The Ugly Truth About Netflix: Investors Beware


It is almost becoming an expected event every quarter: Netflix releases quarterly earnings amid much speculation about its future, and the price soars.

Continue Reading →

How to Value a Stock, Step 3: Economic Earnings


This article is the third in a four part series that walks readers through how to rate and value a stock. Our third step to gauge the value of a company is to determine its economic earnings.

Continue Reading →

GAAP Opinion versus Economic Fact

GAAP financial statements generally fail to meet equity investors’ analytical needs. We try to calculate something that does.

Continue Reading →

July’s Most DANGEROUS Stocks Available to the Public

New Constructs released July’s Most Dangerous Stocks report to the public today.

Continue Reading →

Off-Balance Sheet Debt – Invested Capital Adjustment


Investors who ignore off-balance sheet debt are not holding companies accountable for all of the capital invested in their business. By adding back off-balance sheet debt to invested capital, one can get a true picture of the value that management is creating for shareholders. Diligence pays.

Continue Reading →

Footnotes Adjustments for Earnings & Valuation Diligence

This article details the uniquely rigorous diligence behind each of our ratings on 3000 stocks, 7000 mutual funds and 400 ETFs. It contains reports on all the adjustments we make to convert GAAP data to economic earnings and derive true shareholder value in a discounted cash flow model.

Continue Reading →

Implied Interest For Operating Leases – NOPAT Adjustment


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.

Continue Reading →

Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment


Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

Continue Reading →

February’s Most DANGEROUS Stocks Available to the Public

New Constructs released February’s Most Dangerous Stocks report to the public today.

Continue Reading →

Top Stock Picks & Shorts: Moneylife Radio Interview w/ Chuck Jaffe

Listen in on my 15 minute interview describing the rigorous diligence New Constructs applies to every rating on the stocks, ETFs and mutual funds we cover.

Continue Reading →

Bank Of America (BAC): Very Dangerous Rating — for Ask Matt Readers

Bank Of America (BAC) gets our Very Dangerous rating because it has misleading earnings and a very expensive valuation. Here is my free report on BAC.

Continue Reading →

Registered Rep Interview on Economic vs Accounting Earnings

David A. Geracioti, Editor-In-Chief of Registered Rep magazine, recently invited me for an interview on why economic earnings matter when selecting stocks, mutual funds and ETFs.

Continue Reading →

Buy LRCX: More Value Than Meets the Eye


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.

Continue Reading →

Sell Baker Hughes Before The Stock Goes Up In Fumes


It is only a matter of time before oil and gas stocks stop moving with the price of oil and start reflecting their underlying economics.
When this happens, Baker Hughes (BHI – “very dangerous” rating) will be among the stocks that fall the hardest.

Continue Reading →

Nucor Corporation (NUE) — Dangerous Risk/Reward Rating for Ask Matt Readers

The valuation of NUE’s stock implies the company will grow its after-tax cash flow (NOPAT) by nearly 20% compounded annually for 20 years.

Continue Reading →

PowerShares Leads The “Most Attractive” ETFs


PowerShares Buyback Achievers (PKW) is the #1 “most attractive” ETF out of the 375+ ETFs we ranked according to our predictive rating system.

Continue Reading →

Sell Morgan Stanley Before It Sells You Down the River


When Morgan Stanley (MS) started in 1935, there were around fifteen employees. For 2010, the company reported 62,542 employees. Bigger is not always better. And for big, publicly-traded companies, big tends to be worse especially when it comes to financial reporting.

Continue Reading →

Buy Eli Lilly & Company (LLY) – Attractive and Safe Enough To Take Home To Mom

The risk/reward of this stock is quite compelling. Downside risk is low as the valuation already implies a permanent 54% decline in profits. How much worse can the valuation get? Upside reward potential is strong as the stock has to go over $77/share to trade at a value that implies the company’s profits will experience a 0% decline, still a no-growth scenario.

Continue Reading →

Stock Pick of the Week: Buy Apollo Group Inc cl A (APOL)- Very Attractive Rating

1. Our discounted cash flow analysis shows that APOL’s current valuation (stock price of $42.31) implies that the company’s profits will decline by 60% and never grow again.
2. Economic earnings are higher than reported accounting earnings.
3. Excess cash of $1,201mm or about 20% of its market cap

Continue Reading →

Tech and Pharma Stocks are Most Attractive for January

January’s Most Attractive Stocks are now avail­able. Technology and Pharmaceutical stocks predominate compared to other sectors. One newcomer to the list, Seagate Technology (STX), is actually an old friend. STX made our subscribers a lot of money when the stock jumped on acquisition speculation last fall. After that jump, the stock was too expensive to…

Continue Reading →

Page 1 of 4