Founder, F.A.S.T. Graphs
Phone: 813-960-9600
Contributor's Links: F.A.S.T Graphs F.A.S.T Graphs Demo

F.A.S.T. Graphs™ founded by Charles (Chuck) Carnevale.  The F.A.S.T. Graphs™ tool takes all the hours of manual graphing of business fundamentals and reduces it to seconds, giving you critical information in an instant. This charting tool has been used by Chuck and his family ... more

ALL CONTRIBUTIONS

Sound Valuation - More Important Than Time In The Market? SBUX, CPB, FDS
Two of the most important investing principles that prudent investors should embrace are valuation and time in the market.
Read
Why Valuation Determines Total Dividend Payments For Overvalued Stocks; Johnson & Johnson Case Study
Valuation not only has a material impact on dividend income, it also has a major impact on total return.
Watch
Newell Brands Inc - A Turnaround Opportunity
The company’s blended P/E ratio is quite low at 8.5 which is approximately half of what I would consider attractive, so valuation appears enticing.
Watch
WEC Energy Group, NextEra Energy: Great Utilities But Risky Stock Values
If I were to find them attractively valued again in the future, as I am basically certain I will, I will be a ready and willing buyer of either or both.
Watch
Western Digital Corporation, Significantly Undervalued
Western Digital Corporation is a technology stock providing personal and business storage. The company has a cyclical operating history and as a result, the market has tended to value it at lower-than-average valuations.
Watch
FV The Sherwin-Williams Company, Trading At Uncharacteristically Higher Valuations
Historically the company has grown at double-digit above-average rates. However, since coming out of the Great Recession the company’s earnings growth rate has accelerated significantly.
Watch

Comments

Latest Comments
How Can You Avoid Value Traps In This Market?
2 years ago

Jim,

Thanks for your input. However, with all due respect, I suggest you are misconstruing what I was showing with AVP. I simply used it as an example to illustrate what a true value trap looked like. Nothing in my analysis was in reference to what might be happening with AVP going forward. However, since you brought it up, if you look closely at the FAST Graph in the article, you will notice that estimates suggest a strong recovery in 2016. On that basis, it could be argued that a recovery is in the making.

Nevertheless, to repeat and clarify; my utilization of AVP in this article had nothing to do with the company’s future. Instead, it was simply used as an example to illustrate how a company’s stock price would track a long-term trend in falling earnings, even when historical current valuations appeared reasonable.

Regards,

Chuck

In this article: VFC, AVP, HRL, KMB, MCD, PNR, SHW, WBA
How Can You Avoid Value Traps In This Market?
2 years ago

Susan,

Please see reply to Wax above.

Regards,

Chuck

In this article: VFC, AVP, HRL, KMB, MCD, PNR, SHW, WBA
How Can You Avoid Value Traps In This Market?
2 years ago

Wax and Susan,

I’m sorry you are finding FAST Graphs confusing. Actually, they are very simple to understand once you know what you are looking at. FAST is an acronym for fundamentals analyzer software tool. What makes this stock research tool different is that it focuses on the business behind the stock. The orange line on the graph represents a reference of intrinsic value based on widely-accepted formulas for valuing a business. The orange line is drawn by placing a multiple on each year’s earnings.

In the Pentair graph, the orange line represents a P/E ratio of 15 across the entire graph. Therefore, if the price is touching the orange line anywhere, the stock is trading at a fair value P/E ratio of 15. Conversely, if the price is below the line, it is trading at a lower P/E - and vice versa.

The black line on the graph represents monthly closing stock prices overlaid on to the graph. When the price is above the orange line, overvaluation is indicated, and when the price is below the orange line, undervaluation is indicated. Note how the price tracks earnings over the long-term, and when it gets disconnected it inevitably moves back into alignment. Since price is currently below the orange line, which represents fair value, Pentair appears undervalued with a P/E ratio of 11.2. On a live graph you would be able to point to the orange line and a pop-up would appear indicating what a fair value price would be today.

Finally, if you are interested, here is a link to a paper titled The Interpretation of the Earnings and Price Correlated FAST Graphs Made Simple that will assist you in understanding FAST Graphs.

www.fastgraphs.com/.../...aphs%20Made%20Simple....

Regards,

Chuck

In this article: VFC, AVP, HRL, KMB, MCD, PNR, SHW, WBA
How Can You Avoid Value Traps In This Market?
2 years ago

Wall Street Jack,

Thanks for your comment, I found it interesting. However, there is a difference between a down year where the company was still profitable, but earnings were slightly lower than the previous year versus a company that is actually generating losses. Most cyclical companies will go through periods of rising and falling earnings over time. However, the strong ones will always be profitable in each and every year. In other words, the earnings of many cyclicals tend to be always positive. Frankly, like you, I would never buy a company that was producing losses.

Regards,

Chuck

In this article: VFC, AVP, HRL, KMB, MCD, PNR, SHW, WBA
1 to 4 of 4 comments

STOCKS I FOLLOW

AAPL Apple Inc.
CELG Celgene Corporation
CLX The Clorox Company
CVS CVS Health Corporation
LMT Lockheed Martin
PG Procter & Gamble Co.
RTN Raytheon Company

TWEETS

LATEST ACTIVITY

Chuck Carnevale
Stock Investing Videos – Take The Guessing Out Of Investing #stocks #in...

more
Chuck Carnevale
Sound Valuation - More Important Than Time In The Market? $SBUX $CPB more
All Posts

PERSONAL BLOG

Latest Posts

Work Experience

Education

Publications