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Steve Hach is the Senior Editor at, 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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  • Valuations Remain Elevated But "Normal"

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    Valuations Remain Elevated But "Normal"

    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 60.99% of stocks are overvalued and 23.14% 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 February 26th, and at that time we were within the same narrow range. As was the case then, these figures are down significantly from where they were for much of 2014.

    As is always the case with this unprecedented rally, the market remains beholden to Janet Yellen and the Fed's rate raising schedule. Good news for the economy may paradoxically be bad bad for equities under these conditions. Bad news may provide a mini boom.

    Despite recent poor GDP figures, we still find an improving labor situation which should finally bolster the recovery. We have also seen a remarkable recovery in the oil markets as US producers have reacted to Saudi attempts to crush them via low prices with agility and speed. That was bad news for speculators counting on low oil prices, but could be more beneficial to employment in places like Pennsylvania, Ohio, Texas, Oklahoma, etc. The quick reduction in drilling activities hurt workers and local economies, but a price recovery will mean a faster return for that industry.

    We still find it more likely that the Fed will focus on employment rather than inflation (although that remains low as well) as it sets its rate increase schedule, and thus believe that equities may still remain the only game in town for a bit longer than many expected even a few months ago. Of course, the long hard winter for many areas of the US is now over. That brings to the forefront the long-held trader's maxim of "Sell in May and Go Away." Will that hold sway this year? Stay tuned.

    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.

    Tags: valuations
    May 07 2:00 PM | Link | Comment!
  • Apple Posts Impressive Results For Q2

    VALUATION WATCH: Overvalued stocks now make up 60.7% of our stocks assigned a valuation and 22.44% of those equities are calculated to be overvalued by 20% or more. Fourteen sectors are calculated to be overvalued--with seven at or near double digits.

    --Keeping the Doctor Away (AGAIN)

    Apple Posts Impressive Results for Q2

    Apple Inc. (NASDAQ:AAPL) is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. The Company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered in Cupertino, California.

    This is getting to be the broken record of earnings releases, Apple yesterday announced record results once again. For Q2 2015, the company posted record sales for iPhones and Macs as well as the App Store. The company is in the enviable position where they can raise prices on products AND increase market share at the same time. For example, iPhones sold for @ $60 more on average than the same period last year.

    "We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever," said Tim Cook, Apple's CEO. "We're seeing a higher rate of people switching to iPhone than we've experienced in previous cycles, and we're off to an exciting start to the June quarter with the launch of Apple Watch."

    "The tremendous customer demand for our products and services in the March quarter drove revenue growth of 27 percent and EPS growth of 40 percent," said Luca Maestri, Apple's CFO. "Cash flow from operations was also outstanding at $19.1 billion."

    The company also announced additional dividend increases as well as a massive increase in its share repurchase program on Monday. The dividend was increased 11% while company increased the size of the share repurchase program from $50 billion to $140 billion. The company now enjoys a truly massive cash reserve of almost $200 billion. According to the Wall Street Journal, that is more than the market cap "of all but 15 other companies in the S&P 500."

    Big growth in China is driving Apple to new heights and is now the company's second-largest market behind the US. The company bucks another trend here, given the fact that they are posting these huge foreign gains at a time when the strong dollar is hurting other companies reliant on foreign sales and markets.

    All this good news occurs with little down side--other than the fact that the big pick ups in new phone sales seem to be cannibalizing sales of iPads somewhat as larger phones mean fewer people feeling to need to carry a tablet. And, it is important to note that these results do NOT include the company's newest product, the iWatch.

    ValuEngine continues its BUY recommendation on APPLE INC for 2015-04-27. Based on the information we have gathered and our resulting research, we feel that APPLE INC has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.

    New iPhones have Bolstered Apple's Bottom Line

    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 APPLE HERE.

    Below is today's data on AAPL :


    ValuEngine Forecast


    Valuation & Rankings
    Valuation19.17% overvaluedValuation Rank(?) 23
    1-M Forecast Return0.80%1-M Forecast Return Rank 94
    12-M Return56.30%Momentum Rank(?) 93
    Sharpe Ratio1.08Sharpe Ratio Rank(?) 94
    5-Y Avg Annual Return26.20%5-Y Avg Annual Rtn Rank 92
    Volatility24.23%Volatility Rank(?) 71
    Expected EPS Growth12.83%EPSGrowth Rank(?) 49
    Market Cap (billions)772.65Size Rank 100
    Trailing P/E Ratio16.69Trailing P/E Rank(?) 72
    Forward P/E Ratio14.79Forward P/E Ratio Rank 65
    PEG Ratio1.30PEG Ratio Rank 39
    Price/Sales3.87Price/Sales Rank(?) 25
    Market/Book6.76Market/Book Rank(?) 20
    Beta0.79Beta Rank 60
    Alpha0.41Alpha Rank 95

    Apr 28 12:01 PM | Link | Comment!
  • Utilities Ranked And Rated By

    Valuation Watch: Overvalued stocks now make up 60.96% of our stocks assigned a valuation and 22.89% of those equities are calculated to be overvalued by 20% or more. Fourteen sectors are calculated to be overvalued--with six at or near double digits.

    ValuEngine Index Overview






    IndexWeek OpenThursday PMChange% ChangeYTD
    RUSSELL 20001257.611268.8311.220.89%4.10%
    S&P 5002084.112116.0231.911.53%1.21%


    ValuEngine Market Overview






    Summary of VE Stock Universe
    Stocks Undervalued39.04%
    Stocks Overvalued60.96%
    Stocks Undervalued by 20%12.85%
    Stocks Overvalued by 20%22.89%


    ValuEngine Sector Overview


    SectorChangeMTDYTDValuationLast 12-MReturnP/E Ratio
    Aerospace-0.39%-0.59%9.07%18.03% overvalued0.90%25.35
    Medical0.78%3.68%15.54%17.55% overvalued12.05%33.83
    Retail-Wholesale0.20%1.74%3.34%12.60% overvalued10.21%25.84
    Computer and Technology0.21%3.10%6.37%11.18% overvalued3.34%31.63
    Consumer Discretionary0.29%3.25%6.90%10.06% overvalued0.29%28.42
    Multi-Sector Conglomerates0.37%2.28%4.30%9.07% overvalued1.47%18.96
    Oils-Energy1.05%10.11%7.25%8.11% overvalued-33.45%23.52
    Consumer Staples-0.17%1.20%3.79%8.04% overvalued6.93%24.61
    Business Services0.10%1.16%7.49%7.32% overvalued5.33%26.55
    Utilities0.56%3.78%3.08%5.47% overvalued1.89%24.76
    Auto-Tires-Trucks0.44%2.09%6.69%4.08% overvalued-2.08%18.20
    Finance0.27%1.93%3.70%3.89% overvalued4.13%18.12
    Industrial Products0.52%3.09%3.26%3.20% overvalued-5.40%20.82
    Construction0.14%1.50%3.08%0.42% overvalued-0.37%24.55
    Transportation0.36%4.84%4.96%1.57% undervalued7.76%21.59
    Basic Materials1.27%4.07%2.04%3.79% undervalued-20.22%24.27

    ValuEngine Newsletters Latest Results






    VE NewsletterCurrent ResultsBenchmark*Last Month TotalBenchmark*Since InceptionBenchmark*
    Forecast MNS2.500.14-6.771.48113.2631.46
    Dividend Stock0.33-0.13-1.69-1.169.9734.39
    Small Cap Stock3.772.72-1.64-0.2533.3659.57

    *NOTE: Benchmark for Forecast MNS for last month and inception is the MLSAX Long/Short Fund. Benchmark for Small Cap is the Russell 2000 Small Cap Index (RUT). Benchmark for current month Forecast MNS and VE View and VE Dividend for all timeframes is the S&P500.

    ValuEngine's Newsletters Beat the Market

    Sector Talk--Utilities

    Below, we present the latest data on Utilities stocks. Top five lists are provided for each category. We applied some basic liquidity criteria--share price greater than $3 and average daily volume in excess of 100k shares.

    Top-Five Utilities Stocks--Short-Term Forecast Returns







    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    SPKESPARK ENERGY13.04n/an/a
    TEOTELECOM ARGENTI21.7418.299.36
    NTTNIPPON TELE-ADR34.82n/a32.50
    BIPBROOKFIELD INFR44.6944.2312.23
    SJWSJW CORP29.9831.373.70

    Top-Five Utilities Stocks--Long-Term Forecast Returns







    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    SPKESPARK ENERGY13.04n/an/a
    TEOTELECOM ARGENTI21.7418.299.36
    NTTNIPPON TELE-ADR34.82n/a32.50
    BIPBROOKFIELD INFR44.6944.2312.23
    SJWSJW CORP29.9831.373.70

    Top-Five Utilities Stocks--Composite Score







    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    VZVERIZON COMM50.0557.205.52
    FEFIRSTENERGY CP35.6037.926.94
    BIPBROOKFIELD INFR44.6944.2312.23
    VIVTELEF BRASIL SA16.1521.36-21.91
    EIXEDISON INTL60.4460.137.28

    Top-Five Utilities Stocks--Most Overvalued







    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    ABYABENGOA YIELD34.8521.98n/a
    DTEGYDEUTSCHE TELEKM18.0612.0113.20
    VGVONAGE HOLDINGS4.943.4026.67
    UILUIL HOLDINGS CP50.7338.5037.11
    NJRNJ RESOURCES31.7424.1129.76
    Tags: SPKE, TEO, NTT, BIP, SJW, VZ, FE, VIV, EIX, ABY, DTEGY, VG, UIL, ANJRX, utilities
    Apr 27 12:39 PM | Link | Comment!
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