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ValuEngine Data on Retail/Wholesale Stocks and Overall Undervaluation

|Includes:AMZN, ARO, BIOS, CAH, EBAY, GMCR, LOOP, LULU, M, NFLX, The Priceline Group Inc. (PCLN), SHLD, TA, WFM

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

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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