Fri 10/27/06 Updates - DWDI Analysis
I thought we'd mention the differences between the Dollar Wise Decisions Index (DWDI) and the Warm & Fuzzy Index (WARM) then look at a few relevant upgrades & downgrades.
The WARM Index is comprised of stocks that are (or at least were as of 9/22/06) rated 5 stars, low risk and a wide moat. The DWDI Index is a subset of the WARM index in that it has the same initial criteria but also requires the company's portrayed by their stocks to have 10 years of increasing revenue and positive earnings per share for the last 10 years. On Friday, Sept 22, 2006 there were 10 companies which fulfilled the criteria but today there are only 6 companies left. The other four have risen in price enough that they now only sport 4 starts.
The remaining 6 stocks that still meet the original criteria are as follows
Anheuser-Busch (BUD)
Fastenal (FAST)
Home Depot (HD)
Medtronic (MDT)
Microsoft (MSFT)
Washington Post (WPO)
Those remaining six stocks are an average of 19.7% below their fair market value while the average of all ten stocks in the DWDI is 17.0% below fair market value. Speaking of percentages, keep in mind that if a stock is selling for $80 with a fair market value (fmv) of $100 then it is 20% below fmv then it will have to go up in price 25% to get to fmv.
The DWDI is a tough Index to get in. No companies can go back in time to redo their revenues or earnings per share. I'm very curious to see what the next new company might be to get added to the list. To get an idea of how long we might have to wait to see the next company I'll start reducing the 10 year criteria of increasing revenues and positive earnings per share.
w/ only 9 years - no new companies
looking back only 8 years we discover two new companies ....
eBay (EBAY) and
Berkshire Hathaway B. (BRK.B)
I consider this very exciting news because those are two companies I was looking at adding to my personal portfolio. Berkshire probably just because I think it would be really cool to say I own a share or two of their stock ...as well as being a very good company but primary motivation may be ego based.
eBay is one that I was testing in my portfolio just last night and there are two reasons for that. For one thing, as of today, EBAY is up 23% since 9/22/06 and that is after dropping over 2% today! Another reason would be based on its fundamentals in that EBAY is part of the WARM portfolio and now as we have seen - it's not too far from being able to qualify as part of the DWDI index.
My next new theory is that I'm thinking that if I were to keep decreasing the 10 year requirement of increasing revenues and positive earnings per share that I would keep adding stocks and those stocks would be mostly made up of the WARM index. Let us continue our search ...
Ooops! I missed my second reason for considering EBAY although the second reason mentioned above is quite good. EBAY is still 28.67% below fmv! Which means EBAY has to go up 40.2% to reach fmv! That's one heck of a return!
Oh, btw - no new stocks are returned when we reduce the criteria to 7 years.
no new stocks found when criteria is reduced to 6 years ...
When reduced to 5 years we have two more stocks!
Expeditors International of Washington (EXPD) (that's one I just bought)
Novartis AG ADR (NVS) (this one is a bit new to me, don't know much about it)
Dropping criteria to four years yields no new stocks ...
Dropping to 3 years yields no new stocks ...
Dropping to 2 years yields no new stocks
Dropping to 1 year yields two new stock ...
Cadbury Schweppes PLC ADR (CSG)
SLM (SLM)
Well, let's summarize this information and recap what we've done. We started with 5 star stocks, low risk, wide moat and 10 years of increasing revenues and positive earnings per share, then we started to reduce the total year requirements from 10 to 9 to 8 ... to see what new companies would be added to the mix.
5 Star Stocks, Low Risk, Wide Moats,
Years of Increasing Revenues and Positive Earnings per Share
Now, a few stocks of interest
UPGRADES
Company - Symbol - Brokerage Firm - Upgrade from - Upgrade to
T. Rowe Price - TROW - AG Edwards - Hold - Buy
Getty Images - GYI - Matrix Research - Hold - Buy
Boeing - BA - Matrix Research - Hold - Strong Buy
Goldcorp - GG - RBC Capital Mkts - Sector Perform - Outperform
DOWNGRADES
Company - Symbol - Brokerage Firm - Upgrade from - Upgrade to
WP Stewart - WPL - Bear Stearns - Outperform - Peer Perform
Chubb - CB - Stifel Nicolaus - Buy - Hold
Stanley Works - SWK - UBS - Buy - Neutral
Raytheon - RTN - Friedman Billings - Outperform - Mkt Perform
Gymboree - GYMB - Friedman Billings - Outperform - Mkt Perform
Major Markets; DWDI, LISA, SPDRs & Diamonds
Day Ending Scores
Daily recap for the 10 Stocks that make up the Dollar Wise Decisions Index (DWDI)
Daily recap for the 10 Stocks that make up The LISA Portfolio
The WARM Index is comprised of stocks that are (or at least were as of 9/22/06) rated 5 stars, low risk and a wide moat. The DWDI Index is a subset of the WARM index in that it has the same initial criteria but also requires the company's portrayed by their stocks to have 10 years of increasing revenue and positive earnings per share for the last 10 years. On Friday, Sept 22, 2006 there were 10 companies which fulfilled the criteria but today there are only 6 companies left. The other four have risen in price enough that they now only sport 4 starts.
The remaining 6 stocks that still meet the original criteria are as follows
Anheuser-Busch (BUD)
Fastenal (FAST)
Home Depot (HD)
Medtronic (MDT)
Microsoft (MSFT)
Washington Post (WPO)
Those remaining six stocks are an average of 19.7% below their fair market value while the average of all ten stocks in the DWDI is 17.0% below fair market value. Speaking of percentages, keep in mind that if a stock is selling for $80 with a fair market value (fmv) of $100 then it is 20% below fmv then it will have to go up in price 25% to get to fmv.
The DWDI is a tough Index to get in. No companies can go back in time to redo their revenues or earnings per share. I'm very curious to see what the next new company might be to get added to the list. To get an idea of how long we might have to wait to see the next company I'll start reducing the 10 year criteria of increasing revenues and positive earnings per share.
w/ only 9 years - no new companies
looking back only 8 years we discover two new companies ....
eBay (EBAY) and
Berkshire Hathaway B. (BRK.B)
I consider this very exciting news because those are two companies I was looking at adding to my personal portfolio. Berkshire probably just because I think it would be really cool to say I own a share or two of their stock ...as well as being a very good company but primary motivation may be ego based.
eBay is one that I was testing in my portfolio just last night and there are two reasons for that. For one thing, as of today, EBAY is up 23% since 9/22/06 and that is after dropping over 2% today! Another reason would be based on its fundamentals in that EBAY is part of the WARM portfolio and now as we have seen - it's not too far from being able to qualify as part of the DWDI index.
My next new theory is that I'm thinking that if I were to keep decreasing the 10 year requirement of increasing revenues and positive earnings per share that I would keep adding stocks and those stocks would be mostly made up of the WARM index. Let us continue our search ...
Ooops! I missed my second reason for considering EBAY although the second reason mentioned above is quite good. EBAY is still 28.67% below fmv! Which means EBAY has to go up 40.2% to reach fmv! That's one heck of a return!
Oh, btw - no new stocks are returned when we reduce the criteria to 7 years.
no new stocks found when criteria is reduced to 6 years ...
When reduced to 5 years we have two more stocks!
Expeditors International of Washington (EXPD) (that's one I just bought)
Novartis AG ADR (NVS) (this one is a bit new to me, don't know much about it)
Dropping criteria to four years yields no new stocks ...
Dropping to 3 years yields no new stocks ...
Dropping to 2 years yields no new stocks
Dropping to 1 year yields two new stock ...
Cadbury Schweppes PLC ADR (CSG)
SLM (SLM)
Well, let's summarize this information and recap what we've done. We started with 5 star stocks, low risk, wide moat and 10 years of increasing revenues and positive earnings per share, then we started to reduce the total year requirements from 10 to 9 to 8 ... to see what new companies would be added to the mix.
5 Star Stocks, Low Risk, Wide Moats,
Years of Increasing Revenues and Positive Earnings per Share
| Company/Symbol/Years of Increasing Revenues & +EPS | Stock Type | % Below | Style Box |
| Anheuser-Busch (BUD) - 10 | Slow Growth | 16.32 | Large-Core |
| Fastenal (FAST) - 10 | Classic Growth | 23.13 | Mid-Growth |
| Home Depot (HD) - 10 | Classic Growth | 15.75 | Large-Core |
| Medtronic (MDT) - 10 | Classic Growth | 23.95 | Large-Growth |
| Microsoft (MSFT) - 10 | Classic Growth | 16.65 | Large-Growth |
| Washington Post (WPO) - 10 | Classic Growth | 24.83 | Mid-Core |
| eBay (EBAY) - 8 | Aggressive Growth | 28.67 | Large-Growth |
| Berkshire Hathaway (BRK.B) - 8 | Classic Growth | 19.66 | Large-Core |
| Expiditors International (EXPD) - 5 | Classic Growth | 16.04 | Mid-Growth |
| Novartis AG ADR (NVS) - 5 | Classic Growth | 16.97 | Large-Growth |
| Cadbury Schweppes PLC ADR (CSG) - 1 | Classic Growth | 16.29 | Large-Value |
| SLM (SLM) - 1 | Aggressive Growth | 15.74 | Large-Growth |
Now, a few stocks of interest
UPGRADES
Company - Symbol - Brokerage Firm - Upgrade from - Upgrade to
T. Rowe Price - TROW - AG Edwards - Hold - Buy
Getty Images - GYI - Matrix Research - Hold - Buy
Boeing - BA - Matrix Research - Hold - Strong Buy
Goldcorp - GG - RBC Capital Mkts - Sector Perform - Outperform
DOWNGRADES
Company - Symbol - Brokerage Firm - Upgrade from - Upgrade to
WP Stewart - WPL - Bear Stearns - Outperform - Peer Perform
Chubb - CB - Stifel Nicolaus - Buy - Hold
Stanley Works - SWK - UBS - Buy - Neutral
Raytheon - RTN - Friedman Billings - Outperform - Mkt Perform
Gymboree - GYMB - Friedman Billings - Outperform - Mkt Perform
Major Markets; DWDI, LISA, SPDRs & Diamonds
Day Ending Scores
| Market | % Change | Value |
| Dow | -0.60% | 12,090.74 |
| S&P 500 | -0.85% | 1,377.34 |
| NASDAQ | -1.20% | 2,350.62 |
| . | . | . |
| DWD Indexes | . | . |
| DWDI | -0.76 | 1,068.54 |
| LISA | -0.54 | 1,054.94 |
| Warm & Fuzzy | -0.93 | 1,093.40 |
| Ambitious | -0.56 | 999.00 |
| AEFKY | -1.23 | 1,023.40 |
| . | . | . |
| Benchmark Indicies | . | . |
| Diamonds DIA | -0.47% | 1,032.99 |
| Spiders SPY | -0.63% | 1,048.98 |
| Personal Portfolio | -0.87 |
| Skip's List | -0.90 |
Daily recap for the 10 Stocks that make up the Dollar Wise Decisions Index (DWDI)
| Stock | % Change | Value |
| Anheuser-Busch | -1.08 | 101.17 |
| Biomet | -0.49 | 112.41 |
| Fastenal | -3.23 | 106.96 |
| Home Depot | -0.83 | 103.09 |
| Johnson&Johnson | -0.94 | 106.58 |
| Medtronic | -0.18 | 104.44 |
| Microsoft | -0.04 | 106.30 |
| Wal-Mart | -1.97 | 105.05 |
| Washington Post | 1.21 | 105.77 |
| Wrigley | -0.08 | 116.77 |
Daily recap for the 10 Stocks that make up The LISA Portfolio
| Stock | % Change | Value |
| 3M | -0.37 | 108.05 |
| Coca-Cola | -0.57 | 106.54 |
| Daimler-Chrysler AG | -0.62 | 109.57 |
| Home Depot | -0.83 | 103.09 |
| Humana | 2.61 | 100.38 |
| Johnson & Johnson | -0.94 | 106.58 |
| Lowe's Companies | -0.98 | 107.09 |
| Target | -1.20 | 106.80 |
| Toyota Motor ADR | -0.82 | 111.23 |
| Worthington Industries | -1.59 | 95.59 |
posted by Scott at
6:42 PM
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