No. of Recommendations: 3
This update is to Kenneth Lee’s Benchmark Investing picks based on the latest Monday’s data release. TheS&P500 took a turn for the better in the second quarter with a 10% rebound and a year-to-date performance of about +5% at this moment. With this update there are 4 companies in the DJIA 30 that are below their downside price targets. They are UNH -22%, JNJ -6%, MRK -32%, CRM -41%, and AMZN at -28%. Among this select group only MRK would qualify as a viable 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):
With the market’s rebound, the DOW30 market drifted further from fair value and is now about 18% overvalued.
Downside: -35%
Upside: +0%
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-May-25 385 TRUE 262 381 47% 44% -1% 1.5 400 540 26% 5% FALSE Caterpillar Inc.
MCD 16-May-25 292 FALSE 8% 2.6 410 500 59% 17% TRUE McDonald's Corp.
CVX 23-May-25 144 TRUE 109 154 31% 12% 2% 4.8 205 275 67% 8% FALSE Chevron Corp.
JPM 23-May-25 287 TRUE 190 267 51% 65% 6% 2.1 260 315 1% -17% FALSE JPMorgan Chase
BA 30-May-25 215 FALSE 101% - 255 380 59% -2% TRUE Boeing
TRV 30-May-25 263 TRUE 200 254 31% 40% 18% 1.7 335 410 42% 14% FALSE Travelers Cos.
UNH 30-May-25 309 TRUE 387 528 -20% -31% -18% 2.8 505 755 108% 32% FALSE UnitedHealth Group
AMGN 30-May-25 277 FALSE -2% 3.4 395 480 56% 36% TRUE Amgen
VZ 6-Jun-25 42.31 FALSE 34 44 25% 35% 2% 6.5 60 70 54% -1% FALSE Verizon Communic.
CSCO 6-Jun-25 68.65 TRUE 44 61 54% 58% 7% 2.5 75 95 24% -15% FALSE Cisco Systems
HD 13-Jun-25 369 FALSE 4% 2.5 420 515 29% 24% TRUE Home Depot
SHW 13-Jun-25 346 TRUE 226 360 53% 61% 6% 1.0 435 590 49% 19% FALSE Sherwin-Williams
PG 13-Jun-25 160 TRUE 131 172 22% 22% 5% 2.7 180 220 25% 18% FALSE Procter & Gamble
NVDA 20-Jun-25 158 TRUE 109 341 45% 47% 51% 0.1 170 255 37% 2% FALSE NVIDIA Corp.
AAPL 20-Jun-25 201 TRUE 115 189 75% 90% 17% 0.5 290 390 68% 39% FALSE Apple Inc.
JNJ 27-Jun-25 152 TRUE 162 203 -6% -3% 9% 3.4 240 44% 5% FALSE Johnson & Johnson
MRK 27-Jun-25 79.1 TRUE 116 158 -32% -27% 15% 4.1 175 91% 48% FALSE Merck & Co.
HON 4-Jul-25 229 TRUE 179 243 28% 33% 6% 2.0 260 315 29% 10% FALSE Honeywell Int'l
MMM 4-Jul-25 152 TRUE 104 151 46% 12% -5% 2.0 135 200 13% -15% FALSE 3M Company
GS 4-Jul-25 691 TRUE 365 564 89% 113% 10% 1.8 630 855 10% 6% FALSE Goldman Sachs
KO 11-Apr-25 70.33 TRUE 59 75 18% 24% 4% 2.9 75 90 18% 7% FALSE Coca-Cola
WMT 18-Apr-25 97.27 TRUE 47 68 105% 121% 9% 1.0 110 130 23% 10% FALSE Walmart Inc.
NKE 18-Apr-25 72.04 TRUE 54 85 34% -14% 0% 2.6 75 110 52% 21% TRUE NIKE Inc. 'B'
DIS 25-Apr-25 122 TRUE 87 129 41% 90% 0% 0.8 135 185 33% 4% FALSE Disney (Walt)
AXP 2-May-25 317 TRUE 182 279 74% 89% 6% 1.1 250 380 -1% -3% FALSE Amer. Express
V 2-May-25 349 TRUE 297 406 17% 26% 19% 0.7 375 455 25% 0% FALSE Visa Inc.
IBM 2-May-25 290 TRUE 108 155 167% 193% 7% 2.5 200 245 -15% -22% FALSE Int'l Business Mach.
MSFT 2-May-25 496 TRUE 315 482 57% 77% 10% 0.7 610 745 41% -1% FALSE Microsoft Corp.
CRM 2-May-25 273 TRUE 466 816 -41% -45% 6% 0.6 370 555 79% 0% FALSE Salesforce Inc.
AMZN 2-May-25 223 TRUE 312 534 -28% -25% 3% - 300 405 69% 13% FALSE Amazon.com
Dow30 43,819 28,647 43,635 2.2 48,638 66,847 Dow Jones Industrial Average
Appreciation Potential -35% +0% 11% 53% 41% 9%
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:
• KDP, BUY on Apr 11, 2025, downside price target -29% at that time.
• ALB, BUY on Apr 21, 2025, downside price target -37% at that time.
• NFLX, SELL on Apr 21, 2025, price appreciation less than market’s potential.
• PYPL, ADD on Apr 28, 2025, downside price target -51, all BI criteria met.
• PTC, SELL on Apr 28, 2025, price appreciation less than market’s potential.
• TECH, BUY on May 5, 2025, downside price target -26% at that time.
• CHRT, ADD on Jun 2, 2025, downside price target -21%, all BI criteria met.
• BALL, ADD on Jun 9, 2025, downside price target -33% at that time.
• PFE, ADD on Jun 23, 2025, downside price target -28%, all BI criteria met.
• MRK, BUY on Jun 23, 2025, downside price target -32%, all BI criteria met.
• KIM, SELL on Jun 23, 2025, price appreciation less than market’s potential.
• AKAM, ADD on Jul 4, 2025, downside price target -22%, all BI criteria met.
In 2025 I continue to track and update two different Portfolios. Both these portfolios will be held for the entire year.
The first portfolio (Managed) is a continuation of last year picks that have not yet hit a Sell signal plus any new picks that qualify using the latest results. This portfolio is dynamic and will buy, sell, or add to existing positions throughout the year.
2025 BI Managed Portfolio31 positions in portfolio:
BI Managed Portfolio Total Return Year-to-Date +2.3%
S&P 500 Total Return Year-to-Date +5.8%
The largest winner to date is CAH +42%
The biggest loser this year is PTC -17%
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 be held for the entire year without change.
2025 Current Portfolio7 positions in portfolio: ALGN, PAYC, ADM, TAP, HAL, SLB, PYPL
BI Current Portfolio Total Return Year-to-Date -7.8%
S&P 500 Total Return Year-to-Date +5.8%
The largest winner to date is PAYC +13%
The biggest loser this year is HAL -15%
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
