VLLTR

Let Me Save You Some Time – Josh Brown

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Photo: http://www.detroitmovestheworld.com

This Week at MANIFEST (11/17/2017)

“9. Don’t Rush. You don’t need to already know what you’re gonna do with the rest of your life. Don’t panic. You will soon be dead. Life will sometimes seem long and tough and, God, it’s tiring. You will sometimes be happy and sometimes sad, and then you’ll be old and then you’ll be dead. There is only one sensible thing to do with this empty existence, and that is fill it. Life is best filled by learning as much as you can about as much as you can, taking pride in whatever you’re doing, having compassion, sharing ideas, running, being enthusiastic, and then there’s love and travel and wine and sex and art and kids and giving and mountain-climbing. But you know all that stuff already. It’s an incredibly exciting thing, this one meaningless life of yours. Good luck and thank you for indulging me.” — Tim Minchin (Nine Life Lessons)

Let Me Save You Some Time

Those of you who catch some CNBC during the day probably recognize Josh Brown as one of the mainstays on the Halftime Report. From his books, Backstage Wall Street and the co-author stint via Clash of the Financial Pundits (with Jeff Macke) it’s clear that he and his colleagues see some of the same perspectives that we do. We’ve covered those complementary notions before here: Reformation: Center Stage.

It was refreshing spending a few moments in Detroit this past Thursday and Friday. That may seem strange to some of you but the city is truly engaged in a renaissance. The image above (and link provided) is part of Detroit’s compelling invitation to locate a second HQ here. I’m told that Detroit will likely make the “short list” as this continues to develop.

Detroit moves the world. We also know Detroit as the origins of the modern investment club movement — as championed by George Nicholson. As the first snow fell, it was refreshing to reflect on the dreams, aspirations and gifts bestowed by Nicholson and the community he nurtured. I took a moment to stop by the historic Rackham Building, the birthplace of the National Association of Investors (1951) and a movement that has favorably influenced the lives and investing experiences of so many of us. Nicholson was also a founding influence behind the Financial Analysts Society of Detroit and was a regular attendee … and routinely tendered the first question of the Q&A segment by asking the presenter to share their thoughts on “their greatest challenge.”

I assumed my seat at lunch on Friday next to a friend that I hadn’t met (yet). After brief introductions and observations about snow, I asked, “Did you know George Nicholson?” He smiled. “As a matter of fact, I spent last night with a couple of the Nicholson boys.” Wow. It turned out that his father had been influential in a few of Nicholson’s enterprises going back to the 1950s and 1960s and beyond. It’s a small world. It’s a Better World because of Nicholson’s contributions to the world of investing.

The theme of a better investing world resonates in Josh Brown’s perspective, too. Jason Raznick of Benzinga.com had arranged a town hall meeting format with Josh on Thursday night. If you’re not familiar with Benzinga, Jason has created a Bloomberg-like entity for investors and traders in Detroit that has become quite formidable. Thursday night turned out to actually be a better opportunity to compare notes and spend time with Josh as he shared observations about a number of things.

  • Caveat emptor. He shared that (1) He’d been dismissed (sent home) not once, but twice from summer camp as a child. (2) He knows the Wolf of Wall Street and spent some time in similar trenches. (3) He’s been part of a couple of crash-and-burn initiatives.
  • That last one is actually a virtuous attribute. He’s been there and done that. He considers his evolution from stockbroker to registered investment advisor to be among the best decisions of his life.
  • Incentives Matter. Incentives, good and bad. They both affect performance and behavior in the markets. Incentives matter. Often they dictate the probability of potential outcomes in very foreseeable ways.
  • Josh loves Taco Bell.

  • Regulation FD Killed Most of the Rhinos Returns. So there. He said it. “Besides the growth in the number of funds, something else changed in the hedge fund space. Regulation Fair Disclosure (Reg FD) came into effect in 2000. This SEC-mandated rule forced all publicly traded companies to disclose material information to all investors at the same time. Prior to this, hedge funds had a huge advantage in terms of the information they could obtain prior to other investors. Reg FD changed that. This, combined with the large number of funds chasing similar securities and using similar strategies, has resulted in much lower performance for investors.” — Ben Carlson

Speaking of Ben Carlson, he attended the session on Friday. Hopefully we’ll get a chance to spend more time with Ben, too. Regular readers will recognize that his articles are frequently cited in our Results, Remarks & References section. Here’s a couple of Josh’s slides from Friday, including the famous (infamous?) CNBC Decabox:

Of Dragons and Debate: Active vs. Passive

“I’m so sick of the active vs. passive debate.” “The real debate is likely high cost vs. low cost … or faith-based versus systematic.” The librarians of the investing world are always stuffing things into boxes and categories. Some fodder for the dragons:

  • “The S&P 500 Index Funds Are Not 100% Passive.” Ben Carlson has referred to the S&P 500 as the World’s Largest Momentum Strategy The S&P 500 is constantly re-balancing and the cap-weighting emphasizes Apple, Microsoft, FaceBook, Amazon and Johnson & Johnson. S&P 500 (VFINX) routinely has a 4-5% turnover as companies come and go. That’s not passive.
  • (Mark here) I’d take it a step further and remind investors a la Ralph Acampora from a Detroit stage in 2001 that lost decades happen. That’s right. He told the audience to pick stocks or different funds, because the S&P 500 was about to get “killed.” Ralph was right.
  • Sometimes a fund isn’t passive at all but is classified as a “passive ETF.” Josh cited a WisdomTree fund that is hedging European baskets vs. Japan and currencies in both directions for both geographies. “That may be 6-dimensional CandyLand, but it’s NOT passive.”

And finally, we know that some of our sleep-at-night active investing would be deemed quite “passive” but on closer examination, they’re NOT. Anything but. We buy. We hold … for as long as it makes sense to do so. In the case of our Bare Naked Million Portfolio there have been less than ten sell transactions since Christmas 2005. The turnover is less than these large “passive” index funds. And by the way, that bare naked $1,000,000 is now worth $3,177,277 (11/10/2017) — a “passive” annualized total return of 11.2% vs. 7.3% for the “actively” managed WIlshire 5000 (VTSMX) over the same time frame.

Thanks for the refreshing perspectives, Josh.

MANIFEST 40 Updates

Round Table Stocks

  • Illumina (ILMN)
  • ResMed (RMD)

Best Small Companies (2018)

Round Table Sessions (Video Archives)

Results, Remarks & References

Companies of Interest: Value Line (11/17/2017)

The average Value Line low total return forecast for the companies in this week’s update batch is 1.2% vs. 2.9% for the Value Line 1700 ($VLE).

Materially Stronger: Insulet (PODD), Deere (DE), KLA-Tencor (KLAC), Wabash National (WNC), Xcerra (XCRA), AGCO (AGCO), Thermo Fisher (TMO), Bard, C.R. (BCR), Teleflex (TFX), Intuitive Surgical (ISRG), Cutera (CUTR)

Materially Weaker: Geospace Technologies (GEOS), SCANA (SCG), Bio-Rad Labs (BIO)

Discontinued: Digital Globe (DGI), Select Comfort (SCSS), WebMD (WBMD), UCP (UCP), VCA (WOOF), Female Health (FHCO), Enpro Resources (ERS), Atwood Oceanics (ATW), MOCON (MOCO), Applied Microcircuits (AMCC), Allied World (AWH), Entercom (ETM), Alere (ALR), Landauer (LDR)

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 2.9%, decreasing 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.

Update Batch: Stocks to Study (11/17/2017)

The average return forecast (PAR) for this week’s update batch is 5.7%.

Long & Short Term Perspectives. (November 17, 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.

 

November Round Table November 21, 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 relative return-based selling triggers. We will probably also spend a few minutes with stock selections that we’re thankful for …

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/4510335622157941250

Discovery Club

“Dump your hedge funds and explore their small-cap stock picks.”

Small cap is not necessarily small (faster-growing) companies but in general, we like the idea of a nice blend. So yes, we’re interested in hunting down some actionable ideas among the most successful investors on our radar screen — seeking companies that aren’t on too many radar screens, yet. The discovery of smaller, promising and faster-growing companies has always been one of our favorite (and rewarding) activities. In that spirit, we’re expanding our efforts in this realm, seeking smaller, less discovered companies and add them to our coverage. We will continue to scour our Best Small Company Funds with leaders like Brown Small Company.

This Week’s Sources and Suggestions

  • American Association of Individual Investors & James O’Shaughnessy

Coverage Initiated/Restored: Amtech Systems (ASYS), QuinStreet (QNST), Valhi (VHI)

Go Conventional

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This Week at MANIFEST (7/29/2016)

We up the ante on last week’s shopping theme as this week’s update includes a mother lode of retail and we resume our monthly shopping fireside chat with Tuesday night’s Round Table.

In order to help our subscribers find the companies that are “way off the map,” we’re expanding and digging into some areas that will provide a wider berth of study opportunities.

MANIFEST 40 Updates

  • 20. Coach (COH)
  • 36. 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), Vera Bradley (VRA)

Results, Remarks & References

Companies of Interest: Value Line (7/29/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 6.6% vs. 5.7% for the Value Line 1700 ($VLE).

Materially Stronger: IMAX (IMAX)

Materially Weaker: Conn’s (CONN), Buckle (BKE), Ralph Lauren (RL), Nordstrom (JWN), Penney (JCP), Gap (GPS)

Discontinued: Aeropostale (ARO), Pacific Sunwear (PSUN)

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 5.7%, down from 5.9% 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 (7/29/2016)

The Long & Short. (July 29, 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.

 

Discovery Club

“Dump your hedge funds and explore their small-cap stock picks.”

Small cap is not necessarily small (faster-growing) companies but in general, we like the idea of a nice blend. So yes, we’re interested in hunting down some actionable ideas among the most successful investors on our radar screen — seeking companies that aren’t on too many radar screens, yet.

The discovery of smaller, promising and faster-growing companies has always been one of our favorite (and rewarding) activities. In that spirit, we’re expanding our efforts in this realm. This week, we redouble our efforts to discover some smaller, less discovered companies and add them to our coverage. The EXTENDED EDITION of the Value Line Investment Survey will be the first resource scanned and we’ll also take a look at some new positions or significant accumulations among our Best Small Company Funds starting with Brown Small Company.

But it doesn’t end with only the smaller companies, we’ll also be vigilant for opportunities flagged by reviewing the quarterly filings of idea generation resources like the Renaissance Technologies hedge fund.

This Week’s Sources and Suggestions

  • Bob Shaw suggestion for Fox Factory (FOXF) — Thanks, Bob.
  • Value Line Investment Survey (Extended Edition, Issue 7) — Thanks, Ken Kavula

Coverage Initiated/Restored: Fox Factory (FOXF), Bank Mutual (BKMU), ESSA Bancorp (ESSA), First Clover Leaf Financial (FCLF), First Defiance Financial (FDEF), First Savings Financial (FSFG), Greene County Bancorp (GCBC), Home Bancorp (HBCP), Pathfinder Bancorp (PBHC), Timberland Bancorp (TSBK), United Community Bancorp (UCBA)

January Effect in July?

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This Week at MANIFEST (7/15/2016)

“Self-taught, are you?” Julian Castle asked Newt.
“Isn’t everybody?” Newt inquired.
“Very good answer.” ― Kurt Vonnegut, Cat’s Cradle

Winter is Coming.

Huh? “We’re melting over here and you want to talk about winter?”

Well, yes.

This week’s update batch is pretty “dormant.” We’ve been doing this for a long time and don’t remember the last time we had so few changes and/or materially stronger/weaker triggers. There’s only a couple in this week’s batch.

And yes, it’s the lazy hazy days of summer when Wall Street packs it in early on Fridays, heads for the Hamptons, and the trading volumes wane. So we pass the ice cream and our thoughts turn to January.

January?

The January Effect is a result of tax-loss selling which causes investors to sell their losing positions at the end of December. The January Effect is predicated on the idea that these stocks, which have been sold off to realize the tax losses, will be at a discount to their market value.

And the effect is most prominently manifested among the smaller, faster-growing companies.

This is a best practice that we’ve counseled in the past. Start earlier. Don’t wait. Sell earlier (because the institutions are probably doing this) and build your shopping lists well. Hunt down the opportunities during the fourth quarter and use your best judgment about assuming ownership as the year winds down … or early in January.

In that spirit, Manifest Investing will be working to add more small companies. Every week we see a persistent attrition and a loss of companies in the Value Line universe of 6000+ companies as M&A continues and fewer new companies take shape. We’ll be gearing up for our Best Small Company list to be published around Halloween and will be adding companies in earnest between now and October 1. Monitor the coverage list here in the weekly updates for opportunity and Ken Kavula has suggested that he will chime in on discoveries of promising faster growers as they come into focus.

We’re also going to mine the list of holdings at Renaissance Technologies (RenTec) using a variety of resource including www.insidermonkey.com. Why monitor the exploits of Jim Simons and his team??? (1) Check out this TED Talk: The Mathematician Who Cracked The Wall Street Code and (2) this excerpt of the hedge fund’s track record …

MANIFEST 40 Updates

  • 8. General Electric (GE)
  • 24. Danaher (DHI)

Round Table Stocks: ABB (ABB), MSC Industrial (MSM), Stifel Financial (SF)

Results, Remarks & References

Companies of Interest: Value Line (7/15/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 4.9% vs. 6.0% for the Value Line 1700 ($VLE).

Materially Stronger: AAON (AAON)

Materially Weaker: Stonemor (STON)

Discontinued: Constant Contact (CTCT)

Coverage Initiated/Restored: LGI Homes (LGIH), United-Guardian (UG), Nature’s Sunshine (NATR), WCI Communities (WCIC), Clearwater Paper (CLW), Huttig Building (HBP), Mastech (MHH), Citizen’s Holding (CIZN), United Bankshares (UBOH), Citizen’s Financial (CFG), Liberty Interactive (QVCA)

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 6.0%, down from 6.1% 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.

Stocks to Study (7/15/2016)

  • Akamai Technologies (AKAM) — Highest MANIFEST Rank
  • Investment Technology (ITG) — Highest Low Return Forecast (VL)
  • Stifel Financial (SF) — Lowest P/FV (Morningstar)
  • Morgan Stanley (MS) —Lowest P/FV (S&P)
  • LSB Industries (LXU) — Best 1-Yr Outlook (ACE)
  • Charles Schwab (SCHW) — Best 1-Yr Outlook (S&P)
  • Stifel Financial (SF) — Best 1-Yr Outlook (GS)

The Long & Short of This Week’s Update Batch

The Long & Short. (July 15, 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.

Discovery Club

From the article, “How To Beat The Market By 20 Percentage Points”, the author suggested:

“Dump your hedge funds and imitate their small-cap stock picks.”

Small cap is not necessarily small (faster-growing) companies but in general, we like the idea of a nice blend. So yes, we’re interested in hunting down some actionable ideas among the most successful investors on our radar screen — seeking companies that aren’t on too many radar screens, yet.

The discovery of smaller, promising and faster-growing companies has always been one of our favorite (and rewarding) activities. In that spirit, we’re expanding our efforts in this realm. This week, we redouble our efforts to discover some smaller, less discovered companies and add them to our coverage. The EXTENDED EDITION of the Value Line Investment Survey will be the first resource scanned and we’ll also take a look at some new positions or significant accumulations among our Best Small Company Funds starting with Brown Small Company.

But it doesn’t end with only the smaller companies, we’ll also be vigilant for opportunities flagged by reviewing the quarterly filings of idea generation resources like the Renaissance Technologies hedge fund.

Coverage Initiated/Restored: LGI Homes (LGIH), United-Guardian (UG), Nature’s Sunshine (NATR), WCI Communities (WCIC), Clearwater Paper (CLW), Huttig Building (HBP), Mastech (MHH), Citizen’s Holding (CIZN), United Bankshares (UBOH), Citizen’s Financial (CFG)

https://www.manifestinvesting.com/dashboards/public/discovery-club-20160715

This Week at MANIFEST (6/24/2016)

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This Week at MANIFEST (6/24/2016)

“… it took me about 11 years to get a record deal, and I just had to work around and come to terms with the fact that what I was doing was going to be different, and I just had to wait until somebody was ready to jump on the bandwagon.” — Lee Ann Womack

What we do is different.

The modern investment club movement was a big tent … and a considerable bandwagon. Unfortunately, people’s capitalism and the stewardship of common stock OWNERSHIP has hit a bit of a speed bump, or worse. It’s pretty clear that some WD-40 is needed. The results achieved by the persistent are compelling. But too quiet.

What we do is different. We have no problem with things like discounted cash flow analysis — we believe that we’re chasing fewer variables and that SIMPLER is usually better when it comes to the realm of investing.

“Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw therefrom. In forty-four years of Wall Street experience and study I have never seen dependable calculations made about common-stock values, or related investment policies, that went beyond simple arithmetic or the most elementary algebra. Whenever calculus is brought in, or higher algebra, you could take it as a warning signal that the operator was trying to substitute theory for experience, and usually also to give to speculation the deceptive guise of investment.” — Benjamin Graham, The Intelligent Investor

Amidst the chaos, turbulence and avalanche of information, we find it rewarding and seemingly more reliable to focus on growth, profitability and valuation in a different kind of model. As is often the case, an event like last week’s Morningstar Investment Conference serves to remind about the value of being simple … and different.

The audience gasped when Keith Lee of Brown Capital Management confessed that in 25 years of successful investing that he’s never owned a financial sector stock. In his own words, Brown is “sector benchmark agnostic.” Brown Small Company (BCSIX) has a 10-year relative return of +5.7%.

Keith Lee and Brown Capital Management are different.

MANIFEST 40 Updates

  • 4. Fastenal (FAST)
  • 15. Procter & Gamble (PG)
  • 29. Home Depot (HD)
  • 33. Lowe’s (LOW)

Round Table Stocks: Chicago Bridge & Iron (CBI), Fastenal (FAST)

Results, Remarks & References

Companies of Interest: Value Line (6/24/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 4.8% vs. 5.6% for the Value Line 1700 ($VLE).

Normally we exclude (filter out) those companies with quality rankings less than 60. We left them in to make a point. When a bull market has been running for a while — and is perceived to be in jeopardy — investors and traders will flock to defensive stocks. The companies with high EPS stability and high quality will see their return forecasts driven down as they’re overbought if seen as sanctuaries. This week’s list and update batch is evidence of that.

There are a number of companies in the update batch that would be most welcome as core holdings in many of our portfolios including the likes of Bemis (BMS), Kimberly Clark (KMB), Sonoco (SON) … but the average MANIFEST Ranking for the Issue 6 companies is 44. In other words, the average company in this update is outranked by 56% of the companies in our database. The reason behind this is related to the flight to quality in many cases.

In most cases, it makes sense to wait for a Better Bandwagon.

Materially Stronger: Lumber Liquidators (LL), Martin Marietta (MLM), Tempur Sealy (TPX), Tile Shop (TTS) [Reminder: These step change upgrades do not necessarily imply a “buy” condition … in some cases, it’s a switch from “sell” to “weak hold.”]

Materially Weaker: Beazer Homes (BZH), Restoration Hardware (RH), Aegion (AEGN)

Discontinued: Jarden (JAH), Sun Edison (SUNE)

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 5.6% 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 (6/24/2016)

  • Tractor Supply (TSCO) — Highest MANIFEST Rank
  • Sunpower (SPWR) — Highest Low Return Forecast (VL)
  • Restoration Hardware (RH) — Lowest P/FV (Morningstar)
  • Beazer Homes (BZH) —Lowest P/FV (S&P)
  • Sunpower (SPWR) — Best 1-Yr Outlook (ACE)
  • First Solar (FLSR) — Best 1-Yr Outlook (S&P)
  • Sunpower (SPWR) — Best 1-Yr Outlook (GS)

The Long & Short of This Week’s Update Batch

The Long & Short. (June 24, 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.

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.

Be decidedly older. Do it well.

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.

This Week: Stocks to Study

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This Week at MANIFEST (5/20/2016)

“If you are not willing to learn, no one can help you. If you are determined to learn, no one can stop you.”

We gather. The convention serves a unique purpose. Because connecting investors can prove to be the most valuable resource imaginable for individual investors. In that context, the national convention becomes a true investment club — centered on sharing and discovering actionable ideas and pursuing successful investing, together.

During the current Book Club review of Peter Lynch’s Beating The Street, Hugh McManus mentioned the special session with Peter Lynch at the 1998 NAIC national convention in San Jose. Lynch reviewed many of the key points covered in the book during his speech. This reference inspired me to track down a copy of Smart Money from January 1999 where Emily Harrison Ginsburg provided a story on the heritage of NAIC via Thomas O’Hara. I thought Emily mentioned Peter Lynch in the article, but on further review, I found that she hadn’t. If you’re new to the investment club movement or simply want to go on a nostalgic binge, the Smart Money feature can be found here.

MANIFEST 40 Updates

Round Table Stocks: Caterpillar (CAT), Deere (DE), Illumina (ILMN), Landauer (LDR), Masimo (MASI), Stryker

Results, Remarks & References

Companies of Interest: Value Line (5/20/2016)

The average Value Line low total return forecast for the companies in this week’s update batch is 4.2% vs. 5.6% for the Value Line 1700 ($VLE).

Materially Stronger: Honda Motors (HMC), Nissan Motor (NSANY.PK), II-VI (IIVI), Edwards Lifesciences (EW), Baxter (BAX), Bruker (BRKR)

Materially Weaker: Manitowoc (MTW), OSI Systems (OSIS), Navistar (NAV), Fiat Chrysler (FCAU), Haemonetics (HAE), Douglas Dynamics (PLOW), Terex (TEX), Actuant (ATU)

Discontinued: Newport (NEWP), Affymetrix (AFFX), Sirona Dental (SIRO)

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%, up from 5.4% 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 (5/20/2016)

  • Illumina (ILMN) — Highest MANIFEST Rank
  • Honda Motor (HMC) — Highest Low Return Forecast (VL)
  • Fiat Chrysler (FCAU) — Lowest P/FV (Morningstar)
  • Honda Motor (HMC) —Lowest P/FV (S&P)
  • Cutera (CUTR) — Best 1-Yr Outlook (ACE)
  • General Motors (GM) — Best 1-Yr Outlook (S&P)
  • Alere (ALR) — Best 1-Yr Outlook (GS)

The Long & Short of This Week’s Update Batch

The Long & Short. (May 20, 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.

May Round Table May 22, 2016 at 11 AM 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, Cy Lynch and Mark Robertson as they share their current favorite stock study ideas.

The May session will be simulcast from the NAIC Better Investing national convention near Washington D.C.

Round Table Online Registration: https://attendee.gotowebinar.com/register/8401811825391796481

Various attendance options — including single day passes — are available if you’re interested in attending the BI National Convention and the Round Table “live”: 2016 BI National Convention

Market Barometers (Continued)

Watching Rhino Walk, Not Rhino Talk. If you believe supply-and-demand matters (and you should) then the collective actions of the herd have bearing. By monitoring the relationship of new highs vs. new lows, we get an early warning clarion that signaled as Halloween 2007 approached. Current $USHL has recovered somewhat from the “test” a few months ago.

Happy Thanksgiving!

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This Week at MANIFEST (11/27/2015)

From All of Us to All of You, Happy Thanksgiving, Everybody!

Thanksgiving dinners take eighteen hours to prepare. They are consumed in twelve minutes. Half-times take twelve minutes. This is not coincidence. — Erma Bombeck

I can’t believe that I watched a Charlie Brown/Peanuts Thanksgiving for the first time last night. I’m not sure how that escaped me because a Charlie Brown Christmas is an annual event … and I’ve been known to spend some time in the Pumpkin Patch over the years.

It did serve as a reminder of the arduous voyage made by the Pilgrims across the Atlantic. In cramped quarters, the trip took three months on the Mayflower … and Charles Schultz laid out the cast in terms of crew, Pilgrims and “Strangers.” The term stranger was applied to those were “along for the ride” but not affiliated with the Pilgrim plight nor quest. Until recently, guests to the English Parliament were still referred to as strangers and their seating area known as the Stranger Gallery.

In our community, we celebrate those who invest with a true long-term perspective and frankly, everybody else seems a little strange. (Grin) As David Gardner pointed out recently, the phrase “long-term investing” is a tautology. It’s a mosh of redundancy because by definition, investing is long term.

Ken Kavula and I spent Monday night with another accomplished investment club of 26 years or more (and last Saturday with a couple of 55-year-old clubs) and we marvel at how most clubs welcome Strangers — those who seek the rewards and refuge from the storm … and they do “investing” with friends.

The journey is arduous and although we pay attention to short term influences on trends, we pay more attention to the long-term perspective and do all that we can do bolster the patience and discipline of the Pilgrims around us. As the holiday season approaches, and we all consume too much food on Thursday, we’re reminded that the survivors of the Atlantic crossing were largely children — steeped in optimism and certainly blessed with the most formidable long term expectations. Plymouth would be significantly influenced by the children. A foundation of optimism and sharing erupts when we invest like children.

And for that, we’re thankful. Happy Thanksgiving, Everybody!

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 5.1% — pretty much in line with the 5.6% for the Value Line 1700.

Materially Stronger: Southwest Airlines (LUV), Restaurant Brands (QSR), Cintas (CTAS)

Materially Weaker: Frontline (FRO), WestJet Airlines (WJA-TO), Bristow Group (BRS), Copa Holdings (CPA), U.S. Ecology (ECOL), Clean Harbors (CLH), Huron Consulting Group (HURN)

Discontinued: ConWay (CNW)

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 (11/27/2015)

  • Chipotle Mexican Grill (CMG) & Buffalo Wild Wings (BWLD) — Highest MANIFEST Rank
  • Fiesta Restaurants (FRGI) — Highest Low Return Forecast (VL)
  • Darden Restaurants (DRI) & Union Pacific (UNP) — Lowest P/FV (Morningstar)
  • Huron Consulting Group (HURN) — Lowest P/FV (S&P)
  • Golar LNG (GLNG) — Best 1-Yr Outlook (ACE)
  • Copa Holdings (CPA) — Best 1-Yr Outlook (S&P)
  • Ryder System ( R ) — Best 1-Yr Outlook (GS)

Note: The price targets from Goldman Sachs (GS) 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. Some of the older Goldman Sachs estimates (>6-9 months) have been adjusted using more recent price targets from Merrill Lynch, JP Morgan, Morgan Stanley etc.

 

Black Friday: LIVE at the Forum

Avoid the Madness of Crowds and the arm bar take downs while jostling for those three dirt cheap (and soon to be out-of-stock) LCD displays and share some time with your investing friends instead.

Note: For Manifest Investing subscribers and trial participants. You can start a 30-day FREE trial by creating an account at http://www.manifestinvesting.com

We’ll “man” this folder continuously through the day — with a break for a Murder Mystery with the family at 1 PM ET — starting at 8 AM ET. It’ll be like “Open Microphone, Open Keyboard” but at a slower pace.

  • What’s On Your Mind?
  • What topic would you like to explore? Need some link references?
  • Is there a stock that we should we studying collectively?
  • Did you find the 50 Best Small Companies helpful? Did you study/buy any of them?

The format will be “almost live.” You may either post your questions in this folder or email topics/questions to manifest@manifestinvesting.com and we’ll post answers, links, follow up questions right here on the Forum.

You may also tweet questions and topic requests to: @manifestinvest “Follow me!”

Black Friday Event: Live At The Forum November 27, 2015 at 8 AM ET

Bring your questions and topics to the Forum on Black Friday. Any thoughts on the Best Small Companies or any stocks of interest that we should collectively be taking a look at? Click in and let us know what’s on your mind.  Note: For Manifest Investing subscribers and trial participants. You can start a 30-day FREE trial by creating an account at http://www.manifestinvesting.com

November Round Table November 30, 2015 at 8:30 PM ET ONLINE

Stocks likely to be discussed: TBD

Registration: https://attendee.gotowebinar.com/register/5522647165700089346

Mark your calendar and save the date for our monthly discussion of actionable stock ideas.

If you have a stock or topic for discussion, please let us know.

Cicadas and the Stock Market

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This Week at MANIFEST (9/18/2015)

“The cicadas pierce the air with their searing one-note calls; dust eddies across the roads; from the weedy patches at the verges, grasshoppers whir. The leaves of the maples hang from their branches like limp gloves; on the sidewalk my shadow crackles.” — Margaret Atwood

“Nothing in the cry of cicadas suggests they are about to die” — Matsuo Bashō

“There was an electric buzzing sound that was constantly on, acting as background music like a million cicadas in the forest. A constant white noise.” — Missy Lyons

Cicadas have been used as money, in folk medicine, to forecast the weather, to provide song (in China), and in folklore and myths around the world.

The cicada has represented insouciance since classical antiquity. Jean de La Fontaine began his collection of fables Les fables de La Fontaine with the story La Cigale et la Fourmi (The Cicada and the Ant) based on one of Aesop’s fables: in it the cicada spends the summer singing while the ant stores away food, and finds herself without food when the weather turns bitter.

In China, the phrase “to shed the golden cicada skin” is the poetic name of the tactic of using deception to escape danger. It became one of the 36 classic Chinese stratagems. In the Chinese classic novel Journey to the West (16th century), the protagonist Priest of Tang was named the Golden Cicada; in this context the multiple shedding of shell of the cicada symbolizes the many stages of transformation required of a person before all illusions have been broken and one reaches enlightenment. This is also referred to in Japanese mythical ninja lore, as the technique of utsusemi (i.e., literally cicada), where ninjas would trick opponents into attacking a decoy. More generally, the cicada symbolizes rebirth and immortality in Chinese tradition.

In Japan, the cicada is associated with the summer season. According to Lafcadio Hearn, the song of Meimuna opalifera, called “tsuku-tsuku boshi”, is said to indicate the end of summer, and it is called so because of its particular call.

In an Ancient Greek myth, Tithonus eventually turns into a cicada after being granted immortality, but not eternal youth, by Zeus. The Greeks also used a cicada sitting on a harp as emblematic of music. [Sources: https://en.wikipedia.org/wiki/Cicada]

15-17 Year Cycles In The Markets

From the dusty eddies of end-of-summer (or early autumn) corrections to the notions of noise and the reality of 13-17 year cycles, we find elements of investing in all things cicada. And we wish/hope that the flash crash cicadas will experience similar life cycles.

A number of academic studies have pegged market cycles at approximately 15-17 years. We’re not talking about economic cycles, but those secular trends that seem to last about that long. The bull market of 1982 through 2000 is one example. We just might be living through a cicada cycle from 2000-2002 to 2015-2017 until a real bull market returns. How can we say that? Haven’t we been in a bull market for several years?

Perhaps. Stock prices have recovered in recent years, staggering and muddling along to new highs — but there’s an uneasy feeling among many investors that much of it is artificial, bolstered by things like low interest rates, government seizure and ownership of equities and the quantitative easing of the last several years. As this has propagated, general profitability has been flat and hovering near recessionary levels for the better part of the last ten years. Demand has been quenched and productivity maximized.

We updated the VLLTR forecast chart to cover a period of approximately 16 years. This means that the blue trend line just might cover a full cycle and be “representative.” As we counsel, the blue trend is the real long term path and the spikes and troughs in the green bars (Wilshire 5000) spend time above and below the trend line — much like rising and falling tides in the turbulent oceans.

Investors should not be surprised by a migration back to that blue trend — most likely with some pendulum-like overshoot along the way — because regression to the trend is a little (maybe a lot) like gravity and it’s been historically fairly reliable.

If this is true, we’re likely to be presented with some outstanding long-term opportunities over the next few years as the opportunity cicadas awaken and sing.

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 5.8% — in line with the 5.9% for the Value Line 1700.

Materially Stronger: CVS Health (CVS), Dycom Industries (DY), T-Mobile (TMUS)

Materially Weaker: Bioscrip (BIOS), Dana Holding (DAN), America Movil (AMX), Arris Group (ARRS), Cablevision (CVC), Dish Network (DISH) … “Dishonorable Mention”: Qualcomm (QCOM)

Standard Coverage Initiated: Shake Shack (SHAK)

Discontinued: DirecTV (DTV), Catamaran (CTRX), Integrys Energy (TEG)

A Matter of Perspectives

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This Week at MANIFEST (8/21/2015)

It’s a matter of perspective.

It is true that from a behavioral economics perspective [that average investors] are fallible, easily confused, not that smart, and often irrational. [They] are more like Homer Simpson than Superman. So from this perspective it [could be] rather depressing. But at the same time there is also a silver lining. There are free lunches! — Dan Ariely

The recipe for said free lunch depends on our willingness to be better investors — capturing all that patience and discipline will offer. Because the misbehavior of the herd ranks up there with death, taxes and gravity.

This week, we’ll spend a few moments taking a look at the weekly perspectives that we share from sources like Value Line, Morningstar, Standard & Poor’s, analyst consensus estimates and Goldman Sachs. What are their opinions and expectations? Forecasts? Time horizons? Do they always see things the same?

Of course not. And time horizon matters — a lot. But the profile of their opinions yields the stocks that capture our attention during every weekly update.

We also believe that taken collectively, much like our usage of MIPAR, the average “rating/score” can tell us something about the pessimism or optimism of the various research entities.

Value Line Investment Survey … A Most-Trusted Resource

We start with the Value Line Investment Survey — mostly because it provides the foundation of our weekly updates. 1/13th of the 1700 Value Line companies are updated each week.

As shown in the accompanying figure, the bell curve distribution of low total return forecasts features an average forecast (for the companies in the Issue 1 population) of 3.8%. Some of the higher return forecasts belong to GeoSpace (GEOS) and Navistar (NAV). We’re generally most interested in any high-quality companies that land in the blue circle as candidates for further study. Some of these can be found in our weekly summary table (see Value Line: Companies of Interest below).

Companies that are not “on sale” from the Value Line perspective would be Tesla Motors (TSLA) and Dexcom (DXCM).

Keep in mind that the only inputs to these results are (1) current price, (2) projected low price and (3) projected yield over an approximate 4 year period. (We continuously adjust the calculation for the actual number of years)

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 3.8% — slightly lower than the 4.5% for the Value Line 1700.

Materially Stronger: Douglas Dynamics (PLOW), NextEra Energy (NEE), Natus Medical (BABY)

Materially Weaker: Navistar (NAV), ResMed (RMD), Gorman-Rupp (GRC), UltraTech (UTEK), Manitowoc (MTW)

Standard Coverage Initiated: Zimmer Biomet (ZBH)

Discontinued: Zimmer Holdings (ZMH)

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.

Companies of Interest: Morningstar

Morningstar computes a discounted cash flow-based current fair value (FV) for stocks. As shown here, the population is slightly lower as only 57-of-125 of the Value Line issue 1 population is covered.

The price-to-fair value (P/FV) is simply a comparison of the current price to the current fair value. A value of 100% would be a “fair” price at this time. A value greater than 100% suggests that a stock is potentially overvalued — or priced at a “premium” — and a value less than 100% suggests a potential discount. The graphic has been “flipped” to align with the return forecast charts — basically mapping the less attractive stocks on the left and the more attractive stocks on the right.

This week’s P/FV leader is Tata Motors (TTM) with honorable mention to General Motors (GM), Ford (F) and Fiat Chrysler (FCA).

Companies of Interest: Standard & Poor’s (S&P)

Standard & Poor’s gives us two flavors of perspective:

  • A current fair value based on long-term discounted cash flow analysis that basically suggests what a “good” price for a given stock is today. The calculation is similar to the Morningstar analysis. The current price is compared to the “fair value” to form a P/FV ratio. 100% would be fair value. Less than 100% suggests a discounted price and a potential undervalued opportunity. Greater than 100% suggests that a stock is potentially overpriced.
  • The second perspective is based on a shorter time horizon (1 year or next 52 weeks) and gives another outlook for the covered stocks. For us, S&P provides a bridge between the long term analyses (Value Line, Morningstar and S&P) and the short term 1-year outlook generated by S&P, analyst consensus (ACE) and Goldman Sachs.

This week’s update batch delivers an interesting perspective on the potential of Toyota Motors ( TM ), Honda (HMC) and Nissan (NSANY) from the point of view of the S&P analysts. It’s an interesting bunching of these global automakers to the right hand side (consider buying) of the graphic.

The Outlook For The Coming Year

I’m not sure how useful this piece of information is to an investor versus a trader. It might prove useful in deploying conservative option strategies. But my instinct is that it could serve as one of the tiebreaking factors when comparing a few candidates for purchase. Given two stocks with equal return forecasts over the 5-year time horizon, I might be compelled to select the stock with the better 1-year outlook.

It’s interesting that the stocks on the far right are General Motors (GM) and Cummins (CMI) because both have been regarded as potentially “sluggish” for the coming year based on economic influences. Many of the capital-intensive equipment companies have been punished of late — and the global recession continues to hinder the near-term outlook for many of them.

Companies of Interest: Analyst Consensus Estimates (ACE)

According to the analyst consensus, the stocks with the best outlook for the coming year from this week’s update batch are: Tata Motors (TTM), Checkpoint Software (CKP), Geospace Tech (GEOS) and Navistar (NAV).

The average 1-year total return forecast is 15.1% — but we know the analyst consensus to be (1) volatile and (2) optimistic.

The ACE outlook consistently ranks as the highest among the research entities that we follow.

Our favorite source for analyst estimates is probably finance.yahoo.com with their 1-year price target and current yield — but we frequently audit the sample using benzinga.com and/or marketbeat.com and/or flashratings.com.

Companies of Interest: Goldman Sachs

Why Goldman Sachs? There are number of high visibility research firms from Bank of America (Merrill Lynch) to Morgan Stanley and other firms like Raymond James. But Goldman Sachs is the most influential based on empirical observations over a number of decades.

It’s best to own one of their “new favorites” before they add it to their conviction buy list or substantially raise their price target because you’re virtually guaranteed a boost in return. In fact, one of my colleagues used to use the Goldman Sachs buy and sell list to do just the opposite. He’d watch for exit opportunities after watching the price move up after a buy upgrade and look for shopping opportunities a few days after a sell recommendation.

Sometimes we get a broad update courtesy of articles like this one: Goldman Sachs: Buy and Avoid List (March 2015)

Stocks to Study (8/21/2015)

  • Illumina (ILMN) — Highest MANIFEST Rank
  • Geospace Tech (GEOS) — Highest Low Return Forecast (VL)
  • Tata Motors (TTM) — Lowest P/FV (Morningstar)
  • Nissan Motors (NSANY) — Lowest P/FV (S&P)
  • Tata Motors (TTM) — Best 1-Yr Outlook (ACE)
  • Cummins (CMI) — Best 1-Yr Outlook (S&P)
  • Ford (F) — 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.

Of Lost Decades …

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This Week at MANIFEST (8/7/2015)

“Stock market corrections, although painful at the time, are actually a very healthy part of the whole mechanism, because there are always speculative excesses that develop, particularly during the long bull market.” — Ron Chernow

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch

“After 1929, so many people had been traumatized by the stock market crash that there was a lost generation.” — Ron Chernow

The first ten years of this century are referred to as a Lost Decade.

For those who were concentrated in investments in the S&P 500, it clearly was a “lost decade” as the combined stock prices of the S&P 500 actually ended the 10-year period in nearly the same place they started. There were exceptions, but the carnage was deep. We’ve reminisced before about the October 2001 warnings from Ralph Acampora that index fund investors were “about to get killed.”

There are days when I wonder if we aren’t on the verge of another “lost generation.” Interest in common stock investing has waned to long-term lows and the long-term damage/cost/lost opportunity is likely to be palpable.

I like William Devane. A lot. But as a paid spokesperson for one of those gold companies he’s a disservice. “How many of you were compensated or bailed out by the government after the last crash?”

Answer: None. (1) We didn’t expect to be. No one should. (2) We didn’t need it. Check out the image of Tin Cup and the getting-back-to-even moment that happened for many of us before Jim Cramer started talking and writing about it.

Lost Generation? Think about 1941 and the 12 years of aftermath. It was into this void of investing and the schrapnel of rampant speculation that George Nicholson helped to launch the modern investment club movement in Detroit. Because it’s about EDUCATION … and deployed understanding as a real key to the stock market — as suggested by Peter Lynch — is discovered patience and discipline.