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ValuEngine Weekly November 19, 2010

|Includes:AXL, F, FSYS, GNTX, GPC, HMC, JCI, MTOR, NAV, China Nepstar Chain Drugstore Ltd. (NPD), PCAR, SMP, SPAR, SUP, THRM, TRW, TWI

 

 

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November 19, 2010
The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools available from ValuEngine. In today's fast-moving and globalized financial markets, it is easy to get overloaded with information. The winners will adopt an objective, scientific, independent and unemotional approach to investing. If you are not yet a member of ValuEngine's stock analysis service, sign up now for a two-week free trial at www.valuengine.com!

 

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Bonus for Readers
--Free Individual Stock Report for Weekly Newsletter Subscribers

 As a bonus to our Free Weekly Newsletter subscribers, we are now offering a FREE DOWNLOAD of one of our $ 25.00 Detailed Valuation Reports.  

  This week's free download is our report on China Nepstar (NYSE:NPD)China Nepstar is China's largest retail drugstore chain based on the number of directly operated stores.   Our Forecast Model selected NPD as a short due to its poor short-term forecast return figures last Friday.  It was included in the portfolio sent to subscribers on Tuesday morning.  Then, Wednesday morning China Nepstar reported Q3 net income that was significantly below Q3 2009 figures.  The resulting sell off took @ 23% off the shares. 

  Our models have since re-calculated China Nepstar's valuation and forecast figures.  ValuEngine has issued a HOLD recommendation for China Nepstar on Nov. 18, 2010. Based on the information we have gathered and our resulting
research, we feel that China Nepstar has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE expected EPS growth and company size, but UNATTRACTIVE momentum and 5-year annualized return.

  Even with Wednesday's hair cut, based on available data as of , we believe that NPD should be trading at $3.31. This makes NPD 19.81% overvalued. "Fair Value" indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For NPD, we base this on actual earnings per share (NYSEARCA:EPS) for the previous four quarters of $0.05, forecasted EPS for the next four quarters of $0.13, and correlations to the 30- year Treasury bond yield of 3.92%.

  Subscribers can check out the latest figures on China Nepstar from our models HERE.

Weekly Subscribers can download a FREE Detailed Valuation Report on NPD HERE.

If you have not subscribed and want to be able to receive a FREE $ 25.00 Detailed Valuation Report, you can subscribe to our Free Weekly Newsletter HERE.

See the "What's Hot" section below for more on the ValuEngine Forecast Model Market Neutral Portfolio Newsletter

ValuEngine Index Overview
Index
Week Open
Thurs. Close
Change
% Change
YTD
DJIA
11194.02 11181.2 -12.82 -0.11% 7.22%
NASDAQ
2529.02 2514.4 -14.62 -0.58% 10.81%
RUSSELL 2000
722.35 720.84 -1.51 -0.21% 13.68%
S&P 500
1200.44 1196.69 -3.75 -0.31% 7.32%
ValuEngine Market Overview
Summary of VE Stock Universe
Stocks Undervalued
53.37%
Stocks Overvalued
46.63%
Stocks Undervalued by 20%
24.36%
Stocks Overvalued by 20%
17.32%

 

ValuEngine Sector Overview
Sector
Change
MTD
YTD
Valuation
Last 12-MReturn
P/E Ratio
Basic Materials 2.53% 3.59% 23.13% 14.73% overvalued 53.21% 33.41
Oils-Energy 1.63% 4.51% 10.85% 12.32% overvalued 39.26% 42.43
Multi-Sector Conglomerates 2.18% 2.86% 18.64% 5.93% overvalued 30.07% 32.78
Auto-Tires-Trucks 1.60% 4.98% 41.47% 2.41% overvalued 42.07% 34.80
Transportation 1.50% 1.05% 19.22% 1.41% overvalued 24.24% 39.37
Finance 0.96% 0.89% 13.98% 0.72% overvalued 16.96% 29.47
Industrial Products 1.28% 2.64% 15.98% 0.28% overvalued 25.26% 26.97
Retail-Wholesale 0.93% 3.38% 14.44% 0.05% undervalued 47.18% 25.49
Utilities 1.08% 0.80% 5.26% 0.05% undervalued 16.55% 27.09
Consumer Staples 1.26% 2.75% 6.86% 0.23% undervalued 15.80% 21.99
Aerospace 1.70% -0.56% 14.66% 2.18% undervalued 25.35% 19.22
Computer and Technology 1.33% 1.80% 21.59% 3.13% undervalued 28.38% 39.86
Business Services 1.44% 2.55% 7.39% 3.65% undervalued 15.94% 28.97
Consumer Discretionary 1.86% 2.39% 17.60% 4.05% undervalued 23.03% 30.36
Construction 1.80% 3.36% 1.81% 9.45% undervalued 3.27% 37.58
Medical 0.97% 2.11% 11.68% 10.59% undervalued 17.94% 33.33
  Sector Talk--Autos/Tires/Trucks

  The big market news this week was the successful IPO for back from the dead automaker General Motors (NYSE:GM).  Just a few months ago, radical right-wing political figures in the US were bemoaning the government-forced bankruptcy of GM as evidence of the Obama Administration's socialist tendencies. 

 Now, analysts are asking why the troubled banking and finance sector was not handled in a similar manner.  In the case of GM, all parties--executives, union workers, bond holders--got a "hair cut,"  top management was changed, and the company placed into bankruptcy and restructured.  GM now appears to be on a better footing for the future. 

 Compare this to the situation on Wall St. where tax payer dollars were thrown out hand over fist, incompetent and corrupt management was largely kept in place, bonuses are at an all-time high, and the picture still remains muddied for the future.

 In any case, cars were a big part of our markets this week, so below we present various top-five lists for the Auto/Tires/Trucks Sector from our Institutional software package (Pending:VEI).  These results were filtered by market price and volume--no results below 3$/share or less than 100k shares/day volume.

Top-Five Autos/Tires/Trucks Stocks--Short-Term Forecast Returns

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
SMP STANDARD MOTOR 13.15 28.11 33.77
AXL AMER AXLE & MFG 10.87 -45.66 58.92
ARGN AMERIGON INC 10.35 -33.94 47.86
SPAR SPARTAN MOTORS 5.32 -4.67 3.1
SUP SUPERIOR INDS 19.24 -16.26 26

Top-Five Autos/Tires/Trucks Stocks--Long-Term Forecast Returns

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
PCAR PACCAR INC 53.43 36.09 36.3
HMC HONDA MOTOR 37.99 5.18 19.58
JCI JOHNSON CONTROL 36.92 8 35.14
GNTX GENTEX CORP 21.36 -0.19 26.02
FSYS FUEL SYSTEM SOL 34.65 8.52 -33.71

Top-Five Autos/Tires/Trucks Stocks--Composite Score

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
AXL AMER AXLE & MFG 10.87 -45.66 58.92
GPC GENUINE PARTS 47.5 -7.51 34.37
JCI JOHNSON CONTROL 36.92 8 35.14
TRW TRW AUTOMTV HLD 47.78 10.79 103.93
HMC HONDA MOTOR 37.99 5.18 19.58

Top-Five Autos/Tires/Trucks Stocks--Most Overvalued

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
ARM ARVINMERITOR 17.79 49.17 97.89
PCAR PACCAR INC 53.43 36.09 36.3
TWI TITAN INTL INC 16.17 35.87 92.04
NAV NAVISTAR INTL 52.88 33.62 46.77
F FORD MOTOR CO 16.12 30.81 80.31

 

  Subscribers can check out the latest valuation, forecast, and ratings figures on the Sector from our Models HERE.

 Seeking Alpha Readers should check out our Seeking Alpha VE Investment App HERE

  Currently, you research more than 400 ADRs and other foreign stocks with ValuEngine's software and website! 

We also offer research reports on more than 700 Canadian Companies on our Research Report Web Page.

 

What's Hot--The ValuEngine Forecast Model Market Neutral Portfolio

  One of the more common complaints we have received about the newsletter is that while the performance is good and provides decent returns with lower volatility than the benchmark index, the portfolio is a bit large for the individual retail investor. This leads to transaction costs that can be a burden due to the high rate of turnover for a portfolio that is rebalanced on a monthly basis.

 This month's edition of our ValuEngine Forecast Market Neutral Strategy is the first to feature our newly updated and refined Sector Designations. Starting this month we have implemented a slightly different format for our newsletter. Subscribers will now find that there are 16 sectors and the main portfolio will consist of one stock from each of those sectors for a total of 32 stocks long/short. In addition, 16 alternate stocks from each sector will be provided per side. Thus, you will receive @ the same number of stock picks per month (64 total with 16 sectors vs 66 total with 11 sectors) but the main portfolio will be smaller and provide significant transaction cost savings.

 Of course, Subscribers remain free to trade the portfolio with two stocks per sector.  They can use the primary and alternate selections to make up a portfolio with 32 stocks long and 32 short.

  Website subscribers may also access the long-side selections of this strategy by using the screening functions on our benchmark portfolios page.  Simply go HERE, select Forecast 16, and query the model for its current portfolio picks.

For more on the VE Forecast 22 Market Neutral Strategy Newsletter Portfolio, Click the Logo Below

 

 An archive of this weekly newsletter is available here.

 
 
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Disclosure: no positions
Stocks: NPD, SMP, AXL, THRM, SPAR, SUP, PCAR, HMC, JCI, GNTX, FSYS, GPC, TRW, MTOR, TWI, NAV, F