If large cap stocks are part of your investment universe and you are wondering what stocks appear most attractive in that realm, and what are the companies you should be selling right now, we have prepared a couple of lists with our favorite Buy and Sell ideas , by using relative analysis on some of our key stock selection criteria.
Generally, large cap companies look relatively inexpensive from a valuation stand point right now. The tough economic environment is forcing the management to run leaner operations and increase efficiency by divesting losing business units and downsizing. As a result, these firms are typically able to squirrel away cash on their books and are poised to withstand prolonged periods of weakness in the economy, or grow if the market begins to appreciate at a more rapid rate. In addition, this enables them to buy back more shares and possibly increase dividends, thus providing investors a steady source of income until the current market cloud passes over. Our Attractive list below contains the large cap names with highest AFG valuation and performance metrics rankings.
Despite the overall attractiveness of the large cap stocks at the moment, there are still companies in that universe that appear unattractive on a relative basis – their poor valuation score and poor AFG Recommendation, together with the expected decline of their Economic Margins (EMs) place them in the Unattractive list at this time.
AFG’s buy/sell strategy has done well over time across all size universes (see performance chart below), focusing on variables such as valuation, economic profitability, economic profitability momentum, earnings quality, management quality among others. AFG’s Economic Margin Framework produces a more refined intrinsic value for companies than traditional accounting based metrics (see EM vs. traditional metrics). It allows investors to see past the holes in GAAP accounting metrics and supplies them with a clearer picture of the underlying economic vitality of a company, providing an edge in their stock selection process.
AFG’s performance based metrics work well not only in the U.S., but are also consistent and effective across the globe as you can see in these backtest results (in this article from earlier in the week on ValueExpectations.com ). The performance achieved by using the combination of these metrics has been very encouraging and something that investors should consider when searching to employ new research and investment strategies.
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source: www.economicmargin.com
The backtest results below display the performance of companies that we have identified as buys, sells and holds since 1998. As you can see by using AFG’s Economic Margin framework and valuation techniques there is a significant spread achieved between those companies that we identify as buys or sells.
AFG Buy/Hold/Sell Results - 9/25/1998 - 9/24/2010
AFG Free Newsletter Service – Actionable Buy/Sell Ideas and more!
If lists of stocks to buy and sell from different segments of the market, macroeconomic discussions or other investment ideas are of interest to you then ValueExpectations.com free newsletters can be valuable for stock pickers looking for quality investment ideas. Access to buy and sell ideas that have proven to work backed by a proven research team can benefit your research and due-diligence process and become an added resource for you and your team. Whether you are looking for long or short ideas in Large-Caps, Small-Caps, Dividend Payers or want to understand what’s going on in the markets and economy, ValueExpectations.com newsletters have something for most investors.
The focus of our newsletters is to provide buy and sell idea generation from different segments of the market. AFG research covers over 30,000 companies in 30 countries, if you find our research newsletters interesting we would be pleased to offer a complimentary trial to our institutional research platform (www.AFGview.com) for professional investors which provides analyst and portfolio managers the ability to value a company more in-depth.
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