Sponsors
Bless Israel Investments
LINKS
Portfolio Grader
I will make you a great nation, I will make your name great, and you will be a blessing. I will bless those who bless you and curse those who treat you with contempt. Gen: 12: 2-3
Bless Israel Investments offers, free of charge, to all members of our services Louis Navelier’s Portfolio Grader. The service covers over 5,000 of the most popular stocks, EFTs and mutual funds. It is a relatively comprehensive analysis tool that assigns a letter grade from A to F (just like your report card) to rate a specific instrument. The grade is a rough average of 6 weighted characteristics which gives the viewer a fairly good idea of the health and future growth (or opposite) of the concerned financial instrument. Below are the six characteristics which compose this grading system.
Sales Growth: measures the percent change in a company’s sales this quarter versus the same quarter a year ago. Obviously, positive sales growth typically allows for greater revenue, which should translate into profit. However this may not always be true if the company is selling their goods below cost. The airline industry is good example of this. Although there may be increased sales for the present quarter compared to last year’s, it is not out of the realm of possibility that they may operate at a loss due to extreme competition. This become even more acute if oil prices escalate and razor thin profit margins are wiped out.
Operating Margin Growth: measure how rapidly a company’s operating margins have been expanding. Again, positive growth in these areas would be good for profits.
Earnings Growth: measures the percent increase in a company’s earnings this quarter versus the same quarter last year. This value no doubt would reflect whether sales (growth we hope) are actually providing earnings. This is truly a key figure in showing the profitability of a company.
Earnings Momentum: measures how rapidly a company’s earning have been accelerating over the past four quarters (one year). Again, this is a key component to seeing if sales growth is increasing while at the same time showing whether there is actual earnings growth taking place to indicate positive growth.
Earnings Surprises: measures a company’s ability to exceed the consensus earning estimates on Wall Street. History has shown that exceeding Wall Street’s expectations usually has a multiple effect on increasing the price of a company’s stock.
Analyst Earnings Revisions: measures the magnitude in which earning projections have increased over the past month. In a sense, this characteristic is related to the above noted parameter of “Earnings Surprises”.
Cash Flow: measures the flow of cash earned and spent in a company relative to its total market value.
Return of Equity (ROI): measures a company’s profitability in terms of the profits made from the money shareholders have invested. In almost all instances, companies that have increased the return on your dollars invested in the company will have a net positive effect on the stock price.
Taking these six parameters into consideration will give us a pretty good picture how the company is doing. Obviously, a company's rating that is either a D or F is not one you should or wish to invest in.
Therefore, this analyzing tool should greatly benefit you. Not only can it be used for our purposes here at Bless Israel Investments, but can be used in other portfolios as well.
Once you subscribe to any of our services, you will be given a link directly to the site. All one needs to do is enter the specific equity or its symbol on the top right hand corner of the webpage. It’s that easy.
Investment Tip for the Day
Global Investor: Questionable Tax Havens Teetering on the Brink?
By Evaldo Albuquerque
As long as companies show “better than expected earnings,” stocks will continue to rise and investors will continue to dump the dollar.
The million dollar question – or should I say million-euro question – is when earnings will stabilize at “new normal” levels. That’s when we will see a pullback in stocks and a rally on the dollar. In my view, that’s only going to happen next year.
So why are earnings beating expectations?
Because analysts are categorically underestimating the power of ‘operating leverage,’ which is simply the proportion of fixed costs to total costs. Let me explain…
In the second quarter, analysts underestimated management’s ability to cut costs. And that’s why earnings were better than expected. For this season, the theme will be margins, which is a directly result of cost reduction initiatives implemented during past quarters.
Because companies reduced variable costs – and rising unemployment is proof of that – fixed costs now make up a greater proportion of total costs. And when that happens, it doesn’t take too much of a rise in revenues to generate a great improvement in earnings. So even if sales are below expectation, most earnings will beat analysts’ forecast.
Besides operating leverage, the weakness of the dollar in itself will benefit a lot of U.S. corporations because of cheaper exports and positive currency translation.
Barclays Capital estimates that more than 30% of revenues for the S&P 500 companies come from abroad. So ironically earnings will get a boost from the dollar weakness and will lead to more investors dumping the dollar to invest in higher yielding assets.
But next year, the story will be different.
While Wall Street is still being a bit conservative on this season’s earnings estimates, next year’s estimates are overly optimistic. Earnings estimates for coming quarters require a return to record high operating earnings that can only be achieved through real growth in sales.
Meanwhile, valuations are still not attractive, volumes are weak, delinquency in commercial real state loans are rising, and there are still lots of adjustable-rate mortgages expected to reset next year. So the dollar will only rally when the market realizes that the expected “V” shape recovery will have a shape of a “W” or a “U”.
How To Use
Using this tool is extremely simple. When linked to "Navellier's Portfolio Grader", on the top right hand side is a box that says, "Enter Quote Here". In the box, you simply enter the company name or its symbol (for example, Ford or it's symbol "F" will both work). Presto! Below will be the analysis.
