November 7, 2014

Our Valuation WATCH is OFF: Overvaluation is up a bit but barely out of "normal" range. Overvalued stocks now make up 60.18% of our stocks assigned a valuation and 20.45% of those equities are calculated to be overvalued by 20% or more.  Thirteen sectors are calculated to be overvalued--two by double digits.

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Home Depot (HD) is the one of world's largest home improvement retailer. The company offers a level of service unprecedented among warehouse-style retailers. Home Depot stores cater to do-it-yourselfers, as well as home improvement, construction and building maintenance professionals. The Home Depot currently operates in the USA, Canada, Chile, Puerto Rico, and Argentina. The company also operates EXPO Design Centers across the U.S. and Villager's Hardware in New Jersey.

Despite ongoing bad news over a huge security breach, Home Depot's stock continues to climb. The latest news indicates that the security breach was much larger than originally reported. In addition to 56 million credit card accounts, the company revealed that more than 53 million customer email addresses were also compromised. Email addresses are particularly useful for "phishing" attacks and make unsophisticated internet users more susceptible to identity theft and other crimes.

ValuEngine continues its HOLD recommendation on HOME DEPOT for 2014-11-06. Based on the information we have gathered and our resulting research, we feel that HOME DEPOT has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.

Below is today's data on HD:

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	97.43	0.14%
3-Month	97.80	0.52%
6-Month	99.02	1.78%
1-Year	98.91	1.67%
2-Year	108.74	11.77%
3-Year	81.19	-16.54%

Valuation & Rankings
Valuation	6.00% overvalued	Valuation Rank(?)	48
1-M Forecast Return	0.14%	1-M Forecast Return Rank	61
12-M Return	27.31%	Momentum Rank(?)	83
Sharpe Ratio	1.35	Sharpe Ratio Rank(?)	99
5-Y Avg Annual Return	27.15%	5-Y Avg Annual Rtn Rank	94
Volatility	20.16%	Volatility Rank(?)	81
Expected EPS Growth	15.53%	EPS Growth Rank(?)	46
Market Cap (billions)	133.06	Size Rank	100
Trailing P/E Ratio	22.21	Trailing P/E Rank(?)	51
Forward P/E Ratio	19.23	Forward P/E Ratio Rank	32
PEG Ratio	1.43	PEG Ratio Rank	29
Price/Sales	1.65	Price/Sales Rank(?)	52
Market/Book	13.09	Market/Book Rank(?)	9
Beta	1.07	Beta Rank	48
Alpha	0.08	Alpha Rank	76

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Read our Complete Detailed Valuation Report on HD HERE.

Sector Talk--Finance

  Below, we present the latest data on Finance stocks from our Institutional software package (VEI).    Top five lists are provided for each category.  We applied some basic liquidity criteria--share price greater than $3 and average daily volume in excess of 100k shares. 

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Top-Five Finance Stocks--Short-Term Forecast Returns

Top-Five Finance Stocks--Long-Term Forecast Returns

Top-Five Finance Stocks--Composite Score

Top-Five Finance Stocks--Most Overvalued

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What's Hot
-- VE View Comes Back Strong with Renewed Rally

We still find a positive economic environment for equities within the United States. As we noted a few weeks ago-- when the market was in a sell off mode, most of the doom and gloom seemed to be emanating from political and media sources looking to capitalize on the slight wobble for electoral purposes.

Now, it is worthwhile to note that many of those same "analysts" claim the ongoing rebound is due to the US election results. But we believe that we are seeing not the short-term noise of a mid-term election, but rather the continuation of favorable long-term economic trends within the US that are --finally--being bolstered by an improved employment situation. We hope that nothing from a new GOP-dominated Congress--such as a return to harsh austerity policies favored by the American right wing--will negatively impact the overall upward trajectory of the US economy.

We remind investors once more than mixing politics and investing is a very bad idea. Relying on blatantly political sources for economic analysis and advice is a quick path to a poorly performing portfolio. Whenever you hear an analyst, pundit, or other talking head of any ideological predilection attribute market moves to election results--or the daily ebb and flow of life in Washington DC, it's time to hold on to that wallet/purse.

Consider the market since January 2009--DOW up 94%, SP500 up 118%, NASDAQ up 183%--Anyone who listened to the "BUY GOLD BUY GUNS BUY SEEDS" crowd after the election of 2008 missed out on an epic rally.

In any case, with favorable markets we find that once more our top-performing newsletter portfolio, the ValuEngine View, has bounced back wonderfully and has returned to its winning ways. More than half of our positions are currently at --or close to-- double-digit returns.

Here are the current VE View Newsletter Portfolio Results:

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The ValuEngine View Newsletter is the product of a sophisticated stock valuation model that was first developed by ValuEngine's academic research team. It utilizes a three factor approach: fundamental variables such as a company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's future 12-month EPS, and the 30-year Treasury yield are all used to create a more accurate reflection of a company's fair value. A total of eleven additional firm specific variables are also used. In addition, the portoflio uses top picks from our Forecast Model. In essence, the portfolio is constructed with the best picks from our main propiretary models

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