ValuEngine Weekly: Business Services, Pulte Homes,Facebook,Transportation Stocks,Market Valuation,and Suttmeier

January 18, 2013

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The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools available from ValuEngine.com. In today's fast-moving and globalized financial markets, it is easy to get overloaded with information. The winners will adopt an objective, scientific, independent and unemotional approach to investing. If you are not yet a member of ValuEngine's stock analysis service, sign up now for a two-week free trial at www.valuengine.com!

MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

Week Open
13488.43 3113.65 879.71 1472.05

Thurs Close
13596 3136 890.36 1480.94

Change
107.57 22.35 10.65 8.89

% Change
0.80% 0.72% 1.21% 0.60%

YTD
3.86% 3.59% 4.87% 3.88%

Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 41.17% 58.83% 15.45% 21.12%

SECTOR OVERVIEW
Sector
Aerospace Auto-Tires-Trucks Basic Materials Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities

Change
0.80% 0.90% 0.52% 0.63% 0.73% 1.11% 0.89% 0.63% 0.72% 0.75% 0.73% 1.69% 0.60% 1.03% 0.78% 0.64%

MTD
2.58% 4.82% 4.18% 4.72% 5.34% 5.39% 5.34% 3.41% 4.63% 5.03% 6.00% 3.06% 6.18% 4.62% 7.32% 3.27%

YTD
2.58% 4.82% 4.18% 4.72% 5.34% 5.39% 5.34% 3.41% 4.63% 5.03% 6.00% 3.06% 6.18% 4.62% 7.32% 3.27%

Valuation
3.73% overvalued 2.92% overvalued 4.86% overvalued 6.91% overvalued 12.22% overvalued 19.22% overvalued 5.25% overvalued 24.58% overvalued 12.92% overvalued 16.49% overvalued 12.24% overvalued 4.09% overvalued 3.20% overvalued 12.21% overvalued 18.95% overvalued 4.29% overvalued

Last 12MReturn
10.68% 7.76% -16.54% 10.15% 6.46% 31.40% 10.79% 13.75% 18.87% 7.13% 13.67% 15.48% -8.61% 20.97% 10.72% 9.93%

P/E Ratio
14.19 15.01 31.83 30.2 39.13 42.47 27.19 23.43 22.18 24.03 31.11 14.46 40.71 36.13 25.24 17.45

Sector Talk—Transportation
Below, we present the latest data on leading Transportation Sector stocks from our Institutional software package (VEI). These results were filtered by market price and volume--no results below 3$/share or less than 100k shares/day volume.

Top-Five Consumer Staples Sector Stocks--Short-Term Forecast Returns
Ticker
ANW LCC LUV RYAAY DAL

Name
AEGEAN MARINE US AIRWAYS GRP SOUTHWEST AIR RYANAIR HLDGS DELTA AIR LINES

Mkt Price
6.16 14.48 11.4 38.78 13.83

Valuation(%)
-44.87 36.76 -1.3 30.6 23.48

Last 12-M Retn(%)
23.69 146.26 27.95 40.81 58.42

Top-Five Transportation Sector Stocks--Long-Term Forecast Returns
Ticker
UNP CNI CP UPS LCC

Name
UNION PAC CORP CDN NATL RY CO CDN PAC RLWY UTD PARCEL SRVC US AIRWAYS GRP

Mkt Price
131.67 95.19 110.33 79.79 14.48

Valuation(%)
5.83 4.57 18.88 -1.4 36.76

Last 12-M Retn(%)
22.83 26.4 61.49 10.87 146.26

Top-Five Transportation Sector Stocks--Composite Score
Ticker
DAL LCC CNI UNP UPS

Name
DELTA AIR LINES US AIRWAYS GRP CDN NATL RY CO UNION PAC CORP UTD PARCEL SRVC

Mkt Price
13.83 14.48 95.19 131.67 79.79

Valuation(%)
23.48 36.76 4.57 5.83 -1.4

Last 12-M Retn(%)
58.42 146.26 26.4 22.83 10.87

Top-Five Transportation Sector Stocks--Most Overvalued
Ticker
NM DSX XPO VLCCF TK

Name
NAVIOS MARI HLD DIANA SHIPPING XPO LOGISTICS KNIGHTSBRIDGE TEEKAY CORP

Mkt Price
3.71 8.44 17.05 6.3 34.38

Valuation(%)
300 286.36 135.23 111.82 99.65

Last 12-M Retn(%)
9.44 7.38 48 -51.43 38.85

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Free Download for Readers
As a bonus to our Free Weekly Newsletter subscribers, we are offering a FREE DOWNLOAD of one of our Detailed Stock Valuation Reports--this report is normally $25.00 This week's free download is our report on Facebook (FB). Facebook Inc. operates a social networking website worldwide. The Company's products for users are free of charge and available on the Web, mobile Web, and mobile platforms, such as Android and iOS. Its website enables users to connect, share, discover, and communicate with each other. The Facebook Platform is a set of tools and application programming interfaces that developers can use to build social apps on Facebook or to integrate their Websites with Facebook. It offers products that enable advertisers and marketers to engage with its users. Facebook Inc. is headquartered in Menlo Park, California. Free Weekly Newsletter Subscribers can download a FREE Detailed Valuation Report on FB HERE. Subscribers can check out the latest figures on FB from our models HERE. Not a ValuEngine.com Premium Website member? Then please consider signing up for our no obligation, two-week free trial today. ValuEngine's awardwinning stock Valuation and Forecast Models continue to provide investors with accurate, objective, and timely information on US stocks, ADRs, and foreign equities that trade on US markets. Over the last few months, our stock picks have provided clients with many winners in both up and down periods. If you have not subscribed and want to be able to receive a FREE $ 25.00 Detailed Valuation Report, you can subscribe to our Free Weekly Newsletter HERE

What's Hot--Valuation Report
It's time for our monthly look at our overall market valuation figures. The ValuEngine Valuation Model tracks more than 8000 US equities, ADRs, and foreign stock which trade on US exchanges. The model calculates a level of mispricing or valuation percentage for each equity based on what the stock should be worth if the market were totally rational and efficient--an academic exercise to be sure, but one which allows for useful comparisons between equities, sectors, and industries. We use this metric to get an overall snapshot of the market and to discern if stocks are a bargain or overpriced. In the past, the valuation figures have correlated fairly well to market tops and have signaled impending pull backs.

Our stock market valuation overview has tipped slightly to an overvalued condition as the market has continued to climb. We now see more sensitivity within our Valuation Model as each up day pushes the readings near the levels where we set our Valuation Watches and Warnings. We now calculate that 56.47% of stocks are overvalued and almost 20% of stocks are overvalued by 20% or more. In the first chart below, we see that we had a slight edge up into bargain territory during early November--the post-election "trader tantrum"?--but now we are definitely elevated into the overvalued range. When those numbers hit 60% and more than 20% respectively, we issue a Valuation Watch because in the past market pull backs have correlated closely to those sorts of numbers. We do not have a similar metric for the undervaluation levels, but we generally find that when stocks are calculated to be more than 75% undervalued overall it is time to do some bargain hunting.

2012, like the “fiscal cliff,” went out with a whimper rather than a bang. US politicians demonstrated yet again their propensity for setting artificial deadlines and manufacturing crises. Meanwhile, good news on a variety of fronts--decent jobs numbers, decent housing numbers, a strong recovery for banking and financial stocks, even beat-down Facebook making a move--has investors in a more optimistic mood. The US budget deficit is rapidly diminishing thanks to economic growth and higher revenues—thus making the “crisis” cries of some a bit more strained with each passing day. If only the labor market could demonstrate a break out, then we could say with real conviction that we are out of the woods and ready to put the 2007-2008 financial blow up behind us for good.

For reference, here is a longer-term chart which tracks the metrics back to March, 2010. In this chart, we do see that any sustained undervaluation of 70% or higher is a decent buy signal. Subscribers Get FULL ACCESS to our Market and Sector Overviews

Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard Suttmeier
If you have any comments or questions, send them to Rsuttmeier@Gmail.com Treasury Yields 10-Year--(1.870) Annual and semiannual value levels are 1.981, 2.476 and 3.063 with daily, semiannual, monthly and quarterly risky levels at 1.823, 1.413, 1.349 and 1.027.

Commodities and Forex Comex Gold –($1687.3) Monthly and annual value levels are $1673.8 and $1599.9 with daily, semiannual, quarterly and annual risky levels at $1698.2, $1719.2, $1802.9 and $1852.1. Nymex Crude Oil – ($95.32) My monthly value level is $74.23 with daily and quarterly pivots at $94.88 and $95.84 and annual and semiannual risky levels at $95.84, $115.23, $115.42 and $130.42. The Euro – (1.3375) Semiannual and monthly value levels are 1.2797 and 1.2343 with annual and quarterly pivots at 1.3257 and 1.3334 and daily and annual risky levels at 1.3432 and 1.4295. Major Indices Daily DOW (13,596) Monthly and annual value levels are 12,818, 12,696 and 12,509 with a daily pivot at 13,599 and quarterly and semiannual risky levels at 13,668, 14,118 and 14,323. The QE3 high is 13,661.87 on October 5 with the October 2007 high at 14,198.10. Note that the all time closing high is 14,164.53 set on October 9, 2007. S&P 500 – (1480.9) Quarterly, monthly and annual value levels are 1431.1, 1397.6, 1400.7 and 1348.3 with a daily pivot at 1380.3, and quarterly and semiannual risky levels at 1510.0 and 1566.9. The October 2007 high is 1576.09. NASDAQ – (3136) Quarterly, monthly and annual value levels are 3071, 2934, 2806 and 2790 with a daily pivot at 3139, and quarterly and semiannual risky levels at 3205, 3274 and 3583. The September 21, 2012 high is 3196.93. NASDAQ 100 (NDX) – (2747) Monthly and annual value levels are 2610, 2463 and 2385 with a daily pivot at 2748, and quarterly risky levels at 2798 and 2920. Dow Transports – (5681) Annual, quarterly and monthly value levels are 5469, 5094 and 5012 with a daily pivot at 5693, and annual and semiannual risky levels at 5925 and 5955. We ended Thursday with another new all time closing high at 5681.28. To confirm a “Dow Theory Buy Signal” the Dow Industrials need to have a daily close above its all time closing high of 14,164.53 set on October 9, 2007.

Russell 2000 – (890.36) Annual, quarterly, monthly and annual value levels are 860.25, 821.01, 813.37 and 809.54 with a daily pivot at 889.52, and quarterly and semiannual risky levels at 913.92 and 965.51. The Russell 2000 set a new all time high at 891.00 on January 17. The SOX – (412.53) Quarterly, monthly and annual value levels are 371.62, 347.83 and 338.03 with a daily pivot at 409.04 and quarterly and semiannual risky levels at 440.36 and 520.17. The July 2007 high is 549.39. Stock of the Day Pulte Corporation (PHM) –($29.89) Pulte Corporation is a publicly held holding company whose subsidiaries engage in the homebuilding and financial services businesses. The company's significant subsidiaries include Pulte Financial Companies, Inc., Pulte Diversified Companies, Inc., and other subsidiaries which are engaged in the homebuilding business. Analysis – Pulte has a Buy rating according to ValuEngine with fair value at $15.54, which makes the stock 24.5% overvalued. The ValuEngine one-year price target is $21.02.The daily chart for PHM shows overbought momentum with the stock above its 21-day, 50- day and 200-day simple moving averages at $18.80, $17.60 and $13.37. My annual value level is $14.00 with a monthly pivot at $19.27 and the new multi-year high at $20.54 set on Jan 17.

ValuEngine.com Tools and Services
We provide a variety of means for accessing ValuEngine market analysis and other content. You can find us on some of the leading financial media websites as well as the more popular social media services. While our own website ValuEngine.com provides access to lots of analysis--and you can always sign up to receive email daily and weekly bulletins HERE, some users prefer to download PDF reports of content while others prefer to garner info while browsing the web. Our Chief Market Strategist Richard Suttmeier is a prolific market observer and you can find his content in a variety of places. His weekly column on Forbes provides insights into his "Buy and Trade" strategy while his daily market analysis can be followed and accessed at Scribd, Twitter, and Minyanville. Senior Editor Steve Hach re-posts PDFs and web-accessible copies of Daily and Weekly ValuEngine bulletins at Seeking Alpha and Scribd. In most cases, you can receive notification of VE content posting by Suttmeier and Hach by following the ValuEngine feed on twitter @ValuEngine. Links for this content are provided below, you may also find these links on our website HERE

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