The Best and Worst of the All Cap Value Style 4Q15

The All Cap Value style ranks fourth out of the twelve fund styles as detailed in our 4Q15 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Value style ranked fifth. It gets our Neutral rating.

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Danger Zone: Proofpoint Inc. (PFPT)


As hacks or data breaches seem to occur almost daily, the cyber security sector is receiving significant attention across the globe. When we focus on fundamentals and cut through the “sector theme” noise, we find some weak links in the cyber security industry. This week’s Danger Zone is one of those weak links.

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Danger Zone: Marketo (MKTO)


This week we’ve identified another highflying cloud company that exhibits many of the problematic traits we saw in DWRE and SPLK. Revenue growth can only support a stock for so long and this week’s Danger Zone stock, Marketo (MKTO) has plenty of room to fall.

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3Q15 Style Ratings for ETFs & Mutual Funds


At the beginning of the third quarter of 2015, only the Large Cap Value and Large Cap Blend styles earn an Attractive-or-better rating. Our style ratings are based on the aggregation of our fund ratings for every ETF and mutual fund in each style.

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Ignore the Hype: Splunk Remains Overvalued


In early 2012, Splunk Inc. burst onto the scene with one of the biggest IPOs of the year. Since then, the stock price has ridden the hype and is up more than 320%. This price increase should raise serious concerns for astute investors.

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Get This Cash Cow at a Discount


Strong business fundamentals and low valuations are key ingredients in the overall evaluation of investments. This week’s stock pick of the week brings high profitability and a compelling valuation to the table.

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Best Stocks in the Dow Jones Industrial Average


Last week, we wrote about the riskiest stocks in the Dow Jones Industrial Average. We thought we’d be remiss to not mention our favorite stocks in the index as well. Not all of the blue chips are created equal, and the following are what we consider to be the most attractive investment opportunities in the Dow at the moment.

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Ranked: Our Top 10 ETFs


The following is a list of our top 10 ETFs that have over $100 million in assets under management (AUM), and that are not leveraged.

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A Turnaround Years in the Making


This week’s hot stock has almost been written off by many market pundits. As commonly happens, media coverage tends to overreact to bad news, and those reactions can begin to drown out any positive news.

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The Best Large Cap Value Stocks in the Market


The Large Cap Value style ranks second out of the 12 styles for the first quarter of 2015 and receives our Neutral rating. The Large Cap Value style as a whole outperformed the Russell 3000 in 2014

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Danger Zone: Price to Earnings Ratios


The vast majority of evidence suggests that P/E ratios are an unreliable way to measure the true value of stocks.

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Do Microsoft Bulls Have A Convincing Case?


MSFT currently earns our Neutral rating, but if new CEO Satya Nadella can halt the company’s declining return on invested capital (ROIC), the stock’s valuation is cheap enough to make it intriguing.

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10 Wonderful Companies That Are Bad Stocks


Sometimes, a great company can actually be a risky stock when it gets significantly overvalued.

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Apple’s Declining Advantage is Undeniable


Apple cannot have pricing power and market share at the same time. No one can for an extended period of time. The problem with AAPL is that it is priced for the company to achieve market share penetration and growth at high prices. The reality is that the quality of Apple products versus competitors is declining. Prices will have to come down just to maintain market share.

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Danger Zone: (CRM)


There are too many competitors out there for CRM to grow revenue and expand margins simultaneously to the extent that the market valuation already implies. Too much downside risk is in this stock.

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Danger Zone 11/19/13: Netflix (NFLX)


Netflix (NFLX) is in the Danger Zone this week. The DVD subscription and streaming video service has changed the way people watch movies and TV shows. However, its current valuation is out of touch with reasonable expectations for future cash flows and profitability.

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Danger Zone 9/30/13: Zynga (ZNGA)

The stock has been beat up since its much-hyped IPO in 2011, but even after losing 61% of its value the stock is still too expensive. ZNGA is competing in an immature market where the barriers to entry are almost nonexistent and brand loyalty is a foreign concept.

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Apple Stays Rotten


The “value” in Apple is an illusion. Astute investors need to look at Apple through the lens of what is a reasonable ROIC in the future.

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Excess Cash – Invested Capital Adjustment


Most companies hold some cash—or cash equivalents in the form of investments—above this required amount. Companies hold excess cash in order to cushion against economic downturns, prepare for acquisitions, or any number of other reasons. Sometimes, past profits pile up on balance sheets and are a form of excess cash. Excess cash is not needed for the operations of a company. It is removed from our calculation of invested capital.

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Asset Write-Downs – Invested Capital Adjustment


For debt investors, which GAAP was primarily designed for, write-downs are analytically helpful. They provide a more accurate assessment of the liquidation value of a company’s assets. For equity investors, on the other hand, write-downs are not helpful because they distort the return on invested capital (ROIC) of a company.

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