No. of Recommendations: 11
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, finishing the year up more than +24%. With this update there are 4 companies in the DJIA 30 that are below their downside price targets. They are WBA -68%, JNJ -5%, CRM -35%, and NKE -22%. However, none would fully qualify as a BI pick during this period as none would be able to pass all the qualifying 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.aspxMarket Valuation (Dow 30): Market Valuation (Dow 30):
The DOW30 market is still OVERpriced according to the BI method of valuation by about 25%.
Downside: -40%
Upside: -10%
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-Nov-24 365 TRUE 268 410 36% 38% 2% 1.5 430 585 38% 14% FALSE Caterpillar Inc.
MCD 15-Nov-24 294 FALSE 6% 2.4 375 455 41% 13% TRUE McDonald's Corp.
CVX 22-Nov-24 144 TRUE 128 185 13% -5% 6% 4.8 205 275 66% 6% FALSE Chevron Corp.
JPM 22-Nov-24 241 TRUE 158 231 53% 58% 7% 2.2 205 275 0% -5% FALSE JPMorgan Chase
BA 29-Nov-24 181 FALSE 96% - 245 370 71% 23% TRUE Boeing
TRV 29-Nov-24 241 TRUE 187 245 29% 35% 13% 1.7 355 430 61% 11% FALSE Travelers Cos.
UNH 29-Nov-24 510 TRUE 447 639 14% 13% 9% 1.7 645 785 41% 24% FALSE UnitedHealth Group
WBA 29-Nov-24 9.62 FALSE 30 44 -68% -69% -48% 10.9 11 16 46% -18% FALSE Walgreens Boots
AMGN 29-Nov-24 263 FALSE 5% 3.5 350 430 47% 25% TRUE Amgen
VZ 6-Dec-24 39.92 TRUE 29 38 38% 38% 2% 6.8 55 70 63% -7% FALSE Verizon Communic.
CSCO 6-Dec-24 59.61 FALSE 43% 5% 2.7 70 85 29% 5% TRUE Cisco Systems
HD 13-Dec-24 393 FALSE 6% 2.3 390 475 9% 9% TRUE Home Depot
PG 13-Dec-24 170 FALSE 127 167 34% 36% 9% 2.4 175 215 15% 11% FALSE Procter & Gamble
INTC 20-Dec-24 20.3 FALSE 138% -39% - 25 35 47% 51% TRUE Intel Corp.
AAPL 20-Dec-24 256 FALSE 88 146 192% 179% 7% 0.4 260 320 12% 7% FALSE Apple Inc.
DOW 27-Dec-24 40.03 TRUE 20 31 102% 61% 28% 7.4 65 100 99% 0% FALSE Dow Inc.
JNJ 27-Dec-24 145 TRUE 152 192 -5% -8% -3% 3.5 200 245 43% 9% FALSE Johnson & Johnson
MRK 27-Dec-24 99.7 TRUE 100 135 0% -7% 51% 3.1 140 170 55% 33% FALSE Merck & Co.
HON 3-Jan-25 230 TRUE 161 220 42% 38% 7% 2.0 240 295 16% 11% FALSE Honeywell Int'l
MMM 3-Jan-25 130 TRUE 125 178 4% 9% 19% 2.2 150 200 34% -17% TRUE 3M Company
GS 3-Jan-25 576 TRUE 277 418 108% 125% 18% 2.1 610 830 23% 10% FALSE Goldman Sachs
CRM 3-Jan-25 338 TRUE 518 899 -35% -31% 8% 0.5 370 555 34% 0% FALSE Salesforce Inc.
KO 11-Oct-24 62.45 TRUE 56 70 12% 14% 6% 3.2 70 85 23% 6% FALSE Coca-Cola
WMT 18-Oct-24 91.66 TRUE 42 57 118% 118% 6% 0.9 100 125 21% -6% FALSE Walmart Inc.
NKE 18-Oct-24 76.42 FALSE 98 156 -22% -21% -7% 1.9 115 155 75% 12% FALSE NIKE Inc. 'B'
DIS 25-Oct-24 112 TRUE 61 90 83% 131% 72% 0.8 130 175 35% 7% FALSE Disney (Walt)
AXP 1-Nov-24 301 TRUE 161 237 87% 91% 8% 1.0 210 315 -13% -7% FALSE Amer. Express
V 1-Nov-24 319 TRUE 254 352 26% 30% 12% 0.7 375 455 29% 0% FALSE Visa Inc.
IBM 1-Nov-24 223 TRUE 94 133 136% 137% 4% 3.0 200 245 0% -7% FALSE Int'l Business Mach.
MSFT 1-Nov-24 431 FALSE 264 424 63% 68% 13% 0.8 610 745 54% 27% FALSE Microsoft Corp.
Dow30 42,992 25,339 37,553 2.7 48,646 62,718 Dow Jones Industrial Average
Appreciation Potential -40% -10% 16% 50% 37% 8%
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:
• XRAY, SELL – Nov 25 2024, One year hold time up and is no longer a viable pick. -37% return overall.
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 +18.9%
S&P 500 Total Return Year-to-Date +25.7%
The largest winner to date is NFLX +92%
The biggest loser this year is ALGN -23%
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 +24.8%
S&P 500 Total Return Year-to-Date +25.7%
The largest winner to date is NFLX +92%
The biggest loser this year is TAP -5%
My overall Fool CAPS Rating at the time of this post was 80.6 (+5.1 point since the previous update)
Score: 740
Accuracy: 42%
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
