10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Waldo Thinks Ahead

February 01, 2011 | About:
wax

wax

Author's Website
4 followers
They speak with incredible clarity, with candor, and with conviction. Their target audience being the average investors just like me and you. Many of us follow along like sheep, hoping against hope that if we take their advise, nothing bad will befall our investment.

You would think our lesson, by this time, would be learned. But no, we back up time and time again to repeat the same mistakes, to believe the same silliness, to fall yet again for the same sales pitch.

The markets have been moving ever higher of late, and this upward movement has again brought sensational investment articles carrying headlines like Dow Above 12000 In The Next Ten Seconds, or Buy These Stocks Before You Put Your Pants On. But the reality, at least in our opinion, is that the vast majority of stocks are simply overpriced.

Curious, we decided to take a peak at five stocks highlighted by Zacks as the ones to own.

Basis

Our valuation work is based on audited or annual financial information as taken from a company's most recent SEC Form 10-K filing. Unaudited, or quarterly financial information as taken from a company's SEC Form 10-Q filing, is not used unless otherwise noted.

The Nimble Five

ADTRAN, Inc. - (ADTN) The company designs, manufactures, markets, and services network access solutions that enable voice, data, video, and Internet communications across wireline and wireless networks. The stock closed recently at $41.72, with Resistance at $43.60, First Support at $36.15 and Second Support at $31.85. Should the stock price fall below second resistance, the next stopping point would be at the 52 week low of $20.76.

Our Reasonable Value Estimate for the stock at this time is $32.00, with a Buy Target of $19.00, a First Sell Target of $37.50, and a Close Target of $40.00, based on a 5 year hold. The stock currently has a trailing PE of 23.5 and forward PE of 18.5.

The company announced earnings of $0.56 a couple of weeks ago, beating consensus estimates by $0.16, which was $0.29 better than the same period last year.

Bed Bath and Beyond, Inc. - (BBBY) The company operates a chain of retail stores that sell any manner of completely and utterly worthless stuff for the home. The stock closed recently at $48.60, with Resistance at $50.95, First Support at $47.473 and Second Support at $43.20. Should the stock price break below second support, the toilet for this one is $26.50.

Our Reasonable Value Estimate for the stock at this time is $48.00, with a Buy Target of $29.00, a First Sell Target of $56.50, and a Close Target of $59.50, based on a 5 year hold. The stock currently has a trailing PE of 17.3 and forward PE of 14.5.

The company announced earnings in December of $0.74, $0.08 better than consensus estimates, and $0.16 better than one year ago.

Fairchild Semiconductor International, Inc. - (FCS) The company designs, develops, and markets power analog, power discrete, and certain non-power semiconductor solutions. The stock closed recently at $17.61, with Resistance at $18.45 and First Support at $15.53, Second Support at $11.21. After that, the next support level is at $7.71.

Our Reasonable Value Estimate for the stock at this time is $33.00, with a Buy Target of $20.00, a First Sell Target of $39.00, and a Close Target of $41.00, based on a 5 year hold. The stock currently has a trailing PE of 14.6 and forward PE of 9.9.

The company announced earnings last week of $0.45, $0.06 better than conscensus estimates, and $0.22 better than one year ago.

Haliburton Company, Inc. - (HAL) The company provides various products and services to the energy industry for the exploration, development, and production of oil and natural gas.The stock closed recently at $43.88, with Resistance at $44.00, First Support at $39.67, Second Sup[port at $32.33, and the end of the support line at $21.10.

Our Reasonable Value Estimate for the stock at this time is $34.50, with a Buy Target of $21.00, a First Sell Target of $40.50, and a Close Target of $43.00, based on a 5 year hold. The stock currently has a trailing PE of 22 and forward PE of 12.6.

The company announced earnings about a week of $0.68, $0.05 higher than consensus, and $0.40 better than the same period last year.

Korn/Ferry International, Inc. - (KFY) The company provides provides executive recruitment, leadership, and talent consulting and talent acquisition solutions. The stock closed recently at $22.74, with Resistance at $24.00, First Support at $21.49, Second Support at $16.96, with the bottom of the barrel at $12.78.

Our Reasonable Value Estimate for the stock at this time is $24.50, with a Buy Target of $14.75, a First Sell Target of $28.75, and a Close Target of $30.00, based on a 5 year hold.The stock currently has a trailing PE of 25.5 and forward PE of 16.6.

Earnings of $0.30 were announced back in early December, beating consensus estimates by $0.06.

Final Thoughts

Without exception, all of the nimble five have more downside than upside, and based on current PEs, all of them, at least to our mind, are overpriced. Yet analysts and websites alike continue to tout these and similar companies as must haves going forward. Going forward to what, investment losses?

Perhaps individual investors, instead of talking about the stocks mentioned in an article, or as seen on CNBC, should take the time ask the simplest of questions.

What's it worth?

We have a feeling if more investors asked that question, substance, not content, would become the order of the investing day.

Wax: Wax Ink,

Disclaimer

We have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. We receive no compensation to write about any specific stock, sector or theme.

About the author:

wax
Wax Ink is a baseline equity research company not licensed or registered with any government agency

Visit wax's Website


Rating: 3.8/5 (6 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK