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Steve Hach is the Senior Editor at ValuEngine.com, a Newtown, Pennsylvania-based stock valuation and forecast service. ValuEngine utilizes Ivy League financial research as the basis for its coverage of more than 7000 US, Japanese, and Canadian, and other foreign stocks. Hach utilizes... More
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  • ValuEngine Weekly March 4, 2011 0 comments
    Mar 4, 2011 2:37 PM | about stocks: THRM, TM, BWA, JCI, HMC, CMI, TWI, NAV, SPAR, TEN

     

     

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    March 4, 2011
    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!

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

    ATTENTION Investors and Finance Professionals:
    If you are reading this you should
    sign up for ValuEngine's award-winning stock valuation and forecast service at the low price of $19.95/month! 
    NO OBLIGATION, Two Week FREE TRIAL!

    CLICK HERE!

    If the tables in this email do not display properly, please CLICK HERE to download the newsletter.

    VALUATION WARNING:  Our models find that overvaluation has reached levels typically seen when a market correction is imminent. Overvalued stocks now make up 66% of our universe and almost 34% of the universe is calculated to be overvalued by 20% or more.  ALL sectors are now calculated to be overvalued.

     

    ValuEngine Index Overview
    Index
    Week Open
    Thurs. Close
    Change
    % Change
    YTD
    DJIA
    12130.22 12258.2 127.98 1.06% 4.49%
    NASDAQ
    2791.28 2798.74 7.46 0.27% 4.41%
    RUSSELL 2000
    825.86 828.89 3.03 0.37% 5.09%
    S&P 500
    1321.61 1330.97 9.36 0.71% 4.48%
    ValuEngine Market Overview
    Summary of VE Stock Universe
    Stocks Undervalued
    33.57%
    Stocks Overvalued
    66.43%
    Stocks Undervalued by 20%
    15.47%
    Stocks Overvalued by 20%
    33.97%

    .

    ValuEngine Sector Overview
    Sector
    Change
    MTD
    YTD
    Valuation
    Last 12-MReturn
    P/E Ratio
    Oils-Energy 0.68% 1.85% 11.40% 32.32% overvalued 50.44% 44.53
    Basic Materials 0.99% 1.43% 0.48% 19.93% overvalued 62.98% 35.58
    Multi-Sector Conglomerates 1.25% 1.96% 3.88% 16.86% overvalued 33.21% 29.67
    Transportation 2.03% 2.88% -0.77% 16.03% overvalued 27.06% 27.23
    Computer and Technology 1.86% 2.46% 11.82% 15.89% overvalued 41.07% 38.47
    Aerospace 2.44% 3.39% 15.82% 15.64% overvalued 32.81% 19.32
    Business Services 1.28% 1.75% 3.64% 15.49% overvalued 21.10% 38.44
    Industrial Products 2.15% 2.73% 6.07% 13.62% overvalued 31.76% 29.62
    Auto-Tires-Trucks 1.55% 2.20% -2.31% 11.56% overvalued 42.77% 22.63
    Construction 1.93% 2.58% 2.71% 11.08% overvalued 15.36% 46.50
    Finance 1.36% 1.23% 4.14% 10.82% overvalued 17.58% 25.17
    Consumer Staples 1.61% 2.24% 2.06% 10.70% overvalued 17.95% 27.57
    Consumer Discretionary 1.42% 1.88% 4.92% 10.34% overvalued 25.50% 30.50
    Retail-Wholesale 1.42% 1.50% 2.01% 10.13% overvalued 27.44% 28.20
    Utilities 1.18% 1.51% 2.74% 8.97% overvalued 18.41% 26.57
    Medical 1.59% 2.09% 10.09% 2.87% overvalued 18.25% 45.25
      Sector Talk-- Autos/Trucks/Tires

      Below, we present top-five lists for the Autos/Trucks/Tires 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. 

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

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    ARGN AMERIGON INC 15.06 1.74 46.78
    TM TOYOTA MOTOR CP 92.19 26.98 19.82
    BWA BORG WARNER INC 77.62 40.86 101.19
    JCI JOHNSON CONTROL 40.59 11.85 29.68
    VLKAY VOLKSWAGEN-ADR 30.27 2.98 66.97

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

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    TM TOYOTA MOTOR CP 92.19 26.98 19.82
    BWA BORG WARNER INC 77.62 40.86 101.19
    JCI JOHNSON CONTROL 40.59 11.85 29.68
    ARGN AMERIGON INC 15.06 1.74 46.78
    HMC HONDA MOTOR 43.79 31.7 25.37

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

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    DDAIF DAIMLER AG 69.1 -9.7 58.78
    JCI JOHNSON CONTROL 40.59 11.85 29.68
    VLKAY VOLKSWAGEN-ADR 30.27 2.98 66.97
    CMI CUMMINS INC 103.94 16.09 77.55
    BWA BORG WARNER INC 77.62 40.86 101.19

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

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    TWI TITAN INTL INC 24.34 105.83 177.85
    NAV NAVISTAR INTL 61.06 55.1 47.56
    SPAR SPARTAN MOTORS 6.4 47.12 11.89
    TEN TENNECO INC 40.59 46.2 88.44
    BWA BORG WARNER INC 77.62 40.86 101.19

      Subscribers can check out the latest valuation, forecast, and ratings figures on the Auto/Trucks/Tires 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
    --Valuation Remains at High Levels

      The ValuEngine Valuation Model tracks more than 5000 US equities, ADRs, and foreign stock which trade on US exchanges.  The model calculates a level of mispricing or valuation percentage for each equity based on 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.

      We track valuation figures and use them as a metric for making calls about the overall state of the market. Whenever we see levels in overvaluation levels in excess of @ 60% for the overall universe and 27.5% for the overvalued by 20% or more categories, we issue a valuation watch.  When overvaluation exceeds 65%, we issue a valuation warning. 

      Since December 13, 2010, we have been in a watch condition and have issued several valuation warnings.  ValuEngine has issued another market valuation warning as of today.    Our watches and warnings let us know that the model thinks things are overheated, but they cannot tell us when a correction will occur, nor can they tell us its duration and depth.  But they do provide a critical piece of data that has been helpful in the past.    

      Analysts have been in a quandary with this rally. We have seen many pieces of good data supporting the rally, but issues related to QEII, the austerity proposals of the right-wing in the US, the various crises in the Islamic world, and the rise in critical commodities weigh heavily on the market. 

      Below are charts which track overvaluation calculations since March 2010.  Here you can see what the market did when we issued valuation watches and warnings.  This is real tracked data, gathered from our website on an almost daily basis.  We issued the warnings and watches as indicated by the yellow and red coding on the valuation bars.   

    This chart shows overall universe valuation in excess of 60% vs the S&P 500 from the end of March 2010 to the present. 

    This chart shows universe overvalued by 20% or more levels in excess of 27% vs the S&P 500 from the end of March 2010 to the present.   

      Of course, as always past performance is no indication of future behavior.  Given the wild gyrations of the markets over the past few years, it has been tough to rely completely on any fundamentally or technically-based mode of analysis.  But as you can see from the charts below, the overvalued indicator has been fairly robust and thus must be considered as we move forward.

      This chart shows universe overvaluation figures in excess of 60% vs the S&P 500 from 1991 up until the present.  We cut off the top of the valuation scale to show how the spikes correlate to the overall market.  Note that the highest figure recorded in this data series was @ 71.5% overvalued in Summer 2007.  Most of this data is derived from our backtest program and only becomes real-tracked data in March 2010.   Additionally, the backtest data is only based on monthly figures.

      This chart shows universe overvalued by 20% or more levels in excess of 30% vs the S&P 500 from 1991 up until the present.  We cut off the top of the valuation scale to show how the spikes correlate to the overall market.  Note that the highest figure recorded in this data series was @ 36% overvalued by 20% or more February 18th and 22nd of this year.  Most of this data is derived from our backtest program and only becomes real-tracked data in March 2010.  Additionally, the backtest data is only based on monthly figures.  The bars are yellow unless there is a valuation warning issued.  This reflects the fact that sometimes the overvalued by 20% or more figure may exceed 27% while the overall valuation metric does not cross the valuation watch threshold. 

      In addition to the overall valuation metrics, we see that on a sector basis ALL sectors are calculated to be overvalued.  In the past, our Chief Market Strategist Richard Suttmeier has used the sector valuation figures to buttress his macro market calls.  Almost half of the sectors are calculated to be overvalued by 10% or more.  This is another indicator that stocks are no longer a bargain and that investors should consider implementing additional risk management tools and/or booking some profits. 

     

     

     

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

     

     

     

     An archive of this weekly newsletter is available here.

     
     
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    Themes: autos Stocks: THRM, TM, BWA, JCI, HMC, CMI, TWI, NAV, SPAR, TEN
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