February 27, 2015

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Valuation WATCH: Overvalued stocks now make up 59.57% of our stocks

assigned a valuation and 20.55% of those equities are calculated to be
overvalued by 20% or more. Twelve sectors are calculated to be
overvalued--with six at or near double digits.
MARKET OVERVIEW
Index

Started week

Friday AM

Change

Change %

ytd

DJIA

18140.76

18184.3

43.54

0.24%

2.03%

NASDAQ

4953.1

4980.42

27.32

0.55%

5.37%

RUSSELL 2000

1230.22

1238.61

8.39

0.68%

2.82%

S&P 500

2109.83

2110.29

0.46

0.02%

2.50%

Summary of VE Stock Universe

Stocks Undervalued

40.43%

Stocks Overvalued

59.57%

Stocks Undervalued by 20%

15.31%

Stocks Overvalued by 20%

20.55%

SECTOR OVERVIEW
Sector

Change

MTD

YTD

Valuation

Last 12-M
Return

P/E
Ratio

Aerospace

-0.55%

7.79%

8.37%

19.32% overvalued

3.65%

20.99

Auto-Tires-Trucks

-0.20%

9.17%

6.88%

3.20% overvalued

-1.83%

16.41

Basic Materials

-0.38%

3.55%

2.62%

2.39% undervalued

-21.48%

26.47

Business Services

0.26%

8.35%

4.91%

6.71% overvalued

4.22%

25.61

Computer and Technology

-0.03%

6.08%

4.73%

12.00% overvalued

-0.98%

31.92

Construction

-0.03%

5.28%

1.69%

4.11% undervalued

-0.71%

24.7

Consumer Discretionary

0.09%

5.38%

2.33%

5.05% overvalued

-4.10%

26.65

Consumer Staples

0.06%

3.68%

2.95%

9.88% overvalued

6.96%

24.64

Finance

0.00%

4.42%

0.94%

2.97% overvalued

3.54%

18.02

Industrial Products

0.18%

5.88%

1.44%

1.46% overvalued

-7.08%

21.31

Medical

0.01%

7.31%

9.01%

14.72% overvalued

2.08%

32.92

Multi-Sector Conglomerates

-0.09%

4.94%

4.99%

9.69% overvalued

11.96%

19.35

Oils-Energy

-1.37%

7.18%

1.09%

2.84% undervalued

-27.24%

20.02

Retail-Wholesale

-0.11%

5.06%

0.97%

10.11% overvalued

8.29%

27.77

Transportation

0.16%

5.43%

1.57%

4.33% undervalued

5.80%

22.41

Utilities

-0.56%

3.39%

0.95%

4.95% overvalued

7.01%

22.23

ValuEngine Newsletters Latest Results

VE Newsletter

Current
Benchmark *
Month Total

Last Month
Total

Benchmark *

Since
Inception

Benchmark *

Forecast MNS

3.85

0.78

10.15

1.09

105.43

123.80

Dividend Stock

-2.03

4.00

-4.40

-2.92

11.86

35.97

Small Cap Stock

5.60

2.86

-0.63

-0.09

30.67

55.74

View

-1.05

-0.08

6.20

2.54

133.45

86.80

*NOTE: Benchmark for Forecast MNS for last month and inception is the MLSAX Long/Short Fund.
Benchmark for Small Cap is the Russell 2000 Small Cap Index (RUT). Benchmark for current month
Forecast MNS and all other portfolios for all time frames is the S&P500.

Sector TalkRetail/Wholesale
Below, we present the latest data on leading Retail/Wholesale Sector stocks
from our Institutional software package (VEI). These results were filtered by market
price and volume--no results below 3$/share or less than 100k shares/day volume.

Top-Five Consumer Staples Sector Stocks--Short-Term Forecast Returns

Ticker

Name

Mkt Price

Valuation(%)

Last 12-M
Retn(%)

SAFM

SANDERSON FARMS

85.67

-12.77

10.9

BRFS

BRF-BRASIL FOOD

23.1

-10.07

34.62

CAG

CONAGRA FOODS

34.67

4.05

22.38

ADM

ARCHER DANIELS

47.55

4.95

17.73

TSN

TYSON FOODS A

40.87

-3.53

4.5

Top-Five Consumer Staples Sector Stocks--Long-Term Forecast Returns

Ticker

Name

Mkt Price

Valuation(%)

Last 12-M
Retn(%)

SAFM

SANDERSON FARMS

85.67

-12.77

10.9

BRFS

BRF-BRASIL FOOD

23.1

-10.07

34.62

CAG

CONAGRA FOODS

34.67

4.05

22.38

ADM

ARCHER DANIELS

47.55

4.95

17.73

TSN

TYSON FOODS A

40.87

-3.53

4.5

Top-Five Consumer Staples Sector Stocks--Composite Score

Ticker

Name

Mkt Price

Valuation(%)

Last 12-M
Retn(%)

SAFM

SANDERSON FARMS

85.67

-12.77

10.9

BRFS

BRF-BRASIL FOOD

23.1

-10.07

34.62

TSN

TYSON FOODS A

40.87

-3.53

4.5

ADM

ARCHER DANIELS

47.55

4.95

17.73

CAG

CONAGRA FOODS

34.67

4.05

22.38

Top-Five Consumer Staples Sector Stocks--Most Overvalued

Ticker

Name

Mkt Price

Valuation(%)

Last 12-M
Retn(%)

SSP

EW SCRIPPS CO

23.15

79.87

18.05

GCI

GANNETT INC

35.68

55.46

21.11

SVU

SUPERVALU INC

10

37.77

56.25

TAP

MOLSON COORS-B

77.24

36.77

36.27

NYT

NY TIMES A

14.18

30.14

-9.85

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What's Hot-Valuations Adjust to Higher Market Levels

ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which
trade on US exchanges as well as @1000 Canadian equities. When EPS estimates are
available for a given equity, our model calculates a level of mispricing or valuation
percentage for that equity based on earnings estimates and what the stock should
be worth if the market were totally rational and efficient--an academic exercise to be
sure, but one which allows for useful comparisons between equities, sectors, and
industries. Using our Valuation Model, we can currently assign a VE valuation
calculation to more than 2900 stocks in our US Universe.

We combine all of the equities with a valuation calculation to track market

valuation figures and use them as a metric for making calls about the overall state of
the market. Two factors can lower these figures-- a market pullback, or a significant
rise in EPS estimates. Vice-versa, a significant rally or reduction in EPS can raise the
figure. Whenever we see overvaluation levels in excess of @ 65% for the overall
universe and/or 27% for the overvalued by 20% or more categories, we issue a
valuation warning.
We now calculate that 58.76% of stocks are overvalued and 19.91% of those
stocks are overvalued by 20% or more. Thus we have seen a relatively large shift in
overvaluation over the past month. However, these figures are down significantly
from where they were for much of 2014.
We are still within "normal" range for valuation, but a strong leg up could put us
back into Valuation Warning range. What seems more significant is that the models
have adjusted to the new higher levels for the SP500. For much of 2014 a market at
2100 would have pegged our overvaluation figures to a much higher range. In fact,
one year ago, with the SP500 at 1875 or so, we had overvaluation numbers at @80%.
Now, SP500 at 1900 seems like a buying opportunity.
And let's remember the fact that despite all the doom and gloom from certain
quarters in Washington and New York over the past six years, this has been one of the
most remarkable rallies in US history. Since the 666 inter day SP500 low of March 2009,
that index is up more than 210%, the Dow is up more than 175%, and the NASDAQ has
jumped a massive 292%--meanwhile GLD (the SPDR Gold ETF) the scaremongers
choice--is up a paltry 28%. Given a similar stock market rally under a Republican
administration, you can be sure we would have heard talk about how the country
was "saved" by the wise policies of that President for decades to come.
In addition to the valuation calculations, we find other reasons to remain
optimistic about stocks. The latest news from Janet Yellen's Fed remains positive for US
equities in the short term. Adjustments have been made to oil at @$50/barrel and the
US is in an enviable position vis-a-vis energy right now. Employment is picking up
steamwitness the latest announced wage increases from Wal-Mart, who is dealing
with pressure from within and without when it comes to compensation. Let's just hope
Congress doesn't screw up this momentum with any more ill-advised austerity moves
or shut downs (partial or not.)

Subscribers Get FULL ACCESS to our Market and Sector Overviews

The chart below tracks the valuation metrics from January 2015. It shows levels in
excess of 40%.

This chart shows overall universe over valuation in excess of 40% vs the S&P 500 from
January 2014

This chart shows overall universe under and over valuation in excess of 40% vs the S&P
500 from March 2007*

*NOTE: Time Scale Compressed Prior to 2011.

--Top VE Newsletter Posts Another SP500 Beat

For January/February, the stock market continued its winning ways and laid in
some new highs. Our ValuEngine View Responded well to the market condtiions and
we returned to our winning ways with a significant gain of 6.2%. We beat the S&P 500
index gain of 2.54% by 366 bps. The trailing 12 month gain of the VE View is 18.03%
versus the S&P 500 return of 15.68%. The return since inception of the View is 133.45%
versus the S&P's gain of 86.8.
For the second month in-a-row we had a 66% hit-ratio with declines being
modest. Our biggest decline was just 7.22%. Gains were better this month, with five
positions near, or well into double-digits. Lannett led the way with a huge 42% gain
while Lennar, Greenbrier, Lear, and United Rentals powered up our results. Once
again our suggested stop-loss levels of 15% had no effect given the few losers and the
limited nature of their declines.
Return Comparison vs. S&P 500
Last 12 Months
VE View

18.03%

S&P 500

15.68%

The View features the absolute top quality picks from our extensively tracked
and tested quant models. It is the only newsletter which features picks from both the
ValuEngine Stock Valuation and Forecast Model. With the View, investors can utilize
the power of ValuEngine to achieve their goals in a steady and consistent manner.
Average Monthly Return Statistics
Outperforming S&P 500

28.45%

Average Return

1.65%

With the ValuEngine View Newsletter you Receive 20 Carefully Selected Stock Picks
Representing the Most Up-to-Date Calculations of our Award-Winning Stock Valuation
and Forecast Models
CLICK HERE TO SUBSCRIBE NOW
Here are the latest results from January/February 2015:
Ticker

Company Name

Entry
Price
1/23/15

Exit
Price

Change

%Change

ARRS

ARRIS GROUP INC

28.14

29.01

0.87

3.09

AUO

AU OPTRONCS-ADR

5.68

5.27

-0.41

-7.22

BBD

BANCO BRADESCO

13.9

13.36

-0.54

-3.88

BT

BT GROUP PLC-ADR

63.64

68.79

5.15

8.09

CYS

CYS INVESTMENTS

9.01

-0.01

-0.11

GBX

GREENBRIER COMPANIES

53.67

59.9

6.23

11.61

GILD

GILEAD SCIENCES

105.14

104.7

-0.44

-0.42

HCA

HCA HOLDINGS

70.4

70.41

0.01

0.01

HELE

HELEN OF TROY

77.53

78.28

0.75

0.97

LCI

LANNETT INC

45.26

64.27

19.01

42.00

LEA

LEAR CORPORATION

99.7

110.12

10.42

10.45

LEN

LENNAR CORP -A

43.79

51.21

7.42

16.94

MU

MICRON TECH

30.89

30.77

-0.12

-0.39

MUSA

MURPHY USA INC

69.51

71.42

1.91

2.75

URI

UNITED RENTALS INC

86.03

93.86

7.83

9.10

LONG PORTFOLIO
GSPC

S&P500

6.20
2063.15

2115.48

52.33

2.54

Our Investment Strategies Focus on Dozens of Fundamental and Technical Factors for
over 7,000 Individual Stocks, Synthesize the Data, and then Come Up with a Portfolio

AAII Selects ValuEngine.com "Best of the Web"

The American Association of Individual Investors (AAII) was founded in 1978 by Dr.
James Cloonan. Its purpose is to distill current financial theory and academic
knowledge in a manner which allows its members to beat the market. In short, AAII's
philosophy and membership base is a perfect match for ValuEngine's various
newsletters, website services, and other products.
ValuEngine clients access proprietary stock valuation data on more than 4000 US
equities in addition to forecast and ratings for more than 8000 stocks. They can also
purchase ready-made portfolios based on all of our data which are designed to fit a
variety of investment styles and risk/reward profiles.
ValuEngine is always searching for self-directed investors who recognize the value of
our services--just like the members of AAII, and for that reason we are proud to
announce that we were recently selected one of AAII's "Best of the Web" services.
AAII puts Valuengine.com within the "top 16 sites for consensus analyst estimates,
ratings and recommendations, stock screening, and stock valuation.
It is important to note that in an era of free content, apps, and services, ValuEngine
has almost always been the only fee-based service to win a stock valuation award
from AAII. We have won this award numerous times and AAII notes that
ValuEngine provides a wide range of services for individual investors and is
an excellent source for stock valuation. It was chosen as Editors Choice
because of its in-depth analysis and innovative valuation techniques that
are not available at other sites.
ValuEngine CEO Paul Henneman has always been a strong supporter of AAII's
program and services for individual investors and noted that "ValuEngine's objective,
cutting-edge research provides the tools for any investor looking to reduce
management fees and handle their own portfolios. Savvy individuals, Wall St.
professionals, and the leaders of AAII have known for years that ValuEngine.com
offers an outstanding suite of products which an help improve returns and beat the
market. So, we are of course pleased to be recognized by AAII for yet another year."