More by the Same Author
2013-05-21 General Electric Looks Like It's Becoming The Shareholder-Friendly Company It Once Was by Chuck Carnevale of F.A.S.T. Graphs
General Electric (GE) was once revered as one of the bluest of all blue-chip companies in the world. During its glory days, GE was respected as an industrial conglomerate that manufactured some of the world’s best jet engines, locomotives, appliances and even the highly regarded General Electric light bulb. However, as best I can determine, the roots of General Electric’s ultimate demise were established in 1930 when the company, responding to the great depression, formed GE Finance in order to help their customers finance GE appliances over time.
2013-05-16 The Dow Hits All-Time Highs, But The Truth Is It Remains Cheaply Valued by Chuck Carnevale of F.A.S.T. Graphs
The Dow Jones industrial average sits above 15,000, an all-time high. But don’t be fooled, this doesn’t mean that stocks are expensive. I understand that it seems logical to assume that
2013-04-26 Many Of My Dividend Growth Stocks Have Become Overvalued, What Do I Do Now? by Chuck Carnevale of F.A.S.T. Graphs
To me, there’s almost nothing better than finding a great company that I truly want to own at a fair valuation, or better yet, undervalued. In the long run, it has been my experience that this usually leads to outsized future returns, especially if you buy stocks when they are undervalued at the time. But there is quite often a side effect that can prove very disconcerting. Once an undervalued stock starts moving to the upside, momentum will often carry it above what prudent fair valuation would dictate.
2013-04-12 The Truth About The Impact Of Dividend Reinvesting by Chuck Carnevale of F.A.S.T. Graphs
What follows will be several examples of different kinds of dividend paying stocks offered in order to provide deeper insight into several commonly held notions. With each example, I will focus on how much return comes from dividends and how much comes from capital appreciation. I will also illustrate the precise benefits and effects of dividend reinvestment as it applies to different types of dividend paying stocks.
2012-10-26 How Can I Know If My Stocks Are Fairly Valued? by Chuck Carnevale of F.A.S.T. Graphs
When the operating results of a business, i.e. its earnings and cash flows, do not represent an attractive rate of return on investment, it should be instantly obvious to the prudent investor that fair valuation is not present. Conversely, when the earnings yields are very high based on reasonable assumptions, the opportunities this represents should be readily apparent as well.
2012-10-24 Based on Real Math The S&P 500 Is Fairly Valued by Chuck Carnevale of F.A.S.T. Graphs
As investors, we do not believe in forecasting stock markets or stock prices on individual stocks. Instead, we approach investing as the process of calculating intrinsic value based on fundamentals. To us, the most important fundamental to be considered when evaluating the True Worth of a market or a common stock is earnings. Therefore, it's important that the reader understands that this article is offered as a mathematical calculation of what the S&P 500 is actually worth based on earnings.
2012-10-19 Cyclical and Turnaround Stocks: There Is A Lot Of Value In This Market: Part 5 by Chuck Carnevale of F.A.S.T. Graphs
This article represents the final installment in our "There Is A Lot of Value In This Market" series. In some ways, this article represents prima fascia evidence supporting some of our main hypotheses. First of all, this article will clearly support the notion that not all common stock are the same, and therefore, they should all not be painted with the same broad brush stroke (generalities or opinions).
2012-10-05 High-Yield Buys: There Is a Lot of Value In This Market: Part 3 by Chuck Carnevale of F.A.S.T. Graphs
In this part 3, we turn our attention to the highest yielding stocks that are constituents on the S&P 500. However, we submit that there are essentially two primary reasons that explain why these stocks offer such high yields.
2012-09-28 Growth Stocks: There is a Lot of Value in this Market Part 2 by Chuck Carnevale of F.A.S.T. Graphs
In part one of this series we introduced the notion that in all markets whether bear or bull, there will always exist individual stocks that are fairly valued, overvalued or undervalued. In this same vein we argued that it's a market of stocks, not a stock market. To put this into context, we are simply suggesting that the discerning investor can always find bargains if they are willing to look and do their homework. However, we should also add that bargains can come from many different types of equities.
2012-09-21 There is a Lot of Value in this Market: Part 1 by Chuck Carnevale of F.A.S.T. Graphs
Whenever there is a rise in stock values as we have experienced over the past year or so, it seems to be human nature to automatically assume that valuations have become too high. However, although it is possible that this is true, it is not necessarily so. A lot has to do with where valuations were before the run-up occurred. For example, if valuations were extremely low, then even after a rise, they can continue to be low or perhaps only have risen to becoming fairly valued.
2012-07-17 How to Forecast Future Stock Returns: Part 3 by Chuck Carnevale of F.A.S.T. Graphs
A lot of what Part 1 & Part 2 attempted to convey is the logical and common sense nature of valuation in regards to sensible stock investing. Once you have determined that fair valuation, plus or minus, exists, then the prudent investor should look to future earnings growth as the likely source of future long-term returns. By applying the same principles that we presented and discussed in Parts 1 & 2, we can calculate within a reasonable range of predictability what our future returns might be.
2012-07-05 How to Know What Rate of Return to Expect from your Stocks: Part 2 by Chuck Carnevale of F.A.S.T. Graphs
In this Part 2, we will focus on how to utilize current valuation in conjunction with earnings growth rates in order to come up with a reasonable expectation of the future total returns a stock can be expected to provide. The point is that neither can be looked at in isolation. In other words, the price you pay to buy the growth that the company ultimately delivers, will determine not only how much money you make (the percentage return on investment), but how much risk you took to make it.
2012-06-21 50 Potential Investment Opportunities to Participate in the New Golden Age: Part Three by Chuck Carnevale of F.A.S.T. Graphs
In parts one and two of this three-part series I presented a case that focused on the long-term potential for a bright future of economic strength and growth. Moreover, I pointed out that I felt that the best of what our economic future holds goes mostly ignored, in favor of a focus on our problems. Therefore, I concluded that there exists a general pessimistic view of our future that I believe is wrong.
2012-06-14 The US Economy Sitting on the Threshold of a New Golden Age: Part Two by Chuck Carnevale of F.A.S.T. Graphs
In part one of this multipart series on the US economy I offered the following basic opinion: The majority of the positive aspects underpinning the US economy are being mostly ignored by mainstream media in favor of the smaller, but more titillating, negative aspects. Consequently, I believe that many Americans, and since this is an investing blog, many investors, are holding a much more negative view of the strength of the American economy than is warranted. I offer massive outflows from equity funds into Treasury bonds as evidence supporting my thesis.
2012-06-08 The US Economy Sitting On The Threshold Of A New Golden Age: Part One by Chuck Carnevale of F.A.S.T. Graphs
In the past, Ive written numerous articles positing a long-term optimistic outlook for both our economy and the attractive future growth prospects of our great American businesses. Even though I hate to forecast the market in general, I have even presented evidence indicating that the general market as represented by the S&P 500 is currently reasonably priced and even slightly undervalued. My most recent contribution can be found here.
2012-06-04 My Best Investment Advice - Watch Your Fellow Investors And Do The Opposite by Chuck Carnevale of F.A.S.T. Graphs
In my opinion, the recent selloff in stocks defies commonsense and logic, but in truth and fact it usually does. In other words, its not uncommon to see investors selling at precisely the time they should be buying and vice versa. Moreover, when investor pessimism is at a high, like it is today, stocks become cheap causing people to panic and sell. Now when I review the data, I get optimistic and immediately began to suspect that all this pessimism is creating a great long-term opportunity for investors with a more optimistic view of the future.
2012-05-24 Blue-Chip Dividend Growth Stocks Todays Strong Option For Retirement Portfolios - Part 1 by Chuck Carnevale of F.A.S.T. Graphs
There is a confluence of factors that are painting a very odd picture of current investor behavior. Common sense and a careful analysis of the market dynamics between equities and bonds today would indicate that investors should be acting in the exact opposite manner than they are. Interest rates are hovering at a 100-year low, which creates two problems for investors. First, there is not enough return from bonds to fund a retirees income needs or to fight inflation. Second, investing in bonds with interest rates so low makes it riskier to own bonds today than it has been in over a century.
2012-05-18 Blue-Chip Dividend Growth Stocks Todays Strong Option For Retirement Portfolios - Part 1 by Chuck Carnevale of F.A.S.T. Graphs
There are many pundits and prognosticators that never weary of attempting to convince investors on how risky it is to invest in equities, even high-quality dividend blue-chip paying equities. Invariably, they will always point to volatility as the evidence supporting their thesis that stocks are too risky of an investment for retirees. I believe this is a great travesty that is prominently promogulated upon an unwary investing public. The inevitable interruptions in the business cycle have conditioned people into believing that stocks are riskier than they really are, at least in my opinion.
2012-05-02 Newsflash: The Dividend Aristocrats Found The Lost Decade by Chuck Carnevale of F.A.S.T. Graphs
Volatility can only hurt you if you react to it. And you should not react to it unless there is a real fundamental deterioration with the fundamentals of the businesses you own. If fundamentals are strong and price falls, then buy more if you can, or hold if you cant buy more. The very best companies can remain profitable even during our most severe economic challenges. Consequently, when you can find these companies on sale, regardless of what caused it, I believe you should consider optimistically investing in them. It sure beats taking losses that you dont need to absorb.
2012-04-27 Yes, They Do: Low Interest Rates Do Make Stocks Cheap by Chuck Carnevale of F.A.S.T. Graphs
Im inspired to write this article because I am so frustrated by the plethora of all the so-called expert market prognosticators that continuously bombard the public with negative forecasts. I consider this to be both erroneous and irrational. When the markets are doing well, we are immediately inundated with articles talking about how the market has surely topped and a big drop is imminent. The real truth of the matter is that nobody really knows. Not the Fed, nor any of the so-called experts. Pessimism is pervasive, but optimism is, in fact, more accurate and rational in my opinion.
2012-04-20 Maybe Diversification Is Not All It's Cracked Up To Be by Chuck Carnevale of F.A.S.T. Graphs
As I began digging into the many faces of diversification, I quickly learned that it is a much more complex concept than at first meets the eye. I feel I learned that there is no one-size-fits-all or even a set of universally applicable rules or principles. To a great extent, diversification turns out to be a very personal issue. How much or how little depends more on your goals and objectives, the knowledge and experience you possess, the time you can allocate to your investment portfolio, and of course, your tolerance for risk. Some of us need a great deal of diversification.
2012-04-12 Volatility Is Not Risk by Chuck Carnevale of F.A.S.T. Graphs
Rogers blog dealt with his feelings about a recurring theme in Barrons over the weekend referencing peoples complacency for risk. The first part of his writing dealt with the risks associated with the utilization of puts. On this subject, Roger and I are in agreement. However, the second part of his blog talked about what he felt was the great risk of using dividend paying equities as an alternative investment choice. The following analysis utilizing the F.A.S.T. Graphs earnings and price correlated research tool illuminates the important parts that I feel Roger left out.
2012-04-06 If You Think All Utility Stocks Are The Same - Think Again by Chuck Carnevale of F.A.S.T. Graphs
Utility stocks, especially regulated utility stocks share certain characteristics that differentiate them from the typical dividend growth stock. On the plus side, utilities are thought of as predictable stocks with low volatility characteristics. Utility stocks also tend to provide a higher current yield than many dividend growth stocks. On the other hand, all of this consistency comes at a sacrifice of growth. Since the typical utility has a significant portion of their businesses regulated, their ability to grow earnings and dividends is restricted.
2012-04-05 CACI - Growth at a Ridiculously Low Price by Chuck Carnevale of F.A.S.T. Graphs
We believe that CACI it is extremely high-quality Defense Company with a niche that is currently being unfairly discounted by Mr. Market. The company possesses a predictable and consistent opportunity for continued double-digit earnings growth that is significantly in excess of the average company. Nevertheless, it can currently be purchased at a significant discount to the average company. This company pays no dividends; it is purely an opportunity for growth that can currently be purchased at a significant discount to its True Worth.
2012-04-03 Five Undervalued Dividend Paying Retailers by Chuck Carnevale of F.A.S.T. Graphs
We believe the retail sector is currently a mixed bag where some of the best names are currently too pricey to buy. Retailers such as Costco (COST), Ross Stores (ROST) and T.J. Maxx (TJX) have seen their share prices skyrocket over the last year or so. On the other hand, not all leading retailers have followed suit even when their operating results have been comparable. We have identified five well-known and even leading retailers that offer attractive valuation, good dividend yields and the opportunity for double-digit total returns over the next five years.
2012-03-20 Apple Does Not Need its Cash to Grow as Much as its Shareholders Need it to Spend by Chuck Carnevale of F.A.S.T. Graphs
The debate surrounding active versus passive investment management continues to attract a growing share of investor interest. After several years of underperformance, active managers are finally outperforming their benchmarks YTD, but it may be too late. Investors, frustrated with the underperformance and higher fees, are piling en masse into exchange-traded funds (ETFs) and other low cost solutions. The time for an all-passive solution may not be right now, but active managers are undoubtedly concerned about what the future may hold.
2012-03-16 The Truth About Earnings and How They Drive Stock Values and Shareholder Returns by Chuck Carnevale of F.A.S.T. Graphs
I wanted to clearly establish the importance of a comprehensive fundamental analysis before an investment decision is made. However, determining fair value from the perspective of the right market price to pay to buy a stock is a function of applying the appropriate PE ratio to reported earnings, and the recognition that, long-term rates of return are going to be a function of the companys earnings. Finally, my objective was to provide, conclusive and undeniable evidence that this theory actually works under real-world conditions. Fair market value is clearly a function of earnings.
2012-03-09 Investors In Common Stocks Must Get Valuation Right; Heres How by Chuck Carnevale of F.A.S.T. Graphs
Investors should be careful and willing to always run the numbers out to their logical conclusions. But, it all starts with knowing what you are buying (investing in) in the first place. True investors, like Peter Lynch, and many of the other renowned investing greats such as Phil Fischer, Warren Buffett, etc., all invest as owners in businesses with a focus on the strength of the business behind the stocks they buy. Therefore, these investor greats are always buying the earnings power of the respective businesses they are investing in, relative to their goals and objectives.
2012-02-17 Oracle Is Too Cheap To Ignore Any Longer by Chuck Carnevale of F.A.S.T. Graphs
We believe that Oracle Corp. is just one of many technology titans that we believe the market is mispricing. Furthermore, we believe part of that stems from the general pessimism that has created the so-called flight to safety get out of equities. Pessimism thrives on uncertainty; and one of the main attributes of technology is uncertainty. We believe that investors seeking maximum capital appreciation at reasonable levels of risk might do well to take a hard look at not only Oracle, but the technology sector in general.
2012-02-10 Nike (NKE): Just Do It - Sell by Chuck Carnevale of F.A.S.T. Graphs
A close examination of the earnings and price correlated graphs, coupled with the historic valuations that the market has applied to Nike shares, it becomes clear and obvious that Nike shares are overpriced today. Even with its high expected future earnings growth, the headwind of such overvaluation seems likely to make it extremely difficult to achieve any acceptable long-term rate of return. On the other hand, its also obvious that the market has decided to price Nike at todays rich valuation, and therefore, its at least possible that it can continue to do so.
2012-02-03 Fastenal (FAST): A Vivid Case of Overvaluation by Chuck Carnevale of F.A.S.T. Graphs
We believe that the Fastenal Company is an extremely high-quality stock with a very bright future. Nevertheless, we feel that the current valuation the market is placing on their shares is not only higher than their fundamentals justify, but also seem excessive in light of the valuations that the market is generally applying to other businesses. Consequently, we believe that shareholders would be prudent to either sell their shares or at least take some of their profits off the table. The stock has had a great run over the last three years but valuation now appears to be excessive.
2012-02-02 Has McDonalds Become Too Pricey To Buy or Hold? by Chuck Carnevale of F.A.S.T. Graphs
There are two primary reasons for writing this particular article at this particular time. First of all, weve seen a running debate regarding whether McDonalds (MCD) is fairly valued or overvalued at todays valuation levels. Second, weve been challenged to write articles that were depicting full value or overvaluation because we have typically only written articles on undervalued selections. We believe that because McDonalds had such a strong run in calendar year 2011, that many people believe that it now must be overvalued after rising so much.
2012-01-20 Becton Dickinson- A Healthy Dividend Growth Stock On Sale by Chuck Carnevale of F.A.S.T. Graphs
Becton Dickinson & Co. is a blue-chip dividend growth stock that is on sale. Becton Dickinson is also a Dividend Aristocrat and Dividend Champion, that Value Line Investment Survey has awarded high scores for financial strength, price stability, earnings predictability and price growth persistence and a low beta of .65. The company has shown great persistence and strength through the last two recessions, and we believe that estimates for future growth are well reasoned and well defined.
2012-01-19 Net1 UEPS Technologies (UEPS) Rises Over 30 Percent Rewarding Undervaluation by Chuck Carnevale of F.A.S.T. Graphs
Primary reason this is happening is because the market was grossly undervaluing this company shares. Consequently, a piece of good news stimulated an incredible 30% advance in one single trading day. Common sense would tell us that the intrinsic value of a business, even a small business like Net1 UEPS Technologies, could not logically change by a magnitude of over 30% that quickly. Unless of course, it was through a merger, that increased the size and the value of the business by that much. The win of a contract would be unlikely to have such an impact.
2012-01-13 The Top 25 Best Dividend Challengers To Buy Today by Chuck Carnevale of F.A.S.T. Graphs
This is the third and final article of a series of articles we have prepared on dividend paying stocks with a history and legacy of increasing their dividends each year. Our first article covered Dividend Champions, dividend paying stocks with a history of increasing every year for 25 years. Our second article covered Contenders, companies that have increased their dividend every year for 10-24 years. This final article in the series will cover\ Challengers, companies that increased their dividend every year for a minimum of five, to up to nine consecutive years.
2012-01-12 42 Dividend Contenders for Above-Average Total Return by Chuck Carnevale of F.A.S.T. Graphs
With interest rates hovering near all-time lows, investors needing income are faced with very limited choices. The traditional high yield available from bonds and other fixed income vehicles are no longer available to meet the needs of retirees needing income to live off. Moreover, it is almost a certainty that todays low yields are not adequate enough to fight inflation. Consequently, there is a growing investor interest in dividend paying common stocks, especially those that have a long record of increasing their dividend every year.
2012-01-06 Wal-Mart - The Worlds Greatest Retailer, After a Long Hiatus, is a Solid Buy by Chuck Carnevale of F.A.S.T. Graphs
We are going to start the new year off by looking at Wal-Mart which we believe is a blue-chip growth and dividend income selection that can be purchased at a sound and attractive valuation. We believe it is currently fairly valued. Therefore, it represents a very attractive candidate for the long-term investor interested in above-average capital appreciation, with an attractive dividend yield that is greater than the 10-year Treasury bond yield and potentially growing at double-digit rates.The company represents an ideal long-term buy-and-hold investment for the prudent fundamental investor.
2012-01-06 Dividend Champions a Rare Undervalued Opportunity by Chuck Carnevale of F.A.S.T. Graphs
We believe that based on earnings, 2012 is starting out with the stock market undervalued. We believe in the long-term ownership of great businesses purchased at sound and attractive valuations. Consequently, we view the stock market as merely the store that we shop at in order to buy the businesses we want to own.
2011-12-19 Americas Best Companies are Cheap - So Merry Christmas and a Prosperous New Year! by Chuck Carnevale of F.A.S.T. Graphs
Investors have been fleeing US equities at unprecedented levels. Yet, I believe there is compelling evidence that suggests that this may be the best opportunity to invest in high-quality U.S. common stocks that we have seen in many years. The list of 100 stocks presented in this article represents only a sampling of the many companies that are selling at valuations which are lower than their fundamentals justify. The only logical reason that I can come up with for this, is extreme pessimism.
2011-12-16 Growth and Value: Esterline Technologies - a Leading Defense Contractor by Chuck Carnevale of F.A.S.T. Graphs
With the amount of volatility seen in the equity markets today, many people seem to believe that the old proven practices of investing in solid businesses for the long run no longer apply. But its important to remember that there is a significant distinction between true investing and speculating. And its even more important to recognize that the level of risk taken by speculators is significantly greater than the amount of risk assumed by investors.
2011-11-26 A Micro Case For Future Stock Market Performance Optimism by Chuck Carnevale of F.A.S.T. Graphs
On November 14 Liz Ann Sonders, Senior VP and Chief Investment Strategist for Charles Schwab & Co. prepared a report that focuses on the stock markets micro opportunity. The following excerpts from Sonders report highlights several reasons supporting a rational shift in investors attitudes towards optimism. We will intersperse our own commentary among these excerpts in order to emphasize some of our key points. Our objective in sharing this information, is to support our thesis that common stocks are on sale today and, therefore, all the pessimism is more than likely already priced in.
2011-11-26 The Case for Optimism: Our Top 25 Dividend Growth Stocks are Dirt Cheap by Chuck Carnevale of F.A.S.T. Graphs
Within each challenge there has also been accompanying opportunity.And in most cases, the opportunities tend to dwarf the risks. The opportunities that we believe our recent challenges are bringing us are unnecessarily low valuations on some of our highest-quality companies.Yet, it is a fact that investors are flocking to bonds in droves at precisely a time when the risk of owning bonds is perhaps the greatest it has ever been. Most investors want to defy the cardinal rule of investing-buy low, sell high.
2011-11-10 Aflacs (AFL) Fair Value PE Ratio Should Be Double, and So Should Its Price by Chuck Carnevale of F.A.S.T. Graphs
This is the third in a series of articles that have been designed to provide investors greater insights into the proper understanding and utilization of the PE ratio as a valuation measurement tool. With this iteration were going to look at Aflac to identify significant undervaluation. The first article in this series looked at Amazon as an example of overvaluation. Our second article looked at SCANA Corp. and Darden Restaurant Group as examples of fairly valued companies; however, we further introduced the concept of the earnings growth rate as a relative component of future return.
2011-11-05 Two High-Yield Choices by Chuck Carnevale of F.A.S.T. Graphs
This article is the second in a series of articles designed to elaborate on the proper utilization and understanding of the PE ratio as an important investing metric. Our first article in this series looked at how the PE ratio could be used to determine overvaluation. With this article we are going to review two companies where each is fairly valued and each has similar current PE ratios. Moreover, both companies offer yields above 3 % which is greater than is available on the 30-year Treasury bond (current yield 30-year Treasury bond 3.02%).
2011-11-02 Amazon is a Great Growth Stock But Extremely Overvalued When its PE Ratio is Interpreted Properly by Chuck Carnevale of F.A.S.T. Graphs
We believe Amazon potentially has a bright and prosperous long-term future. Therefore, if we could find Amazon.com Inc. priced at a sensible valuation, we would be motivated to include it into our growth portfolios. But since we fervently believe in the sage advice that price is what you pay, value is what you get, we do not believe in investing in even the best of companies when they are being overpriced by the market. When the PE ratio is properly applied, we believe that it will protect the longterm investor from making the obvious mistake of paying too much for even the best company.
2011-10-26 Netflix - A Brutal Lesson On the Dangers of Overvaluation by Chuck Carnevale of F.A.S.T. Graphs
The stock market has been pummeling Netflix (NFLX), assumingly based on significantly lowered expectations of future earnings results. However, the purpose of this article is not to provide a comprehensive analysis of Netflix the business. The purpose of this article is to focus on the important lesson of valuation that Netflix is currently teaching those with the foresight and an open mind to learning. Therefore, we would like to point out that most of Netflixs poor stock price performance can be attributed to the stock becoming overvalued starting in the summer of 2010.
2011-10-20 Dissecting the Dow: 21 of the 30 Dow Stocks are Undervalued, 6 are Fairly Valued, and Only 3 Appear by Chuck Carnevale of F.A.S.T. Graphs
This has been the fourth article in a series dealing with the relative valuations of the so-called stock markets, where the first looked at the S&P 500, and the last three covered the 30 Dow Jones Industrial Average. The principle idea behind this series is not that the markets are currently fairly valued to even undervalued based on historical precedent. Instead, we are discussing the valuation of the markets based on the intrinsic values of the underlying companies that make up the markets. In short, based on fundamentals, we believe that many quality companies are on sale today.
2011-10-19 Get It Right Already, Apple Had an Awesome Quarter by Chuck Carnevale of F.A.S.T. Graphs
Any way you slice it, Apple booked a great quarter. You can even say an awesome quarter. 99.9% of every publically traded company would give its proverbial right arm for a quarter like Apple had. Apple stock should not be down on this news, it should be up. In fact, based on their incredible past, present and future earnings power we believe that Apple is extremely undervalued. In our opinion, Apples numbers support a better valuation than the market is currently awarding it, based on the fundamentals behind this great technology stock.
2011-10-17 9 of the Second 10 Best Performing Dow Stocks are Fairly Valued by Chuck Carnevale of F.A.S.T. Graphs
We have continued to see a lot of good companies producing good shareholder returns. However, as we have gone deeper down the list, we have begun to see more examples of cyclical companies and companies that have not had as stellar a record of operating performance. Therefore, it stands to reason that these less successful businesses have also produced lower shareholder returns. We believe its important for prospective investors to realize how different specific companies can perform regardless of the general state of the market.
2011-10-14 Most of the 10 Best Performing Dow Jones Industrial Stocks are Great Buys Today by Chuck Carnevale of F.A.S.T. Graphs
When people refer to what the stock market is doing, they are more often than not speaking about the Dow Jones Industrial average. This leading index of 30 high profile stocks serves as a proxy for the overall health of both the economy and the stock market. We have long held that thinking in generalities can be harmful. When dealing with averages the numbers we associate with it represent an average of the whole group. It's important to remember, that the individual companies or components can have materially different results and even attributes than what we glean from the average itself.
2011-10-12 Prof. Schiller and CAPE, Maybe Correct Generally, But Specifically Wrong: The Market is Cheap by Chuck Carnevale of F.A.S.T. Graphs
This is the first of what will be a series of articles arguing in favor of investing in and owning quality common stocks now and for the foreseeable future. On an absolute basis, on real numbers precisely calculated, we believe that the markets in general are attractively valued today. The F.A.S.T. Graphs S&P 500 graph calculation is a current fact. Therefore, we believe that some of our finest and highest quality businesses are currently priced at the best valuations that we've seen in many years. Low valuations, represent an excellent opportunity for investors.
2011-10-07 The Legacy of Steve Jobs and the Record of Apple will Live On by Chuck Carnevale of F.A.S.T. Graphs
The first time Steve Jobs left Apple in 1985 he was fired. In short, his partners in upper management and the Board of Directors at that time did not share Steve's vision for Apple. His friend, Larry Ellison, CEO of Oracle Corp., recently quipped upon the firing of another high profile CEO: That it was the second dumbest decision by a Board of Directors next to Apple's firing of Steve Jobs. What follows, will be a review of the consequences of Steve Jobs firing, followed by what he accomplished upon his return.
2011-09-30 Are You Properly Positioned for the Return of the Economic Vitality of America by Chuck Carnevale of F.A.S.T. Graphs
It has been my observation over my last four decades of studying the stock market that investors have a penchant for projecting into the future what is currently happening. In other words, when the market is behaving badly, they tend to believe it is going to continue to behave badly far into the future. And as I reflect on this, it occurs to me that every bull market has ended with a bear market, and conversely, every bear market has ended with a bull market. The most important attribute to remember about free-markets is that they self adjust. Most know this as the law of supply and demand.
2011-09-23 5 Exceptional Dividend Growth Stocks - Lower Volatility and Higher Total Return by Chuck Carnevale of F.A.S.T. Graphs
For many people these are troubled times where fears about our economy and the stock market are at a heightened state. Stock price volatility is higher than we've ever seen it, adding to investor nervousness. Therefore, we searched for a safe place for conservative investors to invest. Our due diligence identified five dividend growth stocks that possess stringent quality characteristics, while at the same time have produced strong above-average historical returns. But more importantly, each candidate had to have future consensus earnings estimated growth rates greater than the S&P 500.
2011-09-16 Sell your Bonds and Gold and Buy Dividend Growth Stocks Before it is Too Late by Chuck Carnevale of F.A.S.T. Graphs
Although we generally believe in the soundness of the principle of diversification, we also believe that extraordinary times require extraordinary measures. Any historian of markets or economies would agree that financial markets are currently far from behaving ordinarily. We intend to point out several markets that are behaving both inefficiently and completely out-of-sync from sound and prudent economic principles. Therefore, we will argue that certain sacred cows that would and should apply during normal circumstances need to be questioned and challenged in these very uncertain times.
2011-09-10 Strong Standard and Poor's 500 Earnings plus Weak Stock Values equals Opportunity by Chuck Carnevale of F.A.S.T. Graphs
Extensive research, experience and analysis spanning more than 40 years has taught me that earnings determine market price in the long run. I have dubbed this principle with the acronym EDMP. However, there also exists a short-run evil twin sister EDMP. This principle states that emotions determine market price in the short run. Currently, the evil twin sister EDMP is in charge. In the longer run, I believe this spells opportunity based on the oldest of all investing adages 'buy low sell high.'
2011-09-02 8 Strong Growth Stocks Significantly Under-valued by Mr. Market by Chuck Carnevale of F.A.S.T. Graphs
We don't believe in investing in the stock market, we believe in investing in great businesses. Therefore, we tend to focus more on how the business is performing on an operating basis than we do on stock price volatility. True Worth valuation is what we monitor and measure most closely. Our rationale is based on the reality that any business, public or private, ultimately derives its value from the amount of cash flows and earnings it can generate for stakeholders. The bigger the income stream they can buy, the bigger the value they will eventually receive.
2011-08-24 The Greatest Risk We Face: To Again Fall Into a Recession by Chuck Carnevale of F.A.S.T. Graphs
A spate of frightening headlines has led to two troubling declines in financial instruments. The first, of course, is the decline in equity prices that has everyone worried about their financial futures. The second troubling decline in financial instruments is the unprecedented drop in Treasury bond yields. This is troubling because frightened investors are fleeing to the safety of Treasury bonds at the precise time when the risk of owning them has perhaps been the highest in recorded history. This is especially true for the long bond, but also applies to shorter-term bonds.
2011-08-01 FW: F.A.S.T. Graphs video blog on 3M Co. (MMM) and Emerson Electric Co. (EMR) by Chuck Carnevale of F.A.S.T. Graphs
At the special request of readers of our recent blog post titled Six High-profile Industrials with Staggering Three-year Performance? (Part 1) we have prepared a short video blog looking at 3M Corp. and Emerson Electric through the lens of our F.A.S.T. Graphs research tool. Click this link to view the video: youtu.be/EJrIx9sxhQ4
2011-07-29 Cummins Inc. (CMI) Staggering Three-Year Annualized Performance? by Chuck Carnevale of F.A.S.T. Graphs
The recent history for Cummins Inc. (CMI) clearly illustrates that sometimes the greatest opportunities can be found during times of crisis. This gives credence to Warren Buffett's sage advice "be greedy when others are fearful, and fearful when others are greedy." Furthermore, stock price volatility is a fact that cannot be avoided when investing in publicly traded common stocks. On the other hand, we offer this analysis as evidence that over the longer run operating results are clearly more important than price volatility.
2011-07-28 Six High-profile Industrials with Staggering Three-year Performance? (Part 1) by Chuck Carnevale of F.A.S.T. Graphs
As a general rule there is an undeniable relationship between earnings and stock price. Where earnings go, stock price is sure to follow. However, since there are exceptions to every rule, there will be occasions where earnings and price become disconnected. When price rises significantly above earnings, we call this overvaluation. On the other hand, when price falls significantly below earnings, we call this undervaluation. Consequently, on this basis the principles of valuation can be a reliable and profitable means that investors can use to make intelligent buy or sell decisions.
2011-07-22 Six Attractively Valued Dividend Growth Stocks Reporting Earnings! by Chuck Carnevale of EDMP
Investors today have instant access to minute by minute changes in the stock prices of their portfolio holdings in real time. Since stock prices tend to fluctuate wildly from one day to the next, I for one do not feel that this information overload is a good thing. What makes matters even worse is how wildly the value of a stock can change from one day to the next. It's not uncommon to see a stock rise or fall by 10% or more on any given trading day. Yet common sense would dictate that the intrinsic value of a large publicly traded company could not possibly change that much that quickly.
2011-07-15 Should Dividend Growth Investors Forgive General Electric? by Chuck Carnevale of EDMP
There was a time in the not-too-distant past when General Electric Co. (GE) was the darling of Wall Street and everybody's favorite stock to own. This was especially true during the Jack Welch Era, which spanned the years 1981 to 2000. In truth, I agree that Jack Welch should have been given a great deal of credit for the job he did in profitably running this large conglomerate. However, as I will soon demonstrate, I feel that Jack was given undue credit for General Electric’s stock price action during the last five years of his tenure.
2011-07-06 The S&P 500 ends Q2, 2011 Fairly Valued, Year-end Target 1467 by Chuck Carnevale of EDMP
Individual companies derive their value from the amount of earnings and cash flows they are capable of generating for their stakeholders. The market will inevitably capitalize a publicly traded company’s shares based on the velocity and volume of earnings generated. A PE ratio of plus or minus 15 generally applies to the average company growing earnings between zero and 12% a year. The essence behind this valuation is the idea that any company that generates a profitable income stream is worth more than one times earnings.
2011-07-01 Visa and MasterCard Deserved a Higher Price by Chuck Carnevale of EDMP
Both Visa, Inc. and MasterCard, Inc. enjoyed explosive moves in their stock values on Wednesday, June 29, 2011. Visa was up over 15% and MasterCard over 11% thanks to the Fed’s more liberal-than-expected stance on debit fee regulations. In our opinion, this perceived regulatory overhang had caused the share prices of these consistent and powerful earnings generators to sit below their intrinsic value. Therefore, we believed that the Durbin Amendment, although problematic for both Visa and MasterCard, would be less impactful to their long-term business than their low stock prices indicated.
2011-06-22 Five Dividend Paying Giants of Technology Trading at Absurdly Low Valuations? by Chuck Carnevale of EDMP
These five industry dominant, blue chip, leading technology stalwarts represent prima facie evidence of how absurd and irrational the stock market can be at times. The facts are that the fundamentals underpinning each of these strong and healthy technology giants are significantly better than average. Therefore, logic would dictate that the shares of these companies’ stocks should command a premium valuation relative to the average company or the S&P 500. It makes no rational or business sense that they don't.
2011-04-07 The S&P 500 is Fairly Valued by Chuck Carnevale of EDMP
We do not believe in forecasting stock markets or stock prices on individual stocks. Instead, we approach investing as the process of calculating intrinsic value based on fundamentals. The most important fundamental to be considered when evaluating the True Worth of a market is earnings. Therefore, it's important that the reader understands that this article is offered as a mathematical calculation of what the S&P 500 is actually worth based on earnings. The reason we believe this to be important is because we also believe that any deviations from fair value will ultimately self-correct.
2011-03-17 5 Dividend Champions to Work Your Money as hard as You Worked for It! by Chuck Carnevale of EDMP
You worked hard over your lifetime to build a nest egg in order to fund your retirement. Doesnt it make sense that now that youre retired your money should work as hard for you as you worked for it? When you were working, you were accustomed to receiving a raise in pay each year. Why should that end now, just because you are retired? It doesnt have to, because investors today have the good fortune and opportunity to invest in blue-chip 'Dividend Champions' (companies that have increased their dividend every year for at least 25 years) which are trading at historically low valuations
2011-03-02 Stop Losses are for Losers! by Chuck Carnevale of EDMP
First, the title of this article does not refer to people who use stop losses in their investing strategies. Instead, the title of this article refers to the actual status of the common stock that the stop loss is placed upon. Therefore, a specific definition of a loser is required for clarity. In general terms, our definition of a loser is a common stock that should not currently be owned in the first place. There are two primary reasons why this would be true. Either the company's fundamentals are permanently deteriorating, or the company’s stock price is irrationally overvalued.
2011-02-16 A Primer On Valuation: 9 Very Fast-Growing Super Stocks by Chuck Carnevale of EDMP
We hope that this primer on valuing super fast growing companies provided insights into how the market can capitalize such enormous growth. It may not always make sense, but we feel it's valuable to be able to graphically see how the market values fundamentals. It's not always logical, or even fair, but if you look hard enough there usually is some logic that can be discovered. The important thing is that statistics alone do not adequately tell the true whole story, in our opinion.
2011-02-11 A Primer on Valuation (part 2) by Chuck Carnevale of EDMP
To us, the evidence is crystal clear, fundamentals provide a critical perspective that investors should be aware of. Possessing a clear and accurate picture of how well a business has performed on an operating basis is a vital component towards making sound and prudent investment decisions. Contrary to what some might argue, the fundamental operating results of the business tend to persist. The nature of a company's business and the industry it operates in can be reliably evaluated and understood.
2011-02-09 Ben Graham’s famed formula for valuing a stock works in the real world! by Chuck Carnevale of EDMP
These ten examples are based on our article: A primer on valuation: Testing the Wisdom of Ben Graham's Formula (part one) published on 2/08/2011. These represent just a few examples of many we could provide. Ben’s formula works because it is sound. The orange line on each logarithmic F.A.S.T. Graph below represents earnings multiplied by Ben Graham's formula. As you review each F.A.S.T. Graph note how the black price line tracks and correlates to Ben Graham's calculation of intrinsic value. In some cases, the correlation is almost perfect.
2011-02-09 Testing the Wisdom of Ben Graham’s Formula (part one) by Chuck Carnevale of EDMP
Ben Graham’s formula for valuing a company V* = EPS x (8.5 + 2g) established a solid foundation for future value investors to build upon. The small “g” in the formula represents your reasonably expected 7 to 10 year growth rate. Consequently, Ben Graham’s formula was forward-looking. In this article we looked at modern historical performance in order to test the validity of this famous value formula. Remarkably, the formula proves itself to being very precise when applied in the real world to businesses that grow earnings between zero and 5% per annum.
