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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 October 1, 2010 0 comments
    Oct 1, 2010 2:08 PM | about stocks: APWR, RDN, RF, MTG, MFGLQ, FUR, NNI, KKR, ACAS, SLM, AHT, WL, CLP, MBI, DDR, CNO

     

     

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    October 1, 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!

     

    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.  

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

    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 A-POWER ENERGY (OTC:APWR).   A-POWER ENERGY, through its subsidiaries, provides onsite distributed power generation systems and micro power grids for industrial companies primarily in the People’s Republic of China. It designs, constructs, installs, and tests distributed power generation and micro power grids as stand-alone facilities for various customers in the steel, chemical, ethanol, cement, and food industries.  A-POWER ENERGY is headquartered in China.

      A-POWER ENERGY is the current big gainer for our VE Forecast 22 MNS Newsletter.  Since our last re-balance on September 17th, the stock is up 33% on good news related to several big deals as well as some upgrades from analysts.  In addition, this stock had some pretty substantial short interest, so a squeeze may be on and beneficial to our long position.

      ValuEngine has issued a STRONG BUY recommendation for A-POWER ENERGY. Based on the information we have gathered and our resulting research, we feel that A-POWER ENERGY has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E ratio, market/book ratio and market valuation.

    Weekly Subscribers can download a FREE Detailed Valuation Report on A-POWER ENERGY 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.

    ValuEngine Index Overview
    Index
    Week Open
    Thurs. Close
    Change
    % Change
    YTD
    DJIA 10860.03 10788 -72.03 -0.66% 3.43%
    NASDAQ 2379.73 2368.62 -11.11 -0.47% 3.23%
    RUSSELL 2000 671.02 676.14 5.12 0.76% 7.65%
    S&P 500 1148.64 1141.2 -7.44 -0.65% 2.21%
    ValuEngine Market Overview
    Summary of VE Stock Universe
    Stocks Undervalued
    63.95%
    Stocks Overvalued
    36.05%
    Stocks Undervalued by 20%
    31.73%
    Stocks Overvalued by 20%
    13.18%

     

    ValuEngine Sector Overview
    Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
    Basic Industries -0.23% 8.09% 21.71% 1.77% overvalued 37.22% 23.50
    Capital Goods 0.47% 6.97% 15.91% 7.57% undervalued 11.31% 21.00
    Consumer Durables -0.22% 7.62% 12.18% 11.02% undervalued 22.30% 17.99
    Consumer Non-Durables 0.03% 6.12% 7.08% 6.57% undervalued 18.73% 17.20
    Consumer Services 0.09% 8.27% 9.78% 7.98% undervalued 12.19% 21.14
    Energy 0.64% 10.40% 4.24% 2.75% overvalued 25.88% 25.45
    Finance 0.10% 5.06% 12.11% 7.18% undervalued 2.24% 17.81
    Health Care 0.19% 7.54% 20.56% 13.33% undervalued 1.88% 21.07
    Public Utilities 0.09% 3.57% -1.06% 1.44% undervalued 12.39% 19.26
    Technology 0.33% 11.15% 15.45% 9.32% undervalued 20.70% 24.83
    Transportation -0.29% 6.92% 10.66% 1.56% undervalued 15.89% 19.23

     

    Sector Talk--Finance

     Below, we present various top-five lists for the Finance Sector from our Institutional software package (Pending:VEI).  We filtered our results with liquidity requirements of minimum $5/share price and volume of 100k/day

    Top-Five Finance Stocks--Short-Term Forecast Returns

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    RDN RADIAN GRP INC 7.82 -50.94 -25.95
    RF REGIONS FINL CP 7.27 -26.96 17.83
    MTG MGIC INVSTMT CP 9.23 -63.89 24.56
    MF MF GLOBAL HLDGS 7.2 21.37 -0.96
    FUR WINTHROP REALTY 12.36 -20.96 32.33

    Top-Five Finance Stocks--Long-Term Forecast Returns

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    RDN RADIAN GRP INC 7.82 -50.94 -25.95
    RF REGIONS FINL CP 7.27 -26.96 17.83
    MTG MGIC INVSTMT CP 9.23 -63.89 24.56
    NNI NELNET INC CL-A 22.88 -35.26 86.78
    KFN KKR FINL HLDGS 8.78 -48.44 99.09

    Top-Five Finance Stocks--Composite Score

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    KFN KKR FINL HLDGS 8.78 -48.44 99.09
    NNI NELNET INC CL-A 22.88 -35.26 86.78
    ACAS AMER CAP LTD 5.81 -51.27 79.88
    SLM SLM CORP 11.55 -55.44 32.45
    AHT ASHFORD HOSPTLY 9.05 -28.4 161.56

    Top-Five Finance Stocks--Most Overvalued

    Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
    WL WILMINGTON TRST 8.98 300 -36.58
    CLP COLONIAL PPTYS 16.19 231.63 74.46
    MBI MBIA INC 10.05 218.34 29.51
    DDR DEV DIVERFD RLT 11.22 175.76 22.36
    CNO CNO FINL GRP 5.54 111.4 5.32

      VE Premium Website Stock Analysis subscribers can find complete valuation, forecast, and ratings data on every individual equity in our universe of more than 5,700 equities HERE.

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

    What's Hot
    --Universe Valuations and Market Timing

      As we have noted in prior newsletters, we use our market and sector overviews and their valuation metrics to get an overall sense of the market.  The universe and sector valuations are based on our proprietary Valuation Model's calculations of where a stock's price should be if the market were purely based on fundamentals and totally rational and efficient.  Then, we take all of the stocks in the universe, sector, or industry to derive an overall valuation figure.

      Of course, a totally rational and efficient market does not exist.  But one can see from the charts that when valuations begin to get out of hand to one extreme or the other, it is often time for a turn.  For undervaluation in excess of 20%, a figure in excess of 35% often correlates to a bottom.  For overvaluation in excess of 20%, the figure is slightly lower and we see decent correlations when the figure is above 27% or so. 

      We used the overvaluation in excess of 20% or more figure to issue our very timely valuation watch back at the end of April just before that most recent market top.  Chief Market Strategist Richard Suttmeier has been very adept at using the sector valuation calculations to bolster his own technical analysis at key turning points as well--Richard famously called the March 6, 2009 bottom on March 5th!

     Of course, all the usual caveats apply.  Undervaluation can persist for a very long time and increase so it is a tougher signal to follow than the overvaluation--which tends to spike and then fall off as the market tumbles.  We present this data once more to remind readers to keep an eye on both the overall universe and sector valuation figures found in every Daily Bulletin and Weekly Newsletter.  They are another useful data point for ValuEngine users.

      Below, we present charts that compare the S&P 500 performance since the bottom on March 6, 2009 to the overall universe under/over valuation in excess of 20%.  Please note that data prior to March of 2010 is presented at key inflection points.  Post March 2010, the data is presented in approximate weekly intervals and culled from our Daily Bulletins and Weekly Newsletters. 

     

       

     An archive of this weekly newsletter is available here.

     
     
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    Disclosure: no positions
    Stocks: APWR, RDN, RF, MTG, MFGLQ, FUR, NNI, KKR, ACAS, SLM, AHT, WL, CLP, MBI, DDR, CNO
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