Market Indicators Only Part of the Story, Plus Five Fundamentally Strong Stocks

By John P. Reese Among the myriad guidelines that the wise investor follows, diversification sits front and center: Don’t put all your eggs in one basket, either with respect to equities or asset classes. But the notion of diversification extends beyond the process of deciding what to buy. It also applies to the assessment of the market as a whole and the factors affecting it at any given time. The universe of indicators available to investors is vast to say the very least, and there is no shortage of opinion or controversy around them and their relevance at any given […]

Buffett’s Patient Approach to Investing

In a recent article for Forbes, Validea CEO John Reese discusses Berkshire Hathaway’s current stockpile of cash and how Buffett, who Reese refers to as a “Patient Investor”, approaches both choosing opportunities and making investments with care. Reese cites a Bloomberg article that describes Buffett’s investing principle: “There’s no need to chase deals,” it says, adding that Buffett likens investing to hitting a baseball. “Don’t swing at one that’s out of your comfort zone.” Using stock screening models he created based on the philosophies of Buffett and other market greats, Reese identifies the following high-scoring stocks: Credit Acceptance Corp. (CACC) […]

Basketball, Bill Miller and Winning Streaks

 In a recent article for Forbes, Validea CEO John Reese outlined similarities between winning streaks in sports and those in investing. Most notably, the fact that “inevitably, streaks end,” writes Reese. “The same holds true for the stock market,” he says. “It will go up and go down, but will do neither forever.” He references the experience of Bill Miller, formerly of Legg Mason, who had outperformed the market every year from 1991 to 2005, only to see his streak end in the wake of the financial crisis. The best way for an investor to build a strong portfolio, writes […]

Value-Based Picks for the Trump Rally

As the Trump rally continues and stock prices remain elevated, shopping for value stocks may not sound feasible, writes Validea CEO John Reese in this week’s Forbes. He points out, however, that whether or not the market is overbought “shouldn’t matter to a true value investor.” Reese discusses the strategy of value investing legend John Neff, who led the Windsor Fund from 1964 to 1995 and outperformed the market by an average of 3.1% per year. He outlines Neff’s approach and explains the metrics used and the rationale behind them, highlighting the fact that Validea’s Neff-inspired portfolio has outperformed the […]

Four High-Quality Picks with 3% Dividends

When Warren Buffett is on the hunt for strong companies, one of his go-to metrics is return-on-equity, writes Validea CEO John Reese in his latest article for Nasdaq. Reese explains how ROE is calculated, its implications and what levels make a stock attractive. He also addresses the importance of dividend yield and how investing guru James O’Shaughnessy viewed it as an “essential metric when evaluating large companies.” Using his guru-based stock screening models, Reese identifies four high-scoring picks with ROEs above 20% and minimum dividend yields of 3% or above: Taiwan Semiconductor (TSM), a manufacturer and seller of integrated circuits […]

Five Picks that Could Get a Boost if Dodd-Frank is Repealed

There is a flurry of debate over the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to a Dodd-Frank), the negative impact it has had on small, regional financials and if/how it will be repealed. In this week’s Forbes, Validea CEO John Reese gives an overview of the law and the issues surrounding it, and identifies five financials that could benefit from its repeal. Reese explains that the complex regulations Dodd-Frank has imposed on financials has led to a significant loss of market share for community banks: He writes, “It depends on who you ask, but it’s safe […]

5 Commodity Picks for an Inflationary Environment

Along with its recent rate increase, the Fed has upgraded its growth and inflation forecasts—and this could bode well for commodity stocks, writes Validea CEO John Reese in in his article this week for Nasdaq. Reese cites a tighter labor market, stabilizing oil prices and slowing appreciation of the U.S. dollar as potential contributors to inflation, and cites AAII Journal data pointing to a strong outlook for commodity stocks: He identifies five commodity stocks worth a look: Ternium SA (TX), a producer of steel products and iron ore, is favored for its price-sales ratio, debt-equity ratio and cash flow-per-share (which […]

Show Me the Money: Six Cash-Rich Stocks

A company’s free cash flow, defined as the amount of money generated from operations less capital expenditures, offers investors a clue as to how well a company can sustain its operations and, subsequently, build wealth for shareholders,” writes Validea CEO John Reese in a recent article for TheStreet. Reese outlines some of the cash flow-related metrics included in his guru-inspired investment strategies and offers the following high-scoring picks: Maiden Holdings (MHLD) provides reinsurance services to regional and specialty insurers in Europe, the U.S. and other global markets. Favorable cash flow yield and return-on-assets earn high marks, and the relationship between […]