Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

ValuEngine: Southwest Airlines Remains Top S&P500 Stock

|Includes: AFL, CB, DHI, GPN, KLAC, KORS, Southwest Airlines Co. (LUV), TRV, TSN, VZ

VALUATION WATCH: Overvalued stocks now make up 43.24% of our stocks assigned a valuation and 14.84% of those equities are calculated to be overvalued by 20% or more. Six sectors are calculated to be overvalued.

LUV Rules (Still) --ValuEngine: Southwest Airlines Remains Top S&P500 Stock

ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which trade on US exchanges as well as @1000 Canadian equities. When EPS estimates are available for a given equity, our model calculates a level of mispricing or valuation percentage for that equity based on earnings estimates and 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. Using our Valuation Model, we can currently assign a VE valuation calculation to more than 2800 stocks in our US Universe.

We also use trading data to provide forecast estimates for a variety of time horizons for almost ever equity in our database. Our Buy/Sell/Hold recommendations are based upon the 1-year forecast return figure. Using valuation and forecast figures, you can rank and rate our covered stocks against each other, to find out, in an objective and systematic way, the most attractive investment targets based on your own risk/reward parameters. We re-calculate the entire database every trading day, so you are assured that every proprietary valuation and forecast datapoint is as up-to-date as possible.

We can use our data to track individual stocks, industries, sectors, and indices. For today's bulletin, we present key metrics for the top picks in the S&P 500. The companies listed below represent the top-ten BUY/STRONG BUY stocks within the index. They are presented below according to their one-month forecast target prices.

The last time we looked at the S&P 500 was June 2nd. Since then, we have had a 40% turnover in our list. Traveler's has declined yet again as newcomer Michael Kors (NYSE:KORS) debuts in the number two position. Chubb Limited (NYSE:CB) has moved up one spot. Tyson (NYSE:TSN), DR Horton (NYSE:DHI), and Global Payments (NYSE:GPN) have also declined. Other newcomers also include KLA-Tencor (NASDAQ:KLAC), Aflac (NYSE:AFL), and Verizon (NYSE:VZ). Southwest Airlines (NYSE:LUV) retains its number one spot.

 

 

 

 

 

 

 

 

 

 

 

Ticker Company Name Market Price Valuation Last 12-M Retrn 1-M Forecast Retn 1-Yr Forecast Retn P/E Ratio Sector Name June 2, 2016
LUV SOUTHWEST AIR 40.26 -18.08% 15.72% 1.37% 16.50% 10.35 Transportation LUV
KORS MICHAEL KORS 50.8 -21.49% 7.31% 1.15% 13.89% 11.64 Consumer Discretionary TRV
TRV TRAVELERS COS 111.83 -1.27% 11.79% 1.12% 13.49% 10.66 Finance TSN
TSN TYSON FOODS A 62.68 0.97% 44.99% 1.11% 13.32% 15.60 Consumer Staples DHI
CB CHUBB LTD 125.54 7.55% 18.29% 1.01% 12.13% 13.20 Finance DAL
DHI D R HORTON INC 30.79 -1.87% 11.64% 0.95% 11.45% 13.87 Construction CB
KLAC KLA-TENCOR CORP 74.3 -2.38% 27.64% 0.94% 11.28% 17.76 Computer and Technology GPN
AFL AFLAC INC 70.84 17.90% 12.75% 0.94% 11.27% 10.97 Finance T
VZ VERIZON COMM 54.03 4.95% 13.68% 0.94% 11.26% 13.59 Utilities UNM
GPN GLOBAL PAYMENTS 74.26 -45.35% 38.56% 0.94% 11.25% 25.26 Business Services FSLR

NOTE: New stocks are in BOLD

Below is today's data on our SP500 leader, Southwest Airlines :

Southwest Airlines is a major domestic airline that provides primarily shorthaul, high-frequency, point-to-point, low-fare service. Southwest operates over Boeing 737 aircraft in numerous cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall Customer Service records.

VALUENGINE RECOMMENDATION: ValuEngine continues its STRONG BUY recommendation on SOUTHWEST AIR for 2016-06-22. Based on the information we have gathered and our resulting research, we feel that SOUTHWEST AIR has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.


 






ValuEngine Forecast
  Target
Price*
Expected
Return
1-Month 40.81 1.37%
3-Month 41.12 2.13%
6-Month 40.90 1.58%
1-Year 46.90 16.50%
2-Year 38.54 -4.27%
3-Year 29.02 -27.93%

 















Valuation & Rankings
Valuation 18.08% undervalued Valuation Rank(?) 73
1-M Forecast Return 1.37% 1-M Forecast Return Rank 100
12-M Return 15.72% Momentum Rank(?) 84
Sharpe Ratio 0.92 Sharpe Ratio Rank(?) 96
5-Y Avg Annual Return 25.57% 5-Y Avg Annual Rtn Rank 96
Volatility 27.81% Volatility Rank(?) 62
Expected EPS Growth 8.23% EPSGrowth Rank(?) 39
Market Cap (billions) 27.33 Size Rank 96
Trailing P/E Ratio 10.35 Trailing P/E Rank(?) 89
Forward P/E Ratio 9.56 Forward P/E Ratio Rank 83
PEG Ratio 1.26 PEG Ratio Rank 36
Price/Sales 1.35 Price/Sales Rank(?) 56
Market/Book 4.19 Market/Book Rank(?) 28
Beta 1.02 Beta Rank 44
Alpha 0.14 Alpha Rank 83

ValuEngine Market Overview

 

 

 

 

 

Summary of VE Stock Universe
Stocks Undervalued 56.76%
Stocks Overvalued 43.24%
Stocks Undervalued by 20% 25.04%
Stocks Overvalued by 20% 14.84%

 

ValuEngine Sector Overview

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
Consumer Staples -0.10% 1.01% 6.03% 9.57% overvalued 2.23% 23.71
Basic Materials -0.48% 3.52% 33.40% 9.16% overvalued 20.13% 28.65
Utilities -0.15% 1.11% 7.19% 6.78% overvalued 2.68% 23.39
Oils-Energy -0.67% 1.78% 12.81% 5.17% overvalued -30.00% 22.57
Multi-Sector Conglomerates 0.03% -0.21% 4.25% 3.18% overvalued -8.86% 17.93
Industrial Products -0.19% 0.13% 5.72% 2.13% overvalued -9.92% 21.74
Aerospace -0.27% -1.99% -3.78% 0.32% undervalued -5.08% 18.85
Computer and Technology -0.77% -0.52% 5.24% 1.42% undervalued -9.68% 27.78
Business Services 0.31% -0.64% 8.19% 2.89% undervalued -10.28% 22.81
Consumer Discretionary -0.26% -0.49% 2.37% 3.13% undervalued -12.98% 22.35
Finance -0.11% -1.22% 1.15% 3.77% undervalued -6.05% 15.80
Construction -0.22% -1.14% 18.72% 4.76% undervalued -6.12% 20.71
Transportation -0.30% -1.62% 0.67% 7.75% undervalued -27.65% 13.31
Auto-Tires-Trucks -0.69% -1.95% -2.12% 9.11% undervalued -18.18% 11.88
Medical -0.36% -1.70% -7.64% 9.80% undervalued -25.60% 26.57
Retail-Wholesale -0.16% -0.11% -3.79% 11.25% undervalued -14.81% 22.14

ValuEngine.com is an independent research provider, producing buy/hold/sell recommendations, target price, and valuations on over 7,000 US and Canadian equities every trading day.

Supporting Documents

  1. VE_LUV.pdf

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.