Category Archives: BBBY

Bed Bath & Beyond: History Repeats, So Far

On April 29, 2014, we posted a chart of Bed Bath & Beyond (BBBY) comparing the price performance of the stock from 2000-2008 and 2008-2014, as seen below:

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At the time, we suggested that on a technical basis, BBBY might decline in the post-2008 period as much as the 2000-2008 period, on a percentage basis. Along with the technical perspective on BBBY, we provided downside buy targets based on Dow Theory.  The Dow Theory perspective was woefully inadequate compared to the strictly technical downside target provided in the chart above.  Below is the updated side-by-side comparison of the 2000-2008 period to the 2008-2017.

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From what we can tell, history is repeating.  Then as now, the peak in the price and the relative lows are occurring near each other, in timing.  Sharpen your pencils and get your Value Line Investment Survey out, time to verify the numbers and invest accordingly.

Nasdaq 100 Watch List: May 8, 2015

Performance Review

Below is the performance of the Nasdaq 100 watch list from May 9, 2014:

Symbol Name 2014 2015 % change
DISCA Discovery Comm. 37.33 31.33 -16.07%
BBBY Bed Bath & Beyond Inc. 61.31 71.44 16.52%
ISRG Intuitive Surgical, Inc. 353.06 494.32 40.01%
NTAP NetApp, Inc. 34.19 35.65 4.27%
EBAY eBay Inc. 50.54 58.82 16.38%
ALTR Altera Corp. 32.38 44.46 37.31%
WFM Whole Foods Market, Inc. 39.32 42.58 8.29%
SIRI Sirius XM Holdings Inc. 3.16 3.87 22.47%
VRSK Verisk Analytics, Inc. 60.53 73.66 21.69%
COST Costco Wholesale 115.39 145.88 26.42%
LMCA Liberty Media Corp. 34.18 37.93 10.97%
SRCL Stericycle, Inc. 113.90 134.01 17.66%
CERN Cerner Corporation 50.19 68.02 35.53%
CA CA Technologies 29.41 31.60 7.45%

The average gain of the entire list was +17.78% while the top five stocks (DISCA, BBBY, ISRG, NTAP, EBAY) gained an average of +12.22%.  This compares with the gain for the Nasdaq 100 index of +23.41% in the same 1-year time period.

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As has frequently been the case, analyst expectations were too optimistic for stocks on the far right (DISCA, CA, CERN, SIRI, NTAP) where the average gains of +10.73%.  Likewise, the view was too pessimistic for stocks on the far left (LMCA, ISRG, WFM, COST, BBBY) which averaged +20.44% in the above chart.

The absolute change in Liberty Media (LMCA) and Intuitive Surgical (ISRG) was the most extreme.  Liberty Media saw its p/e ratio expand from 20 to 72 while ISRG’s p/e ratio increased from 26 to 39.  The increase in the p/e ratio should be expected with the increase in price.  However, value oriented investors would have overlooked these stocks simply because of the high p/e ratios and the expectation of lower earnings by analysts in 2014.

Watch List: May 8, 2015

Below are the Nasdaq 100 stocks of interest:

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Nasdaq 100 Watch List: April 24, 2015

Performance Review

Below is the performance of our April 25, 2014 watch list.

Symbol Name 2014 2015 % chg
BBBY Bed Bath & Beyond Inc. 62.48 72.53 16.09%
CTRX Catamaran Corporation 38.95 59.56 52.91%
SIRI Sirius XM Holdings Inc. 3.12 3.96 26.92%
NTAP NetApp, Inc. 35.00 36.12 3.20%
ISRG Intuitive Surgical, Inc. 366.37 505.92 38.09%
DISCA Discovery Comm 39.14 32.71 -16.43%
VRSK Verisk Analytics, Inc. 57.81 72.68 25.72%
COST Costco Wholesale 115.01 148.12 28.79%
ALTR Altera Corp. 33.09 40.89 23.57%
SRCL Stericycle, Inc. 113.96 136.94 20.16%
CERN Cerner Corporation 49.51 73.32 48.09%
ROST Ross Stores Inc. 67.77 104.38 54.02%
MAT Mattel, Inc. 37.99 30.20 -20.51%
DLTR Dollar Tree, Inc. 51.36 81.14 57.98%

The average return for the entire list was +25.62% compared to the Nasdaq 100 index gaining +28.41% in the same period of time.  The top five stocks on our list (BBBY, CTRX, SIRI, NTAP, ISRG) gained +27.44% in the last year (excluding dividends).

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As is common with our watch lists, a stock is being acquired at what we believe is a premium.  CTRX is being acquired by UnitedHealth (UNH), a Dow Jones Industrial Average component.  At the time of our watch list last year, CTRX was within 3% of the low.  Additionally, the announcement of the purchase by UNH followed the pattern of many companies buying the intended target after a gain over of +24% within the year and +177% within the last 5 years.

Nasdaq 100 Watch List: April 24, 2015

Below are the 9 Nasdaq 100 stocks that we think are worth your consideration:

Nasdaq 100 Watch List: January 18, 2013

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

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Nasdaq 100 Watch List: January 11, 2013

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

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Nasdaq 100 Watch List: December 24, 2012

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol Name Price P/E EPS Yield P/B % from low
VOD Vodafone Group Public Limited Company 25.12 - -0.55 4.1 1.11 0.68%
TEVA Teva Pharmaceutical Industries Limited 37.79 15.4 2.45 2.1 1.44 1.04%
ATVI Activision Blizzard, Inc. 10.68 13.78 0.78 1.7 1.09 2.20%
BBBY Bed Bath & Beyond Inc. 55.66 12.71 4.38 - 3.13 2.45%
MSFT Microsoft Corporation 27.06 14.63 1.85 3.4 3.36 5.05%
SPLS Staples, Inc. 11.28 - -0.01 3.8 1.26 6.72%
INTC Intel Corporation 20.64 9 2.29 4.3 2.1 7.33%
DLTR Dollar Tree, Inc. 40.05 16.09 2.49 - 5.91 7.89%
PAYX Paychex, Inc. 31.5 20.45 1.54 4.2 6.73 8.17%
NVDA NVIDIA Corporation 12.25 15.29 0.8 2.4 1.63 9.87%
^NDX NASDAQ-100 2,658.05 - - - - 17.50%

Watch List Summary

The last time that Vodafone (VOD) was this close to the low and on our watch list was September 9, 2011 (found here).  At the time, our data indicated that Vodafone had a dividend yield of 7.30% and a price to book ratio of 1.01.  In two months VOD rose +12% and after two years, the highest VOD was able to rise was $30 or nearly 17% from the Sept 2011 low. For us, this is an indication to be mindful of the fact that high dividend yields are not necessarily the clearest path to exception gains, unless in some cases the investor has the willingness to accept the 10% achieved within 2 months.

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Teva Pharmaceutical (TEVA) was on the watch list on September 23, 2011 (found here) when the stock was trading at $35.26.  At its highest point in January 2012, TEVA increased +30% from the September 2011 low.  However, since the January 2012 high, TEVA has fallen –18% to the current price of $37.79 or +7.18% above the price of September 23, 2011.  On September 23, 2011, TEVA sported a dividend yield of 2.10% and a P/E ratio of 10.08.  Now, TEVA has a P/E of 15.4 and a dividend yield of 2.10%.

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Activision Blizzard (ATVI) was on the watch list on August 12, 2011 (found here) when the stock was trading at $10.71.  No sooner than ATVI was on our list that it rose +30% to the November 8, 2011 high.   ATVI is now selling at the same price as August 2011, however, the stock has a lower P/E ratio and a lower P/B ratio.  If we suppose that the stock has not moved up at all in the last year, this could be considered an undervalued stock.

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As is often the case with most stocks, early gains are offset with declines, at least in the first year, which explains why we’re so focused on the 52-week low.  Most stocks seem to run in cycles of 1 to 2 years.  Stocks that fall to a new low after one year should be at or below the price from the prior year.  Stocks that fall to a new low after 2 years could be significantly above the low of two years prior but a 52-week low.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of December 16, 2011 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from December 16, 2011 to December 14, 2012.

Symbol

Name

2011 2012 % change
BMC BMC Software, Inc. 33.17 40.18 21.13%
VMED Virgin Media Inc. 20.95 36.07 72.17%
CTRP Ctrip.com International, Ltd. 23.1 21.15 -8.44%
SYMC Symantec Corporation 15.46 18.68 20.83%
BRCM Broadcom Corporation 28.72 32.06 11.63%
Average 23.46%
NDX Nasdaq 100 2,238.18 2,658.05 18.76%

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The performance of the top five stocks from the December 16, 2011 watch list was reasonable.  However, despite the outcome after a year, all five of the stocks achieved +20% gains within the first three months.

Nasdaq 100 Watch List: December 12, 2012

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol Name Price P/E EPS Yield P/B dividend payout ratio % from low
WCRX Warner Chilcott plc 11.3 7.73 1.46 4.4 -4.33 0.5 34.25% 2.26%
DLTR Dollar Tree, Inc. 38.65 15.53 2.49 - 5.61 - - 4.12%
VOD Vodafone Group 26 - -0.55 3.9 1.14 1.02 -185.45% 4.21%
BBBY Bed Bath & Beyond Inc. 58.18 13.52 4.3 - 3.34 - - 4.68%
TEVA Teva Pharmaceutical 39.47 16.08 2.45 1.9 1.58 0.81 33.06% 5.53%
MSFT Microsoft Corporation 27.24 14.72 1.85 3.4 3.34 0.92 49.73% 7.08%
INTC Intel Corporation 20.67 9.01 2.29 4.5 2.09 0.9 39.30% 7.49%
KLAC KLA-Tencor Corporation 47.08 11.45 4.11 3.4 2.36 1.6 38.93% 8.96%
MCHP Microchip Technology Inc. 31.7 30.16 1.05 4.5 3.12 1.41 134.29% 9.61%
^NDX NASDAQ-100 2,674.57 - - - - - - 21.04%

Watch List Summary

A stock that we’re interested in is Dollar Tree (DLTR).  Dollar Tree has had a substantial run in the last five years.  As the price of the stock has recently peaked at $56.34 on June 20, 2012, the decline has almost been as substantial.

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Dollar Tree (DLTR) has declined -31% from the most recent peak.  The highlight of this stock is the ability to remain in a rising trend from the low in January 2008 in spite of the -40% decline in the general stock market.

From a technical standpoint, the stock has established a significant support level at $37.71.  So far, the stock has the potential to increase from the current level to at least $42.18 level on the upside.  However, falling below the support level means that the stock could easily achieve the conservative downside target of $25.88 (extreme downside target is $18.78).

A decline to $25.88 is equal to –54%. Such a decline would not be unusual as it would only be slightly more than the decline in the stock from July 2007 at $14.74 to January 2008 at $7.41.

According to Dow Theory, Dollar Tree has the following downside targets:

  • $39.93
  • $31.72 (downside fair value)
  • $23.52

More research and a potential purchase should take place at $25.88 and below.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of December 16, 2011 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from December 16, 2011 to December 12, 2012.

Symbol

Name

2011 2012 % change
BMC BMC Software, Inc. 33.17 40.8 23.00%
VMED Virgin Media Inc. 20.95 35.61 69.98%
CTRP Ctrip.com Int'l 23.1 19.79 -14.33%
SYMC Symantec Corp. 15.46 18.75 21.28%
BRCM Broadcom Corp. 28.72 34.34 19.57%
Average 23.90%
NDX Nasdaq 100 Index 2238.18 2674.57 19.50%

Overall, the watch list slightly exceed the Nasdaq 100 index by +4.40%.  All stocks achieved gains of +20% within 5 months.  Virgin Media (VMED) exceeded our expectations by a wide margin. In fact, the stock only went up after being on the watch list by rising +69% in the last year.

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Nasdaq 100 Watch List: December 6, 2012

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol Name Price P/E EPS Yield P/B payout ratio % from low
WCRX Warner Chilcott plc 11.31 7.75 1.46 4.3 -4.31 34% 2.53%
BIDU Baidu, Inc. 88.47 20.08 4.42 - 8.33 - 3.23%
VOD Vodafone 25.87 - -0.55 4 1.13 -185% 3.69%
BBBY Bed Bath & Beyond Inc. 57.79 13.43 4.3 - 3.31 - 4.01%
MCHP Microchip Tech 30.22 28.72 1.05 4.7 2.96 134% 4.36%
INTC Intel Corporation 20.1 8.78 2.29 4.5 2.01 39% 4.68%
ALTR Altera Corp. 31.08 17.41 1.79 1.2 3.04 22% 5.24%
MSFT Microsoft Corporation 26.63 14.45 1.85 3.5 3.26 50% 5.72%
CTXS Citrix Systems, Inc. 60.13 32.85 1.83 - 3.69 - 6.31%
NVDA NVIDIA Corporation 11.95 14.92 0.8 2.5 1.58 38% 7.17%
EXPD Expeditors Int'l of WA 36.78 22.97 1.6 1.5 3.76 35% 7.46%
SPLS Staples, Inc. 11.37 - -0.01 3.9 1.23 -4400% 7.85%
FLEX Flextronics Int'l  5.9 8.04 0.73 - 1.61 - 7.86%
KLAC KLA-Tencor Corp. 46.53 11.34 4.11 3.4 2.3 39% 7.87%
ATVI Activision 11.28 14.59 0.78 1.6 1.15 23% 8.23%
AMAT Applied Materials 10.76 125.35 0.09 3.3 1.82 400% 8.34%
DLTR Dollar Tree, Inc. 40.28 16.21 2.49 - 5.99 - 8.66%
APOL Apollo Group Inc. 20.18 5.8 3.48 - 2.47 - 9.86%
^NDX NASDAQ-100 2,649.12 - - - - - 23.16%

Watch List Summary

We’ve highlighted the chip sector stocks to put emphasis on the fact that, as an industry group, the sector may be at or near a low.  The last time we made this observation of the chip sector was on March 20, 2010 based on the closing price of March 19, 2010 (found here).  The average return of the chips stocks on that watch list was +21.95% as compared to the Philadelphia Semiconductor Index (SOX) gain of +17.86% over the following year.  After the first year had passed (March 18, 2011-present), the same semiconductors stocks have average a loss of –8.98% as compared to the SOX index decline of –10.67% (see chart below).

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Within the first year (March 20,2010-March 18, 2011), all of the stocks on our list except Intel (INTC) managed to achieve gains of over +20% before falling lower.  After the first year had passed (March 18, 2011-present), only MXIM and KLAC were able to achieve gains of +20% while INTC was the only stock to rise above +40%. Depending on the timing of the purchase, we wouldn’t be surprised to see the same performance of the chip related stocks on our current watch list.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top five stocks from our list of November 18, 2011 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from November 17, 2011 to November 16, 2012.

Symbol Name 2011 2012 % change
CTRP Ctrip.com 26.67 17.58 -34.08%
BMC BMC 36.26 38.73 6.81%
NTAP NetApp 35.73 30.26 -15.31%
QGEN Qiagen 13.71 17.16 25.16%
CHRW Robinson Worldwide 65.65 59.16 -9.89%
Average -5.46%
^NDX Nasdaq 100 2272.09 2534.16 11.53%

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As can easily be seen by the table above, after one year the top five stocks severely underperformed the representative Nasdaq 100 index.  However, three of the five stocks gained +10% or more within the first six months.

The disastrous performance of Ctrip.com (CTRP), declining over –50%, was highlighted well in advance in our December 16, 2011 posting (found here). At that time (CTRP at $23.10) we said the following:

“Ctrip.com International (CTRP) is on a pace to replicate the performance from the high in April 2008 to the low of January 2009 which equaled a loss of 72%. A similar decline in CTRP from the high of $50.57 would bring the price down to $14.16. Suffice to say, the stock “only” needs to decline another $8.94 or 38% from the current price of 23.10. This seems very easy considering the high volatility of Chinese stocks. We believe that unless CTRP is summarily dismissed from the Nasdaq 100 index, there may yet be life in this company.

We believe that the Nasdaq 100 committee added CTRP to the index based on the performance of Priceline.com (PCLN). Amazingly, at the current price of $23.10, CTRP sits one penny below the 2nd Dow Theory support level of $23.11. any further deviation below the current price almost ensures that the stock is destined for the $10 range.”

At its lowest point, Ctrip.com fell as low as $12.36 on July 30, 2012.  We feel that our analysis, based on Dow Theory provided appropriate warning on the downside risk.

Another stock that severely underperformed in the last year was NetApp (NTAP).  However, our initial analysis of the company on January 20, 2012 (found here) we said the following:

After a 39% decline in price, NetApp (NTAP) is a prime candidate for a two transaction purchase. The first purchase should take place starting at $30. The second purchase should take place around $23.47. Based on the market capitalization of NTAP may actually be a buyout candidate.

In May 2012, NTAP briefly fell below $30 and then rose +20% by the month of September 2012.  Then on November 2, 2012 (found here), we recommended that investors consider buying NTAP ($27.74).  Since our November 2, 2012 recommendation, NTAP has risen +18.28%.  In all the history of the stock market over a 100-year, 50-year, and 30-year period, gains like these are exceptional on an annual basis and should be considered gifts in a months time.

We ask that you consider selling the principal and allow the gains to run.  Keep in mind that we believe that stock is a buyout candidate.  However, Dow Theory says that the wish should not become father to the the thought (source: Hamilton, William Peter. The Stock Market Barometer. Harper & Brothers, New York. 1922. page 133).