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Steve Hach is the Senior Editor at ValuEngine.com, a Melbourne, Florida-based stock valuation and forecast service. ValuEngine utilizes Ivy League financial research as the basis for its coverage of more than 8000 US, Canadian, and other foreign stocks. Hach utilizes ValuEngine's complex... More
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  • BP Settles With US Government And Gulf States

    VALUATION WATCH: Overvalued stocks now make up 61.71% of our stocks assigned a valuation and 25.81% of those equities are calculated to be overvalued by 20% or more. Fifteen sectors are calculated to be overvalued--eight by double digits.

    --We're Sorry... Really Sorry BP Settles With US Government and Gulf States

    BP p.l.c. is the holding company of one of the world's largest petroleum and petrochemicals groups. Their main activities are exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; and manufacturing and marketing of petrochemicals. They have a growing activity in gas and power and in solar power generation. BP has well-established operations in Europe, North and South America, Australasia and Africa.

    The media are reporting today that BP has reached a settlement related to damages associated with the massive 2010 Gulf of Mexico oil spill. Details have not yet been released, but according to Bloomberg, press conferences are scheduled for this morning by the Attorney Generals of states effected by the spill--Louisiana, Mississippi, Alabama, and Florida.

    The 2010 spill was a disaster for the Gulf and BP's reputation, exposing lax safety practices and a seeming lack of concern on the part of the firm and CEO Tony Hayward. Hayward's legendary "Sorry" speech, which was a PR disaster, led to his widespread ridicule and eventual resignation.

    Since then, the company has spent almost $30 billion on clean up and associated costs--out of a war chest of @$44 billion. But, the company has been fighting claims along the way and trying to avoid big payouts to states and cities under the US federal Oil Pollution Act.

    BP was an interesting case from a quant research perspective, because as shareholders dumped the stock, the price dived yet earnings as calculated by analysts remained the same. So, it actually looked more attractive to computer-based stock forecasting and valuation models.

    Angry environmentally-conscious investors berated firms who ranked the BP a BUY despite the milions of barrels of oil pouring into the Gulf. This was yet another example of the fact that computers can only measure financial data, and until qualitative analysts adjusted earnings data to reflect the liabilities associated with the spill, a true picture of the company's health was impossible to obtain. The stock has never returned to where it was before the spill, and is currently up @23% from the low it hit in June, 2010--although it had been up from the low almost 70% in July, 2014

    Below is today's more extensive data on BP:

    VALUENGINE RECOMMENDATION: ValuEngine continues its HOLD recommendation on BP PLC for 2015-06-30. Based on the information we have gathered and our resulting research, we feel that BP PLC has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Earnings Growth Rate.


     






    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month40.080.31%
    3-Month40.872.28%
    6-Month41.413.63%
    1-Year41.433.68%
    2-Year39.15-2.03%
    3-Year45.5313.93%

     















    Valuation & Rankings
    Valuation1.64% overvaluedValuation Rank(?) 59
    1-M Forecast Return0.31%1-M Forecast Return Rank 74
    12-M Return-20.79%Momentum Rank(?) 28
    Sharpe Ratio-0.02Sharpe Ratio Rank(?) 42
    5-Y Avg Annual Return-0.71%5-Y Avg Annual Rtn Rank 41
    Volatility32.50%Volatility Rank(?) 54
    Expected EPS Growth-27.64%EPSGrowth Rank(?) 11
    Market Cap (billions)121.44Size Rank 100
    Trailing P/E Ratio12.18Trailing P/E Rank(?) 87
    Forward P/E Ratio16.84Forward P/E Ratio Rank 49
    PEG Ration/aPEG Ratio Rank n/a
    Price/Sales0.38Price/Sales Rank(?) 88
    Market/Book1.54Market/Book Rank(?) 63
    Beta1.97Beta Rank 13
    Alpha-0.38Alpha Rank 21

    Tags: BP, energy, oil
    Jul 02 9:30 AM | Link | Comment!
  • ValuEngine.com: Valuations Tip Into Warning Range Again

    VALUATION WARNING:Overvalued stocks now make up 65.8% of our stocks assigned a valuation and 28.29% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with nine at or near double digits.

    Valuations Tip Into Warning Range Again

    ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which trade on US exchanges as well as @1000 Canadian equities. When EPS estimates are available for a given equity, our model calculates a level of mispricing or valuation percentage for that equity based on earnings estimates and what the stock should be worth if the market were totally rational and efficient--an academic exercise to be sure, but one which allows for useful comparisons between equities, sectors, and industries. Using our Valuation Model, we can currently assign a VE valuation calculation to more than 2800 stocks in our US Universe.

    We combine all of the equities with a valuation calculation to track market valuation figures and use them as a metric for making calls about the overall state of the market. Two factors can lower these figures-- a market pullback, or a significant rise in EPS estimates. Vice-versa, a significant rally or reduction in EPS can raise the figure. Whenever we see overvaluation levels in excess of @ 65% for the overall universe and/or 27% for the overvalued by 20% or more categories, we issue a valuation warning.

    We now calculate that 65.8% of stocks are overvalued and 28.29% of those stocks are overvalued by 20% or more. These figures have been fluctuating with increasing volatility, but have pretty much been pinned in this range for much of the past few months. We did our last valuation study on May7th, and with our latest moves to new records, the values have elevated slightly and now reside right on the cusp of our warning level. However, these figures are down significantly from where they were for much of 2013-2014-- when the SP500 was trading in the 1800-2000 range.

    Recent news from the Fed gave the markets yet more impetus for a move to the upside. Confirmation that rates will rise, but not quite yet, coupled with the reassertion that the central bank will provide attention to BOTH sides of its mandate--controlling inflation AND promoting full employment--once more indicated that US equities will remain "the only game in town" for a bit longer.

    Thus, the latest from the Fed confirmed what we had discussed the last time we took a look at our valuations--Yellen et al will make sure workers garner some benefits as they set their rate increase schedule.

    Finally, the recovery has taken hold for all, with wage pressures leading to boosts for workers at McDonald's Wal-Mart, Target, TJMaxx, etc. At the same time, prices remain relatively stable, with a low inflation environment thanks to a respite from high energy prices--and the longer-term deflationary effects of the greatest financial melt down since the Great Depression.

    This is as it should be, labor has been the neglected part of the equation and various austerity measures hindered the recovery and the unemployment rate. We see evidence of this from various parts of the country as long-held right-wing shibboleths are challenged by "reality" and its Colbert-esque "well-known liberal bias." The latest examples of this being the budget shambles in Kansas--whose Republican administration slashed taxes in a move directly drawn from Arthur Laffer only to see employment lag, huge budget deficits, and an eventual tax hike--and Seattle--whose Democratic officials raised the minimum wage and have seen a continuing economic boom.

    Again, we have seen one of the most remarkable market rallies in history. Since the Obama Administration took office the Dow is up @117%, the NASDAQ @247%, and the SP500 is up @153%. An amazing time for investors-- as long as they did not fall prey to the "BUY GUNS BUY GOLD BUY SEEDS!" crowd of pundits and money-losing prognosticators.

    --It is a rather amusing exercise to read the alarmist nonsense from various political ideologues circa 2009 warning of total economic collapse, a worthless US currency, a socialist takeover of the US economy, etc.

    And again, "Sell in May and Go Away"? So far, not so much. But, as always, we remind investors that valuations calculated at these levels indicate a time for some profit taking and hedging for a move to the downside. Make sure to be prepared for a Summer swoon or some unexpected calamity from the Eurozone--the long-feared "Grexit," etc.

    The chart below tracks the valuation metrics from January 2015. It shows levels in excess of 40%.

    (click to enlarge)

    This chart shows overall universe over valuation in excess of 40% vs the S&P 500 from January 2014

    This chart shows overall universe under and over valuation in excess of 40% vs the S&P 500 from March 2007*

    (click to enlarge)

    *NOTE: Time Scale Compressed Prior to 2011.

    Jun 25 12:45 PM | Link | Comment!
  • ValuEngine Top-Five STRONG BUY 5-Engine Stocks For The Day

    VALUATION WATCH: Overvalued stocks now make up 64.17% of our stocks assigned a valuation and 26.74% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with eight at or near double digits.

    Top Stocks

    --ValuEngine Top-Five STRONG BUY 5-Engine Stocks for the Day

    ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which trade on US exchanges as well as @1000 Canadian equities. When EPS estimates are available for a given equity, our model calculates a level of mispricing or valuation percentage for that equity based on earnings estimates and what the stock should be worth if the market were totally rational and efficient--an academic exercise to be sure, but one which allows for useful comparisons between equities, sectors, and industries. Using our Valuation Model, we can currently assign a VE valuation calculation to more than 2800 stocks in our US Universe.

    We also use trading data to provide forecast estimates for a variety of time horizons for almost ever equity in our database. Our Buy/Sell/Hold recommendations are based upon the 1-year forecast return figure. Using valuation and forecast figures, you can rank and rate our covered stocks against each other, to find out, in an objective and systematic way, the most attractive investment targets based on your own risk/reward parameters. We re-calculate the entire database every trading day, so you are assured that every proprietary valuation and forecast datapoint is as up-to-date as possible.

    Below, we present the latest top-five list of 5-Engine STRONG BUY stocks from our models. They are ranked according to their one-year forecast figures. These stocks represent the "best of the best."

     

     

     

     

     

     

    TickerCompany NameMarket PriceValuationLast 12-M Return1-M Forecast Return1-Yr Forecast ReturnP/E RatioSector Name
    PZEPETROBRAS EGY6.63N/A17.35%1.38%16.62%6.68Oils-Energy
    VLRSCONTROLADORA VL12.59N/A43.07%1.37%16.56%11.84Transportation
    AFSIAMTRUST FIN SVC63.0810.12%47.73%1.35%16.32%10.00Finance
    CMAKYCHINA MINSHENG12.84N/A49.88%1.26%15.14%N/AFinance
    ALKALASKA AIR GRP64.65-6.62%31.32%1.22%14.65%13.03Transportation

    As a bonus to our Newsletter readers,
    we are offering a FREE DOWNLOAD of one of our Stock Reports

    Read our Complete Detailed Valuation Report on Petrobras HERE.

    Below is today's data on PZE:

    Petrobras Argentina SA (NYSE:PZE), is an Argentina-based integrated company primarily engaged in the energy sector. The Company's activities are structured in four business segments: Oil and Gas Exploration and Production, including the acquisition, exploration, exploitation and maintenance of oil and gas reserves; Refining and Distribution, focusing in the production of fuels, lubricants and asphalts; Petrochemicals, comprising the production of styrene, polystyrene, bi-oriented polystyrene (BOPS) and synthetic rubber; as well as Gas and Energy, providing gas distribution and electric energy generation and transmission. Through its subsidiaries and affiliates, the Company has operations established in Argentina, Bolivia, Brazil, Ecuador, Venezuela, Mexico, Bermuda, Spain and Austria. YPF SA acquired the Company's 38.45% participation in the concession contract UTE Puesto Hernandez executed between both companies for the exploration of the Puesto Hernandez area.

    VALUENGINE RECOMMENDATION: ValuEngine continues its STRONG BUY recommendation on PETROBRAS EGY for 2015-06-19. Based on the information we have gathered and our resulting research, we feel that PETROBRAS EGY has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E Ratio and Price Sales Ratio.


     






    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month6.721.38%
    3-Month6.751.87%
    6-Month6.904.12%
    1-Year7.7316.62%
    2-Year6.650.37%
    3-Year5.67-14.41%

     















    Valuation & Rankings
    Valuationn/aValuation Rank(?) n/a
    1-M Forecast Return1.38%1-M Forecast Return Rank 100
    12-M Return17.35%Momentum Rank(?) 75
    Sharpe Ratio-0.00Sharpe Ratio Rank(?) 43
    5-Y Avg Annual Return-0.11%5-Y Avg Annual Rtn Rank 43
    Volatility42.76%Volatility Rank(?) 40
    Expected EPS Growth-8.31%EPSGrowth Rank(?) 18
    Market Cap (billions)1.34Size Rank 68
    Trailing P/E Ratio6.68Trailing P/E Rank(?) 98
    Forward P/E Ratio7.29Forward P/E Ratio Rank 96
    PEG Ration/aPEG Ratio Rank n/a
    Price/Sales0.52Price/Sales Rank(?) 83
    Market/Book0.86Market/Book Rank(?) 83
    Beta1.53Beta Rank 25
    Alpha0.08Alpha Rank 75

    Tags: PZE, VLRS, AFSI, ALK
    Jun 22 12:35 PM | Link | Comment!
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