Below are the Nasdaq 100 companies that are within 10% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models.
| Symbol | Name | Price | P/E | EPS | Yield | P/B | % from yr low |
| BRCM | Broadcom Corp. | 26.06 | 36.09 | 0.72 | 1.60% | 1.93 | 0.12% |
| CHRW | CH Robinson Worldwide Inc. | 56.79 | 15.5 | 3.66 | 2.30% | 6.11 | 5.68% |
| EQIX | Equinix, Inc. | 181.18 | 109.41 | 1.66 | - | 3.87 | 6.13% |
| NUAN | Nuance Communications, Inc. | 19.11 | 40.49 | 0.47 | - | 2.22 | 6.76% |
| SHLD | Sears Holdings Corporation | 41.35 | - | -13.2 | - | 1.76 | 7.68% |
| ISRG | Intuitive Surgical, Inc. | 391.87 | 22.8 | 17.19 | - | 4.21 | 9.76% |
Watch List Summary
Broadcom (BRCM) tops our list this week and it is the stock that interests us the most, at the moment. Right off the bat, we see that the stock has a price to book (P/B) ratio of 1.93. Among the listed companies above, this is a compelling attribute. Value Line Investment Survey says that the fair value for BRCM is 12 times cash flow. Based on full year cash flow figures for 2012, BRCM is estimated to be fairly valued at $39.96 or +53% above to current price.
Of concern with the data presented by Value Line is the fact that BRCM went from debt free in 2009 to nearly 15% of capital, as of the most recent reporting. In one sense, corporate borrowing at low rates is a good thing. However, we’re concerned that certain types of borrowing result in loss generating (is that possible) ventures that end up going nowhere.
Broadcom has recently been slammed in the market based on reduced or declining guidance. This from Investopedia.com:
“A lot of what has worried Broadcom analysts and investors appeared to come home to roost with the company's latest earnings report. Weak guidance has investors fearing that the company is losing more and more share to Qualcomm (QCOM), with an overall stagnation in high-end devices leading to fears that ASPs and margins are in danger. (Stephen D. Simpson. Fear Dominating the Broadcom Story. Investopedia. July 29, 2013. accessed August 10, 2013. link).”
Dow Theory has the following downside targets:
-
$24.43
-
$20.61
-
$16.79
-
$12.97
When we ran Edson Gould’s Speed Resistance Lines, we were only able to come up with an extreme downside target of $15.78. It seems that the $24.43 target is highly achievable. Further analysis of BRCM is in order for those with a medium to long-term time horizon.
Watch List Performance Review
In our ongoing review of the Nasdaq 100Watch List, we have taken the top five stocks on our list from August 6, 2012 and have check their performance one year later (August 6, 2012 to August 6, 2013). The top five companies on that list can be seen in the table and chart below.
|
Symbol
|
Name | 2012 | 2013 | % change |
| EXPD | Expeditors Int’l of Washington | 36.04 | 41.21 | 14.35% |
| DELL | Dell Inc. | 11.80 | 13.73 | 16.36% |
| LRCX | Lam Research Corporation | 34.62 | 48.85 | 41.10% |
| CHRW | CH Robinson Worldwide Inc. | 53.63 | 59.58 | 11.09% |
| APOL | Apollo Group Inc. | 27.24 | 20.20 | -25.84% |
| Average % change: | 11.41% | |||
| NDX | Nasdaq 100 | 2694.09 | 3122.20 | 15.89% |
A note on the performance of the watch list from a year ago. At the time, we liked Lam Research (LRCX) enough to do a write up about it. However, as is often the case, we were too conservative with our downside estimates and initial buying targets. We had projected that LRCX had a Dow Theory downside target of $29.52. It never happened.
Value Line Investment Survey said that LRCX had a fair value of $31.20 and the stock fell to that level. Additionally, Value Line had a estimated upside target for 2013 at $54.60. LRCX rose to $51 as recently as August 1, 2013. We consider the Value Line target for 2013 a huge success. Some could argue that because the $54.60 never happened then it wasn’t accurate. Our belief is that with incomplete information at any given time, getting close is good enough.