Technical / Fundamental Analysis - Dividend and Growth

This is a very quick analysis based on a combination of technical and fundamental analysis. Using the VectorVest system to scan all shares in the ASX, the list of 7 shares presented here are based on the following criteria.
1. High Dividend Yield - DY
2. A VST Vector Vest proprietary score >= 1.20
3. Growth Rate > 15%

The original intention of this search is to find high dividend stocks, but we also want "good" stocks. The VST score is an overall rating of the proprietary indicators of Vector Vest. VST range from 0.0 to 2.0. Any stocks above 1.0 is good, so we chose VST >=1.20. Also we look at stocks with good growth rate in the future.

The results are the following 7 stocks:

Company	Symbol	Price	DY	VST	GRT	Industry
Seven West Media Ltd	SWM	4.04	11.14	1.3	18	Consumer Discr(Media)
IMF Ltd	IMF	1.42	10.56	1.28	24	Financials(Diversified)
Myer Holdings Ltd	MYR	2.33	9.87	1.2	21	Consumer Discr(Retailing)
Aus Leaders Fund	ALF	1.17	9.4	1.21	22	Financials(Diversified)
Finbar Group	FRI	1.01	8.91	1.22	26	Financials(RealEstate)
Southern Cross Media Grp Ltd	SXL	1.335	7.49	1.38	25	Consumer Discr(Media)
Alesco Corp LTD	ALS	1.33	6.77	1.3	22	Industrials (CapitalGoods)

The graphs are shown below. As it turns out, although we are looking for good dividend shares, these stocks are also showing good signs of turn around. Turn around stocks are good opportunites as indicated by O'Neil and Weinstein.

Key:
Black Line = Price
Purple Line = 40 Moving Average
Green Line = Stop Loss Price

PS Apoologies for the quality of the graph, eg for the lack of time scale. They are 1-year graphs. More detailed graphs can be obtained from many other free financial websites: finance.yahoo.com, etc.

ALS - Has been suffering for some time, but has stabilised recently. It has also risen above its 40day Moving Average (40MA)

SXL - same story as ALS

ALF - has started a very strong climb and shows no signs of weakening yet.

FRI - is almost reaching its one year high. Again the rise looks set to go on.

IMF - has been a good performer throughout the GFC but slumped in the past year. There are recent signs of turnaround.

MYR - This is the well known but unloved Myer shares. It had a false bounce recently, but may soon follow with a double bottom. Need to wait and see.

SWM - This is another well known industrial - Seven Media. It has been solidly rising for the past half year.

Valuation - the VectorVest way.

This is an explanation of how the VectorVest system calculates the value of a company.
(For other ways of valuation, see:
Warren Buffet's 1981 Formula for quick valuation   )

The P/E ratio is a common and simple ratio used to estimate the value of shares. It can be used to compare with P/E ratio of different companies in the same sector to see if the share is overprice or underprice. However, the PE ratio is very inaccurate as many stock analyst would know, but still uses from time to time.

The other funny result from P/E ratio is that for companies with No Earnings or making a loss, then the P/E ratio is infinite, hence not published. A better way is to look at the E/P ratio, for companies with no earnings, then the E/P ratio is zero.

Another quantity is the Earnings Yield, calculated like:
        EY = 100 x P/E
but we can use the E/P ratio in there like:
        EY = 100 / (E/P)

The E/P ratio is more intuitive because it is like Dividend / Price which is the Dividend yield, since earnings is like dividend.

Another very important relation that the VectorVest founder discovered is like investors will invest in bonds when stocks are performing poorly and then return to stocks when they perform better. So investments cycle back and forth between bonds and stocks. In the overall picture the yield from both are the same. Bonds yield are determined by interest rates (IY), so
         EY = IY

Now using the previous equations for Earnings Yield (EY), we have
         100 * (E/P) = IY

To find the actual value of the company, instead of price, we use the Value variable (V)
         100 * (E/V) = IY

So the value of a company is:
V = 100 * (E / IY)

This gives a value of a stock such that if we assume we want to get at least the interest rate of fixed bonds, then this formula tells us the value or price to pay. So if the price of the stock is much lower than V, then it is undervalued.

Buy Sell Notes to Self

This post will be updated with tips as I read them from various sources and when I want to record it down to look back on later. It is not any kind of advice or suggestion to any other people. 


9 Feb 2012
Recent scan of certain stocks with good turn around price graph.

SPL - Starpharma - strong position for a biotech

TRF - Trafford Resources - bouncing up.

MML - Medusa Mining - Strong fundamentals, resource company with incoming cash flow, technicals may have hit support and bouncing up.

SWL - Seymoure Whyte - good ratings from Money Magazine, Montgomery and VectorVest

8 Feb 2012

From a recent article in the Financial Review

POH - no comment
ACL - not impressive cash burn scenario
SPL - good technicals, coming off a bottom with more to go
TIS – 0.35, NTA 0.086  to expensive






13 Dec 2011


A recent investment newsletter came to me, advertising that some Resource tips they have that can make 1000% or more. Obviously they did not give the name of the companies, but they did provide some clues. Here are my GUESSES on which companies they are;






Guyana - Gold
Azimuth AZH?




High Grade Gold 12g/t,   Silver 161 g/t in  Sumatra
Sumatra Copper and Gold SUM?




 Brisbane based-  Silver Explorer -  Production 2012 -  less than 0.10
Alycone AYN ?




 US Western Plains
 Potash 0.80
Potash Minerals POK?




 Base Metal
 Morocco  54k tonne
 Kasbah KAS?




TAnzania Uranium
Leader came from US uranium Cameco
Uranex UNX?










5 Oct 2010

ESG - wait till go up 85-90c
STO - buy when rebound from 12.30 to 12.50
AMP - ROE 40.50 54.80 27.00 29.50, wait for technicals
TGA - sell when below 1.40
TIS - buy when breakout 25
CUV - sell when close under 19

TZL - wait for break above 50c
VLA - wait for break above 35c
POH - wait for break above 11c


CMC Market allows a simple filtering system.
- ROE > 15%
- Debt / Equity < 0.5
- Market Cap < 100,000, 000
- 5 yr avg annual return > 10%
- Net Profit > 10,000,000

the results from the filtering were:
TBR - Tribune Resources NL
TWD - Tamawood Limited

Is Gold a Safe Investment for Australians?

If Australians think it is safe to buy gold, think again!

Some background: Why would people even consider buying gold.
Given the bleak outlook on the economy from Europe, and the US, the stock market is falling. But the biggest reason for actually buying gold is the deliberate devaluation of currency, US, Euro, China and others. What they call Quantitative Easing is actually printing money. In the end, this means the value of the currency is decreased. If this keeps up, think about, hyperinflation as in Germany 1920's, Argentina 1980's, Zimbabwe recently.

So avoid the devaluation of your money, people suggest to buy gold. The reason is gold is the real money - it is hard asset and recognizable as the default money for thousands of years. While currency or paper money is hyperinflated, then if people have already changed them to gold, then they can still hold the real value of their assets.

There is only ONE problem. In the 1930s the US government confiscated the gold possessions of its citizens. This is blatant seizure of private property. (This is well known and can be googled to confirm). Yet this was done. Perhaps one reason is to increase the legitimacy of the new US paper money.

But Australians should be safe right? The government would never do something like that? Even so, how many Aussie gold investors know that it is written in Australian Law, that the government has the right to, if it chooses, to require its citizens to surrender their gold. This is part of the BANKING ACT 1959 Part IV. An excerpt is shown below:


-------------------------------------

BANKING ACT 1959 - SECT 42

Delivery of gold
             (1)  Subject to this Part, a person who has any gold in the person's possession or under the person's control, not being:

                     (a)  gold coins the total value of the gold content of which does not exceed the prescribed amount; or

                     (b)  gold lawfully in the possession of that person for the purpose of being worked or used by that person in connexion with the person's profession or trade;

shall deliver the gold to the Reserve Bank, or as prescribed, within one month after the gold comes into the person's possession or under the person's control or, if the gold is in the person's possession or under the person's control on any date on which this Part comes into operation, within one month after that date.

          (1A)  A person is guilty of an offence if:

                     (a)  the person fails to comply with subsection (1); and

                     (c)  there is no instrument in force under section 48 exempting the person from the application of this subsection.

Technical Analysis - Bird Flu, Biota and Uptrend

A Bus Driver in Southern China Dies of Bird Flu. Could the Deadly Virus Strike Again?

Hong Kong Urges Bird-Flu

With all the news of Bird Flu perhaps it is time to look at Biota again.

A quick technical look on the graph below shows that it is possibly developing an uptrend. Without any complex technical indicators, price action alone does seem to indicate that things can get interesting and worth a more detailed look. Recall the Weinstein method and the CAN-SLIM method talks about getting in early at such price signals.

The pink smooth curve is the stop signal, the green curve is the moving average, black curve is the main price action.
The smaller graph below is a proprietary indicator showing that it is in an uptrend (RT value > 0.0)

Special Report on Financial Stocks - yourmoneymag

A Special Report on Financial Stocks is available here:
http://resources.keymedia.com.au/ymo/2011/Issue8/FinancialStocks.pdf

It is published by yourmoneymag.com.au and the analyst contributing to this report are:
Stan Shamu - Australian Stock Report
Benny Sada - Australian Stock Report
Dennis Ng - Lincoln Indicators
Julia Lee - Bell Direct

To summarise, the list of stocks picked by this report are:

Commonwealth Bank of  Australia (CBA)
Westpac (WBC)
Australia and New Zealand Banking Group (ANZ)
National Australia Bank (NAB)
Credit Corp Group (CCP)
IOOF Holdings (IFL)
MyState Limited (MYS)
QBE Insurance Group (QBE)
Bendigo and Adelaide Bank (BEN)
Macquarie Group (MQG)
Suncorp-Metway (SUN)
Bank of Queensland (BOQ)

Actually this covers most of the big financials in Australia. But in any case, the report has a pretty graph for each as well as a table of key financial ratios.

Technical Analysis - 21 Nov 2011 - Dow and All Ords with Gann Angles

Since the last update to the Gann charts of the Australian All Ordinaries (XAO) and the Dow Jones Index (DJI), Greek has changed Prime Minister, Italy took over the bad news, Italy changed Prime Minister, Germany failed to sell all its bonds and France is in risk of a ratings downgrade. On either side of Europe, the US SuperCommittee failed to agree on debt reduction plans while the growth in China is in serious doubt.

All these news within two months and it looks like the world finance system is beyond hope. So what do the charts tell us?

The charts below are weekly charts so within the last 2 months there is about 9 new points on the graph. Both the All Ords and Dow Jones show a similar characteristic. Both when sharply up and then both went sharply down. Both have not even reach the resistance level talked about in the previous blog post.

The summary is that, sure the trend is sharply down. But it has broken no major Gann resistance angles yet and have a slight way to go. So although the news sound hopelessly indicating a financial meltdown, the charts say Not Yet.