This Week's Activity – December 7, 2013:
The next Investment Idea Sharing monthly
meeting is this Tuesday, Dec. 10
at my house at 7:30PM.
This week, all the world market indices were
down. Possibly just taking a small break
after the great run up of 2013. Here is a good article that presents some facts
and charts trying to show we are NOT in a stock market bubble yet. http://wallstcheatsheet.com/stocks/3-signs-were-not-in-a-stock-bubble.html/?ref=YF
. I still think the markets are overpriced, but
this article reminds me that I really am not capable of predicting where the
markets are going. Which brings me back
to the fact that as a conservative fundamental value investor, I must continue
looking for under priced stocks of good solid companies.
On Tuesday, I attended an online class from Charles
Schwab called “Strategic Trading in Today’s Market”. They had several excellent charts showing
current market trends that helped me continue to believe that the market is
over priced. You can see these same
slides and you may disagree with me.
Here is the link to their excellent slides: http://wcc.on24.com/event/72/30/67/rt/1/documents/slidepdf/trading_with_a_macro_perspective_1_24virtual.pdf
Pay particular attention to Slide 5 that
shows Margin Debt > $401Billion in Sept. 2013, an all time high. And Slide 17 that shows how similar the run
up of the S&P 500 was from 2003 to 2007 as compared to now, 2009 to 2013.
StockEvaluator ‘Short List’
This week, I have changed the ‘Short List’ screen
to require a stock to meet stricter criteria beyond <5% above 52 week low
and <5 Red cells. ‘Short List’ now
screens to additional fundamental value limits that I look for in a stock
before considering it as a possible buy.
‘Short List’ now includes these added
screening criteria:
1.
Price / Earnings < 20
2.
Price / Sales < 1.5
3.
Price / Book Value < 2
4. Enterprise Value / Revenue
< 1.5
5. Enterprise Value / EBITDA
< 6.5
6. Debt
/ Equity < 80%
7. Goodwill
/ Equity < 50%
8. Revenue
Growth > 0%
9.
Profit Margin > 0%
10.
Current Price Above 52 Week Low < 15%
11.
Dividend > 1%
12.
Dividend Payout Ratio < 60%
‘Short List’ screener will now screen for stocks
that meet these limits. Then I will do
more research to determine if each stock is truly a good buy. This new ‘Short List’ screen will quickly
show me these good fundamental value stocks every week. Since these new ‘Short List’ screening
criteria are much stricter, there may be some weeks when no stock is good
enough to make this list.
Stocks on the “Short List” this week are: CAJ , UMC
Neither are within 5% of their 52 week lows. I have owned UMC since 2009 due to its 2.4%
dividend, and will not buy any more if it drops lower. But, I would like to own CAJ when it gets
back down to its 52 week low.
Stock Evaluator ‘Volatility Sort’
Stocks on the ‘Volatility Sort’ have Current
Price <5% above 52 week low, Volatility >3%, Profit>0%, <6 Red
cells in Stock Evaluator.xls.
Stocks on the “Volatility” list this week are:
NTWK, GMAN
Both are less than $1 Billion in revenues, so I am not
interested in either.
MutualFundEvaluator ‘Short List’ shows funds that are within 3% of
their 52 week low AND have less than 3 Red cells. This week’s list has 35 funds. All except 1 are Bond funds, and all are still
3 to 7% above their lows from 2006 to 2008 before The FED dropped interest
rates to bring the U.S.
out of the recession. When interest
rates go down, bond prices go up, and when interest rates go up, bond prices go
down. These bond funds only pay a 3 to
4% annual dividend and I think they will go down another 3 to 4% when The FED
finally lets interest rates go back to historic levels. I will continue to wait before buying any
bond funds because I could lose a whole year’s worth of interest if I buy back
in too soon. For example, BGNMX closed
this week at $10.65, down from 2011 high of $11.30, but still 8% above 2007 low
of $9.89. My target buy price for BGNMX
is $10.45.
Here is the 10 year chart for BGNMX that shows
these price ranges:
Watching the interest rate on 10 year treasury
notes gives another hint of when these bond fund prices will get back to
normal. As this interest rate comes back
up, the prices of these bond mutual funds will go down. The interest rate on 10 year treasury notes
closed this week at 2.88%, up from 2012 low of 1.50%, but way below 2006 - 2007
highs of 5.2%. My minimum target for 10
year interest rates is 3.5% before I will be ready to buy back into bond mutual
funds.
Here is a chart showing interest rates over
the past 13 years for 10 year treasury notes:
Next Monthly Meeting 2nd Tuesday of every Month:
Tuesday, December 10, 2013 , 7:30 PM at my
house.
Here are my Stock BUYs for This Week:
Stock Symbol:
Buy Date:
Buy Price:
Target Sell Price:
Here are my Stock SELLs for This Week:
Stock Symbol:
Sell Date:
Sell Price:
Buy Price:
Buy Date:
Here are my Option (CALL or PUT) Sells for Last Week:
I only Sell Covered CALLs or Cash Secured PUTs
Option:
Stock Symbol:
Sell Date:
Expiration Date:
Strike Price:
Option Price:
StockEvaluator and Mutual FundEvaluator spreadsheets are available
for download at www.ultimatestockfinder.com
Please remember to send me any other
investing ideas, information or questions that you want to share with the group.
Thanks,
John D.
Disclosure: The author has no positions in any of the
stocks or mutual funds mentioned in this article unless clearly stated above. We
certify that except as cited herein, this is our work product. We received no
compensation or other inducement from any party to produce this article. Please see our full legal disclaimer at: http://www.ultimatestockfinder.com/stockevaluator_disclaimer.html
______________________________________________
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