"... common stocks are subject to irrational and excessive price fluctuations in both directions ..."
LAST SECTOR DATA
UNDERVALUED STOCK: United Continental Holdings Inc (UAL)
UAL Chart ⇨
UAL Report ⇨
UAL Article ⇨
United Continental Holdings, Inc. (UAL) is a holding company and its principal subsidiary is United Air Lines, Inc. (United). The Company transports people and cargo through its mainline operations. It has global air rights in North America, Asia-Pacific, Europe, Middle East, Africa and Latin America. The Company, through United and its regional carriers, operates an average of approximately 5,000 flights a day to over 340 airports across six continents from its hubs at Newark Liberty International Airport (Newark Liberty), Chicago O'Hare International Airport (Chicago O'Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Los Angeles International Airport (LAX), A.B. Won Pat International Airport (Guam), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). It has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express.
This stock has various tailwinds making it a good holding.
First, low oil prices has dramatically decreased expenses.
Second, the price-to-earnings and prices-to-sales are significantly lower than average.
Third, it is among the world's largest airlines.
Fourth, total passengers is set to double to 7 billion by 2034, according to the International Air Transport Association (IATA).
Warren Buffett's Berkshire Reduces Stake in Wal-Mart Stores
31 Mar 2016
Warren Buffett's Berkshire Reduces Stake in Wal-Mart Stores
VIEW dataroma.com ARTICLE ...
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
Vanguard Total Stock Market ETF
June 3, 2016
Market Cap to GDP is a long-term valuation indicator that has become popular in recent years, thanks to Warren Buffett.
VIEW advisorperspectives.com ARTICLE ...
Warren Buffet Increases Stake in Phillips 66
June 6, 2016
Warren Buffett's Berkshire Hathaway Inc. increased its position in Phillips 66 (PSX) and acquired almost 643,000 shares, valued at $64 million. Berkshire now owns 15% of Phillips.
VIEW investopedia.com ARTICLE ...
Buffett's Berkshire Hathaway Discloses Stake in Kinder Morgan
Kinder Morgan Inc.
February 16, 2016
Stake was 26.5 million shares as of Dec. 31, filing shows
... Warren Buffett’s Berkshire Hathaway Inc. added an investment in Kinder Morgan Inc. during the fourth quarter, snapping up shares of the pipeline operator as its market value plunged.
... Kinder Morgan’s shares fell 65 percent last year amid a slump in energy prices.
VIEW Bloomberg.com VIDEO ...
Berkshire’s $1 Billion Apple Bet Suggests Faith in Product Pipeline
May 16, 2016
Buffett's Berkshire Declares $1.07 Billion Stake in Apple
VIEW BLOOMBERG.COM VIDEO ...
This Could Be the End of the Tech Boom
May 18, 2016
This Could Be the End of the Tech Boom.
IPOs have dried up. Companies have not been able to raise money from initial public offerings in 2016.
Tech IPO companies such as Twitter and GoPro have dropped significantly in the past few years.
150 Unicorns are waiting to go public. The last time the IPO market was this bad was in 2009.
VIEW BLOOMBERG.COM VIDEO ...
Information on NFLX ⇨
Chart for NFLX ⇨
Netflix, Inc. (“Netflix”, “the Company”, “we”, or “us”) is the world’s leading Internet television network with over 57 million streaming members in nearly 50 countries enjoying more than two billion hours of TV shows and movies per month, including original series, documentaries and feature films. Our members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Additionally, in the United States ("U.S."), our members can receive DVDs delivered quickly to their homes.
We are a pioneer in the Internet delivery of TV shows and movies, launching our streaming service in 2007. Since this launch, we have developed an ecosystem for Internet-connected screens and have licensed and acquired increasing amounts of content that enable consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices. As a result of these efforts, we have experienced growing consumer acceptance of, and interest in, the delivery of TV shows and movies directly over the Internet.
Our core strategy is to grow our streaming membership business globally within the parameters of our consolidated net income and operating segment contribution profit (loss) targets. We are continuously improving our members' experience by expanding our streaming content with a focus on a programming mix of content that delights our members. We are continually enhancing our user interface and extending our streaming service to even more Internet-connected screens.
We continue to grow our streaming service both domestically and internationally. We began our international expansion with Canada in 2010 and have since launched our service in Latin America and several European countries. We have also expanded our streaming content offering to include more exclusive and original programming, including several Emmy, Golden Globe and Academy Award nominated original series and documentaries.
Prior to July 2011, in the U.S., our streaming and DVD-by-mail operations were combined and members could receive both streaming content and DVDs under a single “hybrid” plan. In July 2011, we separated the combined plans, making it necessary for members who wish to receive both DVDs-by-mail and streaming content to have two separate membership plans.
Source: Annual Report
UNITED STATES OIL FUND, LP (USO)
More Information on USO ⇨
Chart for USO ⇨
have been plunging for quite a while now and they have been hitting 52-week lows.
They have stabilized after hitting the new lows, indicating a lack of sellers under this level.
This is a good sign for future upward movements.
Also, the current price is significantly lower than they have been for years.
Since oil is essential for transportation, there is continuous demand and will be for the foreseeable future.
Solar energy will not be a significant competitor in the near term since since sales of electric
vehicles is still significantly less than sales of gasoline powered vehicles.
STOCK MARKET VALUATION
One way of determining the level of the stock market is by comparing the Wilshire Total Market Index
to GDP. At the peak of previous bull markets, the Index was far above GDP. This ratio indicates stocks are currently overvalued. Another method of determining the level of the market is by looking at the Shiller PE
. The Shiller PE is currently significantly higher than the historical average, indicating stocks are overvalued.
Undervalued Stock Defined
An undervalued stock is defined as a stock that is selling at a price significantly below what is assumed to be its intrinsic value. For example, if a stock is selling for $50, but it is worth $100 based on predictable future cash flows, then it is an undervalued stock. Numerous popular books discuss undervalued stocks. Examples are The Intelligent Investor by Benjamin Graham, also known as "The Dean of Wall Street," and The Warren Buffett Way by Robert Hagstrom. The Intelligent Investor puts forth Graham's principles that are based on mathematical calculations such as the price/earning ratio. He was less concerned with the qualitative aspects of a business such as the nature of a business and its management. Graham's ideas had a significant influence on the young Warren Buffett, who later became a famous US billionaire.
Warren Buffett, also known as "The Oracle of Omaha," stated that the value of a business is the sum of the cash flows over the life of the business discounted at an appropriate interest rate. This is in reference to the ideas of John Burr Williams. Therefore, one would not be able to predict whether a stock is undervalued without predicting the future profits of a company and future interest rates. Buffett stated that he is interested in predictable businesses and he uses the interest rate on the 10-year treasury bond in his calculations. Therefore, an investor has to be fairly certain that a company will be profitable in the future in order to consider it to be undervalued. For example, if a risky stock has a PE ratio of 5 and the company becomes bankrupt, this would not be an undervalued stock. Some qualities of companies with undervalued stocks are:
The company's earning history is stable.
The company does not specialize in high-technology that can become obsolete overnight.
The company is not in the middle of some financial scandal.
The company's low PE ratio is not due to profits realized from capital gains.
The company's low PE ratio is not due to a major decline in profitability.
The company's PE ratio is below its average PE ratio for the last 10 years.
The company is selling at a price below its tangible asset value.
The company's trailing 3-years earnings has risen over the past 10 years.
The company's credit rating is AAA, AA, or A, or even better, there is no rating because there is no debt at all.
The company did not have a loss during the last recession.
One can better check for the EPG ratio also for calculating under valued stocks.
An excellent stock at a fair price is more likely to be undervalued than is a poor stock at a low price, according to Charles Munger, the Harvard-educated partner of Buffett. An excellent stock continues to rise in value over the long term, while a poor stock declines in value. An undervalued stock will usually have a low PE ratio. For example, a PE ratio of 10 is much better than a PE ratio of 20. Some high-flying Internet stocks had PE ratios of 30, 40, 50, 100, 200 or more in year 2000, prior to the bursting of the Internet stock bubble. Investors of these Internet stocks did not purchase undervalued stocks, as they later learned.
Price to Earnings (P/E)
Now that the analyst has several EPS figures (historical and forecasts), the analyst will be able to look at the most common valuation technique used, the price to earnings ratio, or P/E. To compute this figure, one divides the stock price by the annual EPS figure. For example, if the stock is trading at $10 and the EPS is $0.50, the P/E is 20 times. A complete analysis of the P/E multiple includes a look at the historical and forward ratios.
Historical P/Es are computed by taking the current price divided by the sum of the EPS for the last four quarters, or for the previous year. Historical trends of the P/E should also be considered by viewing a chart of its historical P/E over the last several years (one can find this on most finance sites like Yahoo Finance). Specifically consider what range the P/E has traded in so as to determine whether the current P/E is high or low versus its historical average.
Forward P/Es reflect the future growth of the company into the future. Forward P/Es are computed by taking the current stock price divided by the sum of the EPS estimates for the next four quarters, or for the EPS estimate for next calendar or fiscal year or two.
P/Es change constantly. If there is a large price change in a stock, or if the earnings (EPS) estimates change, the ratio is recomputed.
Intrinsic value (finance)
In finance, intrinsic value refers to the value of a company, stock, currency or product determined through fundamental analysis without reference to its market value. It is also frequently called fundamental value. It is ordinarily calculated by summing the discounted future income generated by the asset to obtain the present value. It is worthy to note that this term may have different meanings for different assets.
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S&P 600 index components
AAON AAT AAWW ABAX ABFS ABM ABMD ACAT ACO ACOR ADC AEC AEGN AEIS AFAM AFFX AGYS AHS AIN AIR AIRM AIT AKR AKRX AKS ALE ALGN ALGT ALOG AMED AMSF AMSG AMWD ANDE AOI APEI APOG AREX ARQL ARRS ASEI ASGN ASTE ATMI ATNI ATU AVA AVAV AVD AVID AWR AXE AZZ B BABY BANR BAS BBCN BBOX BC BCOR BCPC BDC BELFB BFS BGFV BGG BGS BH BHE BJRI BKE BKMU BKS BLKB BMI BNNY BOFI BPFH BRC BRKL BRKS BRLI BRS BTH BWLD BWS BYD CACI CALM CAMP CAS CASY CATM CATO CBB CBEY CBK CBM CBR CBRL CBU CCC CCMP CCRN CDI CDR CEC CECO CENTA CENX CEVA CFNL CGNX CGX CHCO CHE CIR CJES CKH CKP CLD CLMS CLW CMN CMO CMTL CNC CNMD COCO COHR COHU COLB COR CPLA CPSI CRK CROX CRUS CRVL CRY CRZO CSGS CSH CTS CUB CUZ CVBF CVGW CW CYBX CYNO DAKT DAR DCOM DEL DGII DGIT DHX DIN DIOD DMND DORM DRH DRIV DSPG DTSI DW DXPE DY EBIX EBS ECPG EE EFII EGL EGOV EGP EHTH EIG ELY EME ENS ENSG ENTR EPAY EPIQ EPR ERA ESE ESI ESIO ETH EVR EXAR EXH EXLS EXPO EZPW FARO FBP FCF FCFS FEIC FELE FF FFBC FFIN FINL FIX FMBI FNB FNGN FNP FOR FORR FRAN FRED FSP FSS FST FTDDV FTK FUL FWRD FXCM GB GBCI GCO GDOT GEO GEOS GFF GIFI GK GLT GNCMA GOV GPI GSM GTAT GTIV GTY GY HAE HAFC HAIN HAYN HCI HCSG HELE HF HGR HHS HI HIBB HITK HITT HLIT HMN HOMB HOS HPY HR HSII HSTM HTLD HUBG HVT HW HWAY HWKN HZO IART IBKR ICON ICUI IGTE IILG IIVI INDB ININ IO IPAR IPCC IPCM IPHS IPXL IRBT IRC ITG IVAC IVC JACK JAKK JBT JCOM JJSF JOSB KALU KAMN KELYA KFY KIRK KLIC KND KNX KOP KOPN KRA KRG KS KWR LAD LDL LDR LFUS LG LHCG LHO LINC LL LMNX LMOS LNCE LNN LOGM LPSN LQDT LTC LXP LXU LYV LZB MANH MBFI MCF MCRI MCRL MCS MDCO MDSO MEAS MED MEI MGAM MGLN MHO MIG MINI MKSI MKTX MLI MMS MMSI MNRO MNTA MOG A MOH MOV MPW MPWR MRCY MSCC MSTR MTH MTRN MTRX MTSC MW MWIV MWW MYE NANO NAVG NBTB NCI NEOG NEWP NILE NJR NOG NP NPBC NPK NPO NR NSIT NSP NTCT NTGR NTLS NTRI NUVA NWBI NWE NWN NX ODFL OMCL OMG ONB ONE OPEN OPLK ORB ORIT ORN OSIS OUTR OXM OZRK PACW PBH PBNY PBY PCTI PDCE PEI PERY PES PETS PFS PJC PKE PKT PKY PLCE PLXS PMC PNFP PNK PNY POL POOL POWI POWL PPS PQ PRA PRAA PRFT PRGS PRXL PSB PSEC PSEM PVA PVTB PZZA QCOR QLGC QNST QSII RBCN RECN RGR RLI ROCK ROG RRGB RSTI RT RTEC RTI RUTH RYL SAFM SAFT SAH SAIA SAM SANM SBRA SCL SCOR SCSC SCSS SENEA SF SFNC SFY SGY SHFL SHLM SHOO SIGI SIGM SJI SKT SKX SKYW SMA SMCI SMP SMRT SNCR SNTS SNX SONC SPAR SPF SPPI SPTN SRDX SSD SSI SSP SSS STBA STC STMP STRA SUP SUPX SUSQ SWC SWM SWS SWX SXC SXI SYKE SYMM SYNA TAYC TBI TCBI TDY TESO TG THS TILE TMP TNC TNGO TQNT TRAK TRST TSRA TTC TTEC TTEK TTI TTMI TTWO TUES TWGP TWI TXI TXRH TYL TYPE UBA UBSI UCBI UEIC UFCS UFPI UHT UIL UMBF UMPQ UNF UNS USMO USTR UTEK UTI VAC VDSI VECO VICR VIVO VOXX VPFG VPHM VRTS VRTU VSAT VSI VVI WAGE WDFC WGO WIBC WIRE WPP WRLD WST WTFC WTS WWW XOXO XXIA ZEP ZEUS ZLC ZQK ZUMZ