November 14, 2014

Valuation WATCH: Overvalued stocks now make up 61.28% of our stocks assigned a valuation and 21.7% of those equities are calculated to be overvalued by 20% or more.  Fourteen sectors are calculated to be overvalued--five by double digits.

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HERTZ GLOBAL HOLDINGS (HTZ) is the worlds largest general use car rental brand, operating from approximately 8,100 locations in 147 countries worldwide. Hertz is the number one airport car rental brand in the U.S. and at 69 major airports in Europe, operating both corporate and licensee locations in cities and airports in North America,

ValuEngine continues its HOLD recommendation on HERTZ GLOBAL HOLDINGS for 2014-11-13. Based on the information we have gathered and our resulting research, we feel that HERTZ GLOBAL HOLDINGS 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 HTZ:

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	22.79	0.27%
3-Month	22.91	0.79%
6-Month	22.92	0.86%
1-Year	23.46	3.22%
2-Year	22.45	-1.22%
3-Year	22.72	-0.05%

Valuation & Rankings
Valuation	n/a	Valuation Rank(?)	n/a
1-M Forecast Return	0.27%	1-M Forecast Return Rank	70
12-M Return	-2.86%	Momentum Rank(?)	42
Sharpe Ratio	0.37	Sharpe Ratio Rank(?)	69
5-Y Avg Annual Return	17.13%	5-Y Avg Annual Rtn Rank	83
Volatility	46.06%	Volatility Rank(?)	42
Expected EPS Growth	24.29%	EPS Growth Rank(?)	57
Market Cap (billions)	10.21	Size Rank	90
Trailing P/E Ratio	13.92	Trailing P/E Rank(?)	82
Forward P/E Ratio	11.20	Forward P/E Ratio Rank	79
PEG Ratio	0.57	PEG Ratio Rank	57
Price/Sales	n/a	Price/Sales Rank(?)	n/a
Market/Book	3.68	Market/Book Rank(?)	33
Beta	2.54	Beta Rank	6
Alpha	-0.40	Alpha Rank	19

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Read our Complete Detailed Valuation Report on HTZ HERE.

Sector Talk--Retail/Wholesale

  Below, we present the latest data on Retail/Wholesale 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. 

Please Click Here to Download a FREE Demo of ValuEngine's Professional VEI Software Package.

Top-Five Retail/Wholesale Stocks--Short-Term Forecast Returns

Top-Five Retail/Wholesale Stocks--Long-Term Forecast Returns

Top-Five Retail/Wholesale Stocks--Composite Score

Top-Five Retail/Wholesale Stocks--Most Overvalued

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What's Hot--
With Latest Market Rebound, Overvaluation Creeps Up

ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which trade on US exchanges as well as @1000 Canadian equities.  When EPS estimates are available for a given equity, our model calculates a level of mispricing or valuation percentage for that equity based on earnings estimates and 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. Using our Valuation Model, we can currently assign a VE valuation calculation to more than 2900 stocks in our US Universe.

We combine all of the equities with a valuation calculation to track market valuation figures and use them as a metric for making calls about the overall state of the market.  Two factors can lower these figures-- a market pullback, or a significant rise in EPS estimates. Vice-versa, a significant rally or reduction in EPS can raise the figure. Whenever we see overvaluation levels in excess of @ 65% for the overall universe and/or 27% for the overvalued by 20% or more categories, we issue a valuation warning. 

We now calculate that 62.26% of stocks are overvalued and 22.66% of those stocks are overvalued by 20% or more. These figures are up significantly from where they were at back in mid-October. Overvalaution declined below the threshold for a warning back on September 23rd, continued to decline, and bottomed out at @40% overvalued on October 14th. Since then, the market has rebounded admirably, and we blew right through "normal" range.

With these sorts of numbers, we now operate under a "Valuation Watch." If the figures continue to increase, we could issue another Valuation Warning within a few days. We have seen the high levels currently associated with the market rally since May, 2013. And it is looking like the recent downturn was little more than an Isis/Ebola/US mid-term election-driven panic sell off rather than an indicator of a fundamental issue with US equities or the economy.

In any case, we now have a Valuation Watch. But, we would expect that this will only be a temporary respite and that overvaluation will soon exceed the 65% level required for a Valuation Warning if/when the market lays in its next move to the upside.

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   The chart below tracks the valuation metrics from January 2014. It shows levels in excess of 50%.

   This chart shows overall universe over valuation in excess of 50% vs the S&P 500 from January 2013

 This chart shows overall universe under and over valuation in excess of 50% vs the S&P 500 from March 2007*

 *NOTE: Time Scale Compressed Prior to 2011.

In addition to the overall valuation metrics, we see that on a sector basis overvaluation has also increased. Fourteen of sixteen sectors are now overvalued according to our Valuation Model, with four of them calculated to be overvalued by double digits--and four more sitting in the 9% overvalued range.

-- 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 105%, SP500 up 129%, NASDAQ up 196%--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.

Here are the current VE View Newsletter Portfolio Results:

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