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October 2, 2015 If you no longer wish to receive this free newsletter, CLICK HERE

October 2, 2015

October 2, 2015 If you no longer wish to receive this free newsletter, CLICK HERE to

The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools available from In today's fast-moving and globalized financial markets, it is easy to get overloaded with information. The winners will adopt an objective, scientific, independent and unemotional approach to investing. If you are not yet a member of ValuEngine's stock analysis service, sign up now for a two-week free trial at www.valuengine.com!

VALUATION WATCH: Overvalued stocks now make up 36.96% of our stocks assigned a valuation and 12.55% of those equities are calculated to be overvalued by 20% or more. Three sectors are calculated to be overvalued.

MARKET OVERVIEW

Index

Started week

Friday PM

Change

Change %

ytd

DJIA

16313.26

16284.7

-28.56

-0.18%

-8.63%

NASDAQ

4665.06

4652.58

-12.48

-0.27%

-1.57%

RUSSELL 2000

1121.87

1099.3

-22.57

-2.01%

-8.75%

S&P 500

1929.18

1930.7

1.52

0.08%

-6.23%

Summary of VE Stock Universe

Summary of VE Stock Universe

Stocks Undervalued

Stocks Overvalued

Stocks Undervalued by 20%

Stocks Overvalued by 20%

67.77%

32.23%

31.96%

10.00%

SECTOR OVERVIEW Sector Change MTD YTD Valuation Last 12-M P/E Return Ratio Aerospace

SECTOR OVERVIEW

Sector

Change

MTD

YTD

Valuation

Last 12-M

P/E

Return

Ratio

Aerospace

-0.10%

-0.05%

-5.99%

2.25% overvalued

-10.84%

16.73

Auto-Tires-Trucks

-0.01%

0.02%

-9.95%

14.93% undervalued

-10.33%

14.37

Basic Materials

-0.06%

0.29%

-20.89%

23.87% undervalued

-31.85%

21.01

Business Services

0.21%

0.27%

-3.40%

3.42% undervalued

-2.94%

22.14

Computer and Technology

-0.64%

-0.57%

-6.33%

7.01% undervalued

-6.47%

27.66

Construction

-0.14%

-0.09%

-5.36%

11.16% undervalued

-4.96%

19.73

Consumer Discretionary

-0.18%

-0.10%

-1.80%

7.04% undervalued

-4.18%

24.96

Consumer Staples

-0.39%

-0.34%

-6.03%

2.26% undervalued

-3.84%

23.12

Finance

-0.03%

0.02%

-2.83%

3.47% undervalued

-3.58%

16.08

Industrial Products

-0.42%

-0.37%

-12.95%

16.29% undervalued

-15.91%

17.03

Medical

-0.39%

-0.23%

1.43%

3.98% undervalued

2.30%

28.85

Multi-Sector Conglomerates

-0.35%

-0.31%

-13.22%

8.14% undervalued

-6.98%

20.68

Oils-Energy

0.26%

0.39%

-25.72%

21.67% undervalued

-50.97%

23.9

Retail-Wholesale

-0.47%

-0.40%

-9.89%

6.92% undervalued

-4.25%

21.97

Transportation

-0.37%

-0.27%

-16.41%

16.44% undervalued

-15.58%

14.77

Utilities

-0.49%

-0.45%

-10.24%

5.12% undervalued

-8.14%

20.65

Sector Talk—Business Services

Top-Five Business Services Sector Stocks--Short-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

CVG

CONVERGYS CORP

23

-5.01%

29.07%

VEC

VECTRUS INC

22.08

N/A

13.06%

WU

WESTERN UNION

18.21

-2.12%

13.53%

ASGN

ON ASSIGNMENT

36.59

-15.64%

36.28%

BBSI

BARRETT BUS SVS

41.78

-29.66%

5.80%

Top-Five Business Services Sector Stocks--Long-Term Forecast Returns Ticker Company Name Market Price Valuation

Top-Five Business Services Sector Stocks--Long-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

CVG

CONVERGYS CORP

23

-5.01%

29.07%

VEC

VECTRUS INC

22.08

N/A

13.06%

WU

WESTERN UNION

18.21

-2.12%

13.53%

ASGN

ON ASSIGNMENT

36.59

-15.64%

36.28%

BBSI

BARRETT BUS SVS

41.78

-29.66%

5.80%

Top-Five Business Services Sector Stocks--Composite Score

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

LAMR

LAMAR ADVER CO

52.04

-20.96%

5.66%

WU

WESTERN UNION

18.21

-2.12%

13.53%

ASGN

ON ASSIGNMENT

36.59

-15.64%

36.28%

CVG

CONVERGYS CORP

23

-5.01%

29.07%

BBSI

BARRETT BUS SVS

41.78

-29.66%

5.80%

Top-Five Business Services Sector Stocks--Most Overvalued

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

ENOC

ENERNOC INC

7.88

300.00%

-53.54%

PFSW

PFSWEB INC

14.03

93.46%

28.95%

SFUN

SOUFUN HLDG-ADR

6.6

75.24%

-33.67%

HCKT

HACKETT GROUP

13.99

40.82%

134.73%

CORE

CORE-MARK HLDG

64.44

28.71%

21.49%

Find out what Wall Street Investment and Media Professionals already know, ValuEngine offers sophisticated stock valuation and forecast research as well as a variety of portfolio screening and creation tools.

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Free Download for Readers As a bonus to our Free Weekly Newsletter subscribers, we are

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As a bonus to our Free Weekly Newsletter subscribers, we are offering a FREE DOWNLOAD of one of our Stock Reports

The Coca-Cola Company (KO) is the world's largest beverage company and is the leading producer and marketer of soft drinks. Along with Coca-Cola, recognized as the world's best-known brand, The Coca-Cola Company markets four of the world's top five soft drink brands, including diet Coke, Fanta and Sprite. Through the world's largest distribution system, consumers in nearly 200 countries enjoy The Coca-Cola Company's products at a rate of more than 1 billion servings each day.

ValuEngine continues its HOLD recommendation on COCA COLA CO for 2015-10-01. Based on the information we have gathered and our resulting research, we feel that COCA COLA CO has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.

Read our Complete Detailed Valuation Report on Coca-Cola HERE.

Company Size but UNATTRACTIVE Book Market Ratio. Read our Complete Detailed Valuation Report on Coca-Cola HERE.
ValuEngine Forecast   Target Expected Price* Return 1-Month 39.76 -0.10% 3-Month 40.19
ValuEngine Forecast   Target Expected Price* Return 1-Month 39.76 -0.10% 3-Month 40.19

ValuEngine Forecast

 

Target

Expected

Price*

Return

1-Month

39.76

-0.10%

3-Month

40.19

0.98%

6-Month

40.73

2.34%

1-Year

39.33

-1.17%

2-Year

44.01

10.58%

3-Year

42.85

7.67%

 

Valuation & Rankings

 

Valuation

0.30% undervalued

Valuation Rank(?)

33

33

1-M Forecast Return

-0.10%

1-M Forecast Return Rank

43

43

12-M Return

-6.70%

Momentum Rank(?)

55

55

 

Sharpe Ratio

0.50

Sharpe Ratio Rank(?)

80

80

 

5-Y Avg Annual Return

6.83%

5-Y Avg Annual Rtn Rank

5-Y Avg Annual Return 6.83% 5-Y Avg Annual Rtn Rank 68

68

Volatility

13.68%

Volatility Rank(?)

 

86

Expected EPS Growth

-0.98%

EPS Growth Rank(?)

21

21

Market Cap (billions)

174.33

Size Rank

 

100

Trailing P/E Ratio

19.41

Trailing P/E Rank(?)

57

57

 

Forward P/E Ratio

19.61

Forward P/E Ratio Rank

27

27

PEG Ratio

n/a

PEG Ratio Rank

n/a

n/a

Price/Sales

3.81

Price/Sales Rank(?)

23

23

Market/Book

68.07

Market/Book Rank(?)

2

Beta

0.53

Beta Rank

Beta 0.53 Beta Rank 66

66

Alpha

-0.05

Alpha Rank

48

48

What's Hot Valuations Dive Again Due To China/Commodities Worries ValuEngine tracks more than 7000 US

What's Hot

Valuations Dive Again Due To China/Commodities Worries

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 2800 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 less than a third of the stocks we can assign a valuation are overvalued--32.23%--and just 10% of those stocks are overvalued by 20% or more. These figures continue to fluctuate, and of late they are stuck below the 40% we consider to be "normal."

We did our last valuation study on August 18th, and since then we have seen a market slide and lots of volatility with the S&P dropping from @2100 down to the 1800- 2000 range. This pull back was initially driven by the Chinese sell off and currency devaluation. Since then, we have found shock waves from that drop and related events impacting equity pricing across the globe.

We saw one day with levels this low near the end of August, but prior to that, you would have to go back to mid-November 2012, to find overvaluation levels below 30%. At that time, the S&P 500 was at 1353. So, from our perspective, with the market now at 1883 or so as of this writing, stocks are "cheap" and oversold. But the market is always right, so what we think does not trump that trend.

In addition, we now have the recent FOMC decision to leave short-term rates unchanged to

In addition, we now have the recent FOMC decision to leave short-term rates unchanged to consider. Fed officials noted that turmoil in China and other emerging markets may have a negative spillover effect for the underlying US economy. Indeed, as we have noted lately, news from companies such as Caterpillar indicates a global slow down. Anything dealing with global commodities and construction can play a role.

And, to throw in random events, seemingly unrelated, you had the bone- headed greed of a pharma CEO and the shady practices of an auto giant causing turmoil in bio-tech and the auto industry and more selling.

But, as always, we note a stronger US economy, with the labor situation improving by the day, some upward wage pressures, continued recovery for housing, a strong rental market, decent auto sales--but probably NOT for VW moving forward!-- etc. US equities remain standing as the last bastion of decent yield for scared investors the world over.

What we fear more now is some sort of shut down scare--or actual shut down-- or perhaps additional austerity measures from misguided right-wing politicians in Washington DC. Or, a Fed that raises rates not in relation to its twin-mandate--control inflation and ensure full employment--but as some sort of sop to some bankers, who want a rate increase for their own needs, or to "send a message" that rates can be raised merely because the economy is strong enough to absorb an increase.

This is not what the Fed is supposed to be about. And hitting the brakes right now, in the face of the Chinese issues and other emerging market concerns vis-a-vis commodities and such, makes no sense. Today's weaker than expected jobs report should also help the Fed make the right decision in the short term--eg, do NOT raise rates.

We believe the market slide will be temporary, driven by events over seas, not any sort of underlying weakness in the US economy. But, we live in an ever-more interdependent world. One cannot ignore events overseas. But, one also should realize that our models see a buying opportunity here. That does not mean things cannot decline further, just that from their perspective equities are far cheaper than they were over much of the past three years.

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

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

metrics from January 2015. It shows levels in excess of 40%. This chart shows overall universe

This chart shows overall universe over valuation in excess of 40% vs the S&P 500 from January 2013

in excess of 40%. This chart shows overall universe over valuation in excess of 40% vs
This chart shows overall universe under and over valuation in excess of 40% vs the

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

in excess of 40% vs the S&P 500 from March 2007* *NOTE: Time Scale Compressed Prior

*NOTE: Time Scale Compressed Prior to 2011.

VE Stock Analysis for Individual Investors

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ValuEngine.com is an independent research provider, producing buy/hold/sell recommendations, target price, and valuations on over 7,000 US and Canadian equities every trading day.

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