SBUX

Happy President’s Day!

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This Week at MANIFEST (2/22/2019)

“Investment in knowledge pays the best interest.” — Abraham Lincoln

“I am a firm believer in the people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts — and some beer.” — Abraham Lincoln

Raise A Glass

Lincoln was a voracious reader. And legend has it — a pretty good listener, too. Reading the Lincoln-Douglas debate transcripts, he was self-effacing, quick on his feet and the exchanges were actually pretty enjoyable (most of the time.)

Holders of the nation’s highest office have often had a close relationship with booze, as George Washington established the nation’s largest whiskey distillery in 1797 and Thomas Jefferson brewed his own beer. Andrew Jackson’s inaugural party in 1829 was so legendary that we still drink the orange punch party goers consumed. But Lincoln was the only president who was also a licensed bartender.

While they sold booze, it was far from a watering hole. The Chicagoist states that “Stores could sell alcohol in quantities greater than a pint for off-premises consumption, but it was illegal to sell single drinks to consume at the store without a license.

In March 1833, Berry and Lincoln were issued a tavern, or liquor, license, which cost them $7 and was taken out in Berry’s name. Stores that sold liquor to consume on the premises were called groceries.

So … it’s more appropriate to think of Lincoln as a grocer than a bartender.

I still think the Spielberg movie, Lincoln is a must see in these interesting times in which we live.

Why In The World Would A Long Term Investor Live In Fear Of Recessions?

MANIFEST 40 Updates

Round Table Stocks

  • Alliance Data Systems (ADS)
  • CBRE Group (CBRE)
  • C.H. Robinson (CHRW)
  • Forward Air (FWRD)
  • Health Care Services (HCSG)
  • Illumina (ILMN)
  • Maximus (MMS)
  • S&P Global (SPGI)
  • Starbucks (SBUX)

Best Small Companies (2019 Dashboard)

The status of the 2019 Best Small Companies can be tracked at: https://www.manifestinvesting.com/dashboards/public/best-small-2019

Investing Round Table Sessions (Video Archives)

Investing Topics with Ken, Mark & Friends

Results, Remarks & References

Companies of Interest: Value Line (2/22/2019)

 

The median Value Line low total return forecast for the companies in this week’s update batch is 7.3% vs. 6.5% for the Value Line 1700 ($VLE).

Materially Stronger: Golar LNG (GLNG), Allegiant Travel (ALGT), United Continental (UAL), Spirit Airlines (SAVE)

Materially Weaker: Bristow Group (BRS), Papa John’s Pizza (PZZA)

Discontinued: Dun & Bradstreet (DNB), American Railcar (ARII)

Market Barometers

The thing very few people tell you about “overvalued” markets is that, occasionally, the fundamentals arrive to justify them. — Joshua Brown

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 6.5%, decreasing from 7.7% 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.

Update Batch: Stocks to Study (2/22/2019)

Long & Short Term Perspectives. (February 22, 2019) 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. 1-Year S&P Outlook: 1-year total return forecast based on S&P 1-year price target.

The average return forecast (PAR) for this week’s update batch is 8.7%. (MIPAR = 8.2%)

The 52-week total return forecast for the group is 18.7% versus 14.9% for stocks overall. S&P has a 1-year outlook for this week’s batch at 10.4%.

Morningstar sees them as fairly valued (P/FV = 101%) and S&P “dissents” at a P/FV of 107%.

Discovery Club

““I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.” — Warren Buffett, 1999 BusinessWeek Interview

This is a reference to portfolio design and balance — specifically achieving a blend of blue chip stalwarts combined with a suitable mix of faster growing promising smaller companies. We generally aim for an overall sales growth forecast of 10-12% with suitable adjustments for time horizon and/or risk tolerance. Based on some recent soul searching, we’re now pondering how much “relatively undiscovered company content” is enough. Or too much? In any event, we’ll be dedicating a larger slice of our weekly updates to DISCOVERY.

This Week’s Sources and Suggestions

  • Value Line Investment Survey Updates
  • Groundhog Challenge XIII (2019) Entries
  • Barron’s 100 Sustainable Companies
  • Kim Butcher’s S&P 600 Initiations

Coverage Initiated/Restored: Northstar Realty Europe (NRE), RingCentral (RNG), Roku (ROKU), Invitae (NVTA), Baozun ADR (BZUN), DXC Technology (DXC)

Fave Five (9/8/2017)

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Fave Five (9/8/2017)

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 10.6%.

Our Favorite Bubbles …

… just might be the kind of bubbles that evolve when we blend Ivory Soap with Irish Spring. Hugh McManus likes to shop for opportunities among stocks that are trading near their 52-week lows and for non-core case studies, he’ll sometimes demand that the stock prices be near multi-year lows. Part of the driver behind this is the recognition that there’s often a large difference between 52-week highs and 52-week lows, even for some of the bluer chip established stocks. Isolating opportunities to invest when stocks are in the lower part of those annual ranges would seem to provide a margin of safety and reduce some of the downside … and “all things created equal” why should we shop anywhere else. (Read that in an Irish brogue for full effect.)

The five stocks flagged this week are repeat selections for the Fave Five tracking portfolio and as the parade of second opinions shows — there’s largely some consensus about expectations. FleetCor (FLT), Starbucks (SBUX) and Ulta Beauty (ULTA) also popped up as high-quality stocks with relatively outsized return potential in Ken Kavula’s review of the Forbes Most Innovative Companies. Gentex (GNTX) has also been a Round Table favorite with stellar performance over the years and Akamai Technologies (AKAM) has been featured as a worthy exploration consistent with the growing need for cyber security.

StockSearch Results using the stock screener at www.manifestinvesting.com with the following criteria: Manifest Rank (percentile ranking based on combination of quality and long term return forecast) greater than 99.44% — or top 1/2 of top percentile of all stocks covered, Financial Strength > B++ (70%) and stocks within 20% of their 52-week low.

The Long and Short of This Week’s Fave Five

The Long & Short. (September 8, 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 +2.3% since inception.

The absolute annualized rate of return is 15.3%.

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

This Week at MANIFEST (8/25/2017)

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This Week at MANIFEST (8/25/2017)

There is no science in this world like physics. Nothing comes close to the precision with which physics enables you to understand the world around you. It’s the laws of physics that allow us to say exactly what time the sun is going to rise. What time the eclipse is going to begin. What time the eclipse is going to end. — Neil deGrasse Tyson

Whenever I sing ‘Total Eclipse of the Heart,’ the way people sing along with me still excites me. It’s one of the songs that audiences know all the lyrics to, and they sing along with me, and it makes me so happy. People also know my songs ‘Holding out for a Hero’ and ‘Lost in France,’ and this gives me so much joy on stage. — Bonnie Tyler

Mark: Ken, You know what makes me sad?

Ken: What’s that, Mark?

Mark: When you and I take a road trip that takes us nearly within walking distance to Punxsutawney, Pennsylvania … and you’re unwilling to make a slight detour.

Ken: Friends, that “slight detour” would have added nearly two hours to a trip that would already require 9 hours. Besides, on both excursions, we were blasted with a deluge that probably drowned Punxsy Phil in all its fury.

Mark: Go ahead, big guy, make light of these tears. Besides, we know that Noah keeps the ark just south of Cincinnati.

Ken: Mark, you know what makes me happy?

Mark: You mean besides dinner with investing friends in Cleveland at Corky & Lenny’s?

Ken: Well, that too. But once again we discover a local conspiracy of investing educators who nurture excellence in long-term investing.

Mark: No kidding. We reviewed four investment club portfolios during the Keystone Strategies conference. All of them were well-positioned, adhering to design targets — most notable in that ALL OF THEM contained a sufficient number of faster-growing companies to keep the overall portfolio growth rate in the 10-12% range.

Ken: Folks, we don’t see this kind of thing very often — and it bodes well for the like-minded investors of Central Pennsylvania.

Mark: Absolutely. It reminded me of Cow Tipping in places like Beardstown and Faribault, Minnesota.

Ken: I can only imagine the detours involved there and I’m probably grateful that I wasn’t in the car. But go ahead, humor me.

Mark: And the wonderful achievements of the Broad Assets investment club of St. Louis. The River Oaks Investment Club has won the Keystone Strategies stock picking contest three out of the last four years in the group category.

Ken: I’ll give you that. The Keystone Strategies contest is outstanding and they’re to be commended. We recommend this type of activity as a path to learning, discovery, sharing of ideas and socializing with successful investors to all communities that we visit.

Mark: … which brings us to Neil deGrasse Tyson.

Ken: I feel a cosmic-sized detour coming on.

Mark: I think we can almost compare the behavior of the stock market in 2008-2009 to an eclipse. In hindsight, it didn’t really last that long but it was scary … but from an epic long-term perspective, we probably should have been looking at the Great Recession with a colander on our heads.

Ken: For some reason, I’m not having much trouble picturing you with …

Mark: [interrupting] I’m serious. Most of “Investor” Nation spends every waking moment worrying about price drops and whether or not it’s possible to time the market ad nauseam. This notion has been very destructive to so many as it has delivered pessimism-driven conservative approaches to asset allocation, etc. as the “gold standard” of prudent investing. For those with long time horizons — and a few more total solar eclipses in their future — there’s no need to think of price volatility as RISK.

Ken: In that case, I think you’re right. And we should point people to the work of our own Cy Lynch on the real definition and impact of RISK in our investing efforts.

Mark: Cy is right about this. And so is AAII’s James Cloonan. Fear of “Risk” has destroyed a lot of capital over the decades. And that leads me to another twisted perception that we’ve been jousting with for years. This turned out to be one of our favorite slides from the weekend.

Mark: [continuing] There’s a couple of things that we can see here. First, we counsel in a BIG way, the importance of all-of-the-above investing. We define this as a blend of fast-growing promising upstarts, a suitable dose of medium-sized workhorse companies growing near average growth rates and a dash of blue-chip stalwarts growing at low single-digit slower growth rates. We build and maintain our portfolios at a 10-12% average sales growth forecast for the portfolio. We can generally point to the Value Line Arithmetic Average as “beating” the S&P 500, largely because of the contribution of the small and medium components. However, this graph shows that the red hot S&P 500 has caught the Value Line 1700 of late, something we’ve not seen since the late 1990s and rarely over the last 60 years. Read Josh Brown’s Just Say No to the S&P 500 from this perspective. But beyond that, notice the roller coaster (volatility) of the S&P 500 versus the Value Line average. Which one is “riskier?” Take it a step further and remove the S&P 500 from the Value Line average (mentally) and imagine how much less bumpy (“riskier”) the remaining small- and medium-sized companies must be.

Ken: This puts our long-held perspective on full display. Fast-growing and medium-sized companies of suitably high quality do not have to be roller coasters. We might also observe our strong emphasis on the S&P 500 field of opportunity approximately five years ago.

Mark: Right. How ya like my colander now? We’ll take a closer look at the S&P 600 and S&P 400 in coming weeks, but we’re launching our Fast Growing Company safari season with a few of the companies we discovered among the entries for the Keystone Strategies contest portfolios. You know what makes me happy? Investing better, with friends, whether the sun is shining or when the moon gets in the way for a few minutes. I’m always holding out for a few more Heroes. (Certain apologies to Bonnie Tyler)

Ken: We visit a lot of chapters and investment clubs. And the efforts of Chuck Reinbrecht, Richard Lindsay and Bruce Kennedy are exemplary as well as the support and achievements we witnessed by the likes of Kyle Blevins, Donna & John Diercks, Ken Mobley, Mary Ann Rentsch and the Cleveland team, John Varner and Barbara Vinson.

Mark: We’re also grateful for the support provided by bivio’s Laurie Madison for the Keystone Strategies contest and event. We look forward to future visits to share ideas and thoughts with the investors of Cleveland and Central Pennsylvania. And that visit to Punxsy Phil’s neighborhood is still on my Bucket List.

MANIFEST 40 Updates

  • 10. FactSet Research (FDS)
  • 27. Starbucks (SBUX)
  • 29. Buffalo Wild Wings (BWLD)

Round Table Stocks

  • Buffalo Wild Wings (BWLD)
  • C.H. Robinson (CHRW)
  • Forward Air (FWRD)
  • Maximus (MMS)
  • McDonald’s (MCD)
  • Standard & Poor’s Global (SPGI)
  • Starbucks (SBUX)
  • Stericycle (SRCL)
  • Waste Connections (WCN)

Round Table Session Recordings Added

Best Small Companies

  • 3. Forward Air (FWRD)
  • 13. BJ’s Restaurants (BJRI)

Results, Remarks & References

Companies of Interest: Value Line (8/18/2017)

The average Value Line low total return forecast for the companies in this week’s update batch is 4.9% vs. 3.4% for the Value Line 1700 ($VLE).

Materially Stronger: Huron Consulting (HURN), Red Robin Gourmet (RRGB), Atlas Air (AAWW)

Materially Weaker: BJ’s Restaurants (BJRI), DineEquity (DIN), Bristow Group (BRS), Ship Finance (SFL), PotBelly (PBPB), Buffalo Wild Wings (BWLD), Waste Connections (WCN)

Discontinued: Panera Bread (PNRA)

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 3.4%, an increase from 3.1% 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.

Update Batch: Stocks to Study (8/25/2017)

The average return forecast (PAR) for this week’s update batch is 8.0%.

The Long & Short. (August 25, 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. 1-Year S&P Outlook: 1-year total return forecast based on S&P 1-year price target.

August Round Table August 22, 2017 at 8:30 PM ET ONLINE

Stocks Likely To Be Featured: TBD

This Round Table will continue the discussion on traditional selling analysis and explore the relative return-based selling we’ve suggested.

Consider joining Ken Kavula, Cy Lynch, Hugh McManus and Mark Robertson as they share their current favorite stock study ideas.

Registration: https://attendee.gotowebinar.com/register/5621511966734158595

Coming attractions 20170821

Round Table (May 2017)

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These excerpts are from our monthly webcast series (The Round Table) that usually airs on the last Tuesday at 8:30 PM ET.  The sessions are FREE and include the selection of 3-5 stocks to study with a demonstration of the analysis used to determine the quality and return forecast.  This demonstration has beaten the market over the last seven years, featuring a collective rate of return of 13.2%.  A tracking portfolio is maintained at:
https://www.manifestinvesting.com/dashboards/public/round-table
If you would like to be added to the reminder list for future sessions, send a request to be added to the list maintained at nkavula1@comcast.net

The Core/Non-Core discussion was a thought starter for sure. Clarifying my thought, adding ‘Successfully’ to ‘Survived At Least One Recession’ means to me that the company was ‘at least’ earnings profitable during a recession period. An example would be UTHR owned by the investment club I belong to. — Marty Eckerle, Cincinnati

[Here is one of the slides used in the discussion …]

Core mettle

 

Selling Decisions Based on Relative Return

Nothing about the traditional selling decision, or Challenge, changes. We still sell with the overall portfolio characteristics in mind. It’s a standard procedure to challenge the holdings with the lowest return forecast. This was referred to by George Nicholson as “Rule One” for portfolio management. For this month’s meeting, Coach (COH) was challenged, updated, analyzed and sold to provide some boost to overall portfolio PAR.

Following that, any company selected within the trailing 12 months that lags (falls behind) the Wilshire 5000 and exhibits a relative return of -20% is subjected to some “head scratching.” The following flow/decision chart is an attempt to capture this process.

Rt flow chart 20170530

Selling Decisions (May 2017)

How To Use This Chart. This chart summarizes the decisions made by checking various attributes of stocks that have triggered the -20% relative return threshold over the last year.

The first chart is a dashboard sorted by PAR (Ascending). The stock at the top of the sort, Coach (COH) is therefore — on the HOT SEAT. After further discussion and the update included in this thread (see below), Coach did not survive and was SOLD.

When a stock reaches a relative return of -20% (versus the Wilshire 5000, VTSMX) it qualifies for this raking over the coals. The relative performance is displayed in the Relative Return column. If LKQ (LKQ) can remain under -20%, it will be removed from this listing at future Round Tables.

Core? is a decision as to whether a stock should be subjected to tighter constraints or given “blue chip” treatment with a “longer leash.” Most participants tend to regard Retail/Apparel companies as Non-Core and we’ve found over the years that steady forecasts and steady results are generally the hallmark of companies that we consider to be core.

If a company is deemed to be core, a quick check of the return forecast (PAR) and Quality is in order to detect degradation or erosion of expectations. In this case NVO is definitely “on the fence” and we’re monitoring for signs of further weakness. It was noted that the stock price performance has been stronger over the last few weeks.

The last “life line” (vs. Industry) is a quick check to see if a company is actually faring relatively well versus its industry or peers while lagging the market. This essentially “saved” LKQ last month as we noted that the Auto & Commercial Vehicle Parts Index (BigCharts: WSJUSIXOTA) has lagged the overall stock market.

Coach (COH) was sold from the Round Table tracking portfolio on 5/30/2017.

Coh analysis 20170530

The Audience Poll was a bit of a photo finish for May 2017. We ruled that the audience selected both Dollar General (DG) and LGI Homes (LGIH) and will invest $1000 in each. The live audience in Cincinnati on 5/19/2017 selected CVS Health (CVS).

Rt poll 20170530

MANIFEST 40 Update (9/30/2016)

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

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

The 40 stocks are something of a barometer because we know that these community favorites are not simply followed … most of them are also widely owned, with considerable diligence and vigilance.

The rate of return remains at 8.8% since inception (9/30/2005) vs. 5.8% for matching investments in the Wilshire 5000 for an excess/relative return of +3.0%. We believe that this portends success for many of our subscribers and investors.

MANIFEST 40: September 2016. Performance Results. These are the most widely followed stocks by Manifest Investing subscribers. Current leader Apple (AAPL) was added on 9/24/2009 and steadily climbed the ranks while generating a relative return of +19.1% (annualized). Figures in parentheses are the June 2016 rankings. Tracking dashboard: https://www.manifestinvesting.com/dashboards/public/manifest-40

Quality is still solid at 90 and the overall return forecast is 9.0%, pegged to slightly outperform the Wilshire 5000 or S&P 500. The average sales growth forecast is 6.6%. Again, we’d like to see an emphasis on discovering smaller, faster-growing companies — the focus of our Discovery Club efforts. We miss smaller, less discovered, companies poised to make difference, like Bio-Reference Labs (BRLI) did.

The top performers continue to be Apple (AAPL), Cognizant Technology (CTSH), Starbucks (SBUX), and Home Depot (HD). 57.5% of the decisions have outperformed the market.

Capturing Attention: Charger

CVS Health (CVS) advanced from #34 to #29. We’ve noted that CVS has been ubiquitous on screening results for a while and collectively, you’ve noticed. Fastenal and Microsoft swapped positions in the top 5 but there are no new entries to the 40 this quarter.

The results of $100 invested into any of these positions at the time of addition can be viewed at any time at: https://www.manifestinvesting.com/dashboards/public/manifest-40

We’ll continue to hope that a few promising faster growers will penetrate a future roll call.

Fave Five (8/26/2016)

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Fave Five (8/26/2016)

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.

Among the stocks covered by Goldman Sachs, the average stock has a one year total return of approximately 10%. We centered our attention this week on the top two percent (return forecast & quality) of our coverage combined with the near term expectations of Goldman. The Muppets are fairly well in consensus with Morningstar and S&P for this batch.

The Fave Five This Week

  • Apple (AAPL)
  • CVS Health (CVS)
  • Jones Lang LaSalle (JLL)
  • Starbucks (SBUX)
  • Stericycle (SRCL)

Context: The average 1-year total return forecast (via Goldman Sachs) for the Value Line 1700 is 9.2%. The average 5-year return forecast for $VLE is 5.7% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short. (August 26, 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 return for the Weekend Warrior tracking portfolio is 12.1% since inception. 48.2% of selections have outperformed the Wilshire 5000 since original selection.

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

Fave Five (8/5/2016)

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We took a different tack this week, focusing on companies with HUGE financial strength and combining those leaders with the best 1-year “sentiment” known as target prices. This week’s companies are: Alphabet (GOOG), Cognizant Technology (CTSH), Disney (DIS), Novartis (NVS) and Starbucks (SBUX).

Fave Five (8/5/2016)

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

  • Alphabet (GOOG)
  • Cognizant Technology (CTSH)
  • Disney, Walt (DIS)
  • Novartis (NVS)
  • Starbucks (SBUX)

Context: The average 1-year total return forecast (via ACE) for the Value Line 1700 is 15.7%. The average 5-year return forecast for $VLE is 5.9% (annualized).

The Long and Short of This Week’s Fave Five

The Long & Short. (August 5, 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 +4.3% since inception. 47.2% of selections have outperformed the Wilshire 5000 since original selection.

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

Decidedly Older Stocks to Study

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This Week at MANIFEST (5/27/2016)

“Decidedly older.” (Women)

The scene was the Better Investing national convention last weekend in Chantilly, Virginia. It was the last session of the conference. The words rang out during Ken Kavula’s presentation of Ulta Salons (ULTA) as his shared stock idea for the May Round Table. He was — of course — talking about the differential between his teenage granddaughters and some of the “more experienced” clientele that may linger longer in the salon portion of the establishment. Sitting directly on Ken’s right (and within elbowing distance) frequent guest damsel Kim Butcher reacted immediately. “Decidedly older??? I’m fairly certain, Ken, that NONE of us ever want to be referred to as ‘decidedly older’ [Ken was probably grateful that his spouse, Natalie, was not in the room, too.]” The audience roared a second.

“Women, traditionally, become the subjects and objects of other people’s lives.” — Jane Fonda

And for that, we’re infinitely thankful.

Those words are from a TedX speech by Jane Fonda, delivered back in 2011 on the subject of “Life’s Third Act.” It features a perspective on longevity, aging and the shift to living longer and contributing more substantially during our last 30 years on the planet. If you liked Jane in her role on The Newsroom, you’ll probably like these 10-12 minutes via TedX.

The audience at the BI national convention is still not getting younger from a demographics perspective. That said, I’d argue that the shift described by Fonda has been a work in progress for some time and that investment clubs and individual investors have indeed been transforming for a few years. We’re witnessing the transformation of rote methods into deeper understanding and in so many cases, pervasive market beating performance over decades. The Super Investor session that I delivered in Chantilly (Beltway Super Investors) featuring Eddy Elfenbein, David Gardner and a slipstream sample of investment club leaders was very well received and we’ll do more.

Ken and I (and many of you) make “coaching club visits” to a fairly large number of clubs. We’ve witnessed an evolutionary shift. Few clubs make some of the traditional mistakes and the portfolios we see are better designed, better positioned and better maintained. So many clubs embrace our efforts at interpretation, innovation and implementation of the delightfully few things that really matter and we’re grateful for this evolving simplicity … and the results we observe.

During a few moments with some decidedly experienced investors in Chantilly, we were encouraged to keep seeking the foundations of Nicholson’s vision. Some observed that the Nicholson moments we reinforced back at the national convention in Chicago a few years were landmark. And most welcome. We were encouraged to do more. A dear friend who knew Nicholson well urged us to continue to re-discover and reinforce … Press on.

The modern investment club movement is less obvious at a time when it’s probably needed the most. Diebold is back to 98% institutional ownership from the 54% it achieved less than ten years ago. It’s enormously challenging to engage the interest of most people, most young people, and even most decidedly older people in ownership of individual common stocks. (By the way, RPM presented at the conference and appears to be stronger than ever)

I think Jane Fonda is right, an opportunity lies ahead. In her words (with a dash of paraphrasing) …

“Circle back to where we started — and know it for the first time. We could be a necessary cultural shift in the world.”

Inspire younger generations to optimize and maximize their investing experience.

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MANIFEST 40 Updates

  • 11. FactSet Research (FDS)
  • 30. Starbucks (SBUX)
  • 32. Buffalo Wild Wings (BWLD)

Round Table Stocks: Buffalo Wild Wings (BWLD), C.H. Robinson (CHRW), Copa Holdings (CPA), Forward Air (FWRD), Knight Transportation (KNX), Maximus (MMS), McDonald’s (MCD), Panera Bread (PNRA), S&P Global (SPGI), Stericycle (SRCL), Waste Connections (WCN)

Results, Remarks & References

Companies of Interest: Value Line (5/27/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 6.3% vs. 5.6% for the Value Line 1700 ($VLE).

Materially Stronger: Iron Mountain (IRM), Texas Roadhouse (TXRH), Sonic (SONC), Forrester Research (FORR), Equifax (EFX), Darden Restaurants (DRI), Domino’s Pizza (DPZ)

Materially Weaker: Teekay (TK), Frontline (FRO), Calgon Carbon (CCC), American Railcar (ARII)

Discontinued:

Coverage Initiated/Restored:

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 5.6%, 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 (5/27/2016)

  • Maximus (MMS) — Highest MANIFEST Rank
  • Ruby Tuesday (RT) — Highest Low Return Forecast (VL)
  • Stericycle (SRCL) — Lowest P/FV (Morningstar)
  • Delta Airlines (DAL) —Lowest P/FV (S&P)
  • Golar LNG (GLNG) — Best 1-Yr Outlook (ACE)
  • Delta Airlines (DAL) — Best 1-Yr Outlook (S&P)
  • Buffalo Wild Wings (BWLD) — Best 1-Yr Outlook (GS)

The Long & Short of This Week’s Update Batch

The Long & Short. (May 27, 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.

Booyah 38 For 2016

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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!

CNBC Stock Draft 2012: Photo Finish?

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Photo Credit: Andreas Ebling via Compfight cc

Last year’s CNBC Stock Selection Draft may have started slow, but coming out of the turn and with one week to go — the race is heating up like, well … two billionaires brawling over a vitamin supplement company.

Not to be outdone by any Hollywood movie whether the horse be named Hidalgo, Seabiscuit or Secretariat … Joshua “Reformed Broker” Brown and his horse (RIMM) did their best imitation of a glue factory admission for most of the year as RIMM started excruciatingly slow but has passed the entire field in recent weeks and days. Cue the drama. Meanwhile, Reggie “No Glue Around Here” Middleton has been driving Google (GOOG) and serving up an unhealthy dose of dust for the field.

Only Josh and Reggie have managed to outperform the S&P 500 with their noble steeds. The highlighted entries show the selections and the other companies in the field were left on the cutting room floor at CNBC. (There’s little if any truth to the rumor that Cramer and Herb were still milling about, dishing out grief over the unchosen/ignored winners … except that Greenberg was notably grumpy about it)

The following provides the current value of $100 (each) invested in the field on 4/25/2012.

Coming down the stretch:

1. Brown (RIMM)
2. Middleton (GOOG)
3. Najerian (SBUX)
4. Altucher (AAPL)
5. Doolittle (DELL)
6. Hickey (JCP)
7. “Elmer” Adami (RSH)

Current dashboard: http://www.manifestinvesting.com/dashboards/public/cnbc-stockdraft-2012