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Chuck Carnevale
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Charles (Chuck) C. Carnevale is the creator of F.A.S.T. Graphs™. Chuck is also co-founder of an investment management firm. He has been working in the securities industry since 1970: he has been a partner with a private NYSE member firm, the President of a NASD firm, Vice President and Regional... More
My company:
F.A.S.T. Graphs™
My blog:
F.A.S.T. Graphs Research
  • Addendum To - Investing In Eastern Utility Stocks - Do Today's Valuations Make Sense, Part 4 8 comments
    Aug 17, 2012 12:49 PM | about stocks: D, ED, FE, NEE, ES, SCG, SO, UIL

    This instablog looks at the eight example Eastern utilities covered in part 4. This instablog will primarily look at valuation through the lens of F.A.S.T. Graphs™. I consider this powerful graphing tool an essential first step when attempting to determine both fair value and the potential return that a common stock offers me. However, they are not the final step. Instead, they provide a very efficient mechanism that allows me to determine whether I want to embark on a more comprehensive research effort or not. Consequently, they can save me (and you) from wasting a lot of my time and effort towards a lost cause.

    For the reader's convenience, follow this link to free sample live FAST Graphs™on the eight Central utilities featured in this article:

    F.A.S.T. Graphs™ are a "tool to think with" and as such have no agenda of their own. Instead, they are designed to provide "essential fundamentals at a glance" and allow the user to interpret the data according to their own philosophies, strategies and beliefs. In this context, F.A.S.T. Graphs™ are the deliverer or reporter of important information.

    In order for the reader to get the maximum benefit out of the eighth sample live fully functioning F.A.S.T. Graphs™ I offer the following suggestions. The long rectangular navigation bar to the left of the graphs allows you to manipulate the graphs in numerous ways. There are different earnings mnemonics that can be run, cash flow overlays, different time frames from 2 to 20 years and much more. Don't be afraid to play with this dynamic tool, you can't break it.

    Furthermore, there are three links to other financial websites in the navigation bar printed in yellow ink that can be utilized to facilitate a more comprehensive research effort. The first two, summary and quote, are just under the symbol box. The third is found at the bottom of the navigation bar and is titled "to find other estimates or symbols" and takes you to Microsoft Money Central where consensus estimates from Zacks can be found to cross-check against the estimates provided by Capital IQ.

    There is one additional link at the very top of the historical graph that takes you directly to the company's website. Here we suggest looking for the investor relations section and then for presentations or events. For most companies this will provide PowerPoint presentations that the companies have made to analysts. In essence, this is the same information that analysts use to make their estimates.

    For the reader's convenience, follow this link to free sample live FAST Graphs™on the eight Central utilities featured in this article:

    (click to enlarge)

    Disclosure: I am long NEE, SCG.

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Comments (8)
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  • Chowder
    , contributor
    Comments (9432) | Send Message
     
    Chuck, do your annualized performance numbers above include dividends? Thanks!
    10 Aug 2012, 03:09 PM Reply Like
  • Chowder
    , contributor
    Comments (9432) | Send Message
     
    I also own SCG and it's one of my favorite utilities. Not from an out-performance point of view, but from a steady eddie point of view.

     

    I usually look for companies that have raised earnings in at least 7 of the past 10 years. I like that time frame because we endured two recessions in that time frame. SCG met that requirement.

     

    Then I look at the light blue area, the dividend. I love charts that show that north-easterly rise going from left to right. That's a thing of beauty! ... Ha!

     

    SO met the same requirements when I purchased it.

     

    D is also one of my core positions.

     

    These three saw me bulking up my portfolio during 2008-2009, so I have some decent returns and I have been reinvesting the dividends.

     

    Again, thanks for covering this sector. I greatly appreciate it.

     

    I will also be making some adjustments late in the 4th quarter, I just don't know which of my 9 holdings will be adjusted yet.
    10 Aug 2012, 03:20 PM Reply Like
  • Chuck Carnevale
    , contributor
    Comments (7199) | Send Message
     
    Author’s reply » chowder,

     

    The simple answer is yes,however, there are two annualized numbers. The "Closing Annualized ROR" is capital appreciation only. The "Total Annualized ROR" includes dividends, but not reinvested.

     

    Also, we do not include partial year dividends at this time, but will be in the future. In other words you will see no dividends for 2012, unless the fiscal year has ended. Or put another way, FAST Graphs are currently annual graphs and only provide annual or full year results and no estimates are included in our performance.

     

    Chuck
    10 Aug 2012, 03:25 PM Reply Like
  • richjoy403
    , contributor
    Comments (10820) | Send Message
     
    Chuck, both your tool and tutorial efforts are greatly appreciated...

     

    >>> The "Closing Annualized ROR" is capital appreciation only. The "Total Annualized ROR" includes dividends, but not reinvested. <<<

     

    Your sentences above strike me as key to understanding the EARNINGS and PRICE Correlated F.A.S.T. Graph...and therefore both your communication and our understanding might be improved if the 2 Rates Of Return designations were altered so as to communicate the exclusion/inclusion of dividends (or at least a footnote?).
    18 Aug 2012, 02:57 PM Reply Like
  • BigIslandBum
    , contributor
    Comments (468) | Send Message
     
    "Then I look at the light blue area, the dividend. I love charts that show that north-easterly rise going from left to right. That's a thing of beauty! ... Ha!"

     

    I believe that north-easterly rise is more indicative of increasing earnings as the dividend is drawn above the earnings (darker green). I'm pretty sure the widening of the light blue area indicates an increasing payout ratio.
    12 Aug 2012, 02:30 PM Reply Like
  • Chuck Carnevale
    , contributor
    Comments (7199) | Send Message
     
    Author’s reply » BigIslandBum ,

     

    You can verify the payout ratio by reviewing the column on the performance table. Also, the dividends are stacked on top because they represent return in addition to the market capitalizing earnings. I am working on an article to elaborate on this point. Probably a couple of weeks out.

     

    Regards,

     

    Chuck
    12 Aug 2012, 02:40 PM Reply Like
  • Chowder
    , contributor
    Comments (9432) | Send Message
     
    Re: Earnings and dividends ... One of the criteria I use in my stock selection is that the company shows increasing earnings in at least 7 of the last 10 years.

     

    Then I expect to see the dividend rising in each of those years.

     

    I had assumed from that criteria, that I would see that north easterly light blue indicator on the graph that I love so much. I nicknamed it the "Stairway To Wealth." Ha! Ha!

     

    So, I'm looking forward to Chuck's article on the indicator.
    12 Aug 2012, 06:31 PM Reply Like
  • OntheRock
    , contributor
    Comments (217) | Send Message
     
    Chuck,
    I have really enjoyed this series, and always appreciate the opportunity to see how to utilize Fast Graphs with specific examples. I have been long D, NEE, and SO for a couple of years, so am not too worried about current overvaluation. Thanks for all of your excellent contributions!
    17 Aug 2012, 04:41 PM Reply Like
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