Good prospects and undervalued (USA)

[james1989]

A replication of my thread on the UK equities section, however, this thread shall have the sole aim of identifying US listed undervalued equities.

Again, please note that no investment advice is intended.

 

[james1989]

One particular business that stands out right now is an Argentinian business, which you can access via an ADR.

Telecom Argentina (TEO) is currently trading at around $18.68 at the time of writing, there appears to be a very good margin of safety involved here based on an extremely conservative appraisal.

At the time of writing I would assign a value of $43.35 per share.

Regards.

 

[james1989]

One more business that stands out is TRW Automotive Corp. (TRW)

Currently trading at $45.72 I would value the company at around $111.30 per share.

 

[james1989]

You may want to refer to the UK thread in order to review my investment philosophy, and again, no advice is intended to buy or otherwise the mentioned securities.

 

[james1989]

While the aformentioned securities are attractive, I have failed to factor in absolute risk which becomes apparent through a system of checks and balances to protect from loss of capital, therefore, I withdraw my rating on TRW.

TEO remains attractive based on 2011 valuations, but to adhere to absolute caution, I would advise a buy in price of around the $14 mark.

 

[ThatBhoyMcLaren]

Hi James, beginner trader here.
I'm trying to learn as much as I can and I was wondering are there any articles on how to value a share like you've done? How do you come about with that estimate?
Thanks!

 

[james1989]

Hi James, beginner trader here.
I'm trying to learn as much as I can and I was wondering are there any articles on how to value a share like you've done? How do you come about with that estimate?
Thanks!

The above calculations were based upon the companies earnings which I do not usually do as I always adhere to 'don't lose money', they are somewhat valid but don't protect against downside absolutely and may be a little over optimistic, hence I would no longer advise those targets.

I use a discounted cash flow method which has many variables and is a fairly complicated process but gives a more accurate entry point and greater margin of safety, in essence it is more conservative, unfortunately it is a patented strategy for my own fund.

As a beginner it is difficult to advise you as you will most likely be drawn into the big return game at some point.

I advise you to read the 'intelligent investor' by Ben Graham, it won't give you a certain valuation strategy, but it will give you some great pointers on what not to do.

Check out my UK thread as it is the more active of the two.

Kind Regards

 

[scose-no-doubt]

Post up on of your DCFs, son. Lemme have a vizzazzle at it.

 

[james1989]

I'm afraid that's out of the question Scose

May I ask, what instruments do you trade? and what strategies do you employ?

 

[scose-no-doubt]

Lol fair enough. Just thought you could use a little help seeing how you're getting bat-sh!t valuations using your current methods.

I trade a little here and a little there every now and again with mixed results. Index, singles, FX and a bit of bonds - holding for a few days at most. Methods are a bit of everything and anything really. I'm not too fixed to any discipline but I'm an accountant by trade so my thought pattern tends to drift along to more numerate analyses.

Looking to start investing but to be honest these markets and all the codswallop intervention make any long term alpha scouring completely gamblerific... I'm starting to see why FI (& Derivs) is the biggest market

 

[james1989]

Lol fair enough. Just thought you could use a little help seeing how you're getting bat-sh!t valuations using your current methods.

I trade a little here and a little there every now and again with mixed results. Index, singles, FX and a bit of bonds - holding for a few days at most. Methods are a bit of everything and anything really. I'm not too fixed to any discipline but I'm an accountant by trade so my thought pattern tends to drift along to more numerate analyses.

Looking to start investing but to be honest these markets and all the codswallop intervention make any long term alpha scouring completely gamblerific... I'm starting to see why FI (& Derivs) is the biggest market

Yes, the valuations you talk about were made using earnings rather than looking at cash, human nature moving away from what works in order to find returns in an up market i'm afraid. If you switch to the UK thread, you will see the prices I get applying my DCF method to Tesco and Electrocomponents.

There are very few undervalued issues around at the moment, i'm currently in a number of positions including Tesco, Hikma and Aberdeen, picked Aberdeen and Hikma up at fantastic prices and had very good returns, so bargains are here and there, just have to keep an eye on things. The situation seems unclear at the moment and it's difficult to predict how it's going to pan out, it's almost useless trying to time the broad market though.

Monthly investment in a good fund or low cost index fund could definately help in retirement while most of these day traders will be sat at breakeven or alot worse despite what they claim, capitalism and the market have always come back, i'm sure you're familiar with compounding.

 

[james1989]

I believe we are due a pullback, whether that be major or minor, I am going to start listing companies I will be looking to take positions in, obviously, valuations change throughout the year and I would need to confirm the valuation still stands should a securities price reach todays valuation.

Regards

 

[james1989]

Bed Bath & Beyond BBBY, buy in around $43.19
Ulta Salon Cosmetics and Fragrance ULTA, $30.71
Dollar General DG, $28.10
CVS Caremark Corp. CVS, $36.57
Dollar Tree DLTR, $54.20
Mcdonald's MCD, $74.46

I will try to analyse more when I have the time.

Regards

 

[gib123]

Bed Bath & Beyond BBBY, buy in around $43.19
Ulta Salon Cosmetics and Fragrance ULTA, $30.71
Dollar General DG, $28.10
CVS Caremark Corp. CVS, $36.57
Dollar Tree DLTR, $54.20
Mcdonald's MCD, $74.46

I will try to analyse more when I have the time.

Regards

Very insightful, I read your UK thread also, it seems you got a very good working analytical model there.

The optimal entry price points for these companies are quite distant from the current prices, got to wait for the next momentarily stock crash then.

Gibson

 

[james1989]

Very insightful, I read your UK thread also, it seems you got a very good working analytical model there.

The optimal entry price points for these companies are quite distant from the current prices, got to wait for the next momentarily stock crash then.

Gibson

Gibson,

You're absolutely correct in saying some of the prices reside far away from current levels, and I doubt the ones with some distance to go will reach without a major shock.

However, the business quality is there and should pessimism reach 2009 levels, they may be a good option if you have the cash to buy.

Of course, when the prices reach, a re-evaluation will be needed.

If you have anything specific you need analysing, don't hesitate to post and i'll provide an up to date valuation for you.

Best Regards

 

[gib123]

Gibson,

You're absolutely correct in saying some of the prices reside far away from current levels, and I doubt the ones with some distance to go will reach without a major shock.

However, the business quality is there and should pessimism reach 2009 levels, they may be a good option if you have the cash to buy.

Of course, when the prices reach, a re-evaluation will be needed.

If you have anything specific you need analysing, don't hesitate to post and i'll provide an up to date valuation for you.

Best Regards

Thanks James, that's very kind of you.

What do you think Apple is valued at right now?
I was planning to pick up a few apple call options expiring on 2014.

Gibson

 

[scose-no-doubt]

do me a Gazprom, James

 

[james1989]

Thanks James, that's very kind of you.

What do you think Apple is valued at right now?
I was planning to pick up a few apple call options expiring on 2014.

Gibson

Just to make it clear, I would not personally invest in Apple.

The fundamentals look great, but the sector is brutal, however discretion is advised as I could and most certainly will be wrong in the shorter term.

Putting a buy price on AAPL, it comes in around $125 with fair value at around $425.

Best Regards

 

[james1989]

do me a Gazprom, James

Scose, what exchange are you looking at?

 

[scose-no-doubt]

LSE baby.

Edit: Sorry, didn't realise that this was the US thread lol