Janaury 21, 2015

VALUATION WATCH: Overvalued stocks now make up 22.24% of our stocks assigned a valuation and 6.78% of those equities are calculated to be overvalued by 20% or more. Zero sectors are calculated to be overvalued.

Indexing

--ValuEngine Rates and Ranks the S&P500

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 2800 stocks in our US Universe.

We also use trading data to provide forecast estimates for a variety of time horizons for almost ever equity in our database. Our Buy/Sell/Hold recommendations are based upon the 1-year forecast return figure. Using valuation and forecast figures, you can rank and rate our covered stocks against each other, to find out, in an objective and systematic way, the most attractive investment targets based on your own risk/reward parameters. We re-calculate the entire database every trading day, so you are assured that every proprietary valuation and forecast datapoint is as up-to-date as possible.

We can use our data to track individual stocks, industries, sectors, and indices. For today's bulletin, we present key metrics for the top picks in the S&P 500. The companies listed below represent the top-ten BUY/STRONG BUY stocks within the index. They are presented below according to their one-month forecast target prices.

The components of this list are little changed since the last time we presented the top S&P picks in December. DH Horton, Chubb LTD, and JPMorgan Chase are newcomers--they replaced DAL, GILD, and LUV. Tesoro Corp remains the overall leader--again.

Keep in mind that with the market declining for 2016, our valuations are now well within the "cheap" range from our model's perspective. We have not seen the overall market calculated to be this undervalued since June, 2012. At that time, the SP500 was at the 1385 level. Of course, there is no guarantee that the current slide is over, but bargain hunting is appropriate if you find companies at attractive levels-- and you want them for the long haul.

Our list is domianted by Oil/Energy firms, but note they include refiners/marketers. Tesoro and Valero are positioned well because they are refiners, and while there is a glut of oil, there is NOT a glut of those who can make gasoline from that oil.

Below is today's data on newcomer DH Horton:

D.R. Horton, Inc., (DHI), one of the largest homebuilders in the United States, builds high quality, single-family homes designed principally for the entry-level and move-up markets. Founded in 1978, the company builds and sells homes with a geographic presence in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. The company also provides mortgage financing and title services.

VALUENGINE RECOMMENDATION: ValuEngine continues its BUY recommendation on D R HORTON INC for 2016-01-20. Based on the information we have gathered and our resulting research, we feel that D R HORTON INC has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.

You can download a free copy of detailed report on DHI from the link below.

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	26.73	1.00%
3-Month	27.07	2.25%
6-Month	27.72	4.74%
1-Year	29.65	12.00%
2-Year	29.14	10.09%
3-Year	29.31	10.75%

Valuation & Rankings
Valuation	12.28% undervalued	Valuation Rank(?)	42
1-M Forecast Return	1.00%	1-M Forecast Return Rank	98
12-M Return	15.34%	Momentum Rank(?)	88
Sharpe Ratio	0.71	Sharpe Ratio Rank(?)	91
5-Y Avg Annual Return	19.75%	5-Y Avg Annual Rtn Rank	92
Volatility	27.77%	Volatility Rank(?)	60
Expected EPS Growth	14.56%	EPS Growth Rank(?)	51
Market Cap (billions)	9.67	Size Rank	91
Trailing P/E Ratio	12.85	Trailing P/E Rank(?)	75
Forward P/E Ratio	11.22	Forward P/E Ratio Rank	64
PEG Ratio	0.88	PEG Ratio Rank	43
Price/Sales	0.89	Price/Sales Rank(?)	63
Market/Book	1.67	Market/Book Rank(?)	50
Beta	1.25	Beta Rank	30
Alpha	0.25	Alpha Rank	89

DOWNLOAD A FREE SAMPLE OF OUR DR HORTON (DHI) REPORT BY CLICKING HERE

ValuEngine Market Overview

ValuEngine Sector Overview