from the Provident Investment Management blog Eleven years into this bull market, it’s déjà vu all over again. It is starting to feel like we are back in the bubble conditions of the 1990s, or at least getting there. It is not so much the overall market that has me bothered. I am concerned about specific cases…a lot of specific cases. A slightly alarming number of stocks have come uncoupled from economic reality. Let me start on a fairly positive note by saying that in the context of prevailing interest rates, overall stock valuations are not crazy — not in most cases anyway. In a world of ult ..read more

With the Fed cutting its target rate, many investors might feel less confident in economic growth than before. If the Fed’s worried enough to do an intrameeting cut, then maybe we’re missing something. Keeping that at top of mind, I pulled the predefined value screen from MyStockProspector.com on March 3, 2020. Even though the screen is called “value,” it still has significant revenue and earnings growth, each above 15%, but it also includes a P/E to growth measure (the PEG ratio) and a relative value measure. MyStockProspector.com uses these criteria: EPS R2 5 year between 0.98 and 1.00 Histo ..read more

Cash Calves As your investment goals slowly evolve from growth to withdrawal (usually not the most difficult part of implementing a financial plan), there’s nothing wrong with introducing a few cash cows into your portfolio. A cash cow is a company that has a mature product or service and is focused on maximizing shareholder value of those mature offerings, instead of pursuing growth for growth’s sake. One problem with solely buying cash cows is that you still need to preserve your purchasing power. So that led me to look for cash cow companies with a bit of spark left in them. And, by spark ..read more

from the Sigma Investment Counselors newsletter According to marriage.com, money is one of the top reasons couples cite when filing for divorce. Money and investments are emotionally fraught – after all, although money can’t buy happiness, it does make the world go round. With the recent stock market volatility, and all of the emotions volatility evokes, I thought it might be time to confess that even professionals experience moments of uncertainty. Below are a few times I had to rely on my training to overcome my emotional bias towards making some common financial mistakes. 1) Making asset al ..read more

As I write this, Tesla (TSLA) has a market cap of $170 billion. That’s an eye-popping number. I’d examine the P/E ratio, but the company still has trailing 12 month losses. When I see a company that’s losing money hit those sort of market caps, I automatically start considering the alternatives. If you were to forego buying Tesla with your $170 billion, you could buy General Motors (GM; $50 billion), Ford (F; $36 billion) and, if you would like to add helicopters and hogs to your garage, Raytheon (RTN; $62.37 billion) and Harley-Davidson (HOG; $5.31 billion) and still have $16 billion or so to ..read more

Tesla’s Valuation With my concerns about Tesla’s eye-popping valuation, I became curious to see which companies would pop up in a classic “growth at a reasonable price” screen. The Growth Companies screen looks for stocks with consistent historical and projected earnings and revenue growth of 15% or above and a PE ratio below its historical average. For further details on this screen, see www.mystockprospector.com. Stock screen generated from www.MyStockProspector.com on February 4, 2020.   Click here to download the stock screen as a Microsoft Excel file Or view or download on Scribd.com ..read more

As I write this, Tesla (TSLA) has a market cap of $170 billion. That’s an eye-popping number. I’d examine the P/E ratio, but the company still has trailing 12 month losses. When I see a company that’s losing money hit those sort of market caps, I automatically start considering the alternatives. If you were to forego buying Tesla with your $170 billion, you could buy General Motors (GM; $50 billion), Ford (F; $36 billion) and, if you would like to add helicopters and hogs to your garage, Raytheon (RTN; $62.37 billion) and Harley-Davidson (HOG; $5.31 billion) and still have $16 billion or so to ..read more

Profitability, Volatility and Security I’ve noticed an increasing perception of impending doom in the media and, in fact, I confess to being a little jittery about valuations myself. But avoiding the stock market because of valuation is like steering clear of San Francisco real estate because of the San Andreas Fault. One of these centuries there’ll be the Big One. But missing the gains can be more costly than the house getting shaken apart in a thousand years. Or even a hundred. With that in mind, this screen looks for volatility with a beta of 1.5 or higher and earnings per share growth of 1 ..read more

from the Sigma Investment Counselors blog Looking at recent earnings reports from the country’s major retailers, it is apparent that some have been very successful, handily beating expectations, while several have reported disappointing results and provided reduced guidance, with surprisingly few in between. Has retailing devolved into success based on grabbing market share? To some extent, this may be the case. However, retail has been one of the stronger segments of the U.S. economy with consumer spending often credited with providing the foundation of economic growth. Growth in consumer spe ..read more

The performance of the S&P Energy sector has been disappointing despite 2019 being a banner year for the S&P 500. Over the trailing twelve months (as of January 10), the S&P 500 Energy sector was down 1.26% against a 26% gain for the broad index. Energy is made up of two industries: Oil, Gas, and Consumable Fuels (but please don’t drink them) and Energy Equipment and Services. Equipment and Services is suffering the worst at -8.08%. If you love underdogs, the stocks in this industry are barking their lungs out. Before buying any of these, carefully consider whether your choice is b ..read more