No. of Recommendations: 11
This update is to Kenneth Lee’s Benchmark Investing picks based on the latest Monday’s data release along with the yearend results. The S&P500 had a fantastic year with a +26.2% total return. During this latest period there were three companies in the DJIA 30 that are below their downside price targets. They are CVX -7%, CRM -25%, and WBA -41%. However, none would fully qualify as a BI 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 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 30%.
Downside: -44%
Upside: -17%
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 10-Nov-23 290 TRUE 258 392 12% 29% 2% 1.8 290 395 18% 15% FALSE Caterpillar Inc.
JNJ 10-Nov-23 155 TRUE 148 189 5% -5% 2% 3.2 185 205 27% 17% FALSE Johnson & Johnson
MCD 17-Nov-23 292 FALSE 6% 2.4 355 435 36% 11% TRUE McDonald's Corp.
CVX 24-Nov-23 151 TRUE 162 232 -7% -21% 6% 4.3 270 335 86% 34% FALSE Chevron Corp.
BA 1-Dec-23 260 FALSE 152% - 300 450 44% 15% TRUE Boeing
TRV 1-Dec-23 186 TRUE 104 137 79% 48% 83% 2.2 255 315 55% 11% FALSE Travelers Cos.
UNH 1-Dec-23 520 TRUE 395 582 32% 32% 11% 1.5 600 735 29% 25% FALSE UnitedHealth Group
AMGN 1-Dec-23 284 FALSE 7% 3.3 340 420 38% 10% TRUE Amgen
VZ 8-Dec-23 37.49 TRUE 36 47 3% -7% 1% 7.1 60 85 94% -6% FALSE Verizon Communic.
CSCO 8-Dec-23 50.09 FALSE 43 61 17% 19% -8% 3.1 65 80 45% 15% FALSE Cisco Systems
HD 15-Dec-23 349 FALSE 2% 2.4 385 470 22% -6% TRUE Home Depot
PG 15-Dec-23 145 FALSE 109 146 33% 35% 2% 2.6 175 215 35% 13% FALSE Procter & Gamble
INTC 22-Dec-23 48 TRUE 9 14 431% 750% 188% 1.1 50 70 31% -39% TRUE Intel Corp.
AAPL 22-Dec-23 194 FALSE 82 138 136% 138% 6% 0.5 220 265 24% 12% FALSE Apple Inc.
IBM 22-Dec-23 162 TRUE 87 121 86% 88% 8% 4.2 130 195 1% -5% FALSE Int'l Business Mach.
DOW 29-Dec-23 55.12 TRUE 19 31 194% 115% 32% 5.5 65 95 46% -16% FALSE Dow Inc.
MRK 29-Dec-23 108 TRUE 16 22 580% 109% 105% 2.9 130 160 37% 18% TRUE Merck & Co.
HON 6-Oct-23 206 TRUE 147 204 39% 40% 9% 2.1 225 275 23% 7% FALSE Honeywell Int'l
MMM 6-Oct-23 106 FALSE -5% 168% 5.8 140 210 68% -4% TRUE 3M Company
GS 6-Oct-23 381 TRUE 192 293 98% 70% 63% 2.9 410 555 27% -3% FALSE Goldman Sachs
CRM 6-Oct-23 266 TRUE 354 599 -25% 18% 49% - 270 405 29% -9% FALSE Salesforce Inc.
KO 13-Oct-23 58.32 TRUE 50 63 17% 17% 3% 3.3 65 80 25% 14% FALSE Coca-Cola
WBA 20-Oct-23 26.22 FALSE 44 65 -41% -43% -6% 7.6 40 65 106% -8% FALSE Walgreens Boots
WMT 20-Oct-23 157 TRUE 104 141 51% 54% 5% 1.5 200 250 48% 8% FALSE Walmart Inc.
NKE 20-Oct-23 108 FALSE 84 134 29% 30% 22% 1.2 145 170 27% -1% FALSE NIKE Inc. 'B'
DIS 27-Oct-23 91.02 TRUE 19 28 385% 206% 103% 0.7 140 190 80% 27% FALSE Disney (Walt)
JPM 3-Nov-23 167 TRUE 145 213 15% 19% 5% 2.5 150 205 6% -7% FALSE JPMorgan Chase
AXP 3-Nov-23 186 TRUE 142 212 31% 43% 8% 1.3 175 240 14% -2% FALSE Amer. Express
V 3-Nov-23 258 FALSE 236 334 9% 16% 8% 0.8 310 380 34% 1% TRUE Visa Inc.
MSFT 3-Nov-23 375 FALSE 212 334 76% 92% 7% 0.8 330 400 -1% 18% FALSE Microsoft Corp.
Dow30 37,386 21,084 31,187 2.8 42,675 55,033 Dow Jones Industrial Average
Appreciation Potential -44% -17% 14% 47% 38% 6%
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:
• CRM, BUY – Oct 6 2023, downside price target -43%.
• TAP, ADD – Oct 13 2023, downside price target -31%. Still meets all criteria.
• NFLX, ADD – Oct 27 2023, downside price target -40%. Still meets all criteria.
• DXC, SELL – Nov 3 2023, sell all, no longer listed as a candidate.
• BK, BUY – Nov 3 2023, downside price target -23%.
• XRAY, BUY – Nov 10 2023, downside price target -36%.
• ALGN, BUY – Nov 10 2023, downside price target -23%.
• EOG, ADD – Nov 24 2023, downside price target -30%. Still meets all criteria.
• DVA, SELL – Nov 24 2023, sell all.
2023 Fixed BI Portfolio Holdings: 15 Holding in BI 2023 Portfolio: CAH, EOG, KMI, DVA, LKQ, NWL, TAP, BEN, IVZ, WBD, PYPL, PTC, DXC, AMZN, META
BI Portfolio Total Return Year-to-Date +20.6%
S&P 500 Total Return Year-to-Date +26.2%
The largest winner this year is META +184%
The biggest loser this year is NWL -30%
2024 Fixed BI Portfolio Holdings: TBD – I will post an update soon as I am still currently working through this selection process.
My overall Fool CAPS Rating at the time of this post was 57.8 (+4.2 point since the previous update)
Score: 1847 (58%)
Accuracy: 46% (55%)
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.
