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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mario :-) who wrote (59942)	10/14/2017 10:14:26 AM
From: E_K_S	Read Replies (2) \| Respond to of 78751

Will check these out. I notice at first glance that several oil/energy companies made your screen, specifically CVX my No one portfolio position. I held this for over 20 years and it has been a good div payer and grower. (NOTE: The GN spreadsheet shows CVX as not being undervalued w/ a fair value of $83.22/share. Will need to see why the difference: CVX Price 119.16 BV 77.15 EPS 25.0 GN 208.32 CHEAP<75 57 % ... EPS of $25/share looks suspect ). Some may be GN candidate stocks because of sector valuation and others due to company specific issues. The next scan I may do w/ the ones of interest is some type of debt/leverage test. Not all debt is the same but generally the lower the better. I also look at when the debt was incurred and for what (to acquire asset, buy back shares). My best picks using GN in the past are those w/ company specific issues that can be fixed by management (usually new management). They need a plan that allows the investor to measure their results YoY and QoQ that eventually move future EPS and BV. An example of this is TIS. They are a small cap paper company and incurred lots of debt to build a 2nd paper production facility. EPS have been coming down over the past 8 months due to seasonal demand, lower margins (from old equipment and sector competition) but new facility will have state-of-the-art equipment that leap frogs competition increasing efficiency and manufacturing margins. Company also got a new customer w/ confirmed orders that once new capacity is online will utilize most of that filling that order. I expect EPS to start growing again and in 8-12 months exceed previous sales records w/ two production lines running at/near capacity. TIS fell into the undervalued GN range (maybe at most 15% undervalued) earlier this year as EPS began to drop. Now I see it only 2.6% undervalued and the valuation model does not reflect the new orders, higher next year revenues and full production results from new equipment (s/d be running at 95% capacity by Q1 2018). The Yahoo Finance number lagg a bit both as EPS fall and when they begin to rise. Company stated they will recapitalize company to pay down debt (from buying new equipment). This may/could be done w/ paying down 7 year equipment note or pushing note out longer (ie 15 years) and/or w/ an equity raise (could result in 20% dilution). That will happen sometime in 2018 and how it is structured will impact EPS. So the company story must fit the GN valuation model and provide the background of why EPS and/or BV will increase. Doing some type of debt scan is important since to pay that down involves selling some assets (reduces BV) and/or issuing more equity (dilutive reducing EPS) both impact the GN Finally, the GN may/could be understated if BV numbers reflect real estate assets at cost not market values. Look at M on your list as this is the case and it is even more undervalued than stated in the GN calculation. I suspect you could 4x-8x the value of the real estate values they carry on their books, thus increasing actual BV (vs stated BV). The question is what/how will management monetize this value into a higher share price w/o destroying EPS. It's not an easy fix. Just look at Sears and/or JCP. Nice list. Will be looking at more of the names and will see if any good stories present themselves. EKS