Changing Expectations

Posted on July 24, 2015 | Stock Superstars Report

Investors expect that the stock they purchase today will be worth more at some point in the future. Exactly how much more is determined by investors’ expectations of future performance. Every quarter, many companies follow their earnings releases with guidance for the upcoming quarter and full year. The new information is used by investors to recalculate their estimate of what the company is worth. This could lead to an increase, a decrease or no change at all in share price.

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NASDAQ Hits Record High

Posted on July 21, 2015 | Stock Superstars Report

The NASDAQ set a new record high this week. The surge in technology valuations has some analysts concerned about a new bubble inflating. Earlier this week, MarketWatch ran an article indicating that technology stocks are now high enough to cause flashbacks to the technology bubble of 2000. Investors are better served, however, by looking at the valuations of individual stocks than being swayed by headlines.

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Four Metrics to Pay Attention to This Earnings Season

Posted on July 10, 2015 | Stock Superstars Report

We are now in earnings season, with companies such as Alcoa (AA) releasing their earnings. The earnings season can be hectic, and it can be tempting for investors to glance at a company’s earnings release and take it at face value. However, the press release doesn’t always highlight what is important to the SSR portfolio. For an SSR subscriber, here are four metrics to look at in the earnings releases of SSR holdings.

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Airlines Getting Too Friendly While Greece and Its Creditors Can’t Make Up

Posted on July 2, 2015 | Stock Superstars Report

While summer is officially underway, the doldrums were not in effect this week, as we saw the potential end game in Greece with the government declaring a referendum for July 5 to determine whether the country would accept its creditors’ terms. The ruling Syriza party has recommended a “no” vote, arguing that the country could get a better deal if the offer was rejected. The creditors have suggested, however, that a “no” vote would be a vote to leave the euro currency bloc. Greece additionally went on to miss a debt payment that was due to the International Monetary Fund (IMF) on Tuesday, which technically constitutes a default.

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All Metrics are Not Equal, Plus Changes to the Portfolio

Posted on June 26, 2015 | Stock Superstars Report

The July SSR Monthly Report is now available at the SSR website. There is one new portfolio deletion and one new portfolio addition to announce. Union Pacific Corporation (UNP) in Group 1 is being removed from the portfolio. MEDNAX Inc. (MD) is being added to Group 3.

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Regulations, Honesty and Analyst Estimates

Posted on June 19, 2015 | Stock Superstars Report

This week, Bloomberg discussed a study that is pending publication in the CFA Institute’s Financial Analysis Journal (FAJ), ”Did Analyst Forecast Accuracy And Dispersion Improve Following the Increase in Regulation Post 2002?” The study looked at whether analysts’ earnings estimates became more accurate following government regulation over the long term. We have been granted permission by the Financial Analysis Journal to discuss this study in the July AAII Journal, though it won’t be generally available for dissemination until publication in a future issue of the FAJ.

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Investors Feeling Cyclical

Posted on June 12, 2015 | Stock Superstars Report

Last week, the Department of Labor estimated that the U.S. economy added 280,000 jobs in May, a number that was significantly higher than expected. Motor vehicle sales also surged in May, which is generally considered a sign of confidence on the part of consumers since it is such a big purchase. Other economic data also points to a slowly strengthening economy.

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Pointing Fingers and Liability

Posted on June 5, 2015 | Stock Superstars Report

The banking industry as a whole has not been particularly forthcoming about their litigation reserves and how much has been paid out of them. The Securities and Exchange Commission (SEC) has not issued a call for lenders to be more forthcoming about their litigation exposure as it has for other vulnerable areas of public companies, particularly banks. JPMorgan Chase disclosed that its litigation reserve in October 2013 was $23 billion, before a large settlement.

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Value Is In, Plus Changes to the Portfolio

Posted on May 29, 2015 | Stock Superstars Report

The June SSR Monthly Report is now available at the SSR website. There is one new portfolio deletion and one new portfolio addition to announce.

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Flying into Turbulence

Posted on May 22, 2015 | Stock Superstars Report

Each industry has its own unique concerns. Price wars and excess capacity are the ghosts from Christmases past that have killed profits for the airline industry. Previous price wars and excess capacity have resulted in billions of dollars of losses for the industry. Any mention of either or both of those can send investors fleeing, as we saw this week.

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