The Benchmark Investing board has been closed by TMF. Future updates will only occur here in the Mechanical Investing board. This update is to Kenneth Lee’s
Benchmark Investing picks based on the latest Monday’s data release. Since our last update, the market took another huge step back, dropping another -9.4% since Q1.
This period there are four companies in the DJIA 30 that are below their downside price targets. They are CVX -24%, DOW -31%, MMM -16%, and WBA -30%. However, DOW,
MMM and WBA would not qualify as a BI pick because of subpar EPS growth EPS growth rate. CVX might soon once VL updates their financials. Stay tuned for updates
on this candidate. If you are interested in following along with this methodology against a broader range of stocks outside of the Dow30, these picks are
posted in my Fool CAPS on a regular basis as trades occur. New this year will be updated returns for the BI Portfolio. I will start the year assuming each holding is in an equal
amount beginning Jan 1.
<b>Current BI Portfolio Holdings:
13 Holding in BI Portfolio: EOG, TAP, DXC, NWL, BEN, META, AMZN, PXD, MS, CAH, IVZ, LKQ, KMI
BI Portfolio Total Return -6.6%
S&P 500 Total Return -17.7%</b>
**Market Valuation (Dow 30):**
The DOW30 market is still overpriced according to the BI method of valuation by about 20%.
Downside: -35%
Upside: -6%
**Long Buy Rules:**
I am using the following TTD rules for Long position considerations:
1. Year-over-Year EPS growth must > 10%, which are the next 4Q / current quarter + previous 3 quarters earnings results
2. VL 3-5 Year price appreciation > average price appreciation of the market
3. When calculating ROE and BV figures, ignore years when they are negative, but must have at least 7+ years of data to be included in final consideration
4. Avoid erratic ROE ratios, that is where they are > 2std deviations = Curr ROE > (10 Year Avg + 2 * Std Dev)
5. ROE and BV current figures must be updated by VL
**Sell Rules:**
I am using the following TTD rules to Sell Long positions:
Criteria (1 OR 2 OR 5, AND 3 AND 4):
1. Price Appreciation < Market Average Appreciation
2. Current Price > BI HiPrice
3. Hold time > 365 days per cycle
4. ROE & BV must be current
5. No longer listed as a market average component
**Summary of Results**
VL Current ROE/BV Down Up %<10Y %<10Y EPS Div 3-5Y 3-5Y VL3-5Y VL18mo ROE
Ticker Date Price Updated Price Price Down Down4Qs Delta Yield VL L$ VL H$ % Chg % Chg <2STD Name
CAT 13-May-22 185 TRUE 152 230 22% 24% 17% 2.6 215 290 34% 33% FALSE Caterpillar Inc.
JNJ 13-May-22 182 TRUE 179 229 2% 23% 5% 2.6 220 265 37% 13% FALSE Johnson & Johnson
MCD 20-May-22 248 FALSE 5% 2.3 270 330 23% 30% TRUE McDonald's Corp.
CVX 27-May-22 145 TRUE 191 265 -24% 14% 42% 3.9 125 190 6% 33% FALSE Chevron Corp.
BA 3-Jun-22 142 FALSE 121% - 205 305 85% 32% TRUE Boeing
TRV 3-Jun-22 167 TRUE 123 163 36% 45% -16% 2.3 225 275 53% 20% FALSE Travelers Cos.
UNH 3-Jun-22 496 TRUE 311 477 59% 77% 17% 1.4 480 585 8% 39% FALSE UnitedHealth Group
AMGN 3-Jun-22 245 FALSE 68% 2% 3.4 320 390 47% 9% TRUE Amgen
VZ 10-Jun-22 50.96 TRUE 51 65 0% 3% 0% 5.1 90 115 101% 21% FALSE Verizon Communic.
CSCO 10-Jun-22 44.1 TRUE 36 51 22% 28% 1% 3.5 70 90 83% 28% FALSE Cisco Systems
HD 17-Jun-22 283 FALSE 4% 2.9 380 460 56% 42% TRUE Home Depot
PG 17-Jun-22 144 TRUE 103 137 40% 46% 5% 2.6 135 165 8% 25% FALSE Procter & Gamble
INTC 24-Jun-22 38.61 TRUE 32 47 20% 7% -30% 3.9 65 80 93% 27% FALSE Intel Corp.
AAPL 24-Jun-22 142 TRUE 80 140 78% 83% 2% 0.7 170 210 40% 46% FALSE Apple Inc.
IBM 24-Jun-22 142 TRUE 91 125 55% 43% 5% 4.8 125 170 7% 0% FALSE Int'l Business Mach.
DOW 1-Jul-22 53.14 TRUE 77 129 -31% -10% -17% 5.5 105 160 153% 34% FALSE Dow Inc.
MRK 1-Jul-22 93.13 TRUE 82 110 13% 26% -1% 3.1 115 140 43% 19% FALSE Merck & Co.
HON 8-Apr-22 180 TRUE 133 185 35% 41% 10% 2.2 220 270 37% 29% FALSE Honeywell Int'l
MMM 8-Apr-22 134 TRUE 160 222 -16% -13% 6% 4.6 220 270 87% 33% FALSE 3M Company
GS 8-Apr-22 303 TRUE 265 404 14% 26% -27% 2.8 470 635 94% 31% FALSE Goldman Sachs
CRM 8-Apr-22 186 TRUE 60 99 208% -29% -22% - 245 370 83% 42% FALSE Salesforce Inc.
KO 15-Apr-22 63.04 TRUE 45 57 39% 42% 3% 2.9 60 75 10% 18% FALSE Coca-Cola
WBA 22-Apr-22 41.65 TRUE 60 87 -30% -30% -20% 4.7 70 100 110% 22% FALSE Walgreens Boots
WMT 22-Apr-22 124 TRUE 106 143 17% 27% 10% 1.9 200 240 82% 34% FALSE Walmart Inc.
NKE 22-Apr-22 113 TRUE 96 147 18% 31% 16% 1.2 170 210 81% 59% FALSE NIKE Inc. 'B'
DIS 29-Apr-22 97.78 TRUE 60 86 64% 41% 229% - 155 210 95% 54% FALSE Disney (Walt)
JPM 6-May-22 117 TRUE 105 151 12% 21% -12% 3.7 145 195 47% 38% FALSE JPMorgan Chase
AXP 6-May-22 146 TRUE 128 189 14% 27% 5% 1.4 185 225 41% 18% FALSE Amer. Express
V 6-May-22 206 TRUE 175 250 18% 34% 19% 0.8 285 345 62% 41% FALSE Visa Inc.
MSFT 6-May-22 268 TRUE 188 294 42% 73% 12% 1.0 320 390 40% 41% FALSE Microsoft Corp.
<b>Dow30 31,502 20,364 29,518 2.6 39,940 51,111 Dow Jones Industrial Average
Appreciation Potential -35% -6% 27% 62% 58% 30%</b>
**AllTooFoolish's CAPS Portfolio:**
If you are interested in seeing this method applied to a broader universe of stocks, follow my actively managed Benchmark Investing portfolio
using Fool CAPS. I have been using this methodology exclusively in [Fool.com](http://Fool.com) for many years with great success. In the Fool CAPS you will find
my current portfolio and can see my most recent activities.
Notable activity in my active CAPS portfolio over the past three months:
DISCA, Sell, no longer tracked since merger with Warner (ticker now WBD)
FB, ticker change to META
PFE, Sell, less upside than overall market potential. I don't get this upside potential. Seems like much higher prices should be in order.
2022 BI Portfolio Holdings:
15 Holding in 2022 BI Portfolio: EOG, PFE, TAP, DXC, NWL, BEN, META, AMZN, PXD, WBD, MS, CAH, IVZ, LKQ, KMI
BI Portfolio Total Return -6.6%
S&P 500 Total Return -17.7%
My overall Fool CAPS Rating at the time of this post was 57 (+2 points since previous update)
Score: 1529 (62%)
Accuracy: 45% (47%)
**Disclosures and Useful Terms**
VL Date is the date of the last summary report update from Valueline as indicated in the post’s subject line.
All data sources from Valueline Dow30 reports made publicly available on the VL website. [https://research.valueline.com/research#list=dow30&sec=l...](https://research.valueline.com/research#list=dow30&sec=list)
Current Price is the closing price of the stock as reported by VL, which is usually a few days behind the date
of the time period mentioned in this posting’s subject line.
ROE/BV Updated is an indication if the stock’s BV and ROE have been updated through the end of the Benchmark evaluation time frame.
10Yr Down is the 10 year downside price. The company must have at least 7 years of non-negative ROE data to qualify.
10Yr Down4Qs is the 10 year downside price averaged over the previous 4 quarter’s valuation price.
10Yr Up is the 10 year upside price. The company must have at least 7 years of non-negative ROE data to qualify.
Both upside and downside are calculated using method outlined in TTD book.
Also a discussion of calculating the upside and downside can be found here:
[http://discussion.fool.com/Message.asp?mid=20916205&sort=who...](http://discussion.fool.com/Message.asp?mid=20916205&sort=who)...
%<10Y Downside is the current price divided by the 10 Yr downside expressed as a percentage.
EPS Future Delta is the projected growth in EPS for the next 4 quarters versus the last four reported quarters.
I use the latest EPS data from the VL spreadsheet which are updated as soon as new earnings are reported.
Div Yield is the current % dividend payout ratio per share.
3-5 Y Low/Hi Price Est. is the downside/upside price estimate which is calculated using the projections of Book Value
and ROE as discussed in TTD.
Min VL Price Appreciation is the expected change in price from current price to low end VL projected 3-5 year
appreciation price.
VL Price 18 Price Appreciate is the VL projected % change in price from current price within the next 18 months.
ROE >2STD is part of a margin of safety consideration, which is briefly discussed in TTD on pg 70-71.
I compare the current year's ROE versus the last 10 years of ROE data. If the current ROE is greater than average (10 Yr
ROE) + (2 * stdev(10 Yr ROE)),
than this column is TRUE, else it is FALSE. This tells me that the stock's ROE is much higher than its historic average and should therefore be avoided.
11 Likes
Why did they close it? It is investing related.
1 Like
I think they closed all boards that were book related or perhaps due to the low level of activity. But I wasn’t given a reason. I just noticed they closed it.
1 Like