USA Stock Consideration Report
Overall, stocks have started to shift away from being overvalued and returned to fair value while an increasing number have become undervalued. Valuations are solidly back in fair value ranges (80.0% to 120.0%), but investor views are still adjusting from previous unrealistic expectations. See the full report and stock directories under the menu Client Service > World Markets > USA Stock Considerations Report.
Investment Strategy Today
Fourteen stocks added to Buy Consideration list today. All of these stocks have:
1. Moved into UnderValue,
2. Made a meaningful move back to fair value
3. Ranked in upper 1/3 for revenue growth over 5,3 and 1 yr or made a significant 1 yr improvement in revenue growth
4. Ranked in upper 1/3 in profitability measured by EDIT, EBITDA, Free Cash Flow/share.
5. Ranked 3 or better in World 10 factor measurement
6. Ranked 3 or better in EPS factor measurement
7. Ranked 2 or better in ISN combined ranking
Investment Strategy Today
Johnson Controls receives a Fair Value increase. Most considerations move toward the center (HOLD) as the markets continue to adjust relative fair value against expectations.
Acquisition: IBM Acquires Red Hat
IBM an Undervalued stock at 74.6% Fv agreed to acquire a previously Overvalued stock that recently dropped from 160% Fv to 110% Fv. At the announcement, Red Hat instantly returned to 160% Fv or over $172/share. IBM’s offer of $190/share represents a 77.6% premium over fair value.
Merger Consideration Brief (November 2018)
Currently, 20.1% of the overall market has an elevated probability of being involved in some level of merger, acquisition or breakup activity. This is a 0.1 point drop over the previous report in August. Approximately, 58% of the activity is expected in SmallCap alone, the remaining activity is expected in MidCap at 23% and LargeCap at 19%.