Presentation on theme: "IBD MEETUP/NORTHRIDGE, SATURDAY JANUARY 12 TH, 2013."— Presentation transcript:
IBD MEETUP/NORTHRIDGE, SATURDAY JANUARY 12 TH, 2013
AGENDA NOW THAT THE MAYAN CALENDAR HAS ENDED NOW THAT THE FISCAL CLIFF HAS… DEFENSIVE SECTORS TO CONSIDER STOCKS TO CONSIDER REVIEW OF WATCH LIST REVIEW OF FLT AND HLF STOCKS REVISIONS TO WATCH LIST MARC’S MOMENT LESSON 13
NOW THAT THE FISCAL CLIFF HAS… BEEN SEMI-SOLVED WITH A LAST MINUTE BRIDGE!
THE FISCAL CLIFF Remember the debt ceiling fiasco in 2011? – At the last second, President Obama cut a deal with Congress to raise the debt ceiling. – But the price he paid was a big set of spending cuts that would automatically take effect unless Congress figured out a way to do something different. – Congress failed, of course, which means all those spending cuts will happen on January 1, 2013. – There are a few other items too, including some new Obamacare taxes that take effect, but this accounts for most of it.
EFFECT ON GDP Which part has the worst effect: the spending cuts or the tax increases? CBO estimates that the effect per dollar is greater for spending cuts than tax increases: roughly a dollar of GDP for every dollar of spending cuts versus about half a dollar of GDP per dollar of tax increases. However, the absolute size of the tax increases is much larger than the absolute size of the spending cuts. Overall, CBO estimates that the spending cuts will reduce GDP by about 0.8 percentage points; the end of the payroll tax holiday will reduce GDP about 0.7 percent; and the expiration of the Bush tax cuts will reduce GDP by 1.4 percentage points.
LAST MINUTE LEGISLATION Figures represent 10-year costs or savings compared to CBO’s March 2012 baseline, which assumed that all tax cuts would expire as scheduled, automatic spending cuts would take effect and the expiring farm bill would be extended. TAXES SUBJECTPROVISION 10-YEAR EFFECTS, $B Alternative minimum tax Income threshold permanently indexed to inflation -1,815.6 Individual income tax rates Rates established in 2001 made permanent for income below $400,000 for individuals, $450,000 for couples -772.9 Estate tax Current estate and gift tax policy revised and made permanent -369.1 Child tax credit Made permanent -354.4 Rates/capital gains & div.s Rates established in 2003 made permanent for incomes below $400,000 for individuals, $450,000 for couples -289.9 Stimulus tax cuts Provisions enacted in 2009 extended through 2017 -134.2 Marriage penalties in IRS code Permanent extension of relief measures -84.6 Tax "extenders" One-year extension of dozens of individual, business and energy tax provisions including the research and development credit and the renewable electricity production credit -76.3 Other tax provisions One-year extension of a variety of education provisions, the adoption credit, the dependent care credit and other provisions -30.8
THE MARKETS REACT Dow Gains 308 Points as Investors Applaud Fiscal-Cliff Solution, or 2.4% Also turning in an impressive show of strength was the S&P 500 Index (SPX), which gained 36 points, or 2.5%. The tech sector didn't disappoint, as the Nasdaq Composite (COMP) outperformed its index brethren, surging almost 93 points, or 3.1%. The CBOE Market Volatility Index (VIX) continued its sharp descent, shedding 3.3 points, or 18.5%, to touch its lowest close since early October.
THE HEALTH OF THE CURRENT BULL MARKET Can current Bull Market last well into 2013? – Investors have been hoarding cash which will eventually flow into the markets – Eight other Bull Markets have lasted longer than the current one. – Institutional Investors still remain ridiculously underweight to equities. – Stocks in the S&P have risen higher in price but have gotten cheaper For the past 2.5 years the P/E Ratio for the S&P has never topped 16 Yet during other Bull Markets since 1962, the average P/E Ratio has been 17.4 Reason is earnings have grown faster than stock prices. Stocks could rally 15.2% in 2013. Bull Markets typically end on a high P/E of say 19.9 according to Bloomberg. We have not seen a real burst of hyper enthusiasm that typically ends Bull Markets This Bull Market still has at least a 31.7% upside before it runs out of steam. Insiders are 4 times more enthusiastic about their companies than just 2 months ago.
BEST SECTORS IN Q-1 2012 SectorTickerQ1 Performance FinancialsXLF+21.88% TechnologyXLK+18.89% Consumer DiscretionaryXLY+15.91% IndustrialsXLI+11.38% MaterialsXLB+10.78% Health CareXLV+8.97% Consumer StaplesXLP+5.45% EnergyXLE+4.18% UtilitiesXLU-1.70%
DIVIDEND PAYING STOCKS So what dividend stocks look good for 2013 Stovall's picks include Chevron (CVX), Microsoft (MSFT) and UGI (UGI), a utility. He screened for stocks with yields of 3% or more, a track record of increasing their earnings and dividends, and other factors.CVXMicrosoftMSFTUGI Among recent IBD 50 stocks, dividend payers include Eastman Chemical (EMN), Ingredion (INGR), Polaris Industries (PII) and Seagate Technology (STX).EMNINGRPIISTX
STOCKS TO CONSIDER Mexican fast-food chain Chipotle Mexican Grill Inc. (NYSE: CMG)CMG SodaStream (Nasdaq: SODA) Israeli company that makes a carbonation machine that makes custom-flavored sodas.SODA Petroleo Brasiliero (NYSE: PBR), the state-owned Brazilian oil and gas firm, better known as Petrobras.PBR Berkshire Hathaway (NYSE: BRK-B) growing by 20% annually will likely go down as the longest and most impressive strings of wealth creation in history. BRK-B holdings include:BRK-B – 1. An increased stake in banking giant Wells Fargo (NYSE: WFCWFC – 2. A huge commitment to DirectTV (NYSE: DTV)DTV – 3. A new stake in Liberty Media (Nasdaq: LMCALMCA – 4. Another notable wide-moat purchase in DaVita (NYSE: DVA), which runs dialysis centers across the United States.DVA – 5. Other notable moves Buffett also acquired additional shares in International Business Machines (NYSE: IBM)IBM in Intel (Nasdaq: INTC)INTC Visa (NYSE: V)V CVS Caremark (NYSE: CVS)CVS General Dynamics (NYSE: GD).GD – 6. Notable sales include the complete liquidation of Exxon Mobil (NYSE: XOM) and lower stakes in Kraft (NYSE: KFT) and Johnson & Johnson (NYSE: JNJ). liquidationXOMKFTJNJ Three candidates for potential takeovers. 1. Avery Dennison (NYSE: AVY) Business: Labels and packaging materials - A likely acquirer could be label and adhesives giant 3M (NYSE: MMM), which, with a robust market cap of $63 billion, would have no problem digesting Avery's $3.3 billion market value. It would easily be able to swoop in and cut overhead to boost efficiencies, as it has a reputation of doing.AVYMMM 2. Office Depot (NYSE: ODP) or OfficeMax (NYSE: OMX) Business: Office supplies retailing - a possible bid by office supply giant Staples (Nasdaq: SPLSODPOMXSPLS 3. RadioShack (NYSE: RSH) Business: Electronics retailing - A potential buyout of struggling electronics retailer RadioShack has become less likely in the near term, given that the founder of industry titan Best Buy (NYSE: BBY), Richard Schulze, is trying to use his 20% stake to take the rest of Best Buy private. But Best Buy is struggling to compete against online rivals that include Amazon.com (Nasdaq: AMZN) Part of its explicit strategy has been to roll out smaller stores that specialize in selling mobile phones. And this is where Radioshack comes in. The retailer operates more than 5,000 smaller domestic stores and has settled on hawking cell phones. Acquiring RadioShack would help leverage the company's fixed costs and market share presence.RSHBBYAMZN
Lessons 1 – 12 showed how the CAN SLIM® Investing System helps you find the best stocks – and spot the right time to buy and sell. This lesson provides checklists and routines to help put the CAN SLIM® rules to work for you.
Quick Investing Routine Approximately 20 – 30 Minutes Step 1: Check overall market direction with The Big Picture Step 2: Scan stock lists & features in IBD for new stock ideas Step 3: Evaluate your stock ideas Step 4: Take action – Buy or Add to your watch list Make it a habit – The more you do your routine, the faster & easier it gets. Short on time? – Do steps 1 & 2, then come back to steps 3 & 4 on the weekend; or when you have more time
Superior Returns start with a superior watch list If you want to get in early on the market’s next big winners, you need to regularly review refresh your watch list. IBD’s stock lists and tools help you do that quickly.
Tips on Maintaining – and Using – Your Watch List √Don’t add too many stocks. Keep it manageable. Focus on the strongest stocks so you can actively track each one and be ready to act on a breakout or pullback to 10-week moving average after a breakout. √Regularly ‘weed out’ your lists. If something changes negatively with a stock on your list, remove it. Your watch list should be actionable. √Create a watch list routine – and stick to it! Find a daily time that works for you and stick to it. √Note potential buy points and make a plan of action. For stocks on your ‘Ready” list, write down the ideal buy point. Then make your plan of action before the market opens. – Determine how many shares you’ll buy when it breaks out. – Set alerts on your quote service or use buy-stops if you’ll be away during trading hours.