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ValuEngine Weekly: Transport Stocks, Valuation Warning,AB-InBev, Fed Meeting, And Market Neutral Results

|Includes: ALK, ATSG, AYR, BUD, CVTI, GOGL, JBLU, LUV, RLGT, Teekay Tankers Ltd. (TNK), TNP, UAL, XPO, YRCW

VALUATION WARNING: Overvalued stocks now make up 66.43% of our stocks assigned a valuation and 28.41% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with eight at or near double digits.

ValuEngine Index Overview

 

 

 

 

 

Index Week Open Friday AM Change % Change YTD
DJIA 17890.76 18083.6 192.84 1.08% 1.46%
NASDAQ 5011.79 5128.96 117.17 2.34% 8.51%
RUSSELL 2000 1259.38 1285.98 26.60 2.11% 6.75%
S&P 500 2091.34 2118.36 27.02 1.29% 2.89%

 

ValuEngine Market Overview

 

 


 

Summary of VE Stock Universe
Stocks Undervalued 33.57%
Stocks Overvalued 66.43%
Stocks Undervalued by 20% 12.37%
Stocks Overvalued by 20% 28.41%
ValuEngine Sector Overview

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
Medical 1.04% 2.77% 15.88% 25.03% overvalued 18.60% 30.67
Aerospace 0.71% 0.86% 5.69% 20.56% overvalued -4.29% 22.61
Computer and Technology 0.49% 1.13% 8.59% 17.03% overvalued 8.02% 30.83
Business Services 0.78% 2.02% 5.98% 15.49% overvalued 3.32% 25.44
Consumer Discretionary 0.65% 1.33% 10.06% 14.59% overvalued 2.03% 28.00
Retail-Wholesale 0.48% 0.70% 2.24% 14.20% overvalued 8.15% 26.20
Multi-Sector Conglomerates 0.76% -0.51% 3.19% 13.83% overvalued 1.07% 23.01
Consumer Staples 0.61% 1.54% 4.48% 13.72% overvalued 2.84% 24.57
Finance 0.55% 1.52% 4.77% 8.89% overvalued 3.40% 17.84
Oils-Energy -0.23% -1.44% -0.43% 8.04% overvalued -34.72% 24.42
Auto-Tires-Trucks 0.75% -1.17% 3.51% 5.70% overvalued -5.43% 16.87
Industrial Products 0.50% 0.39% 4.22% 5.41% overvalued -4.23% 20.60
Transportation 0.64% -0.56% 0.65% 4.37% overvalued 0.72% 19.45
Utilities 1.08% -1.10% 1.06% 4.00% overvalued -5.05% 21.93
Basic Materials 0.22% -0.92% 0.95% 3.03% overvalued -14.40% 24.14
Construction 0.62% 0.75% 2.98% 2.80% overvalued 0.70% 24.66

 

Sector Talk--Transportation

Below, we present the latest data on Transportation stocks from our Professional Stock Analysis Service Top five lists are provided for each category. We applied some basic liquidity criteria--share price greater than $3 and average daily volume in excess of 100k shares.

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

 

 

 

 

 

 

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
TNK TEEKAY TANKERS 7.53 -35.43% 108.01%
UAL UNITED CONT HLD 52.01 -15.67% 17.22%
AYR AIRCASTLE LTD 23.13 1.02% 37.84%
TNP TSAKOS EGY NAVG 9.9 -3.52% 37.88%
CVTI COVENANT TRANS 26.87 -19.44% 152.54%

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

 

 

 

 

 

 

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
TNK TEEKAY TANKERS 7.53 -35.43% 108.01%
UAL UNITED CONT HLD 52.01 -15.67% 17.22%
AYR AIRCASTLE LTD 23.13 1.02% 37.84%
TNP TSAKOS EGY NAVG 9.9 -3.52% 37.88%
CVTI COVENANT TRANS 26.87 -19.44% 152.54%

Top-Five Transportation Stocks--Composite Score

 

 

 

 

 

 

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
LUV SOUTHWEST AIR 33.86 -28.79% 28.02%
UAL UNITED CONT HLD 52.01 -15.67% 17.22%
TNK TEEKAY TANKERS 7.53 -35.43% 108.01%
ALK ALASKA AIR GRP 63.99 -6.94% 29.98%
JBLU JETBLUE AIRWAYS 19.96 -4.72% 106.63%

Top-Five Transportation Stocks--Most Overvalued

 

 

 

 

 

 

Ticker Name Mkt Price Valuation(%) Last 12-M Retn(%)
YRCW YRC WORLDWD INC 13.8 300.00% -38.37%
GOGL GOLDEN OCEAN GP 3.73 149.19% -71.83%
RLGT RADIANT LOGIST 7.23 112.92% 133.98%
XPO XPO LOGISTICS 47.47 79.93% 88.90%
ATSG AIR TRANSPT SVC 10.5 57.69% 15.64%

Find out what Wall Street Investment and Media Professionals already know,
ValuEngine offers sophisticated stock valuation and forecast research as well as a variety of portfolio screening and

Free Download for Readers

As a bonus to our Free Weekly Newsletter subscribers,
we are offering a FREE DOWNLOAD of one of our Stock Reports

Anheuser-Busch (NYSE:BUD) is the leading global brewer and one of the world's top five consumer products companies. Their portfolio of well over 200 beer brands continues to forge strong connections with consumers. They invest the majority of their brand-building resources on their Focus Brands - those with the greatest growth potential such as global brands Budweiser, Stella Artois and Beck's, alongside Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Hasserder and Jupiler. In addition, the company owns a 50 percent equity interest in the operating subsidiary of Grupo Modelo, Mexico's leading brewer and owner of the global Corona brand.

VALUENGINE RECOMMENDATION: ValuEngine continues its HOLD recommendation on ANHEUSER-BU ADR for 2015-06-18. Based on the information we have gathered and our resulting research, we feel that ANHEUSER-BU ADR has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Price Sales Ratio.

As a bonus to our Newsletter readers,
we are offering a FREE DOWNLOAD of one of our Stock Reports

Read our Complete Detailed Valuation Report on AB InBev HERE.


 

 

 

 

 

 

ValuEngine Forecast
  Target
Price*
Expected
Return
1-Month 129.69 0.86%
3-Month 130.63 1.58%
6-Month 134.12 4.30%
1-Year 141.78 10.26%
2-Year 147.83 14.97%
3-Year 94.82 -26.27%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation & Rankings
Valuation 14.24% overvalued Valuation Rank(?) 36
1-M Forecast Return 0.86% 1-M Forecast Return Rank 95
12-M Return 42.20% Momentum Rank(?) 90
Sharpe Ratio 1.06 Sharpe Ratio Rank(?) 93
5-Y Avg Annual Return 25.34% 5-Y Avg Annual Rtn Rank 92
Volatility 23.90% Volatility Rank(?) 71
Expected EPS Growth 9.35% EPSGrowth Rank(?) 43
Market Cap (billions) 749.01 Size Rank 100
Trailing P/E Ratio 15.29 Trailing P/E Rank(?) 77
Forward P/E Ratio 13.98 Forward P/E Ratio Rank 68
PEG Ratio 1.63 PEG Ratio Rank 31
Price/Sales 3.53 Price/Sales Rank(?) 28
Market/Book 6.23 Market/Book Rank(?) 22
Beta 0.83 Beta Rank 58
Alpha 0.29 Alpha Rank 90
What's Hot? Good News From Fed Sparks Rally

Markets have jumped hard this week on a variety of good news for equities. The NASDAQ has reached a level not seen since the dotcom boom of 2000 and both the S&P 500 and the Dow have also jumped up once more. The latest leg up caused yet another valuation warning because at these levels our models find that more than 65% of the stocks we can assign a valaution are calculated to be overvaued.

Investors reacted positively to the latest news from the Fed that the economy is firming up and while it is looking like rates are going up, the central bank is not quite ready to boost them just yet and may let the economy run a bit more before easing off the throttle.

Highlights from the Fed's latest FOMC meeting included the following:

Economic activity has been expanding moderately after having changed little during the first quarter. The pace of job gains picked up while the unemployment rate remained steady.

Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.

Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate.

The Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation

The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. (emphasis added)

We thus see a Fed that is properly balancing inflation concerns with efforts to promote full employment. While it is often tough to read the tea leaves, here we have a clear restatement of the Fed's dual mandate (manage inflation and promote employment) and a clear indication that they are prepared to keep rates low until they are sure the labor market has properly recovered. Thus it appears as though equities will remain the only game in town for a while longer.

VE Forecast Market Neutral Newsletter Posts Strong Pick Up Due to Short Positions

May/June was another good month for our portfolio as we posted a gain of 2.53% and beat both the SP500 loss of 0.31% and the MLSAX pick up of 0.97%. The modified stop-lossed strategy with a suggested 60-40 allocation trailed the standard market neutral allocation with a gain of 2.26%. The trailing 12 month percentage return is 23.38% for the newsletter and 8.75% for the MLSAX Long-Short Fund-and 9.46% for the SP500. Since inception, our portfolio has returned 129.92% vs the MLSAX return of 33.25%.

It was another strange month as longs were lackluster despite the hard jump for the markets in the past few days due to the recent FOMC announcements. We didn't break 50% with our hit ratio-long or short-but we managed a beat thanks to some outstanding results from individual positions. Bright spots for longs were Net1, Gilead, and the still strong TeeKay Tankers. Our shorts also featured major gains from Caesar's-again!--Peabody, and Navistar. Our three 30% gainers really helped to cover the losses from the laggards in the portfolio.

Here are the primary long and short-side selections and their performance for the month.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Position Ticker Company Name

Entry Price 5/20/15

Exit Price Change %Change Sector
Long 1 SPR SPIRIT AEROSYSTEMS 53.96 56.02 2.06 3.82 AEROSPACE
Long 1 AXL AMERICAN AXLE & MFG 25.09 21.96 -3.13 -12.48 AUTO TIRES TRUCKS
Long 1 X UNITED STATES STEEL 24.31 23.39 -0.92 -3.78 BASIC MATERIALS
Long 1 WU WESTERN UNION 22.26 21.28 -0.98 -4.41 BUSINESS SERVICES
Long 1 AUO AU OPTRONCS-ADR 5.24 4.69 -0.55 -10.50 COMPUTERS TECHNOLOGY
Long 1 BZH BEAZER HOMES 18.66 18.75 0.09 0.48 CONSTRUCTION
Long 1 STRZA STARZ-LIBERTY CAPITAL-A 40.32 43.01 2.69 6.67 CONSUMER DISCRETIONARY
Long 1 PPC PILGRIMS PRIDE 25.53 24.33 -1.20 -4.70 CONSUMER STAPLES
Long 1 BFR BANCO FRANC-ADR 18.43 15.39 -3.04 -16.49 FINANCE
Long 1 UEPS NET 1 UEPS TECH 14.43 18.76 4.33 30.01 INDUSTRIAL PRODUCTS
Long 1 GILD GILEAD SCIENCES 110.16 121.21 11.05 10.03 MEDICAL
Long 1 FSS FED SIGNAL CP 15.42 15.27 -0.15 -0.97 MULTI-SECTOR CONGLOM
Long 1 PZE PETROBRAS EGY 7.27 6.68 -0.59 -8.12 OILS ENERGY
Long 1 FLWS 1800FLOWERS.COM 9.77 10.71 0.94 9.62 RETAIL WHOLESALE
Long 1 TNK TEEKAY TANKERS 6.68 7.53 0.85 12.72 TRANSPORTATION
Long 1 TEO TELECOM ARGENTINA 21.02 18.08 -2.94 -13.99 UTILITIES
Short 1 AVAV AEROVIRONMENT 26.38 27.05 -0.67 -2.54 AEROSPACE
Short 1 NAV NAVISTAR INTERNATIONAL 28.42 23.63 4.79 16.85 AUTO TIRES TRUCKS
Short 1 CDE COEUR MINING 5.34 6.33 -0.99 -18.54 BASIC MATERIALS
Short 1 ENOC ENERNOC INC 9.57 10.80 -1.23 -12.85 BUSINESS SERVICES
Short 1 FUEL ROCKET FUEL INC 8.24 8.46 -0.22 -2.67 COMPUTERS TECHNOLOGY
Short 1 KBR KBR INC 18.10 19.77 -1.67 -9.24 CONSTRUCTION
Short 1 CZR CAESARS ENTERTAINMENT 9.97 6.50 3.47 34.80 CONSUMER DISCRETIONARY
Short 1 RDEN ELIZABETH ARDEN 14.82 14.14 0.68 4.59 CONSUMER STAPLES
Short 1 GNW GENWORTH FINANCIAL 7.90 7.93 -0.03 -0.38 FINANCE
Short 1 CAS CASTLE (NYSE:AM) &CO 6.69 6.28 0.41 6.13 INDUSTRIAL PRODUCTS
Short 1 AKBA AKEBIA THERAPEUTICS 8.23 8.28 -0.05 -0.61 MEDICAL
Short 1 CODI COMPASS DIVERSF 16.47 16.48 -0.01 -0.06 MULTI-SECTOR CONGLOM
Short 1 BTU PEABODY ENERGY 3.76 2.46 1.30 34.57 OILS ENERGY
Short 1 ARCO ARCOS DORADOS-A 5.28 5.82 -0.54 -10.23 RETAIL WHOLESALE
Short 1 YRCW YRC WORLDWIDE INC 14.32 13.80 0.52 3.63 TRANSPORTATION
Short 1 CLNE CLEAN EGY FUELS 7.59 7.66 -0.07 -0.92 UTILITIES
    PORTFOLIO TOTAL      
2.53
 
  GSPC S&P500 2097.45 2074.28 -23.17 -0.31  
    LONG PORTFOLIO      
-0.13
 
    SHORT PORTFOLIO      
2.66