August 28, 2015

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VALUATION WATCH: Overvalued stocks now make up 41.26% of our

stocks assigned a valuation and 13.27% of those equities are calculated to
be overvalued by 20% or more. Four sectors are calculated to be
overvalued--with one at or near double digits.
MARKET OVERVIEW
Index

Started week

Friday AM

Change

Change %

ytd

DJIA

16459.75

16618.5

158.75

0.96%

-6.76%

NASDAQ

4351.61

4811.26

459.65

10.56%

1.79%

RUSSELL 2000

1119.76

1154.55

34.79

3.11%

-4.16%

S&P 500

1965.15

1986.94

21.79

1.11%

-3.50%

Summary of VE Stock Universe

Stocks Undervalued

58.74%

Stocks Overvalued

41.26%

Stocks Undervalued by 20%

23.88%

Stocks Overvalued by 20%

13.47%

SECTOR OVERVIEW
Sector

Change

MTD

YTD

Valuation

Last 12-M
Return

P/E
Ratio

Aerospace

1.77%

-6.98%

-2.20%

9.81% overvalued

-7.34%

20.47

Auto-Tires-Trucks

1.55%

-6.96%

-8.34%

9.59% undervalued

-14.66%

14.74

Basic Materials

3.24%

-4.29%

-15.34%

18.96% undervalued

-37.00%

20.04

Business Services

1.55%

-5.66%

-0.99%

1.85% overvalued

-6.73%

22.96

Computer and Technology

1.91%

-4.57%

-4.61%

2.33% undervalued

-8.17%

28.28

Construction

2.08%

-5.26%

-4.83%

8.35% undervalued

-5.70%

22.8

Consumer Discretionary

1.48%

-5.24%

1.42%

0.84% undervalued

-7.14%

26.98

Consumer Staples

1.32%

-5.83%

-4.35%

3.57% overvalued

-5.93%

21.27

Finance

1.41%

-4.45%

-2.40%

2.55% undervalued

-5.20%

17

Industrial Products

1.93%

-7.25%

-8.37%

8.54% undervalued

-15.33%

18.16

Medical

1.59%

-6.49%

8.13%

8.89% overvalued

7.64%

31.13

Multi-Sector Conglomerates

1.86%

-7.23%

-8.43%

3.53% undervalued

-10.35%

21.29

Oils-Energy

5.30%

-8.88%

-20.59%

18.29% undervalued

-49.03%

22.18

Retail-Wholesale

1.83%

-5.41%

-6.76%

0.13% undervalued

-0.98%

23.16

Transportation

2.18%

-8.83%

-11.71%

10.09% undervalued

-15.46%

16.56

Utilities

1.68%

-4.65%

-7.38%

3.37% undervalued

-10.26%

20.44

Sector TalkBasic Materials

Below, we present the latest data on leading Basic Materials Sector stocks from
our Professional Stock Analysis Service. These results were filtered by market price
and volume--no results below 3$/share or less than 100k shares/day volume.

Top-Five Basic Materials Sector Stocks--Short-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

MERC

MERCER INTL SBI

11.46

-2.06%

10.51%

UFS

DOMTAR CORP

39.13

18.11%

4.54%

IOSP

INNOSPEC INC

47.69

19.86%

11.58%

CE

CELANESE CP-A

59.31

-13.46%

-3.94%

KRA

KRATON PERFORM

20.61

-9.82%

1.78%

Top-Five Basic Materials Sector Stocks--Long-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

MERC

MERCER INTL SBI

11.46

-2.06%

10.51%

UFS

DOMTAR CORP

39.13

18.11%

4.54%

IOSP

INNOSPEC INC

47.69

19.86%

11.58%

CE

CELANESE CP-A

59.31

-13.46%

-3.94%

KRA

KRATON PERFORM

20.61

-9.82%

1.78%

Top-Five Basic Materials Sector Stocks--Composite Score

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

CE

CELANESE CP-A

59.31

-13.46%

-3.94%

LYB

LYONDELLBASEL-A

85.26

-33.31%

-24.95%

EMN

EASTMAN CHEM CO

72.63

-18.14%

-10.76%

MERC

MERCER INTL SBI

11.46

-2.06%

10.51%

CMC

COMMERCIAL METL

15.18

-14.64%

-12.91%

Top-Five Basic Materials Sector Stocks--Most Overvalued

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

AVD

AMER VANGUARD

12.85

56.13%

-2.95%

SIAL

SIGMA ALDRICH

139.65

41.54%

35.21%

CYT

CYTEC INDS INC

73.85

31.37%

43.30%

BVN

BUENAVENTUR-ADR

6.21

28.73%

-54.87%

CHMT

CHEMTURA CORP

27.07

27.94%

10.22%

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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 Stock Reports
Apple Inc. (AAPL) is engaged in designing, manufacturing and marketing
mobile communication and media devices, personal computers, and portable digital
music players. The Company's products and services include iPhone, iPad, Mac, iPod,
Apple TV, a portfolio of consumer and professional software applications, the iOS and
Mac OS X operating systems, iCloud, and a range of accessory, service and support
offerings. It sells its products worldwide through its online stores, its retail stores, its
direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered in
Cupertino, California.
ValuEngine continues its BUY recommendation on APPLE INC for 2015-08-27.
Based on the information we have gathered and our resulting research, we feel that
APPLE INC has the probability to OUTPERFORM average market performance for the
next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.
Read our Complete Detailed Valuation Report on APPLE HERE.

ValuEngine Forecast
Target
Price*

Expected
Return

1-Month

114.05

1.00%

3-Month

114.90

1.75%

6-Month

116.61

3.26%

1-Year

126.44

11.98%

2-Year

120.75

6.94%

3-Year

97.09

-14.02%

Valuation & Rankings

Valuation

3.23% undervalued

Valuation Rank(?)

1-M Forecast Return

1.00%

1-M Forecast Return Rank

48
97

12-M Return

10.56%

Momentum Rank(?)

Sharpe Ratio

0.99

Sharpe Ratio Rank(?)

93

5-Y Avg Annual Return

23.88%

5-Y Avg Annual Rtn Rank

92

80

Volatility

24.09%

Volatility Rank(?)

Expected EPS Growth

8.17%

EPS Growth Rank(?)

Market Cap (billions)

657.73

Size Rank

Trailing P/E Ratio

12.81

Trailing P/E Rank(?)

Forward P/E Ratio

11.84

Forward P/E Ratio Rank

PEG Ratio

1.57

PEG Ratio Rank

29

Price/Sales

2.93

Price/Sales Rank(?)

31

Market/Book

5.63

Market/Book Rank(?)

Beta

0.89

Beta Rank

Alpha

0.16

Alpha Rank

67
41
100
81
72

21
50
84

What's Hot
Market Gyrations Impact Potential FED Action?
This week's trading action has unsettled markets and investors, but it may have
led to at least one positive outcome for stocks. At a briefing today for regional
economic conditions, New York Fed Bank Chair--and FOMC member-- William Dudley
told reporters that "at this moment, the decision to begin the normalization process at
the September [FOMC] meeting seems less compelling to me than it did several
weeks ago. But normalization could become more compelling by the time of the
meeting as we get additional information.
That statement is definitely of the "tea-leaves needing to be read" variety, but it
indicates that US markets should continue to trade under the benefit of the Fed's
zero-interest rate policy (ZIRP) for a while longer. US short-term rates have hovered
near 0% for most of the past seven years now. This policy provided the only real boost
for the US economy as the fiscal options, controlled by politicians in Washington DC,
were focused on austerity in lieu of a robust stimulus program.
It would seem quite premature to raise rates under the present circumstances,
and with the Fed still responsible for a dual mandate--low inflation AND full
employment--it appears cooler heads will prevail thanks to the "reality" provided by
China and the global market pull back. Dudley referenced this in his remarks by
noting that incoming data suggest the economy continues to grow at a moderate
pace sufficient to cause a gradual tightening of the U.S. labor market but
international developments have increased the downside risk to U.S. economic
growth.
Again, as we have been noting for a while now, the US economy is recovering,
and we see some pressures within the labor market--as evidenced by changes in
employment practices on the part of Wal-Mart, McDonald's et al. We also see a low
level of inflation--bolstered by the cratering of oil and other commodities pricing.
Stocks, despite their recent gyrations, remain the only game in town where
yields are concerned. We recommend investors with the means to weather this storm
stay the course. We do not foresee a long-term issue for the US economy here, and
we note that selling at the bottom of a down turn is often the worst move one can
make. On the other hand, this is a time to tighten up those stop-losses and to stay

attentive.

VE Forecast Market Neutral Portfolio Shrugs Off

China Turmoil, Posts Big Gain
It was another great result for the ValuEngine Forecast 16 Market Neutral
Strategy Portfolio. July/August was a terrific month as volatility and China-driven
market sell off powered-up our short side. We posted a gain of 7.31% and beat both
the SP500 loss of 6.03% and the MLSAX loss of 1.17%. That's a beat of 848 bps on the
MLSAX and a whopping 1344 bps to the S&P 500!
The modified stop-lossed strategy with a suggested 60-40 allocation trailed the
standard market neutral allocation with a gain of 4.63%. The trailing 12 month
percentage return is 42.96% for the newsletter and 5.44% for the MLSAX Long-Short
Fundand -0.05% for the SP500. Since inception, our portfolio has returned 159.68% vs
the MLSAX return of 30.05%.
This month demonstrated yet again the benefit of the market neutral
approach. Our shorts were amazing with massive pick ups for many selections. Ten of
sixteen picks posted double-digit gains with several positions returning in excess of
40%. Longsas is to be expected given the market action this month-- were pretty
much a wash across the board with the exception of Net 1, PG&E, and Douglas
Dynamic.
Valuations have declined significantly and are looking oversold. 38.55% of the
stocks we can assign a valuation are calculated to be overvalued-- with 11.95% of
them calculated to be overvalued by 20% or more. As we have been saying for a
while now, we remain confident that the underlying US economy is strong-- and
getting stronger. However, we live in an interconnected world and China has a cold.
Time to tighten up those stop-losses.
Find Out More About the VE Forecast 16 MNS Portfolio HERE
Please click HERE to subscribe. You may download a sample copy HERE.

Here are the primary long and short-side selections and their performance for the
month.
Position

Ticker

Company Name

Entry Price
7/16/15

Exit Price

Change %Change

Sector

Long 1

SPR

SPIRIT AEROSYS

55.49

51.49

-4.00

-7.21

AEROSPACE

Long 1

PLOW

DOUGLAS DYNAMIC

21.27

22.11

0.84

3.95

AUTO TIRES TRUCKS

Long 1

MERC

MERCER INTL SBI

13.2

10.68

-2.52

-19.09

BASIC MATERIALS

Long 1

CBZ

CBIZ INC

9.85

9.64

-0.21

-2.13

BUSINESS SERVICES

Long 1

MFLX

MULTI-FINELINE

18.72

17.81

-0.91

-4.86

COMPUTERS
TECHNOLOGY

Long 1

BZH

BEAZER HOMES

19.92

17.04

-2.88

-14.46

CONSTRUCTION

Long 1

STRZA

STARZ-LIB CAP-A

44.86

36.86

-8.00

-17.83

CONSUMER
DISCRETIONARY

Long 1

CALM

CAL-MAINE FOODS

53.59

49.67

-3.93

-7.33

CONSUMER STAPLES

Long 1

HRTG

HERITAGE INSUR

25.19

18.36

-6.83

-27.11

FINANCE

Long 1

UEPS

NET 1 UEPS TECH

18.49

19.98

1.49

8.06

INDUSTRIAL PRODUCTS

Long 1

NLNK

NEWLINK GENETIC

49.97

47.23

-2.74

-5.48

MEDICAL

-6.61

MULTI-SECTOR
CONGLOM

Long 1

FSS

FED SIGNAL CP

13.95

-0.99

Long 1

PZE

PETROBRAS EGY

Long 1

TA

TRAVELCENTERS

6.32

-0.33

-5.20

OILS ENERGY

15.87

12.04

-3.83

-24.13

RETAIL WHOLESALE

Long 1

CVTI

COVENANT TRANS

Long 1

PCG

PG&E CORP

26.76

22.53

-4.23

-15.81

TRANSPORTATION

51.22

53.08

1.86

3.63

Short 1

AVAV

UTILITIES

AEROVIRONMENT

27.75

24.38

3.37

12.14

AEROSPACE

Short 1
Short 1

NAV

NAVISTAR INTL

19.97

16.48

3.49

17.48

AUTO TIRES TRUCKS

MT

ARCELOR MITTAL

9.38

8.26

1.12

11.94

BASIC MATERIALS

Short 1

MRIN

MARIN SOFTWARE

6.07

3.52

2.55

42.01

BUSINESS SERVICES

Short 1

FUEL

ROCKET FUEL INC

7.47

5.71

1.76

23.56

COMPUTERS
TECHNOLOGY

Short 1

LAYN

LAYNE CHRISTENS

8.7

7.24

1.46

16.78

CONSTRUCTION

Short 1

CZR

CAESARS ENTERTN

6.79

8.02

-1.23

-18.11

CONSUMER
DISCRETIONARY

Short 1

RDEN

ELIZABETH ARDEN

12.71

10.38

2.33

18.33

CONSUMER STAPLES

Short 1

GNW

GENWORTH FINL

7.67

4.59

3.08

40.16

FINANCE

Short 1

CAS

CASTLE (AM) &CO

6.01

2.99

3.02

50.25

INDUSTRIAL PRODUCTS

Short 1

RPRX

REPROS THERAPEU

7.71

7.42

0.29

3.76

MEDICAL
MULTI-SECTOR
CONGLOM

Short 1

CODI

COMPASS DIVERSF

Short 1

BTU

PEABODY ENERGY

Short 1

SHLD

SEARS HLDG CP

14.93

16.3

0.16

0.99

1.67

1.78

-0.11

-6.59

OILS ENERGY

23.68

22.64

1.04

4.39

RETAIL WHOLESALE

16.4636

Short 1

DSX

DIANA SHIPPING

7.61

7.1

0.51

6.70

TRANSPORTATION

Short 1

CLNE

CLEAN EGY FUELS

6.16

4.02

2.14

34.74

UTILITIES

PORTFOLIO TOTAL
GSPC

S&P500

7.31
2099.6

1970.89

-128.71

-6.13

LONG PORTFOLIO

-8.85

SHORT PORTFOLIO

16.16

Find Out More About the VE Forecast 16 MNS HERE

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