Sign Up For The Next
New Constructs Webinar






Navigation

How to Avoid the Worst Sector Mutual Funds

Wednesday, August 20th, 2014 BW Final-3rd

Picking from the multitude of sector mutual funds is a daunting task.

Read More

Ford (F) is Hitting on All Cylinders

Tuesday, May 13th, 2014 2789464563_589862125f_m

As long as Ford’s strong profit growth and market share gains continue, this stock has a lot of upside.

Read More

Consumer Discretionary Sector

Tuesday, April 8th, 2014 BW Final2

The Consumer Discretionary sector ranks fourth out of the ten sectors as detailed in my Sector Rankings for ETFs and Mutual Funds report. It gets my Dangerous rating, which is based on aggregation of ratings of 18 ETFs and 21 mutual funds in the Consumer Discretionary sector as of April 2, 2014.

Read More

NOPAT Adjustment: Foreign Exchange Loss

Friday, March 28th, 2014 1841352668_5bb1f8d52f_m

Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

Read More

New Stocks Make Most Attractive/Dangerous Lists For March

Wednesday, March 12th, 2014 5653769118_12c8b2b1f0_m

Momentum chasing is never a good strategy. RCL significantly outperformed the market last year, while F lagged it slightly, but don’t expect those trends to continue in 2014 for either stock.

Read More

GM’s Long Range EV A Further Threat to Tesla

Thursday, September 19th, 2013 GM’s Long Range EV A Further Threat to Tesla

On Monday, GM announced their plan to develop an all-electric vehicle that could go 200 miles per charge, just like Tesla’s Model S. The catch? GM plans to sell their car for only $30,000, less than half of the $62,000 sticker price for the Model S.

Read More

Deferred Tax Assets and Liabilities – Invested Capital Adjustment

Friday, August 2nd, 2013 dtaal1

DTAs artificially raise reported assets and do not help generate operating profit while DTLs are like a source of interest-free financing. We remove the impact of DTAs and DTLs from our calculation of invested capital to ensure the more accurate measure of a firm’s return on invested capital (ROIC).

Read More

Asset Write-Downs – Invested Capital Adjustment

Monday, July 22nd, 2013 AWDF1

For debt investors, which GAAP was primarily designed for, write-downs are analytically helpful. They provide a more accurate assessment of the liquidation value of a company’s assets. For equity investors, on the other hand, write-downs are not helpful because they distort the return on invested capital (ROIC) of a company.

Read More

Accumulated Other Comprehensive Income Removed from Invested Capital – NOPAT Adjustment

Thursday, July 11th, 2013 OCI

Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide balance sheet issues and obscure the true amount of capital invested in a business.

Read More

Best & Worst ETFs and Mutual Funds: All-cap Value Style

Wednesday, February 13th, 2013 ACVG2

The all-cap value style ranks seventh out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Dangerous rating, which is based on aggregation of ratings of two ETFs and 270 mutual funds in the all-cap value style as of February 7th, 2013.

Read More

Show Discretion When Choosing Consumer Discretionary Sector ETFs

Tuesday, May 10th, 2011 Figure4

Retail HOLDRS (RTH) is our top pick for consumer discretionary sector ETFs.  RTH is one of 51 ETFs that gets… Read more >>

Read More

Red Flag Report: Hidden Expenses/Income: What You Don’t Know Can Cost You

Tuesday, March 1st, 2011 dreamstimefree_3430_keepOutBuoyInSmallPond

Most investors are not aware that companies hide one-time and unusual charges and income inside normal, operating line items (e.g. “Cost of sales”) on their income statement. These hidden items can mislead investors by artificially decreasing/increasing GAAP earnings. We found 13,000+ one-time items buried in normal line items like “Cost of Sales” by studying the Footnotes of 10-K filings from 1998 thru 2/15/2011. This research revealed that companies have concealed over $41 billion in one-time items.

Read More

For Ask Matt readers: Ford (F) — Dangerous Rating

Monday, February 28th, 2011 For Ask Matt readers: Ford (F) — Dangerous Rating

Ford gets our Dangerous Rating. This means F has poor quality-of-earnings and an expensive valuation. For example, F’s ROIC at 0.6% is in our Bottom Quintile. And the valuation of the current stock price ($15.07) implies the company will grow its profits at 10% compounded annually for over 40 years. The takeaway: avoid this stock.

Read More