July 26, 2016

VALUATION WATCH: Overvalued stocks now make up 45.8% of our stocks assigned a valuation and 15.29% of those equities are calculated to be overvalued by 20% or more. Seven sectors are calculated to be overvalued.

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ValuEngine View Portfolio Rides Brexit Bounce To 8% Gain

For June/July, we had a great month as the markets shook off the “Brexit” fallout and powered up once again. Our long-only ValueEngine View portfolio matched the upswing perfectly with a big gain of 8.82%. We beat the benchmark S&P 500's similar gain of 8.39% by 43 bps. The trailing 12 month gain of the VE View is -5.23% versus the S&P 500 gain of 2.9%. The return since inception of the View is 108.25% versus the S&P's gain of 91.48%.

We had a perfect 100% hit ratio this month with 15/15 winning positions. Seven of our picks provided double-digit returns with Thor Industries leading the way with a great 22% pick up. Other double-digit returns came from Cooper-Standard, AMN Health Care, Employers Holdings, Smith and Wesson, and Windstream. The big gains meant that none of our picks hit stop-losses levels set at 10%. We will retain those stops at the 10% level moving forward.

Currently, the Valuation Model finds that 45.8% of the equities to which we can assign a valuation are overvalued--with 15.29% coming in overvalued at 20% or more. Seven sectors are calculated to be overvalued. Our valuation figures still show a "normal" market, with valuations nowhere near that bargain level they presented in the immediate aftermath of the Brexit vote.

The markets in the US and elsewhere certainly shook off that Brexit panic, with several indices setting new records over the past few weeks. Many analysts found that the uncertainty in the EU removed any possible scenario where the Fed would raise rates any time soon. Of course, that is not to say that some Fed officials don't favor increases, but the time to hit the brakes may have passed by given the fact that the US is in the midst of a presidential election, and the central bank is notoriously skittish about any hint of political bias.

We won't have a better sense of potential rate increases until after the next round of meetings. If good data for the US and world economy holds up, the Fed may push for an increase in September. But again, we find that the labor market should still be given some room to run. As always, and as we repeat like a mantra, the balancing act between the dual mandate of control inflation and foster full employment creates tension.

In our July portfolio, we turnover just four positions. On a sector basis the model likes Consumer Discretionary stocks and Tech stocks, We add one selection from our Valuation model's aggressive-growth strategy, one position from our Forecast model's diversified-growth strategy, and two positions favored by both.

Below are the latest results from our VE View Strategy Newsletter:

Below, we provide the data on Cooper-Standard (CPS), one of our portfolio leader for the month:

Cooper-Standard Holdings Inc. operates as a supplier of systems and components for the automotive industry. Its products include sealing and trim, fuel and brake delivery, fluid transfer, thermal and emissions and anti-vibration systems. The company markets its products directly to automotive original equipment manufacturers, tier I and tier II suppliers, and non-automotive manufacturers. Cooper-Standard Holdings Inc. is headquartered in Novi, Michigan.

VALUENGINE RECOMMENDATION: ValuEngine continues its STRONG BUY recommendation on COOPER-STANDARD for 2016-07-25. Based on the information we have gathered and our resulting research, we feel that COOPER-STANDARD has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E Ratio and Momentum.

You can download a free copy of detailed report on Cooper-Standard from the link below.

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	90.93	1.34%
3-Month	93.71	4.43%
6-Month	96.90	8.00%
1-Year	104.27	16.20%
2-Year	111.71	24.50%
3-Year	110.00	22.60%

Valuation & Rankings
Valuation	10.73% overvalued	Valuation Rank(?)	26
1-M Forecast Return	1.34%	1-M Forecast Return Rank	100
12-M Return	51.52%	Momentum Rank(?)	92
Sharpe Ratio	0.48	Sharpe Ratio Rank(?)	84
5-Y Avg Annual Return	13.57%	5-Y Avg Annual Rtn Rank	87
Volatility	28.35%	Volatility Rank(?)	60
Expected EPS Growth	-13.48%	EPS Growth Rank(?)	13
Market Cap (billions)	1.54	Size Rank	71
Trailing P/E Ratio	8.89	Trailing P/E Rank(?)	93
Forward P/E Ratio	10.28	Forward P/E Ratio Rank	81
PEG Ratio	n/a	PEG Ratio Rank	n/a
Price/Sales	0.45	Price/Sales Rank(?)	84
Market/Book	3.66	Market/Book Rank(?)	32
Beta	0.60	Beta Rank	63
Alpha	0.24	Alpha Rank	88

DOWNLOAD A FREE SAMPLE OF OUR COOPER STANDARD (CPS) REPORT BY CLICKING HERE

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