Below are the valuation targets for The TJX Companies (TJX) for the next 10 years. Continue reading
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Tompkins Financial 10-Year Targets
Below are the valuation targets for Tompkins Financial (TMP) for the next 10 years. Continue reading
Chart of the Day: SPAR Group
According to Yahoo!Finance, “SPAR Group, Inc., together with its subsidiaries, provides merchandising and marketing services worldwide. The company's syndicated services include product reordering and replenishment; ensuring its products for distribution; adding new products; implementing store planogram schematics; setting product category shelves; ensuring that product shelf tags are in place; checking for salability of the clients' products; placing new product and promotional items in prominent positions; and kiosk replenishment and maintenance services for retailers, manufacturers, and distributors. Its dedicated services consist of syndicated services, as well as new store set-up, store remodel, and fixture installation services for a specific retailer or manufacturer.”
The Study of Failure
“Hitters fail in their task to reach base roughly seven times out of 10. Pitchers fail to get hitters out perhaps 25 percent of the time and allow an average of one run in every two or three innings ("The Baseball Page: Clemens Learns About Failure." UPI Archive: Sports News, 5 July 1986. Infotrac Newsstand. Accessed 17 Dec. 2018.).”
Posted in Chart of the Day, SGRP, The Study of Failure
The Ratings Game: PG&E
In the chart below, we’ve highlighted various organizations that have given a sell rating on Pacific Gas & Electric (PCG).
For our money, when the rating agency gives a “junk” status that is considered the equivalent of a “sell” rating for institutional/long-term investors in PCG bonds.
Posted in PCG, PG and E, The Rating Game
Carnival Corporation 10-Year Targets
Below are the valuation targets for Carnival Corp. (CCL) for the next 10 years.
Our valuation targets for Carnival Corp. (CCL) in 2019 are:
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$109.16 (overvalued)
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$78.67 (fair value)
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$48.18 (undervalued)
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$31.78 (extreme undervalue)
The valuation targets for Carnival Corp. (CCL) are based on a dividend growth rate of 2.50% which is derived from the annual 10-year growth rate as indicated on the Value Line Investment Survey dated November 2, 2018 and applied to Edson Gould’s Altimeter. A graphical representation of the overvalued, fair value, and undervalued levels are below.
The above Altimeter translates into the following undervalued and overvalued ranges since 2006:
10-Year Targets
| Undervalued | Fair Value | Overvalued | Extreme Undervalue | |
| 2018 | $47.00 | $76.75 | $106.50 | $31.00 |
| 2019 | $48.18 | $78.67 | $109.16 | $31.78 |
| 2020 | $49.38 | $80.64 | $111.89 | $32.57 |
| 2021 | $50.61 | $82.65 | $114.69 | $33.38 |
| 2022 | $51.88 | $84.72 | $117.56 | $34.22 |
| 2023 | $53.18 | $86.84 | $120.49 | $35.07 |
| 2024 | $54.51 | $89.01 | $123.51 | $35.95 |
| 2025 | $55.87 | $91.23 | $126.60 | $36.85 |
| 2026 | $57.26 | $93.51 | $129.76 | $37.77 |
| 2027 | $58.70 | $95.85 | $133.00 | $38.71 |
| 2028 | $60.16 | $98.25 | $136.33 | $39.68 |
| 2029 | $61.67 | $100.70 | $139.74 | $40.67 |
| 2030 | $63.21 | $103.22 | $143.23 | $41.69 |
| 2031 | $64.79 | $105.80 | $146.81 | $42.73 |
Observations
According to Value Line Investment Survey, Carnival Corp. (CCL) has an expected price range of $85-$125 by 2021-2023. On our end, we have a range from as low as $50.61 to as high as $120.49 in the same period of time.
A concern that we have with Carnival Corp. (CCL) is that the company employs an aggressive dividend policy in good times that requires being reigned in when the stock is slumping. This makes it necessary to watch for the extreme undervalued level as a natural reaction to the sharp dividend increases since 2015 as well as a possible dividend cut.
Last updated: January 8, 2019
Posted in 10-year Targets, Altimeter, CCL
Chart of the Day: Workhorse Group
According to Yahoo!Finance, “Workhorse Group Inc. designs, manufactures, builds, sells, and leases battery-electric vehicles and aircraft in the United States. It operates through two divisions, Automotive and Aviation. The company also develops cloud-based and real-time telematics performance monitoring system that enables fleet operators to optimize energy and route efficiency. Its products include electric cargo vans, and medium and light-duty pickup trucks, as well as HorseFly delivery drones and truck systems. The company was formerly known as AMP Holding Inc. and changed its name to Workhorse Group Inc. in April 2015. Workhorse Group Inc. was founded in 2007 and is headquartered in Loveland, Ohio.”
The Study of Failure
“'If I have one word of advice to pass along to Bo Jackson,' said Kirk Gibson, Detroit's football-to-baseball star right fielder, 'it is to prepare to accept failure.' ("The Baseball Page: Clemens Learns About Failure." UPI Archive: Sports News, 5 July 1986. Infotrac Newsstand, . Accessed 17 Dec. 2018.).”
Posted in Chart of the Day, The Study of Failure, WKHS
The False Narrative of Stocks and Interest Rates
The good news about the Dow Jones Industrial Average is that it has been around for the last two secular periods of rising interest rates. The first period is from 1898 to 1925 (27 years) and the second period is from 1942 to 1981 (26 years). In this posting, we show how the crowd that claims rate increases are the death of stocks is false.
The False Narrative
The false narrative is as follows, “…the reason for the wealth creation in the U.S. since 2009 is due to the decline in interest rates. Therefore, when interest rates start to increase there will be a crash in stock prices.”
The Facts
Let us review the performance of the Dow Jones Industrial Average from 1896 to 1925 within a secular trend of rising interest rates.
Let us review the performance of the Dow Jones Industrial Average from 1942 to 1981, within the last secular trend of rising interest rates.
In both instances, within the entire period of rising interest rates/inflation, the Dow Jones Industrial Average increased significantly. Most interesting is the fact that the period from 1896 to 1925 had stocks offering substantial total returns due to lopsided par value stock and high dividend yields. This puts much of the gains not calculated in the Dow Jones Industrial Average in the pockets of investors and not the price of the index.
The False Narrative Crowd
It is very easy to make false claims. However, the data tells a completely different story. There will be stock market crashes in either secular trend in interest rates for various other reasons. Strictly because rates are rising isn’t necessarily one of them.
Posted in DJIA, false narrative, interest rates
Standex International 10-Year Targets
Below are the valuation targets for Standex International (SXI) for the next 10 years. Continue reading
Bristol-Myers Squibb 10-Year Targets
Below are the valuation targets for Bristol-Myers Squibb (BMY) for the next 10 years. Continue reading
Chart of the Day: AirMedia Group
According to Yahoo!Finance, “AirMedia Group Inc. operates out-of-home advertising platforms in the People's Republic of China. The company operates a network of digital (television) TV screens on planes operated by 7 airlines; and gas station media network, as well as other outdoor media advertising platforms in gas stations. It also displays non-advertising content, such as weather, sports, comedy clips, local attractions, documentaries, commentaries, and reality shows.”
The Study of Failure
“Baseball is really a game of failure. Statistics measure everything happening to individuals who pass over the white foul lines in a game that is played alone and yet together. All the numbers are a measure of failure, what is not done, more than what is accomplished ("The Baseball Page: Clemens Learns About Failure." UPI Archive: Sports News, 5 July 1986. Infotrac Newsstand, Accessed 17 Dec. 2018.).”
Posted in AMCN, Chart of the Day, The Study of Failure
Mercury General 10-Year Targets
Below are the valuation targets for Mercury General (MCY) for the next 10 years. Continue reading
DJIA Targets: January 4, 2019
Below are the upside resistance levels to watch. Continue reading
U.S. Dividend Watch List: January 4, 2019
2018 started out strong but the bear took over at year end. We look forward to a new year and hope to produce quality investments from the dividend watch list below. Continue reading
Posted in Dividend Achiever Watch List, Dividend Achievers, Dividend Watch List
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Tax Shifting Update: January 2019
Government will fight to support Apple, but Perrigo must battle alone- by Cliff Taylor, The Irish Times
Key Takeaways:
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The Irish government will help Apple (AAPL) defend again an EU claim of €14 billion in taxes while Perrigo (PRGO) will not get support for €1.64 billion sought by the Irish Revenue office.
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With 2017 revenue at $229 billion at Apple and $4.946 billion at Perrigo, the claim against Apple is only 6.11% of 2017 revenue while the claim against Perrigo is 33.15% of 2017 revenue.
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Apple doesn’t need the help of the Irish authority but will get it, Perrigo needs the help of the Irish authority but won’t get it.
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This is a classic catch-22, if the Irish Revenue agency wins their case of taxes owed by Perrigo then it will legitimize the EU’s claim against Apple. The Irish Government wants what is owed to it but does not want its biggest client to lose a case that marginally affects its bottom line.
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The expected outcome of either case is tentatively slated for two years after the initial claim.
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We suspect that the implications of the Perrigo case will dawn on the Irish Revenue Authority and they will settle for far less than what was initially sought and it will be deemed a victory on all sides.
Retrospective: Bristol-Myers pulls $25 bln assets out of Ireland by Matthew Tostevin, Reuters March 16, 2007
Key Takeaways:
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Bristol-Myers Squibb (BMY) pulled $25 billion out of Ireland in March 2007.
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“It’s a holding company. It does not have any business operations or workforce,” said Brian Henry.
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“Henry declined to comment on a report in The Irish Times that the move was to benefit from even lower corporate tax rates elsewhere…”
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The performance of BMY stock price after the shifting of $25 billion out of Ireland coincides, but not necessarily caused by, with a peak and subsequent decline of -34.71%.
Posted in AAPL, income shifting, PRGO, tax inversion, tax shifting
Chart of the Day: Attis Industries
According to Yahoo!Finance, “Attis Industries, Inc., a technology company, focuses on biomass innovation and healthcare technologies. The company operates in two divisions, Technologies and Innovation. The Technology division focuses on providing patient care services; diagnostic and therapeutic solutions for patients and healthcare providers; and products and services in various areas, including hospital consulting services for laboratory and emergency department, polymerase chain reaction molecular testing, pharmacogenetics testing, and medication therapy management. This division also offers Bright City, a mobile application that enables towns, cities, and municipalities to communicate directly. The Innovation division focuses on producing materials and fuels from renewable sources. The company was formerly known as Meridian Waste Solutions, Inc. and changed its name to Attis Industries, Inc. in April 2018. Attis Industries, Inc. was incorporated in 1993 and is headquartered in Milton, Georgia.”
The Study of Failure
“We intuitively know the value of not being hard on children who fail. What parent will scold an infant who stumbles while learning to walk or yell at the 7-year-old who falls during early attempts to master a two-wheeler? When children are young, we encourage all efforts and soothe their feelings when they meet defeats, yet as they grow older we begin to focus on success and lose our tolerance for their failures. (Levine, Frederic A. "WESTCHESTER OPINION; Failures Offer Lessons on Winning." New York Times, 7 Jan. 1990. Infotrac Newsstand, Accessed 17 Dec. 2018.)”
Posted in ATIS, Chart of the Day, The Study of Failure