Stocks that Could Appeal to the Value Investor

In a recent article for The Globe and Mail, Validea CEO John Reese discusses the hefty divergence between growth and value stock performance so far this year and offers insights as to the various factors at play. He references the current market’s stretched valuations, noting that “it may be hard to see value” given that the market multiple is above its historical average. “But remember,” he argues, “a big driver of that is the overweighting and outperformance of a handful of big tech stocks.” Reese suggests that investors with a long-term view might consider “strategically shifting, or tilting, some of […]

Five Stocks that Satisfy Piotroski’s Book/Market Model

The concept of quantitative investing, while gaining a lot of limelight these days, is not a new concept, writes Validea CEO John Reese in a recent Nasdaq article. Reese offers a profile of investing guru Joesph Piotroski, who authored a paper on the subject in 2000 which, writes Reese, “took Wall Street by surprise.” Reese describes Piotroski’s philosophy which focused on the book-market value of stocks as well as other metrics that enabled him to differentiate those companies whose share prices were low due to underlying financial distress from those that represented good investment opportunities. Using stock screening models Reese created […]

Keys to Investing Success and Solid Picks

In a recent Forbes article, Validea CEO John Reese shared a list of core investing concepts outlined in an essay for the CFA institute by Vanguard founder Jack Bogle, and offered parallels with tenets of market gurus such as Warren Buffett, Peter Lynch, and Joel Greenblatt: Invest you must. Failure to earn an adequate return is riskier than short term market volatility. According to Joel Greenblatt: “The strategy of putting all your eggs in one basket and watching that basket is less risky than you might think.” Time is your friend. Benjamin Graham referred to compounding as the “eighth wonder […]

Finding a Hidden Gem is Harder Than You Think

Since its 1990’s beginnings as an online bookseller, Amazon has grown into a behemoth that has “irreversibly changed the way consumers shop for everyday goods and read and watch media and entertainment,” writes Validea CEO John Reese in a recent article for Nasdaq. But scoring a hidden gem like Amazon early on, says Reese, is no easy task. “More often than not,” he writes, “investors who carefully select stocks of strong companies and diversify their portfolios across a wide range of securities are going to make money, but not make it rich on those investments alone.” According to research conducted […]

Sensible Stock Picks Based on Fundamentals

While some forms of stock picking can be risky, choosing stocks based on proven strategies and underlying fundamentals can “increase an investor’s odds of enjoying outperformance over time,” writes Validea CEO John Reese in a recent Forbes article. Reese explains that stock picking resides on a continuum comprised of varying approaches and combinations of approaches. He describes the philosophy of Benjamin Graham, the legendary investor and mentor to Warren Buffett who is widely viewed as “The Father of Value Investing,” and how his fundamentals-based investment strategy formed the basis for some of the stock screening models Reese developed. Using these […]

Five Picks for the Common-Sense Investor

How should an investor address the ever-present question as to whether an exciting, media-saturated stock is actually a sound opportunity? In anticipation of Snapchat Inc.’s IPO, Validea CEO John Reese addresses the quandary in his article for Nasdaq this week. Citing new research by Charles Lee and Ken Li of Stanford University, Reese explains the need for caution in situations such as this. Findings suggest that “those companies most likely to issue stock have a history of negative return-on-assets, high valuation multiples, previous capital raises and positive price momentum.” Circling back to screening models he created based on the strategies […]

Six Tempting Picks for the ‘Joe Six Pack’ Investor

“Davos Man,” the hypothetical investor who gravitates toward global businesses and bonds has been ruling the roost for the past decade, but he might be passing the baton to “Joe Six Pack” investors, which focus more on mainstream, domestic assets. This according to a recent Globe and Mail article by Validea CEO John Reese. The article discusses the notion of the Great Rotation theory– the idea that the financial assets that thrived during the last ten years of slow growth, low interest rates and non-existent inflation are now being eclipsde by those that had underperformed—and highlights the spectrum of opinions […]

Finding the Cream of the Dow

The milestone of the Dow hitting 20,000 in late January should be taken with a grain of salt, writes Validea CEO John Reese in this week’s Nasdaq. He argues that, given the Dow’s history, the event isn’t really that significant. Starting at its inception in 1896, it took the Dow over a decade to reach 100, then 66 years to reach 1,000, then another 41 years to make 15,000—so, rising by 5,000 in three-and-a-half years, writes Reese, “isn’t that big a deal.” Reese cites comments by others including Motley Fool’s Daniel Kline and Bloomberg columnist Mohamed El-Erian, and drives home […]

Three Stocks that Follow Peter Lynch’s Investment Style

The highly successful track record of Fidelity’s Magellan fund throughout the 1980s made then-manager Peter Lynch a household name. In a recent Globe and Mail article, Validea CEO John Reese outlines the major tenets of the Lynch investment philosophy and the corresponding metrics used to evaluate stocks. Lynch believed in doing plenty of research before investing and sticking with companies you understand, says Reese, who explains that, while at Magellan, Lynch “honed in on fast-growing companies where the shares were ready to run up.” He describes Lynch’s belief that investing is a long-term game that “requires patience and a fair […]

Stocks that Could Benefit from the High Price of Raising Kids

A new report from the U.S. Department of Agriculture found that married, middle-income parents will spend $233,610  to raise a child born in 2015 from infancy to adulthood, a figure 3% higher than the prior year, writes Validea CEO John Reese in last week’s Forbes. Using his guru-inspired stock screening models, Reese identifies five high-scoring stocks (representing a range of spending categories), that could see some upside from the high price-tag: Procter & Gamble (PG) sells branded health and beauty, baby care and other home and family products. The company generates cash flow-per-share in excess of the market mean and […]

Arnott: Emerging Markets Hold Promise

Although EM stocks have taken a beating in recent years, things may be looking up, writes Validea CEO John Reese in this week’s TheStreet. Reese offers insight from Research Affiliate’s Rob Arnott, who thinks that, notwithstanding swelled valuations (based on Shiller PE ratios), “emerging-market stocks offer an attractive combination of depressed currencies, low valuations and strong momentum.” Using his guru-based stock screening models, Reese identifies the following five picks that could be poised for growth: Companhia Paranaense De Energia (ELP) generates, transmits, distributes and sells electricity in the Brazilian state of Parana, and scores highly based on its favorable revenue […]

The Trump Rally, Market Timing and Picks

The post-election surge in stocks underscores the risk inherent in trying to time the market. In a recent article for TheStreet, Validea CEO John Reese discusses how investors, by “falling victim to elections, emotions or headlines” can miss out on returns. The goal, he argues, should be to invest in fundamentally sound businesses and avoid “jumping in and out of the market due to knee-jerk, emotional reactions.” Using his guru-based stock screening models, Reese identifies the following five picks: Fujifilm Holdings (FUJIY) develops, produces, sells and services document, imaging and information solutions. The company’s robust top line and strong liquidity […]

Healthcare Picks for the Long Term

While the inner workings of and interactions between the various healthcare industry branches are extremely complex, demand for its products and services is not likely to wane. In an article for this week’s TheStreet, Validea CEO John Reese offers his perspective on industry prospects and identifies four stock picks with good vital signs: Johnson & Johnson (JNJ) is engaged in the research and development, manufacture and sale of a range of products in the health care field. It earns solid scores under our guru strategies based in part on healthy cash flow per share and trailing 12-month sales of more […]

Benjamin Graham Inspired Picks

In his book The Intelligent Investor, the “Father of Value Investing” (and Warren Buffett’s mentor) drives home the importance of evaluating a business’s fundamentals before investing. In a recent article for Forbes, Validea CEO John Reese explains the metrics he used  to create his Graham-inspired stock screening model and offers the following high-scoring picks: Genesco (GCO) is a retailer and wholesaler of footwear, apparel and accessories that earns high marks for its solid revenue base, liquidity and low leverage. Long-term growth in earnings-per-share well exceeds the minimum requirement under this model. Myriad Genetics (MYGN) is engaged in the discovery, development […]

Cyclicals in the Lead

As the quest for yield continues, investors are favoring stocks over bonds. However, over the past few months they have shown an increased appetite for stocks that are more sensitive to economic growth—such as financials, energy and technology companies—versus those in the more defensive utility and telecommunications sectors. Validea CEO John Reese shares his insights on this shift in a recent article for The Globe and Mail. While the movement toward cyclicals comes at a time when corporate earnings for the S&P 500 are falling, it may reflect expectations for better times ahead. A decision by the Fed to raise […]