Category Archives: Nasdaq 100 Watch List

Performance Review

Below is the performance of our Nasdaq 100 Watch List dated September 11, 2015.   In addition, we have broken out the performance to the various categories that we assigned at that time.

The stocks that were favored by analysts to perform the best (high expectations) were unable to exceed the stocks that we highlighted as likely to do better than average.  Stocks highlighted as “average risk” and “high risk” far exceeded the performance of the Nasdaq 100 index and notched better gains than “high expectation” stocks.

The worst three stocks were Western Digital (WDC), Bed Bath & Beyond and Mylan (MYL) at –41.69%, –24.91% and –17.47%, respectively.  the best three stocks were Applied Materials (AMAT), Autodesk (ADSK) and Yahoo (YHOO) at +93.55%, +46.74% and +37.73%, respectively.

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Performance Review

Below is the performance of the Nasdaq 100 stocks from our April 24, 2015 watch list:

The analyst estimates of one year ago are compared to the actual performance.  As can be seen, 3 of 4 stocks expected to decline did while 2 of 5 stocks rose in price that were anticipated to rise.

We mentioned or discussed a few stocks of interest at the time. QCOM and FOSL bombed while SNDK and KLAC exceeded expectations. However, the one stock that stood out the most was regarding NetApp (NTAP).  At the time, we said:

“Investors should remember that with analyst estimates for a +44% gain in the coming year, there is the possibility that expectations are so high that any minor earnings or revenue miss could crater the stock.  In spite of the potential negatives, we think that NTAP could be a takeout target in the next year.”

While there was some talk of NTAP as an acquisition target, the reality was that it was just talk and not much else.  However, the most important issue at the time was proven to be correct, excessive expectations of gains by analysts were met by the most negative divergence in performance.

Nasdaq 100 Watch List

Performance Review

Below is the performance of the watch list stocks from our March 27, 2015 posting:

The watch list averaged an equal weighted loss of –1.32% while the first five stocks averaged a gain of +3.15%.  This compares to the gain for the Nasdaq 100 Index of +0.52% over the last year.  The stocks of interest (STX, QCOM, SNDK, KLAC) had worse than average results with an equal weighted decline of –6.00%.  Our quote at the time was:

“In the chip sector, the recent announcement by Intel that they are interested in buying Altera (ALTR) suggests that further consolidation of the industry is on the way.”

Since that March 2015 posting, all of the companies were involved in some kind of merger/acquisition activity.  Sandisk was supposed to go to Western Digital, Seagate acquired Dot Hill, Lam Research acquired/merged with KLA-Tencor and rumors abounded about Intel actually buying Qualcomm. The mixed results of the stock performance over the last year should not be confused for the long-term reality of this sector.  These stock will be acquired or rendered irrelevant in due time (as is the rule for all stock investments).  However, the odds favor the production, storage/memory and plant assembly in the chip sector.

Performance Review

Below is the performance of the nine stocks from the January 9, 2015 Nasdaq 100 watch list compared to the performance of the Nasdaq 100 Index in the last year.

The nine stocks on our 2015 watch list increased +17.37% while the Nasdaq 100 index gained +1.36%.  The biggest gain was Amazon.com (AMZN) which increased +104.43%.  The largest loss was generated by Qualcomm (QCOM) which fell by –38.35%.  The top five stocks (NUAN, GOOGL, GOOG, MAT, DISCA) gained +20.12%.

The stock that we were most interested in was Nuance Communications (NUAN).  At the time, we said of NUAN:

“NUAN has met all of Gould’s downside targets (extreme at $10.15 and conservative at $24.80.  All that is left for NUAN is to decline to the actual $10.15 price and the 2008 low at $6.18.  Speculators (as opposed to investors) should consider investment into this stock in three stages, once at the current price then the next two at $10.15 and $6.18 levels.” 

The 1-year performance chart for NUAN is below:

Right out the gate, NUAN meandered higher and then took off in late April.  For a stock that was left for dead, we believed that the chances favored NUAN going forward.

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Below is the performance of the stocks from our June 20, 2014 Nasdaq 100 watch list compared to the Nasdaq 100 Index gain of +17.84% over the last year.

Below is the analyst estimates from last year compared to the actual performance of the stocks.

At the extremes we see that Liberty Media (LMCA), Whole Foods (WFM), Fossil (FOSL), Discovery Communications (DISCA) and NetApp (NTAP) went in opposite directions of the analysts.  At the same time, the expectations for the remaining stocks didn’t quite come as close as anticipated.  The lone exception is Ebay (EBAY) which was expected to gain +16.34% as opposed to +23.69% of actual change.

Nasdaq 100 Watch List

Below is the latest list of stocks that we believe present the best investment opportunities from the Nasdaq 100 Index.

Below are the analyst estimates (in red) from our May 30, 2014 Nasdaq 100 Watch List and the actual performance of the stocks (blue).

The actual performance continues to reflect our theory that, at the time of the estimates, the analysts are likely to be too pessimistic of those stocks that have recently fallen on hard times while too optimistic for the stocks that have performed “better.”  Keep in mind that the list of stocks that we follow are already considered to be unloved.  However, the analyst estimates are routinely far off the mark.

The following was our commentary on the watch list last year:

“As we head into the month of June, we have to expect that LMCA and ISRG are the most likely to provide upside surprises as these stocks are considered by most analysts to underperform the market by a wide margin.”

As expected, LMCA and ISRG went in the opposite direction of the analyst estimates. Liberty Media gained +16.25% instead of falling –69.24% while Intuitive Surgical (ISRG) gained +33.90% instead of falling –31.50%.

Our specific stock of interest was Ross Stores (ROST).  Of ROST, we said the following:

“If a repeat of the previous decline were to occur, we should expect $61.49 to appear on our radar before a meaning[ful] attempt at the old high.  We would not be buyers of the stock at the present time, however, the extreme upside target for this stock is $113.19 based on the work of Gould.”

Since our May 30, 2014 posting, ROST declined to $61.83 (within 1% of our estimated downside target) before climbing as high as $108.91 (within 4% of our estimated upside target) by March 24, 2015.

Nasdaq Watch List

Below are the Nasdaq 100 companies that are on our radar.