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After jumping nearly 20% over the September 2012 Quarter, Wednesday saw the leading 50 European blue chip stocks from 12 Eurozone countries, as measured by the STOXX, decline by 2.7%. The Spanish market, which had rebounded 35% from its low point in early July, fell 3.9%. On Thursday, Spanish Prime Minister Rajoy announced his fifth austerity package in nine months of Government. The target is to cut the budget deficit from 6.3 percent in 2012 to 4.5 percent in 2013.

Economists responded by saying “they’ve increased the taxes for next year and cut spending but they didn’t change the growth forecast”. Economists expect the Spanish economy to contract around 1.5%, while the Government is forecasting a contraction of only 0.5%. With their ten year bonds selling above 6%, Spain will likely need to raise the white flag and go “cap in hand” to the European Central Bank for another bail-out. Spain’s declining property market and 25% unemployment is causing a significant solvency issues for their banking system, as the contraction of private sector lending continues.
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by David Buckland Posted in Insightful Insights, Market Valuation, Value.able.

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Fred Smith, CEO of FedEx, the express parcel and logistics operator, said that over the last 25 years global trade had generally grown at a faster rate than the world economy, but over recent months that process had broken down. “That’s what is really going on – that exports and trade have gone down at a faster rate than GDP”. Although Fed Ex announced its revenue for the three months to 31 August 2012 was up 3% to $10.8 billion, it guided down its net earnings for the year to 31 May 2013 to around $6.40 per share. At the current $87, FedEx is on a prospective PE of 13.6X.

by David Buckland Posted in Value.able.

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Roger Montgomery discusses the new Qld Government levies on mining, and the likely impact on mining stocks with Ross Greenwood on Radio 2GB. Listen here.

This program was broadcast on 12 September 2012.

by Roger Montgomery Posted in Companies, Insightful Insights, Radio, Value.able.

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Did you know that the market capitalisation of Apple Inc. is now more than the entire equity markets of Spain, Portugal, Ireland and Greece combined? Its stunning. Surely Forrest Gump from Greenbow Alabama would be writing to Jenny with much enthusiasm. But what about its intrinsic value? Back in 2010 (http://rogermontgomery.com/is-apple-an-a1/) I wrote that Apple’s intrinsic value was higher than the share price at the time. The table below first published in July 2010 reveals the company’s pattern of rising intrinsic values. back then the price was indeed showing a small margin of safety.

A couple of blog readers have subsequently told me they purchased Apple shares and obviously they have done nicely. But what about today?

Only last year, when the share price hit $600 I wrote that I thought price had run ahead of intrinsic value (but not forecast intrinsic value) and the share price subsequently fell slightly. We also noted declining margins and market shares losses. But improving quarterly results and rising forecasts means revisions have resulted in IV estimates continuing their stellar rise so a revisit of our assumptions might be worth our time.

The graph below reveals that our ‘revised’ back-of-the-envelope intrinsic value estimate for Apple is forging ahead. If you are confident that Apple’s pipeline of products will usurp the competition, take back market share and fill Apple’s coffers towards 1000 billion dollars and that the iPhone 5 – expected to be revealed this week – will knock everyone’s socks off, then the massive rises in intrinsic value, might not seem so extreme.

Of course all intrinsic values are just estimates and while our haven’t done too badly for us – we’ve been spot on with BHP at $30 and done well on others – the reality is they can change dramatically as new information comes to hand.

So lets keep an eye on whether Apple impresses this week with its new release.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Market Valuation, Value.able.

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Computershare’s court victory allows it to proceed with its digital post business – and Roger Montgomery discusses its potential in this edition of ABC1’s Inside Business broadcast 2 September 2012 . Watch here.

by Roger Montgomery Posted in Insightful Insights, TV Appearances, Value.able.

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I’d like to offer the opportunity to invest in my new business. No not the new Montgomery retail fund (although I’d be delighted to welcome you as an investor) but an operating company. Like many of the companies reporting earnings this reporting season I will guarantee it will report to you record earnings every year.

This promise is easier to keep than you might initially realise. If companies making such headline-grabbing announcements impress you, then you might be interested to know its not that hard to achieve.

All you need is a bank account and a rocking chair. Lets start with a million dollars in a bank account earning five per cent. First year earnings will equal fifty thousand dollars. Now let’s reinvest all of the interest. Now we have $1.05 million earning five per cent. Year two’s earnings would be $52,500. And there you have it, record earnings! Magic.

When a company reports record earnings, there is nothing more miraculous than the power of compounding. Indeed, if a company cannot increase its earnings, then perhaps a bank account is better.

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by Roger Montgomery Posted in Value.able.

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Roger Montgomery discusses the 2012 results season with Ross Greenwood on Radio 2GB, and how amongst technology stocks there are both big winners and big losers. Listen here.

This program was broadcast on 5 September 2012.

by Roger Montgomery Posted in Radio, Value.able.

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“Follow the steps outlined in Value.able, and I believe that over the long run, you cannot help but beat the market.”

The stock market can be richly rewarding and the broad market indices relatively simple to beat over time but you must first discover the steps to identifying the very best stocks and the steps to buying them for less than they’re worth.  Value.able invites you to not only discover and master the steps to successful value investing but to also hear and watch how Roger Montgomery applies the steps to identifying the best stocks and avoiding the worst with stunning audiovisual clips and screencasts from his own trading screen and using the software he invented.

Using this visually rich and captivating premium version of Montgomery’s best seller will entertain, engage, educate and enrich through all of the stock market’s trials and tribulations.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Value.able.

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by Roger Montgomery Posted in Value.able.

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BREVILLE (BRG)

Both Breville Group (BRG) and Flexigroup (FXL) saw solid gains yesterday.

Breville’s share price hit new highs in terms of price (not that we’re looking of course) in anticipation of a solid result. EBITDA was previously forecast to be in the range of $65 to $67 million but not long ago the company upgraded guidance to $71 to $72 million. Investors who are focusing on depressed local retailing and consumption need to have a look at the US retailing index which is up more than 275% since the March 2009 lows. More than half the company’s revenues now come from outside Australia, with roughly a third coming from North America, and growing despite the weak US economy.

FLEXIGROUP (FXL)

Two days ago, Flexigroup announced that it had successfully priced AUD255m of asset-backed securities, supported by a pool of Australian unsecured, retail, “no interest ever” payment plans, originated by Certegy Ezi-Pay Pty Ltd (“Certegy”), a wholly owned subsidiary of FlexiGroup Limited.

This securitisation of Certegy receivables is part of FlexiGroup’s strategy to diversifying its funding sources by regularly accessing wholesale capital markets. The term securitisation is FlexiGroup’s third and its also the second rated by Moody’s.

According to Spencer Wilson, Associate Director in Fitch’s Structured Finance team, “A valuable tool in Certegy’s underwriting strategy is its access to large volumes of historical data, which is then used to identify key risks across product types, demographics and borrower types,” adding “This transaction follows on from the Flexi 2011-1 deal, with notable features being the short weighted average life of the receivables, small contract size and significant levels of excess that are available to offset potential losses”.

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by Roger Montgomery Posted in Value.able.

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