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Category Archives: Analyst Estimate
Nasdaq 100 Watch List: March 5, 2024
Below are the stocks that we’ll be tracking from the Nasdaq 100 in the next year (2025).
Analyst Estimate: February PMI Stocks
Below are the price projections for the Price Momentum Indicator stocks based on analyst LOW earnings estimates in the coming year. These stocks can be found on our February 2, 2024 U.S. Dividend Watch List.
Analyst Estimates: Blindfold Better?
We continue to break down our watchlists by the analysts earnings estimates, as recently seen here:
Our thesis is premised on the work of many. Our latest example is shown in the piece below from David Dreman dated December 29, 1997.
Our 2017 piece confirms much of the claims by Dreman.
See Also:
Posted in Analyst Estimate, David Dreman
Analyst Estimate: TSX 60
Below are the price projections for the TSX 60 stocks based on analyst LOW earnings estimates in the coming year. These estimates project the price change for the respective stocks over the next 12 months.
Analyst Estimates: Nasdaq 100
Below are the price projections for Nasdaq 100 stocks based on analyst AVERAGE earnings estimates. These estimates project the price change for the respective stocks over the next 12 months.
The 2007 UBS Playbook
In a SeekingAlpha posting titled “Time to dust off investing strategies from 2009 crisis, UBS says” dated April 12, 2020, it is suggested that:
“A group of deep-value stocks were winners for investors through multiple parts of the cycle during the 2008-09 financial crisis, and a UBS analyst team says it is time to revisit those investing strategies.”
The benefit of an analyst is that they give good guidance beforehand. Assessing the recommendations after the fact is necessary but using such an approach could be argued as having elements of survivor bias or data mining. After all, if the company went out of business it isn’t even being considered for the possible mistakes or bad assessment.
In order to truly learn from the past, it is best to look at published recommendations at the peak in the market and review the performance. This is where we can learn the most that isn’t biased toward favorable outcomes.
Below we rate and review published recommendations by all UBS analysts that give specific recommendations in Barron’s throughout the period from January 2007 to December 2007 (that we could find).
Safeway (SWY): UBS analyst Neil Currie
“A compelling voice of dissent comes from UBS analyst Neil Currie, who pegs Safeway's core earnings at $1.65 a share in 2006 and $1.74 in 2007 once Blackhawk is stripped out. With the Street assuming a "best-case scenario," he assigns a more moderate multiple of 15 times 2007 projected earnings of $1.90, and says Safeway should be worth about 29. Smart shoppers might want to check out another aisle for something fresher (Tan, Kopin. Safeway: Ripe for a Fall?. Barron's. January 1, 2007).”
Safeway, as reflected in the chart, was expected to be value not much more than $29 and that the stock price would likely decline in value from there. UBS analyst Neil Currie was right on the mark as Safeway rose slightly in 2007 and then fell as low as $15 by 2012. A later buyout offer of reached for Safeway as the stock traded as high as $35 in 2015.
DBS Group Holdings (DBSDF): UBS analyst Jaj Singh
“Despite last year's rally, bank valuations remain reasonable at 1.75 times book, or accounting, value. UBS analyst Jaj Singh argues that they should be higher because average valuations over the past eight years tracked a deflationary period, and "a more relevant period is the early 1990s." Then, banks traded at 2.6 times book value; UBS' target ratio today is 1.9. In the banking group, DBS, or Development Bank of Singapore (DBS.Singapore), boasts strong deposits, low funding costs and a 67% loan-to-deposit ratio that leaves much room for expansion. Tan, Kopin. Singapore: the Safest Route to Asia's Riches. Barron's. Feb 12, 2007).”
The crosshair in the chart above, from February 12, 2007, should be all that needs to be said on this topic. At roughly $14.85, the price of DBS declined as much as -64%. Currently, DBS Group sits at nearly -7% below the 2007 recommendation.
Weyerhaeuser (WY): UBS analyst Richard Schneider
“Shareholders are pressuring Weyerhaeuser to change its status as a corporation to a REIT with better tax benefits and where gains are passed on to investors, but it is unclear whether the push will succeed. One hurdle: The company "may have to sell everything but timberland to qualify" for RE IT status, according to UBS analyst Richard Schneider. The analyst, who rates the stock Neutral, says Weyerhaeuser may seek to partially restructure and split off its containerboard business (Malik, Naureen S. Forest Grumps. Barron’s. March 19, 2007.).”
From the March 19, 2007 recommendation to the low of March 6, 2009, WY fell approximately -75.44%. Weyerhaeuser currently sits –29.61% below the 2007 recommendation.
Daimler AG (DDAIF): UBS analyst Max Warburton
“Notes Max Warburton, a UBS analyst in London: ‘Ex-Chrysler, Daimler is already an 8% margin business. Management is committed to unlocking value and the 'new Daimler' is set to be a high-margin, high-cashflow business.’ The stock, Jonas and Warburton argue, is worth over $100 (Palmer, Jay. If You Can Find a Better Stock, Buy It. Barron’s. May 21, 2007.).”
From May 21, 2007 to the low of 2009, Daimler AG declined approximately –76%. Currently, Daimler AG sits –63% below the 2007 recommended level.
CSL (CSL.AX): UBS analyst Andrew Goodsall
“The outlook for CSL wasn't always so bullish. In 2003, its plasma business threatened to unravel when prices crashed due to oversupply; CSL shares plummeted from A$52 to a low of A$11.57. The glut spurred Aventis, now Sanofi-Aventis (SNY), to seek a buyer for its plasma unit. CSL Chief Executive Brian McNamee stepped in, paying almost A$1 billion to acquire the business-twice the size of his own plasma division-and the bet paid off.
“The deal helped improve the dynamics for the whole industry, as U.S. collection centers were consolidated. With several key barriers to entering the market, including a three-to-four-year lead time in setting up new centers, UBS analyst Andrew Goodsall estimates demand for plasma product should be "tight" until at least 2010 (Murdoch, Susan. Australia's First $100 Stock? Barron’s. May 21, 2007.).”
From May 21, 2007 to March 9, 2009, CSL increased +10%. More importantly, CSL increased +997% from May 21, 2007 to April 10, 2020.
Ameriprise Financial (AMP): UBS analyst Andrew Kligerman
“UBS analyst Andrew Kligerman predicted in our story that Ameriprise shares, then 45, would surge once investors realized what a money spinner the company was. He has a Buy rating with a target price of 73, or about 30% above recent levels (Willoughby, Jack. Ameriprise Shares Look Lofty. Barron’s. August 6, 2007.) ”
From August 6, 2007 to the low of November 2008, AMP declined -78%. As of April 9, 2020, AMP is up +109%.
Gold/GLD: UBS analyst John Reade
“Analysts say that buyers are set to return as the urge to avoid risk revives. Add to this an increasing physical demand from consumers, particularly in India, and gold's outlook is all the more bullish and its current price all the more attractive. Says UBS analyst John Reade: "In this environment, there's a meaningful chance that gold will attract the safe-haven bid that has been so far mostly absent during the credit crunch (Hotter, Andrea.Glimmers of Hope for Gold. Barron’s. August 27, 2007)."
At the time this was written, the iShares Gold ETF was trading at $65.98. The ETF went as high as $184.82 and settled at $70 at the lowest point in October 2008, gaining +6.09%. Currently, GLD sits below the 2011 peak but comfortably above the 2007 recommendation level.
British Airways (BA) or (IAG.L): UBS analyst Tim Marshall
“BA (British Airways) however, does have an ace up its sleeve: a new state-of-the-art terminal at Heathrow that opens in March. Known as Terminal 5, the huge facility will be for BA exclusively and offer travelers unusual comfort and speed in everything from security checks to baggage claims. The new terminal will ‘make the airline far more competitive and, in the end, will be a far greater positive for the airline than Open Skies will be a negative,’ maintains Tim Marshall, a UBS analyst in London. If he's right, the stock could actually rebound over the next 12 months (Palmer, Jay. Opening the Skies. Barron’s. December 3, 2007.).”
From December 3, 2007 to the low of October 10, 2008, IAG.L declined -68.02%. IAG.L sits
Thoughts
The winners, and still champions, are Safeway, CSL Limited and gold. The analysts, Neil Currie, Andrew Goodsall and John Reade, made calls that have stood the test of a major bear market and thrived through the subsequent bull market. These are analysts that should be tracked down and followed as their assessment may have been a function of timing, luck, or solid hard work.
Our favorite call is the Safeway assessment by Neil Currie because the price target given was very accurate and even after a buyout offer (years later) the stock did not get priced far above the 2007 valuation.
Those that didn’t do so well were at the mercy of the markets. Andrew Kligerman gets a mention for recommending Ameriprise Financial which crashed and recovered.
Posted in Analyst Estimate, Barron's, Barron's Data
Analyst Estimates: U.S. Dividend Watch List
Performance Review
On October 21, 2016, we posted analyst estimates for the expected gains for our watch list stocks dated October 14, 2016. Below is the performance review of the stocks that were part of that assessment.
At the time, we grouped the stocks into three separate categories (“high risk, high return,” “average risk, average return,” and “high expectation, low return”) as seen in the chart below:
As separate categories, the returns were as follows:
We have to be mindful of the fact that the high, average, and low returns are based on long term expectations for similar stocks. When contrasted against the Dow Jones Industrial Average, which gained +27.91% over the same time, the gains of each category are hardly “high” or “average.”
Canadian Dividend Watch List: October 2017
Below is the list of Canadian dividend stocks that currently, or in the past, had a history of consecutive dividend increases that are at compelling prices or values. We include analyst estimates for the coming year.
Insurance Watch List: October 2017
Performance Review
The following is the performance of the Insurance Watch List stocks that we published in October 2016.
| symbol | name | 2016 | 2017 | % chg |
| THG | The Hanover Insurance Group, Inc. | 78.97 | 97.68 | 23.69% |
| HALL | Hallmark Financial Services Inc. | 10.25 | 11.59 | 13.07% |
| CNO | CNO Financial Group, Inc. | 15.67 | 24.04 | 53.41% |
| ORI | Old Republic International Corp. | 18.32 | 19.6 | 6.99% |
The average return for the four stocks was +24.29% as compared to the iShares Dow Jones US Insurance Index ETF (IAK) gain of +20.27%. The analysts called the performance of the stocks fairly well as indicated in the chart below.
Of the four stocks, only Hallmark Financial Services (HALL) was not able to exceed expectations (assuming the low estimate and the price of the stock maintained the same p/e ratio).
In our “Sell the Principal” section we outlined the stocks that we thought investors should consider selling the principal as the price of the stocks had exceeded all reasonable one year gains. Below is the performance of the list of stocks in the order as presented at the time.
| name | 10/16.2016 | 10/6/2017 | % change |
| Syncora Holdings Ltd. | 1.35 | 2.06 | 52.59% |
| Genworth Financial, Inc. | 5.05 | 3.63 | -28.12% |
| Crawford & Company | 11.68 | 11.89 | 1.80% |
| Hilltop Holdings Inc. | 23.15 | 26.08 | 12.66% |
| Lincoln National Corporation | 48.9 | 75 | 53.37% |
| Endurance Specialty Holdings Ltd. | 91.89 | 92.98 | 1.19% |
| Principal Financial Group Inc. | 52.33 | 66.65 | 27.36% |
| Kingsway Financial Services Inc. | 5.65 | 5.95 | 5.31% |
| National Interstate Corporation | 32.42 | 32 | -1.30% |
| Stewart Information Services Corporation | 46.36 | 38.01 | -18.01% |
| Unum Group | 36.37 | 52.54 | 44.46% |
The entire list gained an average of +13.76% as compared to the iShares Dow Jones US Insurance Index ETF (IAK) gain of +20.27%. Only four stocks exceeded the performance of IAK (UNM, LNC, PFG, and SYCRF). Meanwhile, the remaining list of stocks performed well below the +20.27%. More than half the list showed below average or negative returns. This month’s “Sell the Principal” list has refined how the data is interpreted with the stated goal of highlighting those stocks expected to register negative returns after a review in October 2018.
Review: DJIA Analyst Review
In our posting of October 22, 2016, we highlighted the Analyst Estimates for the Dow Jones Industrial Average. We took the analyst low estimated earnings and with a price to earnings ratio of 15 projected one year out. Below are the estimated returns and the actual returns as of September 29, 2017.
In our assessment of October 22, 2016, we had proposed the following outcomes to watch for:
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“We believe that the average category provides the best return overall with the high risk group offering exceptional gains for aggressive investors who have a longer time horizon (3-7 years).”
In the category indicated as “high risk” the estimate by analysts suggested that the group would decline by more than –24.02%. However, instead of falling, the high risk group has gained as much as +21.32%. The “average return” group nearly doubled the expected return as determined by analysts. Finally, the group indicated as “high expectations” gained half as much as the analysts had indicated based on the projected earnings with a price multiple of 15 times.
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Our “NLO dogs” of the Dow would “…produce surprising numbers as compared to the way the conventional ‘dogs’ would perform .”
As outlined in the graph above, the projected return of the “NLO dogs” increased by +17.29% instead of declining –13.30%. However, that exceptional reversal of fortune was not enough to meet our goal of the “NLO dogs” beating the traditional “Dogs of the Dow” investment strategy.
Thoughts
While there are three weeks remaining for the final 1-year numbers to come in, we’ve had some mixed results with our forecasts on expected returns. Overall, the selection of companies in the most widely followed index should have similar outcome as outlined in 2016.
Those stocks that are expected to perform the worst will exceed the prescribed returns while those expected to outperform will generally underperform analyst expectations. We hope to follow up on the overall performance of the “high risk” group to see if the 3-7 year performance manages to hold up to our expectations.
Regarding the “Dogs” investment strategy, while it is nice for the stocks that we selected to exceed the performance of the analysts, the original theory seems to remain consistent, at least in the period from 2016 to 2017.
Posted in Analyst Estimate, dog of NLO, dog of the dow
Insurance Watch List: September 2017
Below is the insurance watch list for the month of September 2017. In additions, we have included the analyst one year estimated returns and a review of watch list stock.
Nasdaq 100 Watch List: August 2017
Performance Review
Below is the performance of the stocks on our watch list from January 25, 2017.
So far, the analysts haven’t fared well in their estimates. Stocks on the left side of the spectrum were expected to decline while those on the right were expected to do very well. Click on the chart to see what the analyst thought in January 2017. In the same period of time, the Nasdaq 100 has gained +17.26%.