New Constructs
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I Hate the Guts of This ETF: Sell URE

The guts of an ETF are its holdings. And an ETF’s guts are what drive my ETF ratings. As highlighted in Barron’s, the only truly diligent assessment of an ETF is based on its holdings. Research on an ETF’s holdings is important because an ETF’s performance is only as good as its holdings. Therefore, if you care about performance, you care about the ETF’s holdings.
by David Trainer, Founder & CEO
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Sell Life Time Fitness: Valuation Is on Steroids

Working out makes just about everything in my life better. I have more energy, food tastes better and (at least feel as if) I look better. I even think it makes me smarter.I do not feel good about Life Time Fitness (LTM)’s stock, however. The growth expectations in the stock are much too high. And I do not believe in management’s over confident EPS guidance.
by David Trainer, Founder & CEO
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Don’t Trust This Utility’s Dividend

Smart investors consider more than just the dividend of a stock. They also consider the principal risk. If the principal risk is greater than the dividend yield then the dividend is of no real value. I see the principal risk of this stock at more than 15% with a fair value closer to $50 – after adjusting for the pension accounting shenanigans.
by David Trainer, Founder & CEO
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“Earnings Accretion” Is a Mirage: Sell HOLX

Sometimes when I analyze a stock, I am reminded of the marvels that investment bankers can do for their valuations, especially if the company is a good client. With its recent $3.7 billion acquisition of Gen-Probe, I would bet that Hologic (HOLX) made its investment bankers quite happy. Investors, on the contrary, should sell the stock and not be happy with that deal.
by David Trainer, Founder & CEO
New Constructs
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The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?

As detailed in "How To Make Money Picking Stocks", quantifying the future cash flow expectations embedded in stock prices is critical to making an informed investment decision. My mentor, Michael Mauboussin, in his latest piece: " The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?" explains more eloquently than I that the key to successful investing is to systematically distinguish between price and value – two very distinct concepts.
by David Trainer, Founder & CEO