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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 Data on Retail/Wholesale Stocks and Overall Undervaluation 0 comments
    Sep 30, 2011 2:57 PM | about stocks: PCLN, NFLX, GMCR, LULU, WFM, SHLD, TA, EBAY, M, CAH, AMZN, BIOS, ARO, LOOP

    MARKET OVERVIEW

     

     

    Index

    started week

    Thursday Close

    4 day change

    4 day change %

    ytd

    DJIA

    10771.86

    11154

    382.14

    3.55%

    -4.77%

    NASDAQ

    2496.98

    2480.76

    -16.22

    -0.65%

    -8.05%

    RUSSELL 2000

    657.37

    662.8

    5.43

    0.83%

    -16.25%

    S&P 500

    1136.91

    1160.4

    23.49

    2.07%

    -9.15%

     

     

    Summary of VE Stock Universe

    Stocks Undervalued

    89.34%

    Stocks Overvalued

    10.66%

    Stocks Undervalued by 20%

    64.56%

    Stocks Overvalued by 20%

    3.72%


     

    SECTOR OVERVIEW

     

    Sector

    Change

    MTD

    YTD

    Valuation

    Last 12-MReturn

    P/E Ratio

    Aerospace

    0.46%

    -7.25%

    0.20%

    23.82% undervalued

    1.72%

    16.33

    Auto-Tires-Trucks

    2.24%

    -11.84%

    -35.84%

    31.86% undervalued

    0.27%

    16.08

    Basic Materials

    -0.34%

    -16.53%

    -27.13%

    32.57% undervalued

    -2.00%

    27.8

    Business Services

    0.27%

    -6.61%

    -12.44%

    25.71% undervalued

    -3.13%

    35.54

    Computer and Technology

    -0.01%

    -7.74%

    -15.60%

    28.87% undervalued

    -3.68%

    31.34

    Construction

    1.69%

    -9.82%

    -30.34%

    33.19% undervalued

    -17.46%

    34.42

    Consumer Discretionary

    -0.16%

    -7.81%

    -17.81%

    27.21% undervalued

    -2.17%

    23.63

    Consumer Staples

    1.38%

    -5.98%

    -19.00%

    20.97% undervalued

    -1.75%

    15.63

    Finance

    2.18%

    -6.59%

    -14.79%

    25.12% undervalued

    -5.46%

    22.8

    Industrial Products

    0.06%

    -11.17%

    -21.62%

    29.79% undervalued

    1.23%

    20.9

    Medical

    0.68%

    -6.16%

    -7.99%

    29.61% undervalued

    3.64%

    24.01

    Multi-Sector Conglomerates

    1.73%

    -8.63%

    -19.68%

    23.41% undervalued

    -1.92%

    20.24

    Oils-Energy

    -0.42%

    -14.32%

    -25.71%

    31.47% undervalued

    3.98%

    32.62

    Retail-Wholesale

    0.06%

    -5.03%

    -7.31%

    21.76% undervalued

    9.22%

    23.53

    Transportation

    1.47%

    -9.58%

    -20.78%

    25.15% undervalued

    -5.73%

    20.14

    Utilities

    1.45%

    -4.98%

    -6.47%

    10.41% undervalued

    3.37%

    23.64

    Sector Talk—Retail/Wholesale Stocks

    Below, we present the latest data on leading ADRs 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 Retail/Wholesale Stocks--Short-Term Forecast Returns

    Ticker

    Name

    Mkt Price

    Valuation(%)

    Last 12-M Retn(%)

    PCLN

    PRICELINE.COM

    478.02

    -34.31

    37.31

    NFLX

    NETFLIX INC

    113.19

    -62.98

    -33.66

    GMCR

    GREEN MTN COFFE

    96.39

    -6.5

    210.33

    LULU

    LULULEMON ATHLT

    51.91

    -14.07

    129.79

    WFM

    WHOLE FOODS MKT

    67.07

    -15.72

    80.44


     


     

    Top-Five Retail/Wholesale Stocks--Long-Term Forecast Returns

    Ticker

    Name

    Mkt Price

    Valuation(%)

    Last 12-M Retn(%)

    SHLD

    SEARS HLDG CP

    57.37

    52.52

    -20.73

    PCLN

    PRICELINE.COM

    478.02

    -34.31

    37.31

    GMCR

    GREEN MTN COFFE

    96.39

    -6.5

    210.33

    TA

    TRAVELCENTERS

    3.67

    -58.92

    7.94

    EBAY

    EBAY INC

    30.67

    -29.75

    22.73


     

    Top-Five Retail/Wholesale Stocks--Composite Score

    Ticker

    Name

    Mkt Price

    Valuation(%)

    Last 12-M Retn(%)

    M

    MACYS INC

    27.26

    -30.28

    19.04

    AHONY

    AHOLD N V ADR

    11.79

    -61.27

    -10.75

    PCLN

    PRICELINE.COM

    478.02

    -34.31

    37.31

    EBAY

    EBAY INC

    30.67

    -29.75

    22.73

    CAH

    CARDINAL HEALTH

    43.04

    -23.2

    31.74


     

    Top-Five Retail/Wholesale Stocks--Most Overvalued

    Ticker

    Name

    Mkt Price

    Valuation(%)

    Last 12-M Retn(%)

    AMZN

    AMAZON.COM INC

    222.44

    65.45

    39.91

    SHLD

    SEARS HLDG CP

    57.37

    52.52

    -20.73

    BIOS

    BIOSCRIP INC

    6.37

    44.29

    22.97

    ARO

    AEROPOSTALE INC

    11.25

    26.7

    -51.8

    LOOP

    LOOPNET INC

    17.43

    24.31

    51.83

    Not a ValuEngine Premium Website member?  Then please consider signing up for our no obligation, two-week free trial today. ValuEngine's award-winning stock Valuation and Forecast Models continue to provide investors with accurate, objective, and timely information on more than 5,700 US stocks, ADRs, and foreign equities that trade on US markets. Over the last few months, our stock picks have provided clients with many winners in both up and down periods


     

    What's Hot

    ValuEngine.com Market/Sector Overviews


     

    The ValuEngine Valuation Model tracks more than 5500 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.  

    We began our last Valuation Watch on April 28th with the SP 500 at 1355 and the overvaluation figures almost hitting 62%.  Significantly, our Chief Market Strategist Richard Suttmeier, using both the fundamentally-based Valuation Model calculations as well as his own read of the technicals, called for a 1000 point decline in the Dow during his May media appearances.   VE Capital Management Portfolio Manager Brian Brogan also warned investors on equities in early June.

    Since then, the markets have shed the year's gains and were flirting with Bear Market correction territory--generally considered to be a decline of 20%  Below, we show the changes in valuation since we issued our last Valuation Watch at the end of April.

    MARKET VALUATION

    04/28/11

    08/04/11

    Stocks Undervalued

    38.25%

    89.34%

    Stocks Overvalued

    61.75%

    10.66%

    Stocks Undervalued by 20%

    16.36%

    64.56%

    Stocks Overvalued by 20%

    30.28%

    3.72%

    sp500

    1355.66

    1160.4

     

    SECTOR VALUATION

    04/28/11

    08/04/11

    Aerospace

    8.67% overvalued

    23.82% undervalued

    Auto-Tires-Trucks

    9.34% overvalued

    31.86% undervalued

    Basic Materials

    10.35% overvalued

    32.57% undervalued

    Business Services

    9.75% overvalued

    25.71% undervalued

    Computer and Technology

    9.95% overvalued

    28.87% undervalued

    Construction

    5.34% overvalued

    33.19% undervalued

    Consumer Discretionary

    6.96% overvalued

    27.21% undervalued

    Consumer Staples

    10.28% overvalued

    20.97% undervalued

    Finance

    7.64% overvalued

    25.12% undervalued

    Industrial Products

    10.11% overvalued

    29.79% undervalued

    Medical

    5.14% overvalued

    29.61% undervalued

    Multi-Sector Conglomerates

    16.31% overvalued

    23.41% undervalued

    Oils-Energy

    20.39% overvalued

    31.47% undervalued

    Retail-Wholesale

    8.22% overvalued

    21.76% undervalued

    Transportation

    13.49% overvalued

    25.15% undervalued

    Utilities

    12.61% overvalued

    10.41% undervalued

    sp500

    1355.66

    1260.34

     
    At today's levels, we see a drop of 15.63% from the May 2nd highs. In this case, the correction predicted by our Chief Market Strategist, our Portfolio Manager, and our Valuation Model most certainly occurred and it remains to be seen if we will actually reach Bear Market territory--and it should be noted that Richard Suttmeier does consider this to be a new Bear Market.

    But what about our universe undervaluation figures?  Can we use the metric in a similar fashion to call a bottom?  Here the task is far more difficult.   The calls are more robust to the upside since the overvalued condition seems to persist for only a short while.  We have seen this with all of our overvaluation warnings and watches dating back to April/May 2010.  However, once we start looking at the undervaluation numbers, the calls become more problematic since we have seen sustained undervaluation readings of 70%, 80%, and even 90% on occasion. 

    Here is a chart tracking undervaluation since that last overvaluation watch in late April.  We had some market swings, but the figures never really shifted out of what we would consider to be "normal" range until early August.  Then you see that as the market really swooned our model switched over to an extremely undervalued situation.


     


     

    Here is a longer-term overall undervaluation chart that starts from Spring 2007.  In late 2008 and early 2009, we saw overall universe undervaluation readings in excess of 90% that lasted for months before the market began to rally in March 2009-- after the "satanic" low of 666 for the S&P 500.    Note the sustained high overall undervaluation readings as the market laid in the bottom into March, 2009.   Note too that the data switched form daily/weekly to monthly and realize that into that March low the undervaluation was pegged in excess of 85%.
     

    This past performance makes it very difficult to use undervaluation to make precise call.  Over time we have grown pretty confident in adjusting allocations and such when we see overvaluation figures at our watch levels and warning levels.  But here we find no similar number upon which to make a bottom call based on undervaluation.  In these cases, we need to emphasize the technicals.  Remember that Richard Suttmeier called that March bottom and predicted a 50% rally on March 5, 2009!
     

    We will continue to watch and track our valuation metrics so that we may add to our dataset.

    Stocks: PCLN, NFLX, GMCR, LULU, WFM, SHLD, TA, EBAY, M, CAH, AMZN, BIOS, ARO, LOOP
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