advalorem,
RE: your comments on ROST
ROST is merely one stock. It is not the only stock I own, nor am I overweighted in it. However, I really do like its' prospects a lot.
I advocate that most investors should have a well diversified portfolio. By diversified I mean some large caps, some mid caps, and some small caps; differing sectors and industries; some NASDAQ and some not; maybe a foreign exposure as well; some tickers beginning with vowels (well you get the idea)... I also think that most investors should be looking at growth stocks as well as value plays. At this point in its' corporate development, ROST is most definitely a growth stock, but the recent slide in price makes it a value play as well. (The price decline is due to a fear of slowing revenues within the retailing industry and has nothing to do with ROST's prospects. In fact, the numbers that ROST just posted are among the best growth rates it has ever seen. In my opinion, the current price makes ROST a "buying opportunity" for those investors already interested in the stock. I generally don't advocate "averaging down", but I think the strategy makes sense in this instance.)
As far as the wage costs go, my opinion is that wages will ultimately rise. If not this year, then next. Rising wages is a problem for all employers eventually. I tend to ignore it because my investment horizon is about 3 to 5 years out. In 3 to 5 years, will rising wages now make a big difference? I think not. I think that in 3 to 5 years we'll be worried about some other problem de jour. But that's just my philosophy. I try to ignore problems that may cause day to day or month to month price fluctuations, and instead concentrate on trends that may affect long term growth.
Would you eliminate Carnival (or any stock) because the timeliness is a 4
The answer would depend upon whether I'm looking at a stock for its' growth rates or its' attractiveness as a value play.
For growth stocks, the answer is an emphatic yes. The VL Timeliness rating is a very accurate guide to near term performance (next 12 months) of the stock price. If Value Line carries a Timeliness rating of 4 or 5 on a particular stock, you can take it to the bank that that stock is currently out of favor with investors, and you're likely looking at dead money. I don't want dead money in the growth portion of my portfolio. For me, growth equates to aggressive investing, and dead money here isn't going to cut it. Besides that, there are too many other opportunities for growth in stocks that are rated 1 or 2. Would I miss the stock that quickly rises from a 4 or a 5 to a 3, 2 or 1? You bet'cha I would. But I'll gladly pass on those that I might miss because overall, the odds are heavily against me winning consistently using that strategy. I try not to get upset with lost opportunities. It's going to happen sooner or later, and to everyone who has ever invested.
That being said, value plays are an entirely different matter. As I indicated earlier, I view both RCL and CCL as value plays right now. The idea is to catch these stocks at or near a bottom, and before an earnings recovery appears on every analyst's screen. You're not going to find many value plays rated 1 or 2 for Timeliness. By their very nature, they're likely to be rated at 3 or 4 or 5 for Timeliness. They're out of favor with the investing public and the analysts. If you can find a good value play that carries a 3 rating, by all means consider jumping all over it.
My view of CCL and RCL is that neither is currently a good growth stock. They both look like very decent value plays, but neither is going anywhere anytime soon (in price). But one (or both) of them currently has a buyback program in place, and both offer decent dividends. I view that as being like a "cushion" of sorts against further price erosion. Of course there's no guarantees regarding either the buybacks or the dividends, but I'm willing to take a chance that both companies will do whatever is necessary to try to prevent any catastrophic price erosion from these already low prices. But again, that's merely an opinion.
One thing that Value Line can't forecast is the degree to which companies, in strong sectors, will beat their estimates.
This is true. Earnings surprises wouldn't be surprises if everyone knew in advance what was going to happen.
I think that most investors have what is referred to as "core holdings" within their portfolio. For me, the core stocks are CSCO and INTC. For you, I would guess it might include JDSU, GLW and SNDK. Nothing wrong with that at all. If you're comfortable with the stock(s), and understand the risks and the industries, fine. They're good holdings. One stock that I like that would fit into that category is SEBL. However, I feel that investors have bid the price up too high for my tastes, and SEBL is now waaaay overvalued for me to make an investment there. But I do like the stock and the company. Another one that comes to mind is NTAP. Very good stock. Very good company. Astronomical P/E ratio...
Very impressive screening tool
So far, all I've shown you is a listing of stocks obtained from a filter. You can also build portfolios or watch lists within the VL tool set. When I get the time, I'll show you how you can combine the watch lists so that you can concentrate on specific stocks, instead of being overwhelmed by sheer numbers of stocks. You really should download the VL demo program so that you can see for yourself what's available. If your comfort level with your computer is high, I think you'll like the electronic Value Line much better than the print version. There's a short and quick learning curve to the tool, but once you settle into that comfort zone, you'll never want to go back to the print stuff again. At least that's how I feel about it.
KJC |
