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It’s been a little over six months since I put out my “avoid” article on Value Line Inc. (NASDAQ:VALU), and in that time the shares have returned about 12.3% against a gain of about 16.6% for the S&P
Value Line Remains Less Attractive Than The Risk Free Alternative
Summary
- Value Line Inc. shares have returned 12.3% in 6 months, underperforming the S&P 500.
- The company remains a low growth cash cow with a solid balance sheet and dividend that has grown at an unsustainable rate.
- Relative valuation shows the stock dividend needs to grow at 11.25% CAGR to match 10-Year Note cash flows, making stock too risky at current prices.
I'm a quant investment newsletter writer who marries fundamental analysis with the latest research in momentum. Over the past few years, I’ve developed a piece of software that helps me track the level of optimism and pessimism embedded in stock price. I seek to challenge the assumptions embedded in price by profitably exploiting the disconnect between what the market thinks and what is a likely outcome. I invest in those companies that have a greater than average chance of giving us all a surprise in the next few months.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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