Showing posts with label reasonable value. Show all posts
Showing posts with label reasonable value. Show all posts

Thursday, July 7, 2011

15 more value stocks breaking out

Here's another batch of interesting looking stocks that we found using the Premium Stock Screener at our sister site TradingStockAlerts.com

This is one of my favorite screens because it tends to highlight solid profitable companies that appear to be starting sustainable bullish moves. This screen starts out by looking for those stocks that I refer to as "Reasonable Value." In other words, they are profitable, PE is not too high, Price-to-Sales ratio is low and Enterprise Value to EBITDA ratio is also fairly low. We are also looking for low Debt-to-Equity ratios.

To these criteria we add a set of technical analysis indicators. The stocks need to be above their 50-day exponential moving average. They also need to have Trend Performance Scores that are only somewhat bullish but have just recently registered a strong improvement in Trend Performance Score. This combination of technical criteria tends to find those stocks that are just beginning to move so you will not find yourself in the position of chasing a stock.

So here's the list:

Symbol Name Sector Industry PE Ratio Price
to Sales
Enterprise
Value to EBITDA
ACM Aecom Technology Corporation Consumer Services Military/
Government/
Technical
13.16 0.45 9.18
APAC APAC Customer Services, Inc. Miscellaneous Business Services 12.65 0.85 4.64
BORN China New Borun Corporation Consumer Non-Durables Beverages (Production/
Distribution)
4.07 0.68 2.45
BRKS Brooks
Automation,
Inc.
Technology Industrial
Machinery/
Components
7.84 1.01 5.61
CMRG Casual Male Retail Group, Inc. Consumer Services Clothing/Shoe/
Accessory Stores
14.06 0.54 6.39
CPHI China Pharma Holdings, Inc. Consumer Durables Major
Pharmaceuticals
4.42 1.36 3.59
CVVT China Valves Technology, Inc. Capital Goods Metal Fabrications 2.92 0.66 1.71
GLDD Great Lakes Dredge & Dock
Corporation
Basic Industries Military/
Government/
Technical
12.11 0.49 4.58
GM General Motors
Company
Capital Goods Auto
Manufacturing
7.47 0.33 2.3
KEM Kemet Corporation Capital Goods Electrical Products 11.93 0.53 3.43
KND Kindred
Healthcare, Inc.
Health Care Hospital/Nursing Management 14.18 0.2 4.95
KSS Kohl's Corporation Consumer Services Department/
Specialty Retail Stores
13.88 0.79 5.48
ONP Orient Paper, Inc. Consumer Durables Containers/
Packaging
4.42 0.58 1.98
SXI Standex
International Corporation
Technology Industrial Machinery/
Components
12.17 0.65 7.31
VSH Vishay
Intertechnology, Inc.
Capital Goods Electrical Products 7.6 0.95 2.87

It is worth noting that eight of these stocks have Return-on-Equity over 20%. Of the remainder, only one has an ROE that is less than ten. High ROE is one of my favorite criteria for identifying growth stocks so it encouraging to see that almost all of these stocks have decent to very good ROE.

With the overall market showing strength lately and earnings season coming, some of these stocks will surely follow through on the bullish moves we see here today. Do some deeper research and add a few of these to your watchlist.

Disclosure: no positions in any stocks mentioned in this post



Thursday, August 5, 2010

15 under-valued stocks to buy on a pullback

Here's another "Reasonable Value" screen run against Tuesday's Trend Leaders list. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:

  • PE between 0 and16
  • PEG between 0 and 1.2
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
  • EV to EBITDA less than 10
With the market showing some strength the last week or two, we actually have a Trend Leaders list that has a reasonable number of stocks on it now - over 500, as a matter of fact. This gives us a wider field in which to seek out those stocks that still have some value characteristics while exhibiting some strong price action. The table below lists this week's candidates:

Sym
bol
Name Industry Last Price PE PEG Price To Sales Price To Book Debt To Equity Cash On Hand Divi-
dend
EV to EBITDA
CACI CACI Int'l, Inc. EDP Services $47.62 13.12 0.98 0.47 1.27 0.4666 174.7M 0 7.4
DOV Dover Corp. Industrial Machinery/
Components
$48.56 18.55 0.95 1.4 2.18 0.4383 973.5M 1.04 8.57
TSTC Telestone Tech-
nologies Corp.
Telecom Equipment $12.10 11.66 0.17 1.61 1.82 0 10.01M 0 9.12
VSEC VSE Corp. Military/
Government/
Technical
$36.22 7.54 0.79 0.19 1.77 0 2.19M 0.24 3.81
ARW Arrow Electronics, Inc. Electronic Components $25.40 16.3 0.43 0.19 1.01 0.4316 576.7M 0 6.93
POWL Powell Industries, Inc. Electrical Products $33.01 9.11 1.01 0.63 1.44 0.075 113.6M 0 3.63
GIII G-III Apparel Group, LTD. Apparel $25.48 12.45 0.64 0.58 2.1 0 17.8M 0 6.73
JACK Jack In The Box Inc. Restaurants $20.89 11.6 0.81 0.49 2.14 0.6549 105M 0 5.85
CORE Core-Mark Holding Company, Inc. Food Distributors $30.10 13.27 0.73 0.06 0.97 0.0021 91M 0 4.62
UNH United Health Group Inc. Medical Specialities $32.42 8.19 0.91 0.38 1.39 0.3237 11B 0.5 4.35
MFB Maidenform Brands, Inc. Department/
Specialty Retail Stores
$24.68 13.33 1.21 1.12 3.56 0.464 22.8M 0 9.35
FDO Family Dollar Stores, Inc. Department/
Specialty Retail Stores
$41.41 16.46 1.19 0.7 3.84 0.1758 444.8M 0.62 7.32
FCX Freeport-McMoran Copper & Gold, Inc. Precious Metals $74.03 9.42 0.73 1.96 3.16 0.4447 3,042M 1.2 4.35
HS Health-
spring, Inc.
Medical Specialities $19.03 7.37 0.93 0.4 1.15 0.1628 294M 0 3.42
AMP Ameriprise Financial Services, Inc. Investment Managers $42.82 13.58 0.85 1.31 1.09 0.7601 4.4B 0.72 8.3
ALV Autoliv, Inc. Auto Parts: O.E.M. $57.78 14.29 0.25 0.78 1.94 0.2708 459.4M 1.2 5.23

Valuation measures listed in the table above show all of these stocks to be at reasonable levels. Data not included in the chart above, however, shows that two companies in particular are also showing impressive growth.

Arrow Electronics (ARW) has steadily improving financials as shown in the chart below:


Revenue, earnings and margins are all up sequentially as well as year-over-year for this distributor of electronic components and systems.

Our other growth candidate is Ameriprise Financial (AMP). I normally am not too fond of financial companies as the sector overall has been the worst performing in our Earnings Scorecard analysis. This company, however, has managed to perform reasonably well while staying far enough under the radar to maintain its value characteristics.


Here, in the chart above, we can see that the most recent sequential quarterly results were quite good on both top line and bottom line.

So why buy on a pullback?

All of these stocks have been on a tear lately, hence their inclusion on our Trend Leaders list. Our experience is that most stocks stay on the list for a week or two and then drop off. These pullbacks are often good buying opportunities as the best stocks show up on the Trend Leaders list again shortly after. For example, UnitedHealth and Family Dollar are both repeat members of the Trend Leaders.

So browse through the table above and pick a few of these stocks for your watch list. Their value characteristics should help limit any downside and their momentum characteristics should eventually yield some good price gains.

Disclosure: no positions in any of the stocks mentioned in this post



Saturday, July 24, 2010

Value stock with a growth stock chart -- RLI could be worth a look

So how can a stock be on both the Trend Leaders list and the Trend Busters list? To review, the Trend Busters lists consists of those stocks or ETFs that have simply broken a trend line while the Trend Leaders list includes those stocks that are exhibiting bullish performance according to MACD, Wilder's DMI and Aroon analysis.

After running Thursday night's Alert HQ process, I have a stock that is on both of these lists and is also passing the screen for Reasonable Value. This company is RLI Corporation (RLI). Here is the chart :


I've drawn two trend lines in blue: a longer term trend that is sloping upward and which RLI seems to be following and a shorter-term downward sloping trend that the stock has broken through to the upside. The fact that RLI has burst upward out of the wedge formed by the two trend lines is another positive which suggests the stock could hit $59 before too long. All in all, pretty bullish performance.

Why is RLI considered Reasonable Value?

Here are my criteria for the Reasonable Value screen:
  • PE between 0 and16
  • PEG between 0 and 1.2
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
  • EV to EBITDA less than 10
Here are the stats on the company:

Market CapPE RatioPrice to SalesPrice to BookPEG RatioDebt to EquityPrice to Free Cash FlowCash Flow Yield Dividend YieldEV to EBITDA
$1.18B102.041.381.130.129.53-1.03%2.08%6.53

RLI meets all the Reasonable Value criteria, with room to spare.

Background --

RLI Corp. underwrites property and casualty insurance primarily in the United States. The company serves the commercial market almost exclusively and operates in three segments: Casualty, Property, and Surety. RLI insures things like office buildings, factories, apartment buildings, refineries, truckers and more.

The company beat earnings estimates earlier this week which allowed the stock to continue its upswing. RLI reported blow-out second-quarter 2010 operating earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.05 per share by 47 cents. These results also compare favorably with operating earnings of $1.32 per share in the year-ago period. Some of this quarter's earnings gain, however, came from reversing reserves set aside during prior years (the same trick the banks are playing this earnings season) but there were also organic gains from increased premiums and investment income. Underwriting income was $30.8 million, up 22.8% year over year, led by an increase in Property and Surety underwriting income, partially offset by a decline again in Casualty underwriting

A measure of profitability used by insurance companies to indicate how well they are performing in daily operations is the Combined Ratio. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in claims than it is receiving from premiums. For RLI, combined ratio for the quarter improved 480 basis points year over year to 74.7% driven by an improvement in Casualty and Surety combined ratios, partially offset by decline in the Property combined ratio.

Because the growth picture is somewhat murky with the Casualty segment lagging in underwriting and the Property segment's combined ratio failing to improve, Zacks maintains a Neutral rating on the stock. Similarly, Stifel Nicholaus has upgraded the stock but only from SELL to HOLD.

Conclusion --

RLI is a value stock with a growth stock chart. Caveats are that it is not unusual for financial stocks to pass the Reasonable Value screen and the company is seeing uneven results in two of the three segments in which it operates. On the other hand, the company is solidly profitable, raises its dividend on a regular basis and has been able to reduce costs year over year. I'm not an expert in analyzing insurance companies but the stock could be worth a trade.

Disclosure: no positions



Sunday, July 11, 2010

Heads up! -- 4 Reasonable Value stocks starting to break out

Here's another "Reasonable Value" screen run against Saturday morning's Trend Busters and Trend Leaders lists. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen (slightly tightened compared to previous posts):

  • PE between 0 and16
  • PEG between 0 and 1.2
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
  • EV to EBITDA less than 10
Today there are four stocks that pass this screen and they're all from the Trend Busters list.
Symbol Name Industry Last Price Market Cap PEPEGPrice To SalesPrice To BookDebt To EquityEV to EBITDA
ENDP Endo Pharmaceuticals Holdings Inc. Major Pharma-ceuticals $23.47 2.729B 9.57 0.62 1.83 1.78 0.2131 4.71
TDW Tidewater Inc. Marine Transportation $41.17 2.135B 8.13 0.18 1.81 0.86 0.1116 6.25
UNF Unifirst Corporation Other Consumer Services $44.63 866M 11.37 0.99 0.85 1.25 0.2542 4.9
SPR Spirit Aerosystems Holdings, Inc. Military/ Government/ Technical $21.12 2.972B 15.83 0.87 0.69 1.81 0.5472 7.17

Given that all these stocks are from the Trend Busters list, it means that they have all broken out above a downward sloping trend line. Let's take a brief look at each.

This first chart is for Endo Pharmaceuticals Holdings Inc (ENDP).


This stock has been on our list in the past based on a shorter-term steeper trend line. Today's trend breakout is illustrated by the blue line. You can see this breakout is definitive. Endo Pharmaceuticals makes branded and generic prescription drugs and recently acquired urological products company HealthTronics.

This next chart is for Tidewater (TDW):


The breakout is not so dramatic on this chart. The company provides supply vessels and marine support services to the offshore energy industry. The company's operations are worldwide. Management expects a decent year but the company could be vulnerable to a moratorium on deep water drilling in the Gulf. Luckily, the company has the ability to move vessels to other busier areas. Tidewater is dependent on the energy industry which, in turn, is dependent on a resurgence in the global economy.

Our third stock is Unifirst (UNF) and here is the chart:


This is a pretty encouraging chart as the stock has not only broken the down-trend, it has also moved above its 50-day moving average. Unifirst sells and rents uniforms and performs laundry services, etc. The financial situation is somewhat mixed. According to its last earnings report, revenues are up but income is down due to increased costs. Nevertheless, results exceeded analyst estimates and the stock popped. If the employment finally begins to improve, Unifirst will benefit.

Finally, we have Spirit Aerosystems Holdings (SPR).


Here's another one that made a definitive move above both the trend line and the 50-day moving average. What seems to be driving this reversal is an upgrade from a UBS analyst who wrote that the aerospace supplier will benefit from production increases at Boeing Co. and stability from a new union contract.

There you have it: four stocks with promising charts and value stock characteristics.



Sunday, July 4, 2010

7 day losing streak for the Dow but not every stock is plunging - value stock in the Ag sector is breaking out

After running Saturday morning's Alert HQ process I checked my "Reasonable Value" screen against the day's Trend Busters and Trend Leaders. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:

  • PE between 0 and 20
  • PEG between 0 and 1.3
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
Today there is just one stock that passes this screen and it's from the Trend Busters list. The company is CF Industries Holdings (CF). The following chart shows why the stock is a Trend Buster:


On Friday, the stock popped up above the bearish trend line (in green). It now sits just below its 50-day moving average. From a technical analysis point of view, the bullish breakout over the downward trend line is a positive but buyers would need to have confirmation by seeing.the stock move above that 50-DMA. Supporting the bullish case, MACD and Williams %R show a change in trend to the upside is in the making. This is further supported by Slow Stochastics (not shown above).

Background and Financials --

OK, now we know why CF is a Trend Buster. Let's look at why the company passes the "reasonable value" screen.

First of all, CF Industries is basically a producer of fertilizer, primarily nitrogen and phosphates. The company has a market cap of $4.6 billion, a trailing PE of 11 and a forward PE of less than 9. PEG is a mere 0.57 and the Enterprise Value / EBITDA ratio is less than 5. The Price-to-Sales ratio is 1.9 and Debt-to-Equity is nearly zero. All these measures suggest deep value.

I mentioned above that the company has a market cap of $4.6 billion. You might be interested to know that they are holding over $1 billion in cash. In addition, they pay an annual dividend of $0.60.

There's more good news from the point of view of fundamental analysis. Take a look at some of the measures calculated by my Trade-Radar software:
  • Annualized cash flow yield which, at 1.52%, is a little low but still positive
  • Cash flow to debt coverage is excellent
  • Survivability (debt less than 3 times EBITDA) is also excellent given that EBITDA is $731 million and debt is less than $5 million
  • Dividend is sustainable based on it being less than 60% of Diluted EPS which in the last 12 months was over $6
  • Management effectiveness is good based on the fact that Return-on-Equity and Return-on-Assets are both in the teens, 19% and 15% respectively.
  • Price-to-book is less than 2
All this points to a company that is financially quite sound and qualifies to be considered as a value stock. So why did the stock take such a hit before its recent upturn? The following chart from Google Finance has the answer:


The company has struggled during the economic downturn as demand and prices declined. Revenue, earnings and margins are all down. You may remember some of the high flying potash producer stocks from 2006 and 2007 that have since crashed. CF is not a potash producer, focusing as I mentioned above on nitrogen and phosphates, but its stock price followed the same trajectory. Driven by the big move into ethanol, planting of corn skyrocketed and the need for fertilizer followed. The growth in the market for ethanol has since slowed.

The outlook --

Back in June, the Department of Agriculture provided a bullish report on corn and soybeans. This is a positive for the fertilizer stocks because corn requires more kinds of fertilizer than many other crops. CF and others popped on the news.

Here are a few other items that suggest the recovery is real for CF.

Management's outlook during the first quarter conference call was bullish. They pointed to low costs for natural gas that conferred advantages for their nitrogen business and added they were exporting nitrogen-based fertilizers to Australia, Mexico and Chile. This is notable as their primary market is in the U.S. The negative aspect of first quarter results was the result of downward pressure on prices in both segments of the company's business.

Looking ahead, management points to reasonable prices for natural gas, increased corn planting, beneficial planting conditions and better expectations for the nitrogen business due to a pick-up in ammonia sales in April and even price increases in the ammonia business. The effects of ethanol are still being felt in the industry.Though the ramp up is not as extreme as in 2006 and 2007, ethanol production continues to slowly increase. This results in more corn planting and growing demand for fertilizer. Corn prices also seem to be in a range that are optimal for the fertilizer companies, encouraging farmers to plant corn and supporting fertilizer company margins.

CF Industries recently acquired Terra Nitrogen Company and the acquisition seems to be proceeding well with nitrogen sales in the first quarter coming in above expectations. Indeed, Terra reported improved net income despite falling prices. The combination of the two companies is also expected to yield efficiencies that will result in cost reductions.

Broadpoint AmTech reiterated a Buy rating on CF Industries on June 15, noting that "patient investors should take advantage of the pullback in fertilizer stocks." Nice call as the stock price more or less began its recovery around that time. Among others, hedge fund Passport Capital also maintains a position in CF.

If things play out as well as management projects, CF's stock price should continue the breakout that we see happening this week. Considering that the stock is well within the value range, any downside should be limited. If you are a value investor, CF appears to be an excellent candidate. If you subscribe to technical analysis, CF appears to show great potential in this case, as well. This is one stock that deserves a place on your watch list.



Wednesday, June 23, 2010

Humana tops our "reasonable value" list with some deep, deep value characteristics

After running Tuesday's Alert HQ process I checked my "Reasonable Value" screen against the day's Trend Leaders. For those of you who have not see one of my previous "Reasonable Value" posts, here are the criteria for the screen:

  • PE between 0 and 20
  • PEG between 0 and 1.3
  • Price-to-Sales less than 2
  • Debt-to-Equity less than 1
As Trend Leaders, each of these stocks is showing good up-trend performance according to MACD, Wilder's DMI and Aroon analysis. Today's list consists of the following four stocks:

Symbol Name Last Price Market Cap PE PEG Price-
To-
Sales
Price-
To-
Book
Debt-
To-
Equity
Cash Flow Yield Cash On Hand EV
-to-
EBITDA
DINE Rewards Network, Inc. $14.11 $124M 18 1.07 1.57 1.44 0 3.9% $14.5M 6.7
ENDP Endo Pharma-ceuticals Holdings Inc. $22.31 $2.6B 8 0.62 1.71 1.66 0.21 16.5% $848M 4.39
SKX Skechers U.S.A., Inc. $41.35 $1.9B 19. 0.83 1.26 2.44 0 3.4% $325M 10.42
HUM Humana Inc. $48.41 $8.2B 7 0.96 0.27 1.38 0.27 34% $8.5B 0.82

I had trouble squeezing the table into this post because I've added a couple of columns. Let's start with the column containing the ratio of EnterpriseValue-to-EBITDA, otherwise known as enterprise multiple. When this value is roughly around 6 or lower, it indicates a stock that is undervalued. By this measure, then, Sketchers begins to look less like a value stock. On the other hand, Humana looks like the deepest of deep value stocks.

I've also included Cash Flow Yield this time. All the companies look decent on this measure but now Endo Pharaceuticals and Humana stand out with very attractive numbers. Furthermore, Humana's CFY is more than twice that of Endo Pharaceuticals.

Finally, we have the Cash on Hand column. The definition I use here is Cash + Short Term Investments. According to Google Finance, Humana has  $8.5 billion in cash. Oddly, Yahoo Finance has the same number on their Key Statistics page but when looking at the Balance Sheet for the most recent quarter, Yahoo lists no Short Term Investments and thus a cash level of only $1.8 billion. So I'm not sure which number is right but consider the following: if Humana has the higher cash level, then you can buy the company for only slightly more than the cash on its books. You would get the rest of the company as a going concern for almost free. That would be value indeed.

Looking at today's list of reasonable value stocks, Humana seems to be the clear winner. These numbers beg the question, though, of why the stock should be so undervalued. Here are some factors that may have pressured the stock:
  • The latest quarter included a net 33 cents of gains from a reserve reversal. This is a good sign in that the reserve is no longer needed but it is a bit of a gimmick in terms of the effect on the income statement and a cheesy way to "make its numbers".
  • The commercial segment remains under pressure due to the high rate of unemployment and the shaky economic situation. Companies are unwilling to add health benefits and layoffs have reduced the ranks of the insured.
  • The commercial segment's pretax earnings increased 8% on the reserve mentioned above gain but enrollment fell 4% from a year earlier and 2.3% during the quarter. Losing customers is never a good sign.
  • The health care bill is now law and there are some analysts who feel that it will negatively impact Humana's participation in Medicare Advantage programs
Much of the negativity around the stock, therefore, is largely a function of the economic downturn. If you have a bullish outlook on the U.S. economy, this stock looks really ripe for a BUY. If you are downbeat on the U.S., the stock is still probably a HOLD since it's deep value characteristics suggest there shouldn't be much downside potential.

In any case, after peaking in February, the stock seemed to be consolidating and has now been moving strongly upward for the last 5 weeks.


The chart above shows that the criteria we use to designate a company a Trend Leader are all present: MACD, Wilder's DMI and Aroon are all still bullish. It does look, however, that these indicators are weakening. Does that mean a buying opportunity or further breakdown? You be the judge.

Disclosure: no positions in any companies mentioned in this post



Saturday, June 19, 2010

Value by Industry -- how do your favorite sectors stack up?

Today I ran a stock screen that looked at the ratio of "Enterprise Value" to "Earnings before Income Taxes, Depreciation and Amortization". This is known more simply as EV-to-EBITDA or the "enterprise multiple" and it is often used a measure of whether a stock is over-valued or not. The enterprise multiple looks at a firm as a potential acquirer would, because it takes debt into account - an item which other multiples like the P/E ratio do not include. The lower the enterprise multiple, the greater the potential that the company is under-valued.

For this screen I took the average value of EV-to-EBITDA across each industry and created the following chart. Within the 10 standard sectors we have a total of 201 industries represented.

Sector Industry Average EV-to-EBITDA
Capital Goods Building Materials 107.5
Capital Goods Building Products 95.7
Capital Goods Homebuilding 46.6
Consumer Non-Durables Farming/Seeds/Milling 39.9
Technology Computer Communications Equipment 37.7
Technology Semiconductors 36.5
Capital Goods Biotechnology: Laboratory Analytical Instruments 34.6
Consumer Services Consumer Specialties 32.4
Health Care Ophthalmic Goods 31.3
Consumer Non-Durables Environmental Services 30.6
Finance Real Estate 29.3
Capital Goods Electrical Products 28.5
Health Care Biotechnology: Biological Products (No Diagnostic Substances) 28.2
Consumer Services Hotels/Resorts 27.8
Consumer Services Building operators 27.5
Technology Industrial Machinery/Components 27.3
Technology Computer Software: Prepackaged Software 27.1
Energy Industrial Machinery/Components 27.0
Energy Oilfield Services/Equipment 25.0
Finance Investment Managers 24.8
Basic Industries Forest Products 23.6
Consumer Durables Diversified Electronic Products 23.1
Finance Finance/Investors Services 21.0
Consumer Services Television Services 21.0
Energy Oil & Gas Production 20.9
Consumer Services Advertising 20.8
Technology Radio And Television Broadcasting And Communications Equipment 20.7
Health Care Medical/Dental Instruments 20.3
Basic Industries Precious Metals 20.1
Consumer Non-Durables Motor Vehicles 19.3
Basic Industries Steel/Iron Ore 18.5
Energy Integrated oil Companies 17.7
Capital Goods Construction/Ag Equipment/Trucks 17.2
Technology Professional Services 17.1
Consumer Services Real Estate Investment Trusts 16.6
Technology EDP Services 16.5
Consumer Non-Durables Consumer Specialties 16.4
Health Care Biotechnology: In Vitro & In Vivo Diagnostic Substances 16.3
Capital Goods Ordnance And Accessories 16.2
Transportation Oil Refining/Marketing 16.1
Miscellaneous Business Services 16.0
Capital Goods Pollution Control Equipment 15.8
Technology Diversified Commercial Services 15.8
Technology Advertising 15.6
Technology Electronic Components 15.4
Consumer Services Catalog/Specialty Distribution 15.4
Miscellaneous Multi-Sector Companies 15.3
Technology Computer peripheral equipment 15.1
Basic Industries Major Chemicals 15.0
Consumer Services Real Estate 14.9
Consumer Services Movies/Entertainment 14.8
Capital Goods Railroads 14.6
Consumer Durables Home Furnishings 14.5
Capital Goods Metal Fabrications 14.4
Technology Computer Software: Programming, Data Processing 14.4
Consumer Durables Major Pharmaceuticals 14.0
Finance Diversified Commercial Services 13.9
Capital Goods Industrial Machinery/Components 13.7
Energy Consumer Electronics/Appliances 13.7
Consumer Non-Durables Recreational Products/Toys 13.6
Health Care Biotechnology: Electromedical & Electrotherapeutic Apparatus 13.3
Public Utilities Natural Gas Distribution 13.2
Technology Computer Manufacturing 13.2
Basic Industries Aluminum 12.8
Consumer Services Home Furnishings 12.8
Consumer Non-Durables Consumer Electronics/Appliances 12.7
Basic Industries Engineering & Construction 12.6
Consumer Non-Durables Packaged Foods 12.5
Energy Natural Gas Distribution 12.3
Capital Goods Auto Manufacturing 12.2
Transportation Railroads 12.0
Consumer Services Broadcasting 11.8
Consumer Services Diversified Commercial Services 11.8
Consumer Services Transportation Services 11.8
Consumer Services Consumer Electronics/Video Chains 11.7
Technology Retail: Computer Software & Peripheral Equipment 11.7
Miscellaneous Office Equipment/Supplies/Services 11.7
Consumer Services Other Consumer Services 11.6
Consumer Non-Durables Beverages (Production/Distribution) 11.6
Consumer Durables Publishing 11.4
Consumer Durables Industrial Specialties 11.4
Capital Goods Steel/Iron Ore 11.4
Basic Industries Metal Fabrications 11.4
Consumer Services Military/Government/Technical 11.3
Consumer Durables Telecommunications Equipment 11.3
Finance Finance: Consumer Services 11.3
Consumer Durables Specialty Chemicals 11.3
Consumer Non-Durables Meat/Poultry/Fish 11.2
Consumer Services Marine Transportation 11.0
Energy Metal Fabrications 10.9
Basic Industries Mining & Quarrying of Nonmetallic Minerals (No Fuels) 10.9
Consumer Durables Metal Fabrications 10.9
Consumer Durables Consumer Electronics/Appliances 10.9
Health Care Industrial Specialties 10.9
Health Care Medical Specialities 10.8
Miscellaneous Other Consumer Services 10.7
Consumer Services RETAIL: Building Materials 10.6
Consumer Services Paper 10.6
Miscellaneous Industrial Machinery/Components 10.6
Consumer Non-Durables Homebuilding 10.6
Basic Industries Miscellaneous 10.5
Public Utilities Water Supply 10.4
Capital Goods Tools/Hardware 10.4
Consumer Services Rental/Leasing Companies 10.4
Basic Industries Agricultural Chemicals 10.3
Capital Goods Electronic Components 10.3
Consumer Non-Durables Telecommunications Equipment 10.3
Consumer Durables Miscellaneous manufacturing industries 10.2
Health Care Precision Instruments 10.2
Consumer Durables Industrial Machinery/Components 10.1
Miscellaneous Home Furnishings 10.1
Consumer Services Automotive Aftermarket 10.1
Consumer Services Professional Services 10.1
Energy Electric Utilities: Central 10.0
Consumer Services Recreational Products/Toys 10.0
Capital Goods Aerospace 10.0
Health Care Hospital/Nursing Management 9.9
Consumer Non-Durables Food Chains 9.8
Consumer Services Services-Misc. Amusement & Recreation 9.7
Health Care Medical/Nursing Services 9.7
Consumer Durables Office Equipment/Supplies/Services 9.7
Transportation Air Freight/Delivery Services 9.7
Transportation Marine Transportation 9.7
Capital Goods Industrial Specialties 9.6
Consumer Non-Durables Electronic Components 9.6
Consumer Non-Durables Specialty Foods 9.6
Basic Industries Specialty Chemicals 9.6
Transportation Aerospace 9.6
Capital Goods Auto Parts:O.E.M. 9.5
Capital Goods Medical Specialities 9.5
Consumer Services Telecommunications Equipment 9.5
Capital Goods Specialty Chemicals 9.5
Consumer Non-Durables Apparel 9.5
Consumer Services Clothing/Shoe/Accessory Stores 9.5
Basic Industries Homebuilding 9.4
Basic Industries Telecommunications Equipment 9.4
Energy Oil Refining/Marketing 9.4
Capital Goods Automotive Aftermarket 9.4
Consumer Durables Automotive Aftermarket 9.3
Finance Finance Companies 9.2
Consumer Services Motor Vehicles 9.1
Consumer Non-Durables Package Goods/Cosmetics 9.1
Consumer Durables Building Products 9.1
Capital Goods Fluid Controls 9.1
Health Care Biotechnology: Commercial Physical & Biological Resarch 9.1
Basic Industries Environmental Services 9.0
Transportation Trucking Freight/Courier Services 8.9
Basic Industries Package Goods/Cosmetics 8.9
Consumer Services Other Specialty Stores 8.9
Miscellaneous Publishing 8.9
Consumer Non-Durables Shoe Manufacturing 8.9
Consumer Services Newspapers/Magazines 8.6
Capital Goods Containers/Packaging 8.6
Consumer Services Publishing 8.5
Public Utilities Oil/Gas Transmission 8.5
Health Care Other Pharmaceuticals 8.5
Public Utilities Environmental Services 8.4
Basic Industries Electric Utilities: Central 8.3
Consumer Durables Containers/Packaging 8.2
Finance Investment Bankers/Brokers/Service 8.2
Public Utilities Oil & Gas Production 8.2
Public Utilities Power Generation 8.2
Energy Coal Mining 8.1
Public Utilities Electric Utilities: Central 8.1
Health Care Medical Electronics 8.1
Technology Electrical Products 7.9
Consumer Non-Durables Plastic Products 7.8
Consumer Non-Durables Textiles 7.8
Finance Business Services 7.8
Basic Industries Paints/Coatings 7.7
Finance Life Insurance 7.6
Public Utilities Telecommunications Equipment 7.6
Consumer Services Restaurants 7.5
Transportation Other Transportation 7.5
Consumer Durables Steel/Iron Ore 7.5
Basic Industries Paper 7.5
Capital Goods Engineering & Construction 7.5
Capital Goods Military/Government/Technical 7.4
Basic Industries Home Furnishings 7.4
Consumer Services Farming/Seeds/Milling 7.2
Transportation Transportation Services 7.2
Finance Specialty Insurers 7.2
Consumer Durables Consumer Specialties 7.2
Consumer Services Office Equipment/Supplies/Services 7.0
Consumer Services Department/Specialty Retail Stores 6.9
Consumer Non-Durables Food Distributors 6.9
Consumer Services Books 6.8
Consumer Services Food Chains 6.4
Basic Industries Military/Government/Technical 6.4
Finance Property-Casualty Insurers 6.2
Basic Industries Textiles 6.0
Consumer Durables Electrical Products 5.9
Basic Industries Containers/Packaging 5.8
Finance Accident &Health Insurance 5.6
Capital Goods Marine Transportation 5.5
Technology Telecommunications Equipment 5.5
Consumer Durables Paper 5.3
Consumer Services Consumer: Greeting Cards 4.8
Consumer Services Homebuilding 4.1
Consumer Services Electronics Distribution 3.7
Basic Industries General Bldg Contractors - Nonresidential Bldgs 3.6

One interesting thing that jumps out at me is how the General Bldg Contractors - Nonresidential Bldgs industry is at the bottom of the list where the deepest value industries are found. But at the top of the list, where the most over-valued industries are, we see Building Materials and Building Products. It seems odd that the these industries would be at the opposite end of the spectrum. And then there's Homebuilding. With it's position way at the over-valued end of the list, it seems like residential construction is garnering much more investor enthusiasm than it deserves while commercial real estate is perhaps getting much less than it deserves. Indeed, REITs are less over-valued that those companies in the Real Estate industry. In any case, there seem to be some imbalances in investor perception in these industries.

Another over-valued industry is Semiconductors. As this is one of my favorite areas for investment, this gives me pause. On the other hand, semis are generally perceived to be growth stocks so I would expect them to score poorly on a screen like this but not as poorly as they are doing here.

So if you are a value investor, this list could give you a good jumping off point for focusing on attractive industries and avoiding over-valued industries.

Note: If you are interested in which companies are in which industry, here is a link to the NASDAQ web site that will allow you to download lists of companies on the NYSE, the NASDAQ and the AMEX: http://www.nasdaq.com/screening/company-list.aspx. Included in the data is the sector and industry of which each company is a member. Download the CSV files and open them in an Excel spreadsheet and all the data will be right there.




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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