Disciplined Investing Pays
Posted on August 28, 2015 | Stock Superstars Report
The September SSR Monthly Report is now available on the SSR website. There is one new portfolio deletion: Sanderson Farms (SAFM) from Group 2. Replacing it is First American Financial Corp. (FAF) in Group 2.
Volatility Is Higher But Not Historically High
Posted on August 21, 2015 | Stock Superstars Report
The market’s downside volatility was the focus of the financial news media this week. Though it’s understandable that reasons for the decline were sought (weakness in China and continued uncertainty over the timing of the first interest rate increases by the Federal Reserve were cited), the commentaries miss the bigger trend.
Home Sales Expected to Heat Up
Posted on August 14, 2015 | Stock Superstars Report
While currency fluctuations are not a component of the SSR approach, the slowdown in China and the government’s willingness to devalue the yuan made headlines in the early part of the week. The announcement was a surprise to the market. Many market participants viewed the devaluation as an attempt to boost Chinese companies at the expense of foreign competitors. Foreign companies could be hurt by this devaluation primarily in two ways. One way would be that Chinese products could be less expensive, toughening the competitive landscape. The second way could hurt non-Chinese companies: Any profits they do earn in yuan could now be worth less when converted back to their home currency.
Second-Quarter Earnings Highlights
Posted on August 7, 2015 | Stock Superstars Report
As we move out of earnings season and the end of summer beckons, let’s take a moment for a quick look back at the nearly completed second-quarter earnings season. The numbers offer a mixed picture for investors.
According to Thomson Reuters, using data as of August 7, 70% of the 440 S&P 500 companies reporting had earnings above the mean estimate. Thirty-two of the 36 SSR portfolio companies have reported second-quarter results, and of these 69% beat their I/B/E/S consensus earnings estimates.
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.
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.
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.
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.
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.
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.