Calling a bottom?

[SaulR80683]

Last weekend, in my post “Stock Market Thoughts”, http://discussion.fool.com/stock-market-thoughts-31253459.aspx, my second thought was I think most of my stocks have now bottomed and are finished with this ridiculousness. Now, I want to say that if I happened to have nailed the bottom, it was mostly just luck, as there have been earlier times I thought this was ridiculous too, but this is the first time I said it was the bottom and it does look like I might really have hit it.

Let’s see, every time the S&P 500 has gotten close to 1900 it’s had a panic attack and sold off, but Friday it closed over 1900 for the first time (barely). Doesn’t prove anything but it’s better than a kick in the face.

And here’s what I wrote last weekend about my stocks (in italics) followed by what happened this week. Let’s see how I did.

AFOP bottomed 3 months ago at $11.50 and is holding in the $18 range in spite of the sell-off, closing Friday at $18.37. - Closed this week up $2.50 at $20.89, so right on that one (for now anyway).

AMBA hit bottom last Friday, closing at $22.50, and finished this week up 7% at $24.05 - Closed this week up $1.85 at $25.90, so right on that one, too.

BOFI seems to have hit bottom at $73.50 five weeks ago. With the great earnings since, they’ve been back up to $86 and the shorts have continued to push, but they closed this week at $75.25. This is one of my highest conviction stocks. If you have any question, read Fletch’s commentary on their quarter. - Closed this week up $3.75 at $79, so right on that one, too.

CALL actually closed the week at $15.07 (I even bought some at $14.76). With adjusted earnings of $2.64 that gives them a PE of 5.7!!! With a bunch of young guys enthusiastically recreating the company, if you see a lot of downside at this price, let me know what hallucinogenic you’ve been smoking. - While enthusiastic about this one, I didn’t call a bottom, and it dropped 70 cents. We’re getting close.

CELG bottomed 6 weeks ago and has moved up a little every week since. - Closed this week up $2.80 at $150.10, so right on that one, too.

CSGP dropped from $215 to about $155 five weeks ago. It closed this week at $154. That seems like it’s been making a bottom. - Yes! Up $7.70 at $161.35, so very right on that one, too for now at least.

HZNP is a long way down from its high of $17.37 to its current price of $12.88. It must be because its sales only quintupled (!) year over year to $52 million from $9 million, and only up 74% sequentially (!) from $30 million. (And earnings of positive 13 cents, up from a loss of 30 cents a year ago and a loss of 4 cents sequentially). Pretty mediocre!!! - I didn’t call a bottom one way or another on this one but it closed up 58 cents at $13.46.

JCOM, and KRED don’t seem to have been especially affected by the sell off, and are doing fine. - I didn’t call anything on these two. JCOM was up and KRED (my tiny position) was down.

MTZ went from a high of $44 to a low of $38, mid-week last week, if you call that a self off? It’s now at $39.50. - This is an example of why I used stocks that hadn’t sold off for cash. MTZ hadn’t sold off much, so didn’t go up this week, finishing down 80 cents.

P got clobbered in the sell-off getting as low as $22.20 on a daily close a week ago. (I actually bought some at $21.95). They closed this week at $23.40 but I can’t be sure they have hit bottom yet. - Looks as if they did. Finished up $2.15 at $25.55.

PFIE is doing fine. Didn’t sell off much. I’ve been buying a lot to build a position. - Similar to MTZ, didn’t sell off much and was only up a penny on the week

PSIX has been trading between $70 and $86, up and down for 11 weeks now, Moving $8 to $12 up or down each week, but not going out of the range. - Up $7.25 (!) on the week, but still in the range.

SCTY is hard to tell. They closed as low as $47.75 one day last week. This week their low close was Friday, at $50.20. Hard to say if they have bottomed. - I didn’t call a bottom, but they were up $1.85 to $52.05.

SYNA simply never went down much. - Similar to MTX and PFIE, didn’t go down much and was down a tiny 35 cents on the week

SZYM dropped all the way down to $9.09 a week ago because their factory in Brazil was delayed. (It was as high as $14.70 nine weeks ago). They have enormous potential, and I view this as incredibly shortsighted and short-term thinking. I think it’s a great price right now (closed this week at $9.21) - Up 20 cents on the week to $9.41, but it’s all about when they open their Moema factory!

UBNT bottomed and bounced. I was able to buy at $32.30 last week and then $30.95 this week. It closed this week at $34.40. - And this week at $34.20. (Never got close to its lows of the week before).

WAB never really sold off. I love the company but I sold a bunch of my position to buy some of these other things. - Finished up $2.60 at $77.

Z never really sold off, but I bought some more this week anyway, being very impressed by their earnings report. - They finished up $13 at $119.80

And I used my last shred of cash to buy back a truly tiny (one quarter of one percent position, that’s all the cash I had and I didn’t want to sell any more of my WAB) in TSLA this week at about $193.50. This was my only trade of the week so it was a more normal week than the ones I described several weeks ago. It finished at $207, so right on that one too.

I really didn’t do too badly on calling the bottom, if it sticks. I know enough about the market though to know it can do irrational things, and all this could break down again. We’ll have to see.

Saul

[dumaflotchie]

Saul:

The bottom hasn’t been hit.

There are at least four main macroeconomic forces that favor more downward momentum IMO:

1. quantitative easing is coming to an end and M2 is likely to pressure stocks downward.

2. interest rate hikes are coming and such hikes will pressure stocks

3. summer doldrums is upon us.

4. the Buffet valuation indicator of stock market cap to GDP is overvalued.

You may argue that individual stocks can do better than the market but I would argue that the general market trend is more powerful and many of your stock selections have high Betas and will fall a greater proportion.

So IMO, these macroeconomic considerations urge caution and at the very least retaining some % of portfolio as cash to take advantage of pricing pressures in near term.

[SaulR80683]

Hi Duma,

You certainly may be right. I certainly have no special skills in predicting general market trends. And a downturn will come eventually. It always does. But it may be after the market has risen quite a bit from current levels.

I’m aware that your position about a correction coming is very popular currently, which is a reason I think it may not happen.

People have known that quantitative easing is coming to an end for so long now that it’s not even “old news”. You’d have to agree it’s “ancient news”. Anyone who doesn’t know about it yet must have been hibernating, and anyone who plans to act on it and hasn’t yet must be in a coma. People have been warning about rising interest rates for so long now it seems like years. It probably is years. (And anyway, in times of rising interest rates, slow-growing dividend stocks are hit as bonds directly compete with them for those interested in income, but growth stocks, as the only source of growth left, tend to keep doing well for some time after interest rates start rising, which hasn’t even started yet).

And the economy is growing with basically no sign of slowing down. Short corrections can come any time and they finish quickly and stocks return to their previous levels. Bear Markets almost NEVER start without an economic recession preceding them. Do you see any sign of a recession?

As for “summer doldrums”, I have to assume you were being humorous as I can’t believe you would consider the month of the year as an investment indicator. (You know: 53% of the time down means 47% of the time up, etc).

As for the Buffet Valuation Indicator, here’s what Buffet said about stocks in November (6 months ago) when the S&P 500 was roughly 1800. (It’s now 1900).

“I would say that they’re in a zone of reasonableness. Five years ago, I wrote an article for The New York Times that said they were very cheap. And every now and then, you can see that that they’re very overpriced or very underpriced. Most of the time, they’re in an area where maybe they’re a little high, a little low, and nobody really knows exactly. They’re definitely not way overpriced. They’re definitely not underpriced.”

I could just say 1900 is in the same range as 1800 and let it go at that. (It’s just 5.5% more actually, but let’s take into consideration that the GDP grows roughly 3.0% per year. Therefore the GPD it has grown roughly 1.5% since Buffet’s speech, so the current S&P of 1900 is only up 4% from levels that Buffet said was a zone of reasonableness. Anyone who bases a sell decision on that is exaggerating a bit.)

Again, I don’t time the general market, I’ve been positive through every recession except 2008, I stay fully invested, and I do see possible indications that my stocks have hit bottom.

Best,

Saul

[dumaflotchie]

Hey Saul:

Beyond those issues I mentioned, there are other supporting elements to a down market trend.

For example, you point out that the removal of quantitative easing has been known for some time which is of course true. But…there is no real fear in the market as you have suggested…in fact if anything, there is complacency. Look how we are at a 2 year low on the VIX:

http://finance.yahoo.com/q/bc?s=%5EVIX&t=2y&l=on&…

Check out this chart on historical market cap to GDP:

http://www.vectorgrader.com/indicators/market-cap-gdp

Or one could look at the PE10 here:

http://advisorperspectives.com/dshort/updates/PE-Ratios-and-…

And yes as regards the summer doldrums, there is pretty good data to support this:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2154873

All this said, I am not a money under the mattress investor either. My only point is a word of caution that by no single measure that I am aware of at ThIS time, do we see a significant margin of safety with stock investments. In fact, we see just the opposite on almost every measure.

A fear mongerer would be out of the market here. I am more espousing keeping some % of cash available to take advantage of what seems likely lower prices in near term. Nothing is more disheartening then to be 100% invested and be subject to all down investments such that one only has a reallocation strategy rather than deploying new money into potential bargain hunting.

Take all this with a grain of salt which is of course more than it is worth.

[SaulR80683]

I had never heard of the VIX, which I learned is an index of volatility. When I googled it the first article I found was from a public article from Barrons, published on a couple of days ago, and by a guest columnist who was an expert on the VIX index.

Here are excerpts from it. It certainly doesn’t sound as if a low VIX is something for us to be imminently worried about.

Saul

Low Volatility: How To Profit From a Quiet VIX…

By Bill Luby
May 22, 2014
…The problem with using volatility extremes as an indicator is the asymmetrical nature of those extremes. VIX spikes are generally short-lived, and when those spikes are over, the VIX typically mean reverts (returns to previous trading range) in a matter of days. A low VIX, however, often persists for extended periods. This was the case from 1992 – 1996 and again from 2003 – 2007, when anyone who reasoned that it would not be possible for the VIX to remain at historically low levels discovered that the VIX is capable of remaining below 20 for at least 18 months in a row…

With the VIX in the 12s, we hear a chorus of complaints about how the VIX is broken, unresponsive or no longer relevant.

The truth is that investors are being short-sighted when they turn their frustrations toward the VIX….a VIX of 12-13 is right in line with historical norms. Once you consider that uncertainty related to the Fed and Ukraine is on the decline, the relentless selling in momentum stocks is subsiding, and there is little in the way of new threats related to China and Europe, then it is difficult to make the case for a significantly higher VIX, at least in terms of what Donald Rumsfeld referred to as “known unknowns.”

As I see it, the current penchant for being fearful of too much complacency is misplaced. Historically, equities have performed well in low-volatility environments… In other words, those seeking to profit from low volatility may be better served by simply buying stocks…

No matter what your market outlook, however, do not make the mistake of thinking that the VIX is no longer relevant, and be careful when it comes to equating a low VIX with complacency. The VIX has closed below 13 some 964 times – and almost all of these instances have been in the middle of a bull market.

Guest columnist Bill Luby, a veteran volatility trader, publishes the VIX and More blog and serves as Chief Investment Officer of Luby Asset Management, LLC.

[dumaflotchie]

Thanks Saul.

I don’t want to get into articles battling Vix or any other indicator. We most certainly can go on for sometime doing just that.

Rather, my point is that most if not all “indicators” and macroeconomic conditions are not favoring a big bull run.

Take it or leave it…everyone is a master of his domain.

oTOH…if we do get a big bull run…I will now include the “Saul Index” in my analysis for the future

[SaulR80683]

It’s amazing. I never heard of the VIX until Duma posted about it and, by coincidence, I received an article by my favorite “common-sense” analyst on the VIX index in my email today. I cut it down considerably. the bolding is mine.

Saul

Look Out Below! Fear at All Time Low

by Mitch Zacks, Senior Portfolio Manager

With the S&P 500 hitting new highs it is very important not to become complacent. As I have said numerous times before, when the market hits new highs it is generally an indication that more new highs are in store. Nevertheless, I am becoming concerned about the low levels of expected risk across the market.

One very reasonable way to measure market risk is to focus on the VIX index. When people trade options on stock indexes (think calls or puts on the S&P 500), there is a method developed by a Nobel-prize winning economist called the Black-Scholes Formula that determines the theoretical price of a call or put option…. If the Black-Scholes formula is used somewhat backwards and the actual price of call options on the S&P 500 is entered into it, we can solve for the volatility that is expected by the price of the call option. This expected or implied volatility forms the basis for the VIX index. In other words, the market for call options on the S&P 500 is creating an estimate for what the overall market believes is going to happen with regards to the future volatility of the S&P 500…

The Danger of Low VIX

Last week, the VIX index reached its lowest level since before the eve of turmoil in 2007 that preceded the crash of ’08. Should we be cheering? …Doesn’t the low VIX level indicate that investors do not expect the S&P 500 to bounce around that much in the future?

The answer is yes, that is exactly what the option markets are telling us. The problem is that what has historically happened is the opposite….So periods of low expected volatility are often followed by periods of high-realized volatility and vice versa. Looking at the VIX over the past ten years, I see that when the VIX gets too low it often shoots up in the future. Similarly, when the VIX gets too high it often falls.

My conclusion is that we are overdue for a spike like we saw in’08, ’10 , and ’11. It comes back to the belief that things have been too calm for too long in the equity markets. We are due for a spike in volatility, which almost always accompanies selling in the market….When the VIX gets low you bet that there will be a spike, when the VIX spikes, you bet it will return to normal.

Where Are We Today?

….Now is not the time to be chasing high-beta stocks. It is better to be buying Wal-Mart( WMT ) than Facebook( FB) as Wal-Mart is going to hold up much better when volatility spikes than Facebook. As I have always said I do not believe in market timing. It is a fool’s game that results in underperformance. You may time the market correctly one or two times but over long periods you underperform the indexes.

It is important to recognize that the VIX can be low and remain low for several years. Yes, we know that a spike in volatility will eventually happen but it the timing is not clear. We don’t know when the spike will occur or how long it will last. For this reason, I do not think that equity allocations should be changed based on the low VIX reading.

In the long run, it is a fact that the more you allocate to equities the better your returns. The key is to stay constant in terms of equity exposure over long periods of time.

Individuals who were 70% in equities and 30% in fixed income prior to the ’08 crash and maintained that exposure did fine as the market recovered. Similarly, individuals who were allocated to 30% equities and 70% fixed income prior to the crash also did fine over time if the equity allocation was not changed after the market collapse of ’08.

The individuals whose portfolios were damaged and who never recovered from the ’08 crash were those that switched from a 70% equities 30% fixed income to a 30% equities 70% fixed income following the market collapse.

The Key to Making Money in the Market

Try and maintain an equity allocation as high and as long as you possibly can stomach and don’t react to market fluctuations. Of course, this is much easier said than done.

As I indicated last week, the market is likely due for a breather. The VIX is signaling it, and various valuation metrics are signaling it as well. So what should you do? The answer is absolutely nothing.

Don’t increase equity exposure but by the same token don’t decrease equity exposure. Just be prepared for the VIX to spike, and the market to sell-off. This must happen at some time in the future. When this does materialize the key is not to react to the selling. As always keep the eye on the long-game, over long-periods of time the market trends upward.

-Mitch Zacks

Attribution: Mitch also is a Portfolio Manager for the Zacks Small Cap Core Fund ( ZSCCX ).

To contact him by mail: ?Zacks Investment Management ?Attn: Wealth Management Group ?One South Wacker Drive, Suite 2700 ?Chicago, IL 60606

[SaulR80683]

Rather, my point is that most if not all “indicators” and macroeconomic conditions are not favoring a big bull run.

Duma,
I’m not saying anything about a big bull run. But this just doesn’t feel like a market top, whether or not there’s a lot of “volatility”. All the talking heads have been calling for a correction. Everyone expects one. No one, but NO ONE, is predicting a big rise from here. The bubble in momentum stocks burst eight weeks ago, and has already deflated. Your neighbors are not coming over to tell you about the best stock to buy. Most people I know are licking their wounds. Sorry, but if this is a market top it’s the strangest one I’ve ever seen.

And I’ve been through a lot, including the Interent Bubble. When the favorites like AMZN and YHOO were rising $30 per day, three days in a row, and analysts were saying what bargains they were because they were only 200 times sales when other internet stocks were 400 times sales. And everyone I knew had an opinion on the best high flyers to own. Now, there was a market top. This feels nothing, NOTHING, like that.

Sorry

Saul

[buynholdisdead]

It’s amazing. I never heard of the VIX until Duma posted about it and, by coincidence, I received an article by my favorite “common-sense” analyst on the VIX index in my email today. I cut it down considerably. the bolding is mine.

Saul

Saul, that tells me you don’t listen to all the traders on MSNBC because they are always talking about the VIX. Your a really smart man because alot of that MSNBC will just clog your mind.

Andy

[Mykie]

Attribution: Mitch also is a Portfolio Manager for the Zacks Small Cap Core Fund ( ZSCCX ).

Hi Saul,

I’m in quite a different category than you are when it comes to investing. I would guess, small caps are your meat and potatoes and you do very well with them but for me, I just began learning what’s a small, medium and large cap.

I have been thinking about buying a small cap index fund to park in the corner of my portfolio and to use as an indicator of how I am doing with my small cap picks. I really have no desire to work hard, only to find out some fund is out there doing it much better than I.

Do you own the ZSCCX fund? I know there are lots of small cap funds and usually I lean towards Vanguard since their expenses are so much lower than the rest.

Of course, the final decision is mine so feel free to skip the caveats.
Mykie

[XMFgoLong]

I really like Mitch’s columns. That dose of common sense is very useful. Some day, I am going to try out one of their service offerings.

Thanks Saul for sharing.

Anirban.

[SaulR80683]

I have been thinking about buying a small cap index fund to park in the corner of my portfolio and to use as an indicator of how I am doing with my small cap picks. I really have no desire to work hard, only to find out some fund is out there doing it much better than I. Do you own the ZSCCX fund?

Mykie,

As I noted elsewhere, I don’t own any mutual funds because I know that I can beat them in the long run. Here’s what I wrote:

10. You can beat any mutual fund over the long run. You can’t tell much from a mutual fund’s results because you are always buying last year’s results. For example, if it’s a oil company fund, and last year oil stocks were in, it will show great results, but this year it could do terribly. Also, you are always buying the results they had when the fund was much smaller and nimbler than it is now (because those good results they had when they were tiny made people pour money in).

When I first started out I put part of my money in stocks and part in carefully chosen small mutual funds with great records. The small mutual funds got bigger, and the stock part of my portfolio always won out, though not always by a lot. I gradually got more confidence and after a few years eliminated mutual funds altogether.

On the other hand, Mitch Zacks is a bright guy, and if you want to put part of your money in his fund to see how it goes, I’d be interested to hear how it works out.

Saul

[landi7]

Hi, Saul

I did not see PFIE listed in your holdings in your post of 3/29; do you have notes or a post about it? Thanks

Andy

[Mykie]

On the other hand, Mitch Zacks is a bright guy, and if you want to put part of your money in his fund to see how it goes, I’d be interested to hear how it works out.

Thanks Saul,

Now, if it were you, how do you determine when it’s a good price to enter? Do you wait for a certain PE, or dip in the market or how would you process this purchase?

Thanks and happy Memorial Day
Mykie

[SaulR80683]

Now, if it were you, how do you determine when it’s a good price to enter? Do you wait for a certain PE, or dip in the market or how would you process this purchase?

Mykie, I’m not sure I understand. If you are thinking of investing in the mutual fund, it doesn’t have a PE as far as I know. If I understood what you wanted to do, you just buy it tomorrow and note the value of your stocks, and then, six months or a year later, you check which did better, the mutual fund or your stocks.

Saul

[SaulR80683]

Hi, Saul, I did not see PFIE listed in your holdings in your post of 3/29; do you have notes or a post about it? Thanks, Andy

Andy, Here are my notes

Saul

Profire PFIE

Apr 2014 – Walter’s recommendation (http://www.growthstockinsider.com)

PFIE ($3.50) is the leading provider of automated burner management systems used by oil and gas producers to remove contaminants after the energy is pulled up from the ground. The products are also used to clean up oil and gas while in transit.

Most U.S. wells employ manual systems that require workers to relight a unit if the flame is extinguished. Profire’s machines monitor the burners with computers. That allows operators to adjust the flame density automatically as the amount of oil and gas increases or diminishes. The systems also relight the units if they go out.

Canadian regulations require automated units like Profire’s to improve worker safety. The U.S. hasn’t implemented these rules yet. Dozens of American workers continue to be blown up every year using the old technology. A growing contingent of U.S. producers are adopting Profire’s automated approach not only to enhance safety, but to improve efficiency and generate environmental benefits, too.

Profire originally was a service company that focused on burners and other oilfield equipment. The company saw the opportunity to automate the process and developed its own technology in the late 2000s. Sales initially addressed the Canadian market due to the regulatory tailwind there. Initial success led to expansion in the United States.

The transition to becoming a manufacturing company wasn’t seamless. Financial performance was inconsistent prior to the current fiscal year (March). But Profire emphasized product development and customer service despite the ups and downs, enabling it to become the industry leader by a wide margin. Less than 5% of the potential market has been penetrated to date.

That market continues to expand at above average rates as North America becomes the #1 energy producing region in the world. And Profire is ensconced as the industry leader. The company holds 65%-70% of the market today, and that figure is continuing to rise.

Growth has accelerated in response to expanding U.S. adoption. Sales are on track to more than double to $35 million in the fiscal year which ended in March. Margins have recovered from last year’s decline, supporting a likely 400% expansion in profits to $.15 a share.

Regulatory uncertainty caused a hiatus in Canadian sales for a large part of last year. Profire also misplayed its sales force expansion in the United States. The U.S. situation was resolved by the time the current fiscal year began. That paved the way for the explosion in sales. The Canadian business has bounced back but remains less vibrant than it might be. Regulations exist but have been enforced inconsistently, encouraging some drillers to employ alternative (non-automated) solutions. The lack of pipeline capacity has impacted production in Western Canada, as well.

Geographic expansion promises to sustain growth at superior levels. Profire covers a small portion of the U.S. market presently. New offices are being opened at a fast clip in North Dakota, Texas, Oklahoma, and Pennsylvania to provide deeper hands-on coverage.

The sales force has doubled over the past six months. That group promises to make significant contributions in the June quarter and become fully operational in the Sept and Dec quarters.

Relationships with OEMs are being expanded. About of 25% of sales are made to makers of complete systems that are installed at the well site. Most of the rest go to installation companies that buy parts from multiple manufacturers and assemble them. About 25% of sales are retrofits to existing systems. International sales remain low but distribution channels have been established in Brazil and Australia. Efforts recently were initiated to enter the Middle East and other high potential international markets.

New products will be introduced on a regular basis. Profire is upgrading its systems with the latest semiconductor technology to facilitate remote software updates. The line is being extended to more upstream applications, as well. Several large non-energy industries employ old fashioned burners, moreover. Profire believes its next generation systems could penetrate those markets, probably in conjunction with resellers who already have marketing relationships. Ancillary products are being developed, too.

Approximately 30% of sales are comprised of third party items like valves and regulators. Margins are good on those sales. But they will be even better once Profire starts manufacturing them in-house.

Prices may increase in the upcoming fiscal year. Current units sell for $2,000-$3,000 apiece, depending on the number of features included. The average well produces $50,000-$100,000 a day in revenue. Manual re-light systems can go dark for days at a time until a worker swings by and starts up the unit again. That normally entails putting a lighted rag on the end of a stick, and inserting it into the burner. Profire’s computer based machines are more economical even when the flames don’t go out. Older units keep the flame steady at a high level no matter how much oil or gas is flowing. The company’s automatically adjust, saving energy. The units also sharply reduce the amount of natural gas that is flared into the atmosphere, cutting greenhouse gas emissions. Many of the 35,000 new wells drilled each year in the U.S. now use an automated system. But about 850,000 older wells are still out there with manual systems.

Acquisitions could enhance performance. Our estimates reflect Profire’s organic potential. But the company is investigating several deals, both in the burner management space and among other types of products that could be sold to the same customer base. Acquisitions within the industry would be made to acquire distribution. Profire probably would sunset any acquired systems and transition the new sales force to its existing line-up.

The U.S. retrofit market could surge if safety regulations are implemented. The industry is moving in that direction due to the high benefits and low costs associated with Profire’s units. But that transition is mainly focused on new wells currently. If tighter rules are created the company probably would be the largest beneficiary. That level of adoption also might facilitate international growth.

We estimate sales will improve 40%-55% next fiscal year to $50-$55 million. Acquisitions could yield upside from there. Earnings have the potential to reach $.20-$.25 a share. In 2-3 years sales could achieve $100-$125 million, delivering income of $.45-$.55 a share. Growth could remain at a high level in subsequent years as North American energy production continues to grow, the retrofit market develops, and international demand becomes a more important element. Applying a P/E multiple of 20x to the midpoint of the range suggests a target price of $10 a share, potential appreciation of 185% from the current quote.

May 2014 - announced that it has opened a new service center in Victoria, Texas, and has upgraded its Pennsylvania satellite office to a service center.
The expansion is expected to accommodate the Company’s growing service and sales teams, support growing product-sales, and help test a new recurring-revenue service model. The company emphasized, however, that supporting product sales is still the service team’s first priority.

[landi7]

Thanks so much

Andy

[Mykie]

If I understood what you wanted to do, you just buy it tomorrow and note the value of your stocks, and then, six months or a year later, you check which did better, the mutual fund or your stocks.

Thanks Saul, you did understand me.

I guess my next step is to assess Zack’s fund for cap size, do the same with the stocks I own and then watch them both going forward. Would percentage of increase be the metric I use, comparing Zacks increase from a given date to the % of increase of my stocks, same date?

Mykie

[SaulR80683]

Here’s a little interesting commentary from The Reitmeister Trading Alert. Steve Reitmeister is currently head of Zacks. This a trading newsletter where I occasionally get a long idea for a long-term position. He has a portfolio of a dozen current positions which I wouldn’t mention here, but what I’m posting is just a little commentary of his on on the market as a whole.

Stocks wasted no time breaking out further above 1900. It was hard not to be bullish when there were 3 fresh economic reports flexing their muscles:

1) Durable Goods up +0.8% versus -0.8% expectation.
2) PMI Services Flash report jumped to 58.4 from a prior reading of 54.2.
3) Consumer Confidence of 83.0…the second highest reading since the Great Recession.

Even better was having small caps taking the lead after a downright miserable performance year to date. This is a very healthy sign as more aggressive stocks should be winning as the market makes new highs….

I truly believe the reason we broke out is because of all the folks who thought we wouldn’t. I got a lot of emails pointing the to the clear and obvious cycle taking place that the market would fail at 1900.

That is the difference between charts and fundamentals. The charts show a pattern in the past that “may repeat” in the future. Fundamentals are the cause behind the effect of stock price movements. I will always prefer a focus on that over technicals.

I think this is basically what I had been saying in this thread.

Saul

[dearnojem]

Saul,

This is amazing. Long time lurker here and I need to re-read all your post. Been busy with work and kids that it is hard to find a lot of time reading the boards.

Thank you for your contribution.

Johnny -