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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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  • 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!
  • ValuEngine Weekly: Transport Stocks, Valuation Warning,AB-InBev, Fed Meeting, And Market Neutral Results

    VALUATION WARNING: Overvalued stocks now make up 66.43% of our stocks assigned a valuation and 28.41% 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.

    ValuEngine Index Overview

     

     

     

     

     

    IndexWeek OpenFriday AMChange% ChangeYTD
    DJIA17890.7618083.6192.841.08%1.46%
    NASDAQ5011.795128.96117.172.34%8.51%
    RUSSELL 20001259.381285.9826.602.11%6.75%
    S&P 5002091.342118.3627.021.29%2.89%

     

    ValuEngine Market Overview

     

     


     

    Summary of VE Stock Universe
    Stocks Undervalued33.57%
    Stocks Overvalued66.43%
    Stocks Undervalued by 20%12.37%
    Stocks Overvalued by 20%28.41%
    ValuEngine Sector Overview

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    SectorChangeMTDYTDValuationLast 12-MReturnP/E Ratio
    Medical1.04%2.77%15.88%25.03% overvalued18.60%30.67
    Aerospace0.71%0.86%5.69%20.56% overvalued-4.29%22.61
    Computer and Technology0.49%1.13%8.59%17.03% overvalued8.02%30.83
    Business Services0.78%2.02%5.98%15.49% overvalued3.32%25.44
    Consumer Discretionary0.65%1.33%10.06%14.59% overvalued2.03%28.00
    Retail-Wholesale0.48%0.70%2.24%14.20% overvalued8.15%26.20
    Multi-Sector Conglomerates0.76%-0.51%3.19%13.83% overvalued1.07%23.01
    Consumer Staples0.61%1.54%4.48%13.72% overvalued2.84%24.57
    Finance0.55%1.52%4.77%8.89% overvalued3.40%17.84
    Oils-Energy-0.23%-1.44%-0.43%8.04% overvalued-34.72%24.42
    Auto-Tires-Trucks0.75%-1.17%3.51%5.70% overvalued-5.43%16.87
    Industrial Products0.50%0.39%4.22%5.41% overvalued-4.23%20.60
    Transportation0.64%-0.56%0.65%4.37% overvalued0.72%19.45
    Utilities1.08%-1.10%1.06%4.00% overvalued-5.05%21.93
    Basic Materials0.22%-0.92%0.95%3.03% overvalued-14.40%24.14
    Construction0.62%0.75%2.98%2.80% overvalued0.70%24.66

     

    Sector Talk--Transportation

    Below, we present the latest data on Transportation stocks from our Professional Stock Analysis Service 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 Transportation Stocks--Short-Term Forecast Returns

     

     

     

     

     

     

    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    TNKTEEKAY TANKERS7.53-35.43%108.01%
    UALUNITED CONT HLD52.01-15.67%17.22%
    AYRAIRCASTLE LTD23.131.02%37.84%
    TNPTSAKOS EGY NAVG9.9-3.52%37.88%
    CVTICOVENANT TRANS26.87-19.44%152.54%

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

     

     

     

     

     

     

    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    TNKTEEKAY TANKERS7.53-35.43%108.01%
    UALUNITED CONT HLD52.01-15.67%17.22%
    AYRAIRCASTLE LTD23.131.02%37.84%
    TNPTSAKOS EGY NAVG9.9-3.52%37.88%
    CVTICOVENANT TRANS26.87-19.44%152.54%

    Top-Five Transportation Stocks--Composite Score

     

     

     

     

     

     

    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    LUVSOUTHWEST AIR33.86-28.79%28.02%
    UALUNITED CONT HLD52.01-15.67%17.22%
    TNKTEEKAY TANKERS7.53-35.43%108.01%
    ALKALASKA AIR GRP63.99-6.94%29.98%
    JBLUJETBLUE AIRWAYS19.96-4.72%106.63%

    Top-Five Transportation Stocks--Most Overvalued

     

     

     

     

     

     

    TickerNameMkt PriceValuation(%)Last 12-M Retn(%)
    YRCWYRC WORLDWD INC13.8300.00%-38.37%
    GOGLGOLDEN OCEAN GP3.73149.19%-71.83%
    RLGTRADIANT LOGIST7.23112.92%133.98%
    XPOXPO LOGISTICS47.4779.93%88.90%
    ATSGAIR TRANSPT SVC10.557.69%15.64%

    Find out what Wall Street Investment and Media Professionals already know,
    ValuEngine offers sophisticated stock valuation and forecast research as well as a variety of portfolio screening and

    Free Download for Readers

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

    Anheuser-Busch (NYSE:BUD) is the leading global brewer and one of the world's top five consumer products companies. Their portfolio of well over 200 beer brands continues to forge strong connections with consumers. They invest the majority of their brand-building resources on their Focus Brands - those with the greatest growth potential such as global brands Budweiser, Stella Artois and Beck's, alongside Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Hasserder and Jupiler. In addition, the company owns a 50 percent equity interest in the operating subsidiary of Grupo Modelo, Mexico's leading brewer and owner of the global Corona brand.

    VALUENGINE RECOMMENDATION: ValuEngine continues its HOLD recommendation on ANHEUSER-BU ADR for 2015-06-18. Based on the information we have gathered and our resulting research, we feel that ANHEUSER-BU ADR has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Price Sales Ratio.

    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 AB InBev HERE.

    (click to enlarge)


     

     

     

     

     

     

    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month129.690.86%
    3-Month130.631.58%
    6-Month134.124.30%
    1-Year141.7810.26%
    2-Year147.8314.97%
    3-Year94.82-26.27%

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Valuation & Rankings
    Valuation14.24% overvaluedValuation Rank(?) 36
    1-M Forecast Return0.86%1-M Forecast Return Rank 95
    12-M Return42.20%Momentum Rank(?) 90
    Sharpe Ratio1.06Sharpe Ratio Rank(?) 93
    5-Y Avg Annual Return25.34%5-Y Avg Annual Rtn Rank 92
    Volatility23.90%Volatility Rank(?) 71
    Expected EPS Growth9.35%EPSGrowth Rank(?) 43
    Market Cap (billions)749.01Size Rank 100
    Trailing P/E Ratio15.29Trailing P/E Rank(?) 77
    Forward P/E Ratio13.98Forward P/E Ratio Rank 68
    PEG Ratio1.63PEG Ratio Rank 31
    Price/Sales3.53Price/Sales Rank(?) 28
    Market/Book6.23Market/Book Rank(?) 22
    Beta0.83Beta Rank 58
    Alpha0.29Alpha Rank 90

    What's Hot? Good News From Fed Sparks Rally

    Markets have jumped hard this week on a variety of good news for equities. The NASDAQ has reached a level not seen since the dotcom boom of 2000 and both the S&P 500 and the Dow have also jumped up once more. The latest leg up caused yet another valuation warning because at these levels our models find that more than 65% of the stocks we can assign a valaution are calculated to be overvaued.

    Investors reacted positively to the latest news from the Fed that the economy is firming up and while it is looking like rates are going up, the central bank is not quite ready to boost them just yet and may let the economy run a bit more before easing off the throttle.

    Highlights from the Fed's latest FOMC meeting included the following:

    Economic activity has been expanding moderately after having changed little during the first quarter. The pace of job gains picked up while the unemployment rate remained steady.

    Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

    The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.

    Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate.

    The Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation

    The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

    The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. (emphasis added)

    We thus see a Fed that is properly balancing inflation concerns with efforts to promote full employment. While it is often tough to read the tea leaves, here we have a clear restatement of the Fed's dual mandate (manage inflation and promote employment) and a clear indication that they are prepared to keep rates low until they are sure the labor market has properly recovered. Thus it appears as though equities will remain the only game in town for a while longer.

    VE Forecast Market Neutral Newsletter Posts Strong Pick Up Due to Short Positions

    May/June was another good month for our portfolio as we posted a gain of 2.53% and beat both the SP500 loss of 0.31% and the MLSAX pick up of 0.97%. The modified stop-lossed strategy with a suggested 60-40 allocation trailed the standard market neutral allocation with a gain of 2.26%. The trailing 12 month percentage return is 23.38% for the newsletter and 8.75% for the MLSAX Long-Short Fund-and 9.46% for the SP500. Since inception, our portfolio has returned 129.92% vs the MLSAX return of 33.25%.

    It was another strange month as longs were lackluster despite the hard jump for the markets in the past few days due to the recent FOMC announcements. We didn't break 50% with our hit ratio-long or short-but we managed a beat thanks to some outstanding results from individual positions. Bright spots for longs were Net1, Gilead, and the still strong TeeKay Tankers. Our shorts also featured major gains from Caesar's-again!--Peabody, and Navistar. Our three 30% gainers really helped to cover the losses from the laggards in the portfolio.

    Here are the primary long and short-side selections and their performance for the month.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    PositionTickerCompany Name

    Entry Price 5/20/15

    Exit PriceChange%ChangeSector
    Long 1SPRSPIRIT AEROSYSTEMS53.9656.022.063.82AEROSPACE
    Long 1AXLAMERICAN AXLE & MFG25.0921.96-3.13-12.48AUTO TIRES TRUCKS
    Long 1XUNITED STATES STEEL24.3123.39-0.92-3.78BASIC MATERIALS
    Long 1WUWESTERN UNION22.2621.28-0.98-4.41BUSINESS SERVICES
    Long 1AUOAU OPTRONCS-ADR5.244.69-0.55-10.50COMPUTERS TECHNOLOGY
    Long 1BZHBEAZER HOMES18.6618.750.090.48CONSTRUCTION
    Long 1STRZASTARZ-LIBERTY CAPITAL-A40.3243.012.696.67CONSUMER DISCRETIONARY
    Long 1PPCPILGRIMS PRIDE25.5324.33-1.20-4.70CONSUMER STAPLES
    Long 1BFRBANCO FRANC-ADR18.4315.39-3.04-16.49FINANCE
    Long 1UEPSNET 1 UEPS TECH14.4318.764.3330.01INDUSTRIAL PRODUCTS
    Long 1GILDGILEAD SCIENCES110.16121.2111.0510.03MEDICAL
    Long 1FSSFED SIGNAL CP15.4215.27-0.15-0.97MULTI-SECTOR CONGLOM
    Long 1PZEPETROBRAS EGY7.276.68-0.59-8.12OILS ENERGY
    Long 1FLWS1800FLOWERS.COM9.7710.710.949.62RETAIL WHOLESALE
    Long 1TNKTEEKAY TANKERS6.687.530.8512.72TRANSPORTATION
    Long 1TEOTELECOM ARGENTINA21.0218.08-2.94-13.99UTILITIES
    Short 1AVAVAEROVIRONMENT26.3827.05-0.67-2.54AEROSPACE
    Short 1NAVNAVISTAR INTERNATIONAL28.4223.634.7916.85AUTO TIRES TRUCKS
    Short 1CDECOEUR MINING5.346.33-0.99-18.54BASIC MATERIALS
    Short 1ENOCENERNOC INC9.5710.80-1.23-12.85BUSINESS SERVICES
    Short 1FUELROCKET FUEL INC8.248.46-0.22-2.67COMPUTERS TECHNOLOGY
    Short 1KBRKBR INC18.1019.77-1.67-9.24CONSTRUCTION
    Short 1CZRCAESARS ENTERTAINMENT9.976.503.4734.80CONSUMER DISCRETIONARY
    Short 1RDENELIZABETH ARDEN14.8214.140.684.59CONSUMER STAPLES
    Short 1GNWGENWORTH FINANCIAL7.907.93-0.03-0.38FINANCE
    Short 1CASCASTLE (NYSE:AM) &CO6.696.280.416.13INDUSTRIAL PRODUCTS
    Short 1AKBAAKEBIA THERAPEUTICS8.238.28-0.05-0.61MEDICAL
    Short 1CODICOMPASS DIVERSF16.4716.48-0.01-0.06MULTI-SECTOR CONGLOM
    Short 1BTUPEABODY ENERGY3.762.461.3034.57OILS ENERGY
    Short 1ARCOARCOS DORADOS-A5.285.82-0.54-10.23RETAIL WHOLESALE
    Short 1YRCWYRC WORLDWIDE INC14.3213.800.523.63TRANSPORTATION
    Short 1CLNECLEAN EGY FUELS7.597.66-0.07-0.92UTILITIES
      PORTFOLIO TOTAL   
    2.53
     
     GSPCS&P5002097.452074.28-23.17-0.31 
      LONG PORTFOLIO   
    -0.13
     
      SHORT PORTFOLIO   
    2.66
     
    Jun 19 3:02 PM | Link | Comment!
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