We joined TDA Network’s The Watch List on Thursday, December 19 to discuss two stocks with good Earnings Distortion Scores going into earnings season next year.
Our Most Attractive Stocks (+3.5%) outperformed the S&P 500 (+2.3%) last month and our Most Dangerous Stocks (+1.3%) outperformed the S&P 500 (+2.3%) as a short portfolio last month. See two of the featured stocks from this month’s model portfolios.
Our Most Attractive Stocks (+0.6%) outperformed the S&P 500 (-1.0%) last month and our Most Dangerous Stocks (-2.2%) outperformed the S&P 500 (-1.0%) last month. See two of the additions to this month’s model portfolio.
When I ran across the recent article "270,033 pages later, a chance to catch our breath…", I could not help but admire footnoted.org's marketing moxy.
The article provides a count of the number of pages of 10-K filings that have poured in during the real earnings season. It also highlight a couple of the largest filings. At first glance, it is easy for one to assume that all of the 270,033 pages were also analyzed.
The radically higher number of US equity mutual funds (4,700+) versus ETFs (380+) is not indicative of better stock selection from active management. On the contrary, the vast majority of actively-managed funds do not justify the higher fees they charge. They do not, in terms of stock selection and expected returns, add value versus passively managed benchmarks.
Most of my research and publishing tends to focus on companies manipulating accounting rules to make their reported earnings look better than the real economic cash flows of their business.
It is unfortunately rare that I find a company whose economic earnings are outpacing the reported accounting results and whose stock is cheap.
One such company is Lam Research (LRCX – very attractive rating). One of September’s most attractive stocks, LRCX offers investors hidden value.