On June 21, 2016, we provided downside targets for WD-40 Co. (WDFC) based on the work of Edson Gould. At the time, we said the following of the stock:
“The assumption by many momentum investors is that WDFC will continue to rise further. However, prior experience suggests that a parabolic rises usually end in a breakdown in the price.”
Since the 2016 posting, three weeks later, WDFC managed to increased from $114 to $122 on a closing basis. However, since the July 11, 2016 high, the price of WDFC has meandered as low as $110. Considering that the stock is putting up so much resistance to decline after a clear parabolic peak, there may be more life in this stock than we thought.
From a standpoint of investment safety, WDFC would be an ideal consideration at or near the $72.49 conservative downside target as indicated in the chart below.
Below is the performance of the Nasdaq 100 Watch List from May 2016:
|| % chg
||Walgreens Boots Alliance, Inc.
||Bed Bath & Beyond Inc.
||Gilead Sciences Inc.
||American Airlines Group Inc.
The analyst estimates for the stocks are indicated in the following chart:
Looking at the performance, we can see that the analysts got the general direction of 4 of the 6 stocks. The stock that exceeded analyst expectations was Symantec (SYMC) while Gilead Sciences (GILD) underperformed by a wide margin on the downside.
May 2017 Watch List
Below are the price projections based on analyst earnings estimates for our recent U.S. Dividend Watch List dated May 12, 2017. These estimates project the price change for the respective stocks over the next 12 months and the risk profiles associated with the estimates.
Below is the performance of our Canadian Dividend Watch List dated May 25, 2016:
It appears that the analyst call on Cameco (CCO.TO) was quite accurate. All other stocks on the list fell short of analyst expectations. When compared to the Toronto Stock Exchange gain of +11.84%, the watch list from last year severely underperformed with an equal weighted decline of –5.82%.
One stock that we had particular interest in was Gluskin Sheff (GS.TO). At the time, we said the following of the stock:
“…we believe that GS.TO is in a general range of undervaluation and should be considered at the current price. Additional attention should be paid to the worst case target of the stock falling to the $7.25 price. Our fair value target price from the current level is $20.87 or approximately +27% above the current price.”
On two occasions in the last year Gluskin Sheff approached, but never achieved, our fair value target price. Once on September 6, 2016 at an intraday high of $19.45 and again at $19.93 on February 14, 2017.
Merely approaching our fair value target is sufficient to warrant the sale of some/all of the stock in a qualified retirement account. However, the stock would have failed to trigger a sale of the stock in a non-qualified account. With GS.TO sitting slightly below last year’s price we are publishing an updated Altimeter for a perspective on where the stock might be on a dividend/price basis.
Below is the performance of our Canadian Watch List from April 2016:
On the whole, the watch list underperformed with a –0.10% decline, this is contrasted with the Toronto Stock Exchange +17.70% change in the same period of time.
While the analysts got a majority of the calls wrong, estimates for Shaw Communications (SJR-B.TO) and Canadian Real Estate Investment Trust (REI-UN.TO) exceeded estimates on the upside. Our call on Imperial Oil (IMO.TO)was short of the mark in the final analysis. However, looking at the intra-year performance below, we can see that Imperial Oil rivaled the performance of the Toronto Stock Exchange (^GSPTSE).
Canadian Dividend Watch List