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Strategies & Market Trends : A.I.M. PIC List (Perverse Investment Candidates)
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To: OldAIMGuy who wrote (101)1/1/2002 4:21:56 PM
From: LemonHead  Read Replies (1) of 127
 
Hi Tom, I been trying to decide on which AIM thread should one discuss potential AIM candidates. I guess this is the best place.

I've really dug into researching HAL (Halliburton) the last few days. One thing I came across was the "Guru" take at the NASDAQ site. I thought it of some value...
nasdaq.com

Note the following:

HAL gets a 86% rating based on Benjamin
Graham's methodology.

HAL gets a 71% rating based on David
Dreman's methodology.

HAL gets a 100% rating based on James O'Shaughnessey's
methodology.

For each one you can "Click" For Detailed Analysis.

Check Dreman's out.
Report Card for David Dreman 
MARKET CAP: [PASS]  
EARNINGS TREND: [PASS]  
EPS GROWTH RATE IN THE IMMEDIATE PAST AND FUTURE: [PASS]  
P/E RATIO: [FAIL]  
PRICE/CASH FLOW (P/CF) RATIO: [PASS]  
PRICE/BOOK (P/B) VALUE: [PASS]  
PRICE/DIVIDEND (P/D) RATIO: [PASS]  
CURRENT RATIO: [PASS]  
PAYOUT RATIO: [FAIL]  
RETURN ON EQUITY: [FAIL]  
PRE-TAX PROFIT MARGINS: [FAIL]  
YIELD: [PASS]  
LOOK AT THE TOTAL DEBT/EQUITY: [FAIL]


Then you can go further and review why each one passed or failed. Let's review the "Fail's".

The P/E of a company should be in the bottom 20% of the overall market. HAL's P/E of 14.44, n/a, is higher than the bottom 20% criterion (below 12.91), and therefore fails this test.

A good indicator that a company has the ability to raise its dividend is a low payout ratio. The payout ratio for HAL is 54.82%, while its historical payout ratio has been 32.15%. Therefore, it fails the payout criterion.

The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 largest cap stocks, which is 9.86%, and would consider anything over 27% to be staggering. The ROE for HAL of 8.97% is not high enough to pass this criterion.

This methodology looks for pre-tax profit margins of at least 8%, and considers anything over 22% to be phenomenal. HAL's pre-tax profit margin is 5.21%, thus failing this criterion.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20%. HAL's Total Debt/Equity of 37.00% is not acceptable.

Other than the Debt/Equity ratio, HAL looks to be a fairly good choice if it can over come the asbestos claims.

I also thought the "Stock Consultant" displayed some value.

nasdaq.com

FWIW
Keith
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