No. of Recommendations: 9
This update is to Kenneth Lee’s Benchmark Investing picks based on the latest Monday’s data release. The S&P500 continues to move higher. Year-to-date it is up more than +22%. With this update there are 3 companies in the DJIA 30 that are below their downside price targets. They are WBA -71%, CRM -48%, and NKE -12%. However, none would fully qualify as a BI pick during to not being able to pass all the filters.
If you are interested in following along with this methodology against a broader range of stocks outside of the Dow30, these picks are posted in my Fool CAPS on a regular basis as trades occur, which can be found here
https://caps.fool.com/player/alltoofoolish.aspx.
Market Valuation (Dow 30): The DOW30 market is still OVERpriced according to the BI method of valuation by about 23%.
Downside: -38%
Upside: -8%
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 9-Aug-24 369 TRUE 267 408 38% 40% -1% 1.6 375 505 23% 15% FALSE Caterpillar Inc.
MCD 16-Aug-24 297 FALSE 4% 2.4 365 445 38% 12% TRUE McDonald's Corp.
CVX 23-Aug-24 146 TRUE 141 205 3% -9% 5% 4.7 215 295 77% 6% FALSE Chevron Corp.
BA 30-Aug-24 153 FALSE 144% - 300 450 141% 25% TRUE Boeing
TRV 30-Aug-24 239 TRUE 173 226 38% 51% 27% 1.8 355 430 63% 9% FALSE Travelers Cos.
UNH 30-Aug-24 575 TRUE 454 648 27% 31% 11% 1.5 655 800 25% 17% FALSE UnitedHealth Group
WBA 30-Aug-24 8.71 TRUE 30 44 -71% -75% -36% 11.1 14 20 88% 50% FALSE Walgreens Boots
AMGN 30-Aug-24 337 FALSE 10% 2.8 350 430 17% 13% TRUE Amgen
VZ 6-Sep-24 44.33 TRUE 29 38 53% 44% 1% 6.2 60 75 53% -12% FALSE Verizon Communic.
CSCO 6-Sep-24 51.97 FALSE 42 59 24% 25% -5% 3.2 60 70 28% 7% FALSE Cisco Systems
HD 13-Sep-24 390 FALSE 4% 2.3 390 475 12% 8% TRUE Home Depot
PG 13-Sep-24 174 FALSE 129 170 36% 44% 7% 2.3 175 215 12% -4% FALSE Procter & Gamble
INTC 20-Sep-24 21.84 TRUE 2.5 3.9 787% 153% -54% - 25 35 44% 87% TRUE Intel Corp.
AAPL 20-Sep-24 228 TRUE 96 160 138% 153% 6% 0.5 240 290 20% 13% FALSE Apple Inc.
DOW 27-Sep-24 51.71 TRUE 25 39 107% 110% 47% 5.6 65 100 59% -4% FALSE Dow Inc.
JNJ 27-Sep-24 164 TRUE 152 192 8% 5% -6% 3.1 200 245 33% 6% FALSE Johnson & Johnson
MRK 27-Sep-24 117 TRUE 104 141 13% 37% 28% 2.6 140 170 30% 24% FALSE Merck & Co.
HON 5-Jul-24 203 TRUE 171 233 19% 26% 11% 2.1 235 290 30% 14% FALSE Honeywell Int'l
MMM 5-Jul-24 135 TRUE 109 156 23% 16% 396% 2.1 150 200 31% -18% TRUE 3M Company
GS 5-Jul-24 498 TRUE 281 424 77% 138% 24% 2.5 585 790 41% 14% FALSE Goldman Sachs
CRM 5-Jul-24 267 TRUE 510 885 -48% -41% 9% 0.6 320 480 58% 27% FALSE Salesforce Inc.
KO 12-Jul-24 71.64 TRUE 55 69 31% 34% 4% 2.8 70 85 8% -4% FALSE Coca-Cola
WMT 19-Jul-24 79.06 TRUE 42 57 88% 106% 7% 1.1 95 115 32% -6% FALSE Walmart Inc.
NKE 19-Jul-24 86.52 FALSE 98 156 -12% -5% -9% 1.8 110 150 60% 13% FALSE NIKE Inc. 'B'
DIS 26-Jul-24 93.75 TRUE 33 49 185% 166% 27% 1.0 140 180 68% 9% FALSE Disney (Walt)
JPM 2-Aug-24 211 TRUE 153 224 38% 43% 6% 2.2 185 250 4% 5% FALSE JPMorgan Chase
AXP 2-Aug-24 269 TRUE 158 231 71% 78% 5% 0.9 195 295 -6% 6% FALSE Amer. Express
V 2-Aug-24 285 TRUE 254 352 12% 19% 13% 0.7 375 455 43% 7% FALSE Visa Inc.
IBM 2-Aug-24 218 TRUE 91 128 138% 138% -1% 3.1 190 235 -1% -8% FALSE Int'l Business Mach.
MSFT 2-Aug-24 435 FALSE 264 424 65% 82% 13% 0.8 605 735 55% 26% FALSE Microsoft Corp.
Dow30 42,068 25,453 37,714 2.6 47,711 61,360 Dow Jones Industrial Average
Appreciation Potential -38% -8% 16% 50% 40% 12%
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 Fool CAPS. I have been using this methodology exclusively on Fool.com for many years with great success. In the Fool CAPS you will find my current dynamic portfolio and can see my most recent activities as they occur.
Notable activity in my CAPS dynamic BI portfolio over the past three months:
• PYPL, ADD – Aug 2 2024, downside price target -58%. Still meets all criteria.
• AMZN, ADD – Aug 2 2024, downside price target -24%. Still meets all criteria.
• ALGN, ADD – Aug 9 2024, downside price target -34%. Still meets all criteria.
In 2024 I will be tracking and updating every quarter two different BI Portfolios. Both these portfolios will be held for the entire 2024 year without any adjustments - we'll see how they do.
The first portfolio (Managed) will be a continuation of the 2023 picks that have not yet hit a Sell signal plus any new picks that qualify as a Buy using the latest results.
2024 BI Managed PortfolioXRAY, ALGN, CAH, EOG, KMI, TMUS, LKQ, BALL, CRM, TAP, IVZ, NFLX, WBD, BK, PYPL, PTC, AMZN, META, VFC, PXD.
BI Managed Portfolio Total Return Year-to-Date +13.0%
S&P 500 Total Return Year-to-Date +22.3%
The largest winner to date is META +65%
The biggest loser this year is WBD -29%
The second portfolio (Current) will only include picks that currently qualify based on the Buy rules using the latest results.
2024 BI Current PortfolioXRAY, EOG, TAP, NFLX, PYPL, VFC, PXD
BI Current Portfolio Total Return Year-to-Date +15.9%
S&P 500 Total Return Year-to-Date +22.3%
The largest winner to date is NFLX +51%
The biggest loser this year is TAP -5%
My overall Fool CAPS Rating at the time of this post was 75.6 (+6.9 point since the previous update)
Score: 541
Accuracy: 40%
Disclosures and Useful TermsVL 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/research#list=dow30...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.asp?mid=20916205&so......
• %<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
