Sunday, February 26, 2012

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.


Here are a few useful strategies:
- Look for Green light
- RT 15 SMA > RT 10 SMA
- VST Mighty Mites





Saturday, February 11, 2012

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. 


4 Dec 2012
mnf
flt
gem
alu
ccv
sul



26 Nov 2012
A selection of stocks near the bottom but they are in rising industries
ALQ - ALS Ltd
TSE - Transfield Services
MIN - Mineral Resources
SXL - Southern Cross Media


25 Nov 2012
EAX - Energy Action
GEM - G8 Education 


9 Oct 2012
MIN when above 8.00
KRM when break 1.23
AYN above 0.055
CKF when break 1.20



Money Magazine October Issue
Nst roe 40%
slr growth67%
pru grow131%
mineral resources yields 8.45%
sxe grow
mnd roe life debt cash flow
sdm yields 10%
wtf roe 62%
nck grow 23%
dmp
bol
crz roe
rdf grow 15%



16 Sep 2012

RED - Red 5 Mining - nice trend up
SFR - Sandfire Resources - nice trend up 

12 Sep 2012
PRU - Persues Mining - Potential Head - Shoulder bottom.
MGR - Mirvac Group - Search by various criteria seem to pop up this stock quite often.



28 Aug 2012
MYR - Myer Holdings
AHE - AUTOMOTIVE HOLDINGS FPO


20 Aug 2012
There is a green light confirmation as of the end of last week.
Stocks looking good are:
AEU.ax
CYG.ax



30 June 2012

The following stocks are picked using an analysis based on favourable EPS and dividend yield. In addition, from a technical viewpoint, their price pattern are non-declining.

DLX
MIO
MLD
MGR




29 May 2012
EPW ERM Power     GO
DMP Domino Pizza   GO

1 May 2012
WEB - Webjet                GO
RFE - Red Fork Energy     GO 
DML - Discovery Metals   GO 
RED - Red 5 Limited        STOP


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