Subject: Benchmark Investing Update April 4, 2025
This update is to Kenneth Lee’s Benchmark Investing picks based on the latest Monday’s data release. The S&P500 took a breathier the first quarter, finishing down about -5%. With this update there are 6 companies in the DJIA 30 that are below their downside price targets. They are NVDA -42%, MRK -21%, MMM -19%, NKE -39%, CRM -56%, and AMZN at -49%. Among this select group NVDA and MRK would qualify as a BI viable pick.
If you are interested in following along with this methodology against a broader range of stocks outside of the Dow30, these picks are posted here under this post on a regular basis as trades occur (BUY, SELL, and ADD).
Market Valuation (Dow 30):
Market Valuation (Dow 30):
The DOW30 market is getting closer to fair value but remains a bit OVERpriced according to the BI method of valuation by about 8%. This is the closest that I can recall it being to fair value in many years.
Downside: -23%
Upside: +15%
Long Buy Rules:
I am using the following TTD rules for Long position considerations:
1. Year-over-Year EPS growth must > 10%, which are the next 4Q / current quarter + previous 3 quarters earnings results
2. VL 3-5 Year price appreciation > average price appreciation of the market
3. When calculating ROE and BV figures, ignore years when they are negative, but must have at least 7+ years of data to be included in final consideration
4. Avoid erratic ROE ratios, that is where they are > 2std deviations = Curr ROE > (10 Year Avg + 2 * Std Dev)
5. ROE and BV current figures must be updated by VL
Sell Rules:
I am using the following TTD rules to Sell Long positions:
Criteria (1 OR 2 OR 5, AND 3 AND 4):
1. Price Appreciation < Market Average Appreciation
2. Current Price > BI HiPrice
3. Hold time > 365 days per cycle
4. ROE & BV must be current
5. No longer listed as a market average component
Summary of Results:
VL Current ROE/BV Down Up %<10Y %<10Y EPS Div 3-5Y 3-5Y VL3-5Y VL18mo ROE
Ticker Date Price Updated Price Price Down Down4Qs Delta Yield VL L$ VL H$ % Chg % Chg <2STD Name
CAT 7-Feb-25 328 FALSE 294 426 12% 22% 1% 1.7 440 595 51% 15% FALSE Caterpillar Inc.
MCD 14-Feb-25 309 FALSE 9% 2.0 385 470 36% 12% TRUE McDonald's Corp.
CVX 21-Feb-25 168 TRUE 137 193 23% 21% 13% 4.1 225 300 56% 5% FALSE Chevron Corp.
JPM 21-Feb-25 242 TRUE 193 272 26% 48% 5% 2.6 260 315 14% -6% FALSE JPMorgan Chase
BA 28-Feb-25 171 FALSE 92% - 255 380 77% 12% TRUE Boeing
TRV 28-Feb-25 264 TRUE 193 245 37% 43% -14% 1.6 335 410 42% 15% FALSE Travelers Cos.
UNH 28-Feb-25 525 FALSE 500 683 5% 13% 8% 1.6 690 840 47% 24% FALSE UnitedHealth Group
AMGN 28-Feb-25 313 FALSE 4% 3.1 395 480 43% 19% TRUE Amgen
VZ 7-Mar-25 45.37 FALSE 34 44 34% 50% 2% 6.2 60 70 47% -8% FALSE Verizon Communic.
CSCO 7-Mar-25 61.27 TRUE 44 61 38% 44% 6% 2.7 75 95 37% -8% FALSE Cisco Systems
HD 14-Mar-25 363 FALSE 0% 2.5 420 515 29% 13% TRUE Home Depot
SHW 14-Mar-25 345 TRUE 235 358 47% 66% 7% 0.9 430 580 46% 18% FALSE Sherwin-Williams
PG 14-Mar-25 170 TRUE 138 178 23% 32% 7% 2.4 180 220 20% 12% FALSE Procter & Gamble
NVDA 21-Mar-25 106 TRUE 182 357 -42% 10% 51% 0.1 160 245 78% 35% FALSE NVIDIA Corp.
AAPL 21-Mar-25 219 TRUE 125 190 76% 118% 19% 0.5 320 390 60% 26% FALSE Apple Inc.
JNJ 28-Mar-25 166 TRUE 166 208 0% 5% 11% 3.2 200 245 37% -4% FALSE Johnson & Johnson
MRK 28-Mar-25 89.36 TRUE 113 153 -21% -17% 17% 3.7 140 170 75% 32% FALSE Merck & Co.
HON 4-Apr-25 212 TRUE 179 239 18% 25% 6% 2.1 260 315 34% 17% FALSE Honeywell Int'l
MMM 4-Apr-25 145 TRUE 179 253 -19% 5% 9% 1.9 150 205 16% -13% TRUE 3M Company
GS 4-Apr-25 539 TRUE 367 539 47% 78% 7% 2.1 610 830 25% 24% FALSE Goldman Sachs
KO 10-Jan-25 71.66 FALSE 57 72 26% 30% 4% 2.9 70 85 10% 5% FALSE Coca-Cola
WMT 17-Jan-25 86.63 TRUE 46 67 87% 106% 8% 1.0 110 135 61% -8% FALSE Walmart Inc.
NKE 17-Jan-25 63.41 FALSE 104 165 -39% -35% N/A 2.4 95 130 78% 13% FALSE NIKE Inc. 'B'
DIS 24-Jan-25 97.69 FALSE 46 69 111% 110% 98% 1.0 130 175 56% 23% FALSE Disney (Walt)
AXP 31-Jan-25 265 TRUE 179 275 48% 67% 7% 1.1 250 380 14% 8% FALSE Amer. Express
V 31-Jan-25 343 FALSE 310 424 11% 34% 12% 0.7 375 455 26% 0% TRUE Visa Inc.
IBM 31-Jan-25 248 TRUE 95 135 163% 160% 6% 2.7 200 245 -11% -9% FALSE Int'l Business Mach.
MSFT 31-Jan-25 371 FALSE 340 521 9% 44% 11% 0.9 610 745 73% 28% FALSE Microsoft Corp.
CRM 31-Jan-25 266 TRUE 600 1050 -56% -48% 6% 0.6 370 555 64% 0% FALSE Salesforce Inc.
AMZN 31-Jan-25 187 TRUE 367 627 -49% -32% 11% - 300 405 45% 22% FALSE Amazon.com
Dow30 41,965 32,101 47,978 2.1 52,248 67,493 Dow Jones Industrial Average
Appreciation Potential -23% +15% 25% 62% 43% 11%
AllTooFoolish's CAPS Portfolio:
If you are interested in seeing this method applied to a broader universe of stocks, follow my actively managed Benchmark Investing portfolio using an update to this post. I have been using this methodology for many years with great success. In this post you will find my current dynamic managed portfolio and can see my most recent activities as they occur.
Notable activity in my Managed BI portfolio over the past several months:
• TAP, ADD on Jan 5, 2025, downside price target -32% at that time.
• SLB, ADD on Jan 24, 2025, downside price target -37% at that time.
• L, BUY on Jan 31, 2025, downside price target -20% at that time.
• AMZN, ADD on Jan 31, 2025, downside price target -22 at that time.
• NVDA, BUY on Mar 21, 2025, downside price target -33% at that time.
• PFE, BUY on Mar 27, 2025, downside price target -29% at that time.
• PAYC, BUY on Mar 27, 2025, downside price target -26% at that time.
• AKAM, BUY on Mar 31, 2025, downside price target -27% at that time.
In 2025 I will continue to track and update two different Portfolios. Both these portfolios will be held for the entire year - we'll see how they do. The first portfolio (Managed) will be a continuation of last year picks that have not yet hit a Sell signal plus any new picks that qualify using the latest results. These are noted as “ADD” or “BUY” during each weekly update.
2025 BI Managed Portfolio
ALGN, CAH, EOG, KMI, BK, INCY, TMUS, LKQ, CHRT, BALL, L, KIM, CRM, TAP, IVZ, NFLX, WBD, SLB, PYPL, PTC, EPAM, AMZN, META, NVDA, PFE, PAYC, AKAM.
BI Managed Portfolio Total Return Year-to-Date -3.0%
S&P 500 Total Return Year-to-Date -4.6%
The largest winner to date is TMUS +21%
The biggest loser this year is EPAM -26%
The second portfolio (Current) will only include picks that qualified based on the Buy rules using the results at the very beginning of the current year and will held for the entire year without change.
2025 Current Portfolio
ALGN, PAYC, ADM, TAP, HAL, SLB, PYPL
BI Current Portfolio Total Return Year-to-Date -5.1%
S&P 500 Total Return Year-to-Date -4.6%
The largest winner to date is SLB +10%
The biggest loser this year is PYPL -24%
Disclosures and Useful Terms
VL Date is the date of the last summary report update from Valueline as indicated in the post’s subject line. All data sources from the Valueline Dow30 reports are made publicly available on their website. https://research.valueline.com...
Current Price is the closing price of the stock as reported by VL, which is usually a few days behind the date
of the time period mentioned in this posting’s subject line.
• ROE/BV Updated is an indication if the stock’s BV and ROE have been updated through the end of the Benchmark evaluation time frame.
• 10Yr Down is the 10 year downside price. The company must have at least 7 years of non-negative ROE data to qualify.
• 10Yr Down4Qs is the 10 year downside price averaged over the previous 4 quarter’s valuation price.
• 10Yr Up is the 10 year upside price. The company must have at least 7 years of non-negative ROE data to qualify.
Both upside and downside are calculated using the method outlined in TTD book. Also, a discussion of calculating the upside and downside can be found here:
http://boards.fool.com/Message......
• %<10Y Downside is the current price divided by the 10 Yr downside expressed as a percentage.
• EPS Future Delta is the projected growth in EPS for the next 4 quarters versus the last four reported quarters.
• I use the latest EPS data from the VL spreadsheet which are updated as soon as new earnings are reported.
• Div Yield is the current % dividend payout ratio per share.
• 3-5 Y Low/Hi Price Est. is the downside/upside price estimate which is calculated using the projections of Book Value and ROE as discussed in TTD.
• Min VL Price Appreciation is the expected change in price from current price to low end VL projected 3-5 year appreciation price.
• VL Price 18 Price Appreciate is the VL projected % change in price from the current price within the next 18 months.
• ROE >2STD is part of a margin of safety consideration, which is briefly discussed in TTD on pg 70-71.
I compare the current year's ROE versus the last 10 years of ROE data. If the current ROE is greater than average (10 Yr ROE) + (2 * stdev(10 Yr ROE)), then this column is TRUE, else it is FALSE. This tells me that the stock's ROE is much higher than its historic average and should therefore be avoided.
-AllTooFoolish