically an emphasis on the median Value Line low total return forecast (VLLTR) … a parameter that includes dividends, extending beyond long-term price appreciation and aligns even more favorably when we compare Forecast vs. Actual with the past couple of decades in the rear-view mirror.

http://www.marketwatch.com/story/finding-the-best-four-year-market-forecaster-2013-04-19

Shopping By Sector: Technology En Fuego

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Photo Credit: Tc Morgan via Compfight cc

Where to shop these days?

Start by recognizing where NOT to shop and that’s probably the utility sector. The utility stocks have been en fuego. Don’t shop among the ashes of a bonfire, shop where a flammable pile is smoldering — but distinguish ashes from ignition.

The accompanying table has been sorted from highest potential to lowest potential based on projected annual return (PAR) — the return forecast for the ten traditional sectors from S&P.

Technology stocks worth a closer look: Apple (AAPL), Cognizant Technology (CTSH), Google (GOOG), EMC (EMC), Oracle (ORCL), Qualcomm (QCOM) and Intel (INTC).

Keep in mind that the smoldering might take a while as the often unfriendly (to Tech stocks) days of summer swoop in — for investing for the long term …

Sector gps 20130411

MANIFEST 40 (March 2013)

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The Stocks You Follow: March 2013 Update

We’ve always believed that the collective decisions made by our community of long-term investors is worth huddling over … a place where ideas are born.

Apple (AAPL) continues at the top of the leader board, a position the company has held for several months. AAPL first appeared on this listing on 9/24/2009 and proceeded to ascend to the summit.

Performance Results

It’s here that your favorites shine. The average annualized RELATIVE return for the current tracking portfolio is +4.2%. (The absolute return for the tracking portfolio since inception is 6.4%.)

The accuracy rating (% of outperforming entries) of the current selections is 59.0%.

Including all selections since inception (7.5 years) the annualized relative return of the MANIFEST 40 is +3.0%.

The figures in parentheses are the position of the company during the December 2012 listing of the MANIFEST 40. For example, FactSet Research (FDS) advanced from #17 to #13 over the last three months.

Chargers

What companies are making the strongest gains among the consensus collection? This may be indicative of strong fundamentals (combined with attractive prices and return forecasts) and probably warrants further study.

The stocks making the largest advances (by % of dashboards) since 12/31/2012 are: QUALCOMM (QCOM), Coach (COH) and Bio-Reference Labs (BRLI).

The newcomer this quarter is Coca-Cola (KO).

Strongest Performers

The top performers in the MANIFEST 40 tracking portfolio are: