Rant About It

Archive for the ‘Health Care’ Category

Highest Rated Sectors: Did Analyst Get It Right ?

Posted by rantaboutit on March 13, 2007

What are we looking at here ?
The most popular S&P 1500 groups. The table is self explanatory, so i will just point out few interesting things. The first column is the list of sectors most recommended by the Wall Street Analyst. The sixth column gives the overall percentage of buy recommendation. The last column is the stock that is most favored in that particular sector. As you can see Contruction Materials topped the table with 61.1% buy recommendation. Analyst are most bullish on Vulcan Materials Company VMC.

Construction Material Sector
Vulcan Materials Company VMC is currently trading at $116.01

  • P/E = 24.76 (ranked #2 in the construction materials sector)
  • EPS = 4.69
  • PEG =2.31 (ranked #2)
  • Dividend = 1.50% (ranked #9)
  • Market Capital = $11.02 billion (ranked #2)
  • Analyst recommendation of 1.4/5.0

All in all, pretty impressive record. Add to that their 1-year return was whooping +49.75%. No wonder analyst love it. Construction Raw Materials sector performance ? Last one year returns was +25%. Pretty neat…Analyst got it right.

Consumer Finance Sector
Second best is Consumer Finance according to all the analyst. Highest rated in that group is American Express Company AXP which is priced at $54.75.

  • P/E = 18.29 (ranked #11 in the consumer finance sector)
  • EPS = 2.99
  • PEG =1.28 (ranked #9)
  • Dividend = 1.00% (ranked #14)
  • Market Capital = $65.28 billion (ranked #1)
  • Analyst recommendation of 2.0/5.0

AXP has a huge market capital and ranked #1 in their sector. P/E and PEG all look good. But what matters the most for the investors is returns. Their 1-year return was a lousy +0.96%.
Consumer Finance sector performance ?
Last one year returns was -1.65%. Pretty lousy…Analyst got it wrong.

What did we prove here ? Analyst do not get it right all the time. However at times they do not get the credit they deserve. Predicting stock markets is no easy task, especially with multiple factors affecting the stock movement. I checked out 1-year returns for all the listed sectors in the table above. 8 out of 10 were positive. Noteworthy were Water Utility with +25.94% returns, Aero & Defense with +23.01% and Energy Services with +15.21% returns.

Conclusion: Bashing the analyst for getting is wrong is always one of the favorite things to do for all kinds of investors. You and me need to understand that analyst do not get it right all the time. Obviously they wont. Otherwise they would have made billions and billions of dollars at the stock market. Analyst opinions & recommendations can be a good guide for investors to dig deep into the company stock. But it should not be used as an indicator to trade stocks. That brings us to the million dollar question. Are you going to trust the analysts and buy the stock/sector they are most bullish on ?

Recommended Books:

(Source: TickerSense)

Posted in Construction Material, Consumer Finance, Energy, Health Care, Oil, Sector, Water | Leave a Comment »

Newspapers Beat Local TV

Posted by rantaboutit on February 16, 2007

Newspapers Beat Local TV

According to a media research firm, the newspapers are making more money from online video advertising than local TV stations, $81 million to $32 million. TV stations have a mass audience compared to targeted audience on the internet. Newspapers have been selling customized solutions, with particular success in converting help wanted and automotive classified advertisers. Time Warner Cable TWX in North Carolina is producing original video advertisements for local merchants.

This is pretty intuitive. If you know your target audience it is much more easier to sell. It is estimated that local online video advertising will surpass $5 billion, representing more than one-third of all local online advertising.

U.S Trade deficit
The U.S. trade deficit stands at $763.6 billion compared with $716.7 billion in 2005. In the month of Decemeber the trade deficit widened to $61.2 billion exceeding analyst estimates of $59.5 billion. Trade deficit was reduced in the month of September, October and November due to lower oil prices. However with increase in oil prices that scenerio has changed. December imports rose 2.1% to $186.7 billion, while exports were up 0.6% to $125.5 billion. With the increasing trade deficit, the US dollar will become weaker and weaker. This would eventually mean that investors would have more faith in basic materials (Gold and Silver) over the currency.

Pfizer over the counter

Three of the Boots pharmacies in London, will allow men to buy the impotence drug Viagra, manufactured by Pfizer Inc. PFE, without a doctor’s prescription.The cost of the drug will be $97 for four pills. I believe this is a good marketing move. This will definitely boost sales.

IBM soon to challenge Intel
IBM IBM plans to announce breakthrough in the production of DRAM (dynamic random access memory) chip technology used in PCs. This will be a challenge to Intel INTC. The new technology will act as a temporary storage unit, holding data inside a microprocessor while it is being processed. IBM claims the new technology will speed up the performance 10 times the current speed. This will definitely be something to look out for and will directly affect the stock prices in the longer run.

Southwest gets greedy
Southwest Airlines LUV is famous for air-tickets at discounted rate. Southwest is the only carrier to report profits in every quarter since the Sept. 11 attacks. You can state that in the competitive world of airline industry, Southwest has been the clear winner. However in 2006, SouthWest has raised its fares 6 times. Again recently they raised it by another $10. Other airlines are expected to follow. So why is Southwest raising fares ? This one is a no-brainer. Increasing oil prices, high maintenance cost and pressure to raise revenue says it all.

Indian stocks take a dive

Country’s central bank decided to increase the amount cash lenders must set aside to cover deposits. Inflation is the culprit that has accelerated to the fastest pace in more than two years. Wholesale price inflation increased to an annual rate of 6.58%. Indian index mutual funds and ETFs are off sharply this week and the financial sector has been particularly hard hit. The India Fund ETF IFN has been shaky all week.

For more information, here is an article from Brad Hessel

Are Photoblogs potential threat to photography stock market
Dan Heller quotes

The internet has brought down the barriers that have kept consumers out of the photo business in the first place. Now that they’re here, they have fundamentally altered the photo industry, whether intentional or not, and whether other photographers like it or not.

Alot of people look at Flickr as a medium to share/view brillaint photographs. Bloggers look at it as a photo repository where they can tag their photos and make it available to the world. However there is a potential that photoblogs can grow into a market of its own and give traditional stocks a run. Watch out Getty Images GYI and Jupitermedia JUPM.

(Source: SeekingAlpha)

Posted in Airline, Asia, Health Care, Industry News, Technology | Leave a Comment »