Market Commentary 05/15/2012
HRA FEELS A HIGH LEVEL OF CONFIDENCE IN THE ECONOMY, CONFIDENCE IN OUR STOCK-PICKING SYSTEM, CONFIDENCE IN THE AMERICAN VOTER, AND CONFIDENCE IN BUYNG STOCK WITH CASH (NOT BORROWING AT THIS TIME!).
Yes, HRA feels that we are taking that first step in a longer-term business cycle, where the US economy has come out of recession and is embarking on a long, slow bullish business cycle. Economic indicators have been increasingly positive, aside from the fudging of the unemployment numbers, and we are seeing good earnings growth which tends to precede the stock market by 6 to 9 months.
Our HRA GOPF Index is showing that our universe of 800 stocks, which we feel is a fairly good indicator of the overall stock market sentiment, is showing that the market is 18% UNDER-PRICED at this time.
HRA is willing to stick our collective necks out to say that we are cautiously optimistic in saying that we expect to see, within 3-6 months, an upturn in the stock market, and from now through June 30, we expect to see the general mood of pessimism change to one of optimism.
Considering that the S&P 500 Index showed a 24.5% increase in the 6 months from 9/30/12 to 3/31/12, and has given back 5.5% since 3/31/12, and our theoretical model portfolios have also seen the same sort of activity, is the recent give-back (correction) due to profit-taking and a brief wait to get back in to the market? Or is the stock market “correction” that has been so heavily predicted and talked about since the phenomenal returns up through 3/31/12 a victim of its own popularity?
We at HRA believe that this is one of the best times to be invested in U.S. stocks – with the value of the dollar increasing, and the price of oil decreasing, U.S. companies will be worth more, inherently, than other world stocks, and their operating costs should decrease along with the cost of oil, as the raw materials will cost less to bring in and the finished goods can be transported at a lower expense, and (we hope) the cost of electricity will also be reined in with lower oil and gas prices.
We’ve seen a lot of segment cyclicality: tech stocks had great returns during the Sept – March period, but have corrected since then. Consumer spending and consumer sentiment helped boost retail stocks into an upward cycle since February. We are seeing bank stocks being beaten around based on Euro fears as well as the JP Morgan fiasco, while certain parts of this industry, such as regional banks, don’t have as much exposure to the same risks, so should not behave in the same manner.
What we are seeing is a typical segment rotation, and HRA believes that as consumer sentiment continues to increase, and U.S. businesses start feeling a bit more optimistic (especially as the political campaigns solidify their platforms), we should see more hiring towards the end of the summer and a definite rise in optimism once the Euro zone fears have settled down again after the recent elections.
On the more personal side, all investments should be based on the individual investor’s risk tolerance – if you want to be aggressive, and can live with volatility over the short-term, then investing in stocks over the long-term may provide increased returns along with that higher level of risk.
Remember, not all investments are suitable for all investors – check with a financial advisor if you plan to make major changes in your portfolio. Also, remember that historical returns are not predictors of future returns, and HRA does not believe that you can time the market. With those qualifiers, we at HRA wish you luck in your investing, and are here to answer your questions!
Welcome to HRA Stock Picks
Fundamental U.S. Stock Research
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New Services Have Arrived!
Market sentiment data for 19 individual sectors showing how under- or over-priced each one is will be available for our subscribers. The calculated theoretical price of companies in that sector will be charted against their actual pricing giving a quarterly market sentiment reading for each sector back the last 8 quarters. These will be similar in format to our current GOPF Index that shows the under- or over-pricing currently in the overall US stock market. All of these measurements are based on historic evaluation of over 30 factors and are dynamic in that results from today affect our measurements in years past.
You are also able to sort all the 800 companies in our database by up to 4 prioritized variables at a time using ascending or descending order or equal to (certain variables such as Buy/Sell/Hold, sector #, earnings trend) to identify stocks that meet YOUR criteria. These sortable factors include 1, 3 and 6 month price changes, current and future theoretical price increase/decrease potential, 4 year projected earnings growth rate, and dividend rate.
HRA focuses on buying long-term growth stocks but we have generated a host of fundamental information that may be useful in other types of investing. Welcome to HRAstockpicks.com! Whether you are a Buy-To-Hold stock investor like we are or not, our research data can be used by all types of investors. At HRA, (Halvorson Research Associates LLC), we use our massive database of information collected over 20 years to select undervalued growth stocks. The key data items we are looking for include potential price increase (PPI) and this is calculated using earnings estimates now (calculates current theoretical market price or CTMP) or projections for future earnings (used to calculate future theoretical market price or FTMP). Another key datapoint is our 4 year aggregate earnings growth rate where the most recent years carry more weight than earlier years. Each of the 800 stocks we follow can be called up by its stock symbol and all its information displayed.
The newest research we have developed is the sector indices. Here we have broken down the 800 U.S. stocks we track and have divided them into 19 main categories of industry codes that can be researched quarterly for the last 8 quarters (2 years).... Each index can be plotted by our subscribers on a line graph and compared to the other sectors or the overall U.S. market index or do them all at the same time. These sector readings can be used to give a relative indication of over or under-pricing as compared to the theoretical price values collectively in the sector.
The latest tool we have developed is a sorting page where you, as a subscriber, can select the research variables of choice (up to 4 at a time) and sort in ascending or descending order with prioritization or set the variable to be sorted to a specific value. You can sort all stocks in general, in a specific sector, or by Buy/Sell/Hold classification. Variables you can use include:
- current potential price increase %
- future potential price increase %
- HRA's 4 year aggregate earnings growth rate calculation
- stock price changes in 1 , 3, or 6 months
- dividend rate
All of our data at our website is updated regularly each month.
So that you can quickly differentiate our stock pick service, this is how we differ from the other "stock pickers":
No Penny Stocks - We only analyze and recommend stocks with at least 2.25 years of ACTUAL earnings and all are generally more than $5.
Long Term Focused - Our goal is realistic price growth, by picking low priced growth stocks. If you rotate constantly into the "hot sectors" your taxes and trading costs will be higher. The best market days are quiet, and when you least expect it, so we believe in staying invested in undervalued growth stocks as most gains come at the beginning of a bull run.
Invest in Stocks You Know - Our stock recommendations are predominantly mid to large cap U.S. stocks whose expected earnings are estimated by multiple sources.
Benefits of investing the HRA way :
Review our recommendations against your portfolio and become a long-term investor that does not panic with daily stock market fluctuations.
Run your own fund at minimal expense (only $90 for 3 months to HRA).
We will tell you when the current market is over-priced so you can evaluate your own risk (See our Over-Under/Priced Market Chart). Since 1988, we have calculated the theoretical market price of 800 stocks (represents approx 75% of the US stock capitalization) and plotted these calculations against actual prices. You can see when the market is under or over priced and by how much. This tool we provide for your use gives all of us the confidence we need to hold stocks and an estimate of the probability of a market correction either way.
Relax, turn off the TV, and become a disciplined investor who is confident that your stock holdings are fundamentally sound, and in time, will provide you with your best chance for a market beating performance, low trade cost, and peace of mind.
IT'S TIME TO ACT - HRA does not believe in market timing, and you can't win if you aren't invested! As a serious investor, you are aware that losses as well as gains can, and do happen under any investment program, without either warning or reason. HRA believes that by concentrating on under-priced growth, this risk can be minimized. But there are no guarantees concerning future price performance of stocks. SUBSCRIBE TODAY! We are offering a monthly trial subscription for $30/month - cancel anytime, or a discounted annual subscription of $350. Your subscription will give you 24/7 access to our website for a 3 month or a 12 month period of time. Here you will find research on over 800 companies that you can search using the stock symbol. To get a better description of our research, please see our"Members Benefits" section. HRA is ready and able to help you pick your stocks with confidence.
>> SUBSCRIBE HERE - monthly trial subscription for $30 or annual $350
Halvorson Research Associates
Portfolio Management / Market Research
- Sentiment Research on 19 Different Sectors
- User Interactive Sort Capability of Research Variables
- Buy/Sell/Hold Recommendations on 800 Stocks
- Current and Future Theoretical Stock Prices