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VSH Analysis Q1 2013

VSH Video Analysis

Watch this video analysis of Vishay International (NASDAQ:VSH) to learn if VSH is a stock idea worth learning about further…

VSH Fundamental Analysis – Market Outlook

The global semiconductor industry had a tough time in 2012. Demand in Asia was particularly week early in the second half of 2012, as distributors stopped buying in anticipation of slowing consumer demand. And while North American markets remained relatively robust, demand out of Europe slowed in the latter half of the year too.

So What Does That Mean For Investors Interested in VSH Today?

Time will tell. For now, VSH management seems to have weathered this storm with disciplined operations. Cost reduction measures are in full effect, accounting for tens of millions in savings. Coupled with their growth plan (more on that below), this could just be enough. Now if you’re interested in drilling down a little further…

Here’s an Analysis of How VSH is Performing Across Business Units:

VSH enjoys a very strong position in the industrial and automotive markets. But as expected industrial demand slowed last quarter in Europe. Some are expecting an uptick in 2013, but it’s tough to be certain. On the other hand, one tailwind is the improved penetration in the medical sector.

Capacitors are another business unit with a strong position in Europe and North America (though sensitive to economic sensitivities in the latter area). To see margins increase we will need to see an uptick in volume. Management is confident that green energy applications can drive growth for the capacitor portfolio.

Vishay’s Opto business consists of infrared sensors, couplers and LEDs, mainly for automotive applications and accounted for $50M, down 2% from the last year.

Vishay is also the largest worldwide supplier of diodes, though they are the particular stand out in power applications. But results last quarter were down 18% compared to the year prior, perhaps further proof VSH will struggle to grow on any ongoing European weakness. It seems most areas of their business are exposed here. But I guess in that case, they’re not the only company.

Last but not least…

Vishay is a leader in the low-voltage MOSFET business. But in the last quarter, demand slowed due to the Asia-centric nature of this business. Pains were exacerbated by price deterioration as well. On the high-voltage end of the market, there is anecdotal evidence the products are being well received at market, but

So where does VSH go from here?

While VSH has a number of leading business units, any chance of serious appreciation in their stock price will require solid execution of their growth plan. They are investing more in R&D, key product line manufacturing and aggressively expanding their sales force in Asia, with a serious focus on the Chinese market. So far it looks good but you’ll have to stay tuned for Q1 2013 earnings, April 30, 2013.

So now that you have an idea of the global semiconductor market, and where Vishay Intertechnology fits in, let’s turn to the financial statements…

VSH Fundamental Analysis – Valuation Metrics

As I said in the VSH video analysis above, VSH has a pretty robust balance sheet. It’s not likely they’re going bankrupt anytime soon. So I guess that’s a good starting point.

The book value per share is $11.33, which is just about a dollar below the current stock price ($12.27 as of writing). They also have $4.18 net per share in cash, which is a healthy cushion. Accordingly, debt is quite manageable, with a debt/equity ratio of 0.22.

Bottom Line: VSH Generates a reliable amount of free cash and they are on sound financial footing.

In terms of earnings, recent annualized EPS come in at 0.79, putting the PE at 15.5 – that’s a little high for my tastes, though not outrageous. With a Graham number of $14.36, you’ll see there are still a few dollars of upside here. That said, because the stock is trading above book value and because we have yet to see the growth plan materialize, I would be inclined to wait for lower prices before buying.

But what’s the risk-reward from a trading perspective?

VSH Technical Analysis

In the VSH video technical analysis above, you can see VSH analyzed on multiple time frames. And when you zoom into the 1 year daily chart, you can see that VSH put in a multi-month base from June to November of last year. Since then, the stock has gone on quite the run, before topping out just shy of $14.

VSH Analysis Q1 2013

VSH 1 year chart, daily (click to enlarge)

In the last month, we’ve seen VSH stock make a series of lower highs. Now so far, it has held it’s primary breakout area at 11.66, but this looks like it good fall off at any second. Play safe, children.

And by the way…

If you’re into Fibonacci numbers, you’ll notice that the 50% retracement on the recent rally is about $11.15, and the next stop is $10.65. Given the strong base and the rising 100 and 200 day moving averages below, I would expect this latter level to hold and might even consider initiating a position in VSH.

VSH Analysis – Final Conclusions

As I said in the video analysis of VSH above… WAIT!

The immediate technicals of the chart don’t look great. And given any broader market weakness this stock could quickly roll over. So…

Be Patient. Put this on your radar as an idea to check back with in a month. It could make a great investment if you can buy below book value. It’s just not quite there yet. But let me ask you…

What’s your VSH Analysis?

Best Free Technical Analysis Videos

Technical Analysis VideoI do my best to make free online technical analysis videos to help you find new investment ideas but…

I’m nothing compared to some of the bigger online investment fish.

Specifically:

There are two major money managers whose stock ideas you’d be (literally) wise to watch. ChessnWine and Chris Ciovacco.

And here’s the thing I like most about them: These savvy financial pros focus on delivering actionable technical analysis information on a very consistent basis. You know they are disciplined, committed and focused.

Here’s what you need to know:

The Best Daily Technical Analysis Videos Online:

As I said above, I like that these guys crank out stock videos so often, without compromising quality of analysis. It’s amazing…

ChessNWine’s daily stock market recap videos are a veritable gold mine of stock idea information. The videos are timely, and I love watching them right after the close. It’s especially helpful if you haven’t been able to watch the stock market all day. It’s a perfect summary.

And…

To make matters better, Chess has also started doing chart analysis based on reader requests. So if you are wondering whether a stock idea is ripe to breakout, you might be able to get a hand from your friendly swing trader. You can follow him on twitter, @Chessnwine. Because it gets better…

Beyond the daily technical analysis videos, Chess blogs about thirty-seven times a day. So you can always check his author page on iBankCoin. Each morning, day and night he provides looks at individual breakouts occurring in real time, as well as important market tells.

By the way:

He also publishes a weekly strategy session for members of his 12631 trading group. And while I’ve been a member of the PPT since inception, I’ve yet to check out Chess’s big picture views. I’ll get around to it one of these days.

But in the meantime…

Best Free Macro Technical Analysis Videos

Hands down, Chris Ciovacco provides the best big picture technical analysis you can find for free online. His technical analysis videos are typically a bit longer (15-25 minutes), but they are well worth watching (even if you can only make the time while ironing).

Chris always does a fantastic job pulling together a number of technical indicators and, weaves together a very compelling narrative. By the end of his technical analysis videos you’ll have a clear picture if the stock market is leaning towards a “risk on” or “risk off” environment.

It’s immensely helpful in grounding your market analysis on factual price action. Plus…

Chris also elaborates on some of the more telling aspects of his video analysis in his Ciovacco Capital Management blog. This is a great way to get digest his most pressing stock market findings, even if you’re at work or you don’t have time to watch the longer technical analysis videos.

To keep your finger on the pulse of the stock market you can follow Chris on Twitter @CiovaccoCapital

In short, technical analysis is not the strongest aspect of my investing. So I like to supplement my own understanding with the commentary of verified technical pro’s. And video screencasts are the most effective way to do it. I really suggest you follow the two smart money investors above, and bookmark their blogs for regular reading.

Here’s a video I made about…

Best Free Technical Analysis Videos Online

But I’m curious to ask you…

Who makes your favorite technical analysis videos?

If you find yourself short on stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.

How To Pick A Sell Target – FLEX Analysis

It’s something a lot of people ask. And buying stock without a sell target is dangerous. So this blog post will explain how you can pick a sell target using both fundamental and technical analysis.

You can also watch the video FLEX analysis below to see the principals in this blog applied.

When I talk about picking a sell target, I am referring to an intermediate to long term price target. I believe the stock will hit this price at some point in the future, based on fair value and historical price. Specifically…

Picking A Sell Target – Technical Analysis:

When you determine a sell target for your stock, you should be sure to look at the prior prices. Pull up a chart of your stock idea. Then zoom out to get a ten year view (at least). Over this time period, most stocks trade in a channel. Here’s what you do:

Look at the highs and look at the lows. Ask yourself…

Where’s the low end of the high range?” It will probably be about 20-30% off the highs. And if you’re willing to hold your stock long enough… (and the company doesn’t implode)… you can reasonably wager your stock will “eventually” get back to this price.

This is basic technical analysis, sure. But price has memory. And when the fundamental case supports your technical hypothesis, you can make cake. But there’s another ingredient…

Picking A Sell Target – Fundamental Analysis:

Fundamental analysis is another factor in calculating your sell target. It’s irresponsible to choose a sell target based only on technicals. You can greatly increase your odds of success by looking at the financial statements.

The Graham Number is quick test you can use to see if the fundamental analysis supports the technical analysis. If the numbers align, the decks could be stacked in your favor. Here’s how it works…

The Graham Number gives you a sell target based on the fair value of the company. The number is calculated using earnings per share and book value per share. The output of the equation derived by Benjamin Graham so many years ago gives you a price that is the most a defensive investor would pay for the stock.

Does that make sense? Hopefully your Graham Number, which is based on the business fundamentals, gives a similar (or higher) price. Got it?

In action, here’s what it looks like…

When I pick a sell target I typically look for the lower of the technical and Graham numbers, plus or minus 5%. I also usually scale in and out of my positions. So I might sell 1/5-2/3 or my position and let the rest ride towards the other price target (with a stop order at the first sell). Cool?

Picking A Sell Target – Due Diligence And Further Research:

You need to do your own due diligence when you pick a sell target. Before ever making financial decisions you should do your own research and contact your financial professional. In terms of other metrics…

I like to look at current ratio and operating cash flow to understand that the business is short to intermediate term viable. I try to avoid big debt burdens.

And you should also read conference call transcripts, at least the couple quarters prior. You need to get a handle on management and the company’s position in the industry if you want an accurate sell target.

At least, that’s my opinion.

What Do You Consider When Picking Your Sell Target?

GLW Video Analysis 1Q13

GLW Video Analysis 1Q13

Watch this Video analysis of Corning Incorporated (NYSE:GLW) to learn if GLW is coming back from the dead. Check out this free GLW Video Analysis to see if you can profit off this “zombie money!” Plus, you can read more about the fundamentals of GLW below…

Is GLW Breaking Out?

GLW has been dead money for the last few years, frustrating investors and traders alike. Anyone looking for a breakout in GLW has had to be very patient. So my advice (from a technical analysis perspective outlined in the GLW video analysis above) is for you to hang in a little longer. Be safe. If you’ve waited this long, another week or two won’t kill you.

GLW Fundamental Analysis: Conference Call Notes

As I mentioned in the GLW video analysis above, GLW has been dead money for the last few years. In reading the Q3 2012 GLW conference call transcript it becomes clear why GLW has stalled…

At the outset of 2012, Corning management warned share holders that Korean and Chinese market share are waning and LCD pricing pressures are increasing. So it’s not surprise Corning has been flopping around for the last year as the c-suite tries to stabilize and restore earnings growth. But hey…

At least management has a plan to manage margin deterioration. And GLW has reached agreements with key customers to stabilize pricing – this goes for both their telecom and environmental businesses – positioning the company for growth if global demand picks up. By the way…
GLW Video Analysis
While management is extremely cautious in their tone, (primarily due to macroeconomic headwinds), they are doing a respectable job reducing costs to help manage earnings. Additionally, management increased the dividend. So they’re obviously not too worried about operating cash flow. Wouldn’t you call that a positive sign?

Moving into and analysis of GLW Q4 2012 results, you can see that GLW management sounds a little bit more optimistic about their ability to reduce costs and stabilize profitability, even in volatile and competitive markets with declining worldwide demand.

In terms of revenue growth, Corning returned to year over year EPS growth (Before special charges), buoyed primarily by Gorilla Glass growth (in both volumes and margins).

GLW Fundamental Analysis – Points of Interest:

(In no particular order…)

The stock repurchase last year is also a bit of a red flag – at least they are buying up share at a price below book value (usually companies buy their shares at the peak)… I’m still a little wary and will frown on further buy backs at a higher price.

It will be interesting to see what gains we can start to see from the acquisition of Discovery Labware.

Gorilla Glass margins are improving. 1 Billion devices using Gorilla Glass. They expect further margin improvements in 2013. Wow.

The solar business (Via polysilicon demand at Hemlock semiconductor, a subsidiary of Dow Corning) is facing some serious headwinds and problems from trade disputes on solar between the US and China.

The Yen Issue, as highlighted by CFO James Flaws, “Specific to Corning, if the yen moves one point higher or lower in Q1, we estimate our sales would decrease or increase by $8 million.” Obviously given the unprecedented amounts of quantitative easing by BOJ, this is a serious consideration for long term stock investors.

For the technical analysis of GLW, remember to watch the free GLW video analysis above.

What do you think about GLW as an investment idea?

Update
4/24/2013 – GLW released Q1 earnings today, beating analyst expectations (adjusted EPS of $0.33 vs $0.31). However, revenues on the quarter came in short, at $1.80B vs. $1.96B.

Update #2 ChessNWine, formerly referenced for his fantastic technical analysis videos, has a very informative post about the RSI and MACD indicators and what it means for GLW stock prices! Read Why GLW Is No Longer Trading Like a Cornball

But that’s not all…

The GLW dividend increased from 9 to 10 cents/share. As per the article above, you’ll also notice the board approved a $2B share buyback program. I’m generally wary of share buybacks. Not always a great use of capital… So…

I need to listen to the conference call to get some more color on these decisions. I’ll give you another update at that point… Now… you must be wondering…

How Is GLW Stock Trading Today?

As of 1:45pm 4/24, GLW is up over 5%, (or $0.71/share). I will be watching to see if GLW closes at the high of the day. At this point, it looks likely. And volume is raging too.

That said…

I will not chase GLW stock! I will let my current position ride. And maybe I’ll even add on a pullback (once I hear the conference call). So while I’m happy Corning is doing well, and I’m glad I own some, the trade is becoming a bit too risky for my tastes.

I’ll keep following GLW though. And actually…

One other interesting development of note is a memo out from Dow Corning indicating the LED market is at an inflection point where conventional materials will have to be left behind for more advanced (read: silicone-dependent) LED. Of course you don’t need to be an analyst to know this would be great news for GLW!

I believe there is good news on the horizon, but I’m disciplined. And I won’t pay too much to be in on the action. Make sense?

INFN Analysis – Infinera Corp 1Q13

INFN Analysis – Trading Infinera Corp Stock 1Q13

Watch this free INFN Analysis video below to see how I’m trading Infinera Corp (NASDAQ:NYSE).

INFN Analysis: Fundamental Case for INFN

By my analysis, INFN is very well positioned. Folk wisdom says they’ll beat down your door for a better mousetrap. Lucky for us, INFN has a better digital optical networking model. On the other hand…

(And as I mentioned in the video analysis above), INFN is the only stock I own that I would classify as a growth stock. Sure, my other stocks are growing. But the purchases are based on discounted valuations reflected in the common stock that give me a margin of safety.

Whereas…

My purchase of Infinera stock (and call options, here and there) are my most speculative investments by far. As you saw in the video INFN analysis above, the stock is trading at over twice book value per share, and it’s not even making money!

Benjamin Graham Would Not Approve This INFN Analysis

But based on the superior PIC based product, an increasing need for networking equipment and an impending infrastructure upgrade cycle, INFN continues to gain market share with the DTN-X platform. It may be a bumpy road (more on why that is in the technical analysis below)… but INFN should be able to weather the storm with its stack of cash and lack of debt.

April 16 Update: INFN announces another DTN-X win with Interoute – Europe’s largest owner/operator of cloud services. If you’ve read the well-regarded book, “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers,” you know that as more customers deploy the highly advanced DTN-X platform, the number of potential reference customers grows, and DTN-X becomes more likely to be adopted by more conservative players. Fingers crossed the INFN snowball keeps rolling.

Thus…

I believe INFN will continue to grow enough to justify buying the stock around $6. Without more Tier 1 DTN-X adoptions, I see $9.50 as a fundamentally justifiable intermediate term sell targets… $7.50 and $8 are closer near term sell targets — (I like to trade parts of my investments, especially if they are becoming over priced).

Speaking of INFN price action…

INFN Analysis – Technical Analysis of Infinera Corp

As you read above, INFN may have a tough time getting higher today. It’s been trading in a channel the last two months and looks to be heading back to the bottom. Why the volality? It may be because as a small cap tech stock with limited volume and news, it is subject to technical manipulations lower. Big players can sell 100 share blocks all day long to drive the price down so they can gobble up the shares of weak hands at lower prices.

Speaking of which…

Non-believers in INFN may also be quick to sell out, for bonds and consumer staples when European debt headlines start popping up, or when the broader market indices pull back a few percent. It’s not exactly an overly safe investment.

From a technical analysis perspective, I would be reassured if INFN could hold the 200 day moving average and then consolidate further before moving steadily higher back up up to $7.50. The daily INFN chart doesn’t look stretched, but I wouldn’t be surprised if it needed more time before heading up.

So some of these price dynamics explain the rapid decline in Infinera stock price, shown in the INFN analysis in the video above. It certainly wasn’t a news story (unless some insiders know something?)

Anyway, while I am interested in buying the stock as it heads towards $6, I would wait for some stabilization before really diving in here (especially since it closed at the low of the day).

What’s your INFN analysis?

Update:
April 24, 2013 – Infinera announced earnings today and beat analyst expectations. The stock is up over 10% after hours. So here is an updated analysis for you…

I have never heard Infinera management this confident before. Over the last few quarters the CEO was much more cautious, compared to his opening statements this afternoon. There were also way more questions than the last couple calls. So I guess people are getting interested. Now I know these things are hard to quantify, but they’re always worth consideration. So…

Here are a couple other things that stood out to me:

INFN Management seems to believe that 100G is very rapidly becoming the industry minimum, globally. They’re also clear the DTN-X is the best solution for this caliber of long haul requirement. And they probably should be, since they are gobbling up market share with a record number of shipments this quarter. Accordingly…

They’re “very comfortable with the high end of their guidance.” Cool.

The rate of decrease in price is starting to slow as this disruptive new technology advances along the cost curve. This hasn’t impacted margins yet, and management still believes cost cutting will drive any margin improvements this year, and next year the sales on existing networks will start to improve margins too.

There has been a lot of growth out of Western and Eastern Europe. The RFP pipeline is strong here as well as in Asia, where demand seems to be a bit higher than expected. Opportunity appears ripe in the second half of 2013.

A word of caution: In the past few quarters, INFN has sold off after earnings. It will be interested to see if it ramps higher and follows through at the close tomorrow. My fingers are crossed, but I’ve been to this rodeo before. And given management’s tone, this time might be different.

What did you think this of the INFN earnings?

BRKS Analysis – 1Q 2013

BRKS AnalysisBrooks Automation (NASDAQ:BRKS) just popped up on my stock screener one day…

And I’m glad I took a closer look. Here’s an analysis for you on why I think BRKS is an interesting investment idea…

BRKS Analysis – Business Fundamentals

BRKS is in the business of automation, vacuum and instrumentation solutions. Their end users are high tech manufacturing industries (think semi-conductors and life sciences). BRKS has solutions to help keep those assembly-line robots working well.

And in general…

You should understand I’m very bullish on automation. Maybe it’s a bias. But I use it in my own job, and it’s massively helpful. Technology can be very transformative, it can do the work of 10 people, without lunch breaks. The right technology implemented effectively can really provide a quantum leap forward in productivity, – investors be warned!

But transformative technological hype aside…

BRKS is a best in class automation company. They have strong products and are best positioned in the 450mm market, which should heat up, (if OEMS ever ramp up production). Another recent strategic move to analyze is the recent acquisition of Crossing Automation by BRKS. Truthfully…

Acquisitions usually make me weary. But in this case…

Management and the CEO appear to be on point. I know this is a little subjective but, they’ve recently demonstrated a strong focus on growth, and are executing their strategic plan with discipline. Their move into the well-capitalized life sciences industry this past year is a great start.

And you know what?

Based on my own scientific background: I appreciate first hand how scientists need automation solutions to accelerate research. I am curious to see how this new life sciences business unit will contribute to a BRKS analysis a year from now, know what I mean? So, by now you must be wondering…

What do the financial statements look like?

BRKS Analysis – Fundamental Valuations

In my fundamental analysis of BRKS, I came to believe that it was a growth stock, without any expectations of growth priced in. An interesting discrepancy indeed…

The price to earnings ratio is a modest 5.19! Really? BRKS is managing the downturn in demand well. But c’mon…

At some point:

Business will pick up. Semiconductor manufacturers will need to upgrade their equipment eventually. And at that point, (assuming management keeps us on track) you can expect multiple expansion. It might take awhile but…

My patience is buffeted given that BRKS is well positioned in their market, and are successfully finding new revenue streams. And beside that, there’s another very interesting point to consider about this stock idea.

BRKS has cash (net $1.64/share), and is currently trading below book value per share ($10.11). Personally, that margin of safety is a bit tight for me. So I’d like to buy the stock on any technical pullbacks (which assumes the fundamental thesis isn’t subject to change!)

Oh yeah…

The other things I like about BRKS is the 3.4% dividend, not to mention a perfect debt/equity score of zero. All signs that management is allocating capital effectively, (if the 21.66% ROE didn’t tip you off).

So:

Now that you have a solid foundation on the fundamentals of the Brooks Automation business, let’s look at the price action of BRKS…

BRKS Analysis – Technical Summary

I like to start my technical analysis of BRKS by showing you a long term view. It’s easy to see BRKS has been building a base. But don’t you think it could still be rangebound for awhile before technicals force any big move? That’s kind of how I see it.

BRKS Analysis - Monthly

BRKS Monthly Chart – click to enlarge

And then…

When you zoom in on the daily chart, you can see that BRKS is flagging a bit. I own the stock from $8.60 and might consider adding around $9.30 but would like to see the stock base up more, after it’s most recent pump higher.

BRKS Analysis - Daily

BRKS Daily Chart

As the 200 day moving average begins to slope up, we might very well see some buying. But given the thin volume of this security, there’s likely to be so volatility. So I’ll probably hold off until the convergence of the 200, 50, and 20 day SMA realigns. Call me old fashioned.

By the way…

Keep in mind the $10.50 area has acted as meaningful resistance to BRKS in the last couple months. So you can use that as a near-term sell target if you are swing trading part of your investment (though keep in mind, my ultimate sell target is closer to $13).

So to summarize my BRKS Analysis:

I still think this chart needs some time to firm up. And given my fundamental valuation above, (which mandated a larger margin of safety), I am comfortable sitting on my hands for now and waiting for the setup to come to me. The truth is…

The stock is a little too close to book value, even with the growth potential. I believe you will see a better entry point in the next month or two. With stock futures pointing down this morning that opportunity may come sooner than later. For example, I would like to see it back down closer to $8 or less. Then it’s really a steal.

Often patience is the best option (and it doesn’t come up with a transaction cost!)

Disclosure: I own a 1/4 position around $8.65 (but would like to add more below that price)

Update

Watch this short BRKS video analysis for an updated technical analysis of BRKS…

After this BRKS Analysis: Do You Think Brooks Automation is a buy?

AEG Analysis: Is Aegon A Bargain?

Aegon AEG AnalysisIs Aegon (NYSE:AEG) a bargain? It certainly looks cheap. Read this short AEG Analysis to find out if this is the buying opportunity you’ve been waiting for…

This AEG analysis gives you a quick fundamental primer (to help you determine the safety of AEG). Then we’ll dive into the technicals to identify some target entry points. So here’s the AEG analysis you’ve been waiting for…

Q1 2013 AEG Analysis – Video Update

Fundamental Analysis of AEG: Global Insurance Market…

There are a couple of things you should recall about the business AEG operates in. First of all, the insurance market is very competitive. This mutes expectations of growth.  And…

While management has done a good job cutting expenses, streamlining the business and maintaining disciplined pricing, they’re being conservative about forward guidance. This is in large part because of global market trends.

Insurance companies are interesting businesses for investors because they generate a fair amount of cash by collecting monthly and annual premiums. Warren Buffett owns a lot of insurance (and reinsurance) assets.

Unfortunately…

Developed markets are pretty saturated in terms of life insurance (one of AEG’s main products). And the aging of the baby boomer segment means (eventually) fewer premiums and increased claims. Double ouch. By the way…

AEG also engages in pension management services, which may also be liable for a hit (unless baby boomers work until their death, a not impossible theory)

But you should still be careful…

And watch closely to understand how AEG and other insurance companies will fight these demographic headwinds in the coming quarters. How will they monetize emerging markets, and hedge their demographic risks?

Insurance companies that want to keep growing will need to answer these questions. AEG included.

By the way, we haven’t even touched on the fact that AEG is a European asset management company. Sure, by all appearances AEG is a well-capitalized Dutch bank. But who knows what can happen as Euro stress heats up. I’d be scared to own this stock if Spanish and Italian bond yields ever creep up again.

AEG Analysis: Fundamental Valuation Metrics

You might not believe it: But at one point in time, AEG traded above $60 per share. But for the last four to five years, AEG has bounced around in a channel, from $4 to $8. So it shouldn’t come as a surprise that in terms of my stock screening metrics, AEG stacks up pretty well.

Specifically

AEG Analysis Fundamentals

You’ll probably notice: AEG has a ton of cash per share. Management has done a great job here. But the sword cuts both ways. And while cash makes AEG a safer investment, the problem now is a chronically low return on equity. And given European banking capital requirements, it’s unlikely this cash will be deployed anytime soon. See the problem?

That said, the current ratio of AEG is a healthy 1.42 which, gives some color on the higher debt/equity ratio. I can stomach stable long term debt, I think. The 4.2% dividend makes it a little more palatable. And as long as central governments (banks?) keep easy policy, AEG looks relatively safe.

So where should you buy AEG?

AEG Analysis: Technical Price Action

AEG Analysis - Technical

AEG Chart – Does the wedge mark a continuation or reversal pattern? (Click to Enlarge)

For AEG, (and other stocks) you’re best served to do technical analysis on a couple of different time frames (year, month, day, intra-day). It helps get good perspective. For example…

As I mentioned above, AEG has been “dead money” over the last 5 years, bouncing from $4 to $8. This is good context you should keep in mind when you’re planning a buy target in your AEG analysis…

Over the last year AEG has floated up from $4 to $7, and now back to $6. Year to Date, AEG has lagged, while the SPDR S&P Insurance ETF KIE is up 17%…. So, where do you go from here?

Currently, AEG looks to be trading in a wedge formation, resting on prior support. While a continuation pattern appears likely, you should guard against a reversal pattern, or even more churning price action. So what’s my advice to you?

Just try to be patient, and avoid overpaying. This is the kind of stock I like to buy when headline news is getting the market down. Especially if the rumors about hedge funds buying AEG stock are true.

In terms of my own AEG buy targts…

I might look to buy some AEG around recent lows ($5.85) with a stop below the 200 day moving average (depending on your risk tolerance). If the breakdown were purely technical in nature I may even add to my position on a pullback. So long as the moving averages are converging, a move may be in the cards.

And one more thing…

Volume on AEG is usually pretty robust. Lately there’s about 1 million shares trading each day. I also like the 2+ Beta that comes from the overnight gaps (given the company’s headquarters in Europe). It makes the NYSE trading a little choppy. It can be fun, but volatile. So…

Is AEG A Buy? Final AEG Analysis:

There are some significant fundamental headwinds that put a damper on significant capital appreciation for AEG. That said, there is a modest dividend (4.2%) and quite a large margin of safety. These two factors make it attractive to me (in fact, a lot of my investments are based on these factors).

And you know, I’m not a boring old buy and hold type guy either. I hope you didn’t see me that way. Usually, I approach it like this: Buy a 1/4 to a 1/3 position at a time on pullbacks, and sell up to 75% of it whenever the stock goes up 7-15%

I’ve found this to be a good tactic for padding my returns. And I think I can apply it to Aegon. That’s my AEG Analysis. Make sense?

So what do you think?

What’s your AEG Analysis?

AEG Video Update:

AEG Technical Analysis Update – Buy the Dip?

My gut tells me no! Even though AEG looks like a bargain based on valuations, I have to heed my cautiousness given the broad market weakness. I also already have some exposure around those levels, so I am entertained enough just crossing my fingers to see if recent support holds true.

AEG Analysis - 30 Minute

April 17 , 2013: Will recent support hold on this zoomed-out 30 minute chart of AEG? (click to enlarge)

What do you think the technical analysis of AEG on this time-frame is saying?

Best Free Stock Screeners

In my post about stock research, you’ll remember that I talked about stock screeners as a way to save time objectively evaluating stock ideas. I also featured stock screeners as a way to find fundamentally strong stocks under $5 dollars. So…

Here Are The Best Free Stock Screeners Online:

Zacks Stock Screener is a very robust stock screener you can use for free. You can evaluate stocks based on valuation metrics, as well as growth metrics. Another thing that sets the Zacks Stock Screener apart is the ability to scan for broker recommendations. This is something I haven’t seen in many other screeners.

Finviz Free Stock Screener is one of the best free stock research resources online today. The interface is very easy to use and you can scan for an array of technical, fundamental and descriptive factors.  My personal favorite metric to scan using the Finviz Stock Screener is current ratio. The technical pattern rating is also very useful for identifying stocks in a trend. You can also display the results in chart form, which makes it easy to scan through stock picks (see below).

Technical Stock Screener

The FinViz Stock Screener lets you sort by technical pattern and display results in charts

ADVFN Screener: Although the interface on the ADVFN screener is a little bit archaic, you can rely on the functionality. This stock screener boasts the ability to report on a wide variety of metrics and operating ratios. The Graham and Dodd ratios are of particular interest to a value investor like me. Fair warning: it might take you a few minutes to find the functionality as the screener is not very intuitive (see stock screening video above).

So there you have it. Those are the best free stock screeners online. By the way, if you’re looking for criteria to screen your stocks by, you can always check out the stock idea checklist for an objective scorecard you can use to evaluate your stock ideas on a regular basis. Using the stock pick scorecard helps ensure you always make informed decisions buying and selling stock.

So check it out! And start screening for stocks today.

What’s your favorite stock screener?

How To Find New Traders On Stocktwits

Here’s how you can find new traders on Stocktwits

If you’re wondering How To Find New Traders on Stocktwits, you can watch the short video above. You’ll quickly see how Stocktwits is home to a wide breadth of amazing real time investment ideas. So…

You’re well served to find new Stocktwits traders and get the most out of the stock trading ideas they have to offer. It’s a veritable gold mine of stock picks. Seriously…

Here’s How To Find New Traders On Stocktwits:

Howard Lindzon, the founder and CEO of Stocktwits is very diligent about welcoming new users to his social trading information platform. Not only is it an awesome insight into the community he fosters… But, it’s also where you can find new traders (with new stock ideas)…

Just swing by Howard Lindzon’s profile every couple of days. You’ll see him welcoming all the new traders to Stocktwits. You can easily hover over their name to see a pop up of their trading bio. From there, it’s easy for you to engage and see what new stock ideas you can learn from these new traders.

Here’s a screenshot of Howard’s profile, as you can see, his welcome messages make it very easy way to find new traders…

Howard Lindzon New Stocktwits Traders

Howard Lindzon does an admirable job welcoming new traders to Stocktwits.

Since Howard personally welcomes all these new traders, you can just browse his profile to view the newest additions to Stocktwits. These investors are new to the service and very open to sharing and learning new trading ideas – otherwise they wouldn’t have recently taken the action to sign up for Stocktwits!

I recommend you browse Howard’s profile regularly so you can get acquainted with new and engaging traders. And by the way…

How To Find New Traders On Stocktwits

The Welcoming Committee is a great place to find new Stocktwits traders

Stocktwits has recently created a Welcoming Committee – so I guess they are really running with this idea of identifying new traders! The Welcoming Committee will make it even easier to browse new traders as they join this fantastic stock picking platform. Amazing!

And since this video shows you how to find and engage new traders as soon as they’re coming online, you’re more likely to catch them when they’re trying to grow their network.  Thus you can create a lasting and meaningful relationship. It’s a wonderful learning opportunity for everyone.

What do you think though?

How do you like to use Stocktwits to find new traders?

Weekend Stock Pick Research

Weekend Stock Pick Research


If you’re looking to get some research in on your stock picks this weekend, the video above will point you in the right direction. Watch to see where I go for weekend stock pick research.

The weekend is a great time to further research your stock ideas. During the week, I often screen for stocks and quickly add them to my watchlist. I don’t often have time to analyze if they are a buy or a sell until the weekend comes around.

My girlfriend is at yoga, and I can dive deep into data.

To save time, I usually try to leverage the curation of financial knowledge by others. Josh Brown The Reformed Broker usually features the 361 Capital Weekly Research Brief. Barry Ritholtz over at the Big Picture also usually has a weekend wrap-up.

Next up is my twitter feed. Then I head to my favorite blogs, read the newspaper and review my watchlists. I listen to conference calls or devour the transcripts alongside black coffee. Note taking furiously ensues, I plan entry points and sell targets on charts. I update my watchlist to reflect all these changes, and I make plans for the opening bell.

And before I know it, I’ve run out of time to research stock ideas this weekend. Sound familiar?

If you have any favorite weekend stock pick research tips share them below!

Update: Here’s another weekend stock research resource from Ragin’Cajun.