No. of Recommendations: 9
This update is to Kenneth Lee’s Benchmark Investing picks based on the latest Monday’s data release. TheS&P500 took another strong leg up in the third quarter of this year, finishing up nearly +8%. With this update there are 3 companies in the DJIA 30 that are below their downside price targets. They are MRK -32%, CRM -48%, and AMZN -30%. Among this select group only MRK would qualify as a BI pick at this time.
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 22%. With this quarter’s strong performance, the market has, yet again, returned to its significantly overpriced levels.
Downside: -39%
Upside: -6%
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 8-Aug-25 466 TRUE 249 382 87% 78% 9% 1.3 415 560 3% -8% FALSE Caterpillar Inc.
MCD 15-Aug-25 305 FALSE 9% 2.4 410 500 49% 8% TRUE McDonald's Corp.
CVX 22-Aug-25 160 TRUE 90 129 78% 38% 3% 4.4 215 265 50% -6% FALSE Chevron Corp.
JPM 22-Aug-25 316 TRUE 185 276 71% 74% 5% 2.0 280 340 -1% 10% FALSE JPMorgan Chase
BA 29-Aug-25 221 FALSE 113% - 300 450 74% 11% TRUE Boeing
TRV 29-Aug-25 278 TRUE 229 302 21% 37% 11% 1.6 335 410 34% 16% FALSE Travelers Cos.
UNH 29-Aug-25 344 TRUE 262 375 31% -14% -41% 2.5 410 610 44% 22% TRUE UnitedHealth Group
AMGN 29-Aug-25 273 FALSE 21% 3.5 395 480 56% 19% TRUE Amgen
VZ 5-Sep-25 43.61 TRUE 34 44 29% 34% 1% 6.4 60 70 50% 5% FALSE Verizon Communic.
CSCO 5-Sep-25 67.22 FALSE 43 61 55% 52% 40% 2.5 75 95 26% -8% FALSE Cisco Systems
HD 12-Sep-25 410 FALSE 7% 2.2 420 515 14% 14% TRUE Home Depot
SHW 12-Sep-25 342 TRUE 216 343 59% 56% 9% 1.0 450 610 54% 16% FALSE Sherwin-Williams
PG 12-Sep-25 153 FALSE 136 179 12% 15% 4% 2.8 180 220 31% 9% FALSE Procter & Gamble
NVDA 19-Sep-25 178 TRUE 114 357 56% 50% 57% 0.0 205 310 45% 28% FALSE NVIDIA Corp.
AAPL 19-Sep-25 255 TRUE 119 196 115% 129% 18% 0.4 290 390 34% 19% FALSE Apple Inc.
JNJ 26-Sep-25 180 TRUE 162 203 11% 12% 11% 2.9 200 245 25% -5% FALSE Johnson & Johnson
MRK 26-Sep-25 78.56 TRUE 116 158 -32% -29% 20% 4.1 130 175 91% 33% FALSE Merck & Co.
HON 3-Oct-25 208 TRUE 179 243 16% 19% 6% 2.2 260 315 37% 20% FALSE Honeywell Int'l
MMM 3-Oct-25 153 TRUE 105 152 46% 19% 9% 1.9 130 190 3% -9% FALSE 3M Company
GS 3-Oct-25 803 TRUE 379 586 111% 131% 10% 2.0 630 855 -6% 19% FALSE Goldman Sachs
KO 11-Jul-25 65.67 TRUE 59 75 11% 13% 2% 3.1 75 90 24% 8% FALSE Coca-Cola
WMT 18-Jul-25 103 TRUE 47 68 117% 125% 4% 0.9 125 135 36% 19% FALSE Walmart Inc.
NKE 18-Jul-25 69.31 FALSE 54 87 27% 1% -21% 2.3 70 105 22% -10% TRUE NIKE Inc. 'B'
DIS 25-Jul-25 113 TRUE 87 129 31% 56% -8% 0.9 130 195 43% 21% FALSE Disney (Walt)
AXP 1-Aug-25 342 TRUE 195 299 75% 91% 13% 1.0 260 385 -5% 21% FALSE Amer. Express
V 1-Aug-25 337 TRUE 298 408 13% 16% 18% 0.8 390 475 27% 0% FALSE Visa Inc.
IBM 1-Aug-25 284 TRUE 113 162 151% 170% 15% 2.7 250 310 3% 11% FALSE Int'l Business Mach.
MSFT 1-Aug-25 511 FALSE 328 502 56% 70% 10% 0.7 645 785 40% 21% FALSE Microsoft Corp.
CRM 1-Aug-25 243 TRUE 466 816 -48% -50% 1% 0.7 385 575 95% 0% FALSE Salesforce Inc.
AMZN 1-Aug-25 220 TRUE 313 536 -30% -29% 0% - 315 425 68% 25% FALSE Amazon.com
Dow30 46,247 28,149 43,449 2.1 51,849 68,138 Dow Jones Industrial Average
Appreciation Potential -39% -6% 12% 47% 36% 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:
• META, SELL downside price target +71%. Limited upside potential. I hate to let this one go. It was returned nearly 200% (compared to the market's +85%) since my initial purchase in Novemeber 2019, subsequent additions made in Feb 2020 and again in Aug 2022.
• PYPL, ADD on June 28, 2025, downside price target -45%. Meets all criteria again this cycle.
• CMG, BUY on Aug 12, 2025, downside price target -22%. Meets all criteria for this cycle.
• BK, SELL on Aug 18, 2025, current price exceeds upper price limit.
• INCY, SELL on Aug 25, 2025, limited upside compared to overall market.
• PAYC, ADD on Sep 22, 2025, still qualifies with -24% BI downside price target.
• MRK, ADD on Sep 22, 2025, still qualifies with -30% BI downside price target.
I will continue to track and update two different Portfolios. Both these portfolios will be held for the entire year.
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 PortfolioALGN, 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 +6.2%
S&P 500 Total Return Year-to-Date +15.3%
The largest winner to date is WBD +81%. Takeover speculation.
The biggest loser this year is ALGN -38%
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 PortfolioALGN, PAYC, ADM, TAP, HAL, SLB, PYPL
BI Current Portfolio Total Return Year-to-Date -10.4%
S&P 500 Total Return Year-to-Date +15.3%
The largest winner to date is ADM +20%
The biggest loser this year is ALGN -38%
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
