all right
well good evening everybody great to
have you back here for investing in
value stocks folks
my name is mike fairborne you can follow
me there by twitter handle and fairborn
underscore tda i am joined
by my friend and colleague in the chat
miss connie hill who
is a great coach instructor and will
help us out in the chat box with any
questions you might have during this
during this
time frame folks it's good to be here
with you today i welcome all of you here
we've got
uh photo guy good day photo guy here
we've got gabrielle
angie on down the line louis andrea
vinay tony so many folks great to have
you all here
welcome to you joining us from tdm
ameritrade cider just right from youtube
pleasure to be here with you today today
folks we're just going to
discuss big picture why investors
utilize value stocks we're going to take
a look at some valuation ratios what we
want to do
is connect those valuation ratios to
some specific stocks
that may be of interest to investors
that's how
value investing works in many cases
they're finding they're finding
securities that are showing undervalued
characteristics
that might give room upside
room for the stock to run we've got a
few of those stocks a handful
of stocks that fit that criteria this
evening that we want to examine with you
because
we do look at the technicals here as
well take a look at the technicals is
very important right
fundamentals big picture they tell us
what to buy fundamental analysis value
is a
key component of that what to buy
technicals on the other side tell us
when to buy
so all we do here when we incorporate
fundamentals is we try to increase the
probability of our success
and that's what we do here all right in
this class so great to be here with you
today
uh we're going to jump right on into
this because we've got just a you know
about a half hour to
make this presentation uh work here and
uh looking forward to going through it
so just real quickly on some disclosure
on this before we jump on into this
folks
please remember the following points
that are listed here keep them in mind
uh of course stock markets are volatile
can decline significantly in response to
adverse issue or political regulatory
market
or economic developments please keep
that in mind as well as the other points
are listed here
we are using the paper money application
that application is for educational
purposes
only past performance any security
strategies not guarantee future results
or success and all investing
does involve risk including the risk of
loss okay
so just a quick note of myself folks i'm
an education coach here
been here coming up on 14 years i
love what i do here it's great to be
able to teach people
study the markets more apply the
information i have
and you know to share it and to look at
what other traders investors do folks i
do specialize in combining
that combination i just mentioned to you
a fundamental and technical analysis and
trying to work on
getting the probabilities higher right
that's why investors might combine those
two together i do carry
the certified valuation analyst
designation and i do apply those
techniques
as well as other accounting and finance
techniques to this class
and the growth and value strategies
class and portfolio management class
where we manage a portfolio of uh it's a
paper portfolio of stocks
that we we select from this class
and the growth and value strategies
class on thursday so love to have you
here i do
uh contribute to uh some network hits on
the td ameritrade
uh network as well all right folks well
quick just overview on our uh
our agenda this evening so uh a market
overview we'll take a look at the s p
500
chart it's very important to do to get a
sense of where the market is at
right that has a lot to do with the
underlying direction of so many
securities out there
right if the market is strong well as
you might have noticed
yeah you know available
finding value candidates with a couple
of different slides uh
simple straightforward slides and then
we'll jump right into st
value stock examples all right so first
and foremost i want to just point out in
the markets here spx s p 500 index here
we're pulling it up right now folks we
did see another strong day in the market
i was just seeing
on uh the news that uh i think is the td
ameritrade network market
up s p 500 up
let's see eight out of the last nine
days or so
so another strong rally higher above
an all-time high range right there folks
at around 34.
and a lot of times the market will get
heated up
or can't really start to move if you
break through a long-term
resistance level kind of like you're
saying here you know you got that
long-term resistance
and we're breaking up higher so right
now
we just don't have any indications that
we can see it's an
all-time high level and when that's the
case how does the market get to higher
levels
folks it does it one dollar at a time
that's how it keeps going higher we
don't really have any upside resistance
right now because
it's an all-time high range and if
that's the case it just it makes new
highs by making it one dollar at a time
today it was up 26.34 as you can see
right there so
not a lot of time spent uh on the market
you can see that it's just still quite
strong and of course benefiting
collectively generally speaking the vast
majority of
stocks or a majority of stocks right if
the 500 is going up yeah
we know that plenty of companies within
there are going up and across the
marketplace as well
okay having said that we're going to
scoot right back over here
to a little bit of slide deck a little
slide deck action and kind of show you
here
just big picture what we discuss in this
class and why it is relevant
there are three key investing styles
that investors will focus in on when
they're looking at examining at a
company
well value investing number one where
we're looking at
valuations of the security where do we
think the company's value is actually at
relative to the share price
maybe we think it's undervalued giving
it possibly room to go higher
with that a lot of investors that we you
know we talk about this frequently in
this class there's a growth
component associated with value because
you want to find a way
to grow out of those troughs
right if the company's been coming down
which a lot of value stocks have
you want to have a growth component
there to try to help ensure
that prices will go up higher along with
that folks these companies and sometimes
you get all three
you might they might actually be paying
dividends as well and that's another
core component
a lot of times companies that are
undervalued have been staying down for
quite some time
how do you get staying power in those
companies how do you just hold on to
them
while you wait for them to go higher
well one thing is income
if they're paying you dividend it makes
it easier to hold value stocks for a
long period of time
or a longer period of time the other
side is is technical analysis and i know
connie
teaches a lot about that but technicals
themselves are
a great tool for kind of getting an idea
if the train is starting to leave the
station so to speak is it making higher
highs and higher lows
a good driver of share price action and
it can give us
an underlying sense if you know
investors are starting to jump in now
because
they too might believe that there might
be value associated with this stock
or you know growth or a combination
thereof
all right so next couple of slides folks
finding
common valuation ratios and i'm just
going to scoot on down here a lot of
comments in the chat and i appreciate
those coming in folks if you do get a
chance
to fill out the surveys we're going
through this that'd be i'd really
appreciate it i read through those
comments and i
if you're able to do it it's kind of a
short survey like three three questions
or so but uh
great okay on that note folks so jumping
back into it now why do they look at
valuation ratios okay
valuation ratios give us a sense of
where that company is at
compared to itself compared to the
market and compared
to other companies in the same industry
now here are a common a group of common
lists of
valuation metrics as you can see
comparing price to a fundamental metric
this is the most commonly utilized
valuation metric
out there the p e ratio across all
investors i mean
i've read that a number of times but it
measures simply price what are we paying
for price relative to earnings in other
words one way to look at it
is how many times are we paying
a price relative to earnings 10 times
the amount of earnings that a company is
paying in other words looking back over
a 10-year time frame
based on the same earnings it would take
us 10 years of holding the stock to
recapture what the cost of the price is
uh price to sales comparing the sales of
the company
i'll tell you what a lot of some of the
companies want to look at this evening
have a price to sales ratio folks of
less than one
so what investors are actually paying or
you know for the price of the stock
let's say if it's a price to sales ratio
of 50 cents
they're paying 50 cents on the dollar
so for every dollar that the company
makes
shareholders are paying 50 cents for it
now that should give you a sense that
those companies could be undervalued
just based on that so every sale that
comes that's coming in
we're paying 50 cents for every dollar
the company is bringing in
we've also got price to book peg ratio
which we talk about in this class
as well so a lot of different components
that we'll continue to talk about in the
future
i look forward to those future
discussions of course there are some
though that have already been archived
that you can take a look at that i'll
show you uh momentarily
okay so you can see them uh when they're
archived on the website
all right uh very good have you said
that those are some of those
uh quick note this just kind of i just
as a final slide here just wanted to
kind of show you what a lot of investors
will look for
a lot of times they're finding companies
that yes they have
come down they're under valued and a lot
of times with value stocks
they might have pulled back a little bit
now there might have been a longer term
trend that they're just pulling back
from in other words they've had this
longer upward rally but they've pulled
back now
and they're making a higher low but this
place this place down here is where they
might be considered undervalued
stocks will kind of bottom here before
they might rise up
higher reaching up to an area where
there might be perceived value
right and growth and the stock trend and
all these different components can
factor into that
so i want to jump right into that now
okay so let's start talking about some
stocks and
i'll show you some comparisons on the td
ameritrade side so
i'm gonna go full screen right now folks
once again though if you like to follow
myself for connie there's my twitter
handle there love to have you follow me
if you're able to
i do post financial content in there and
some
stocks that investors might be looking
at just based on certain criteria that
investors will focus in on
so and fairborn underscore tda connie
please type yours in the chat box as
well
that'd be great to have okay now i'm
going to click on this little
arrow here on the td ameritrade site
excuse me the thinker swim platform
and what does it do it gives us a bigger
screen to take a look at i want to
examine
and utilize the td ameritrade uh
excuse me the think or swim platform for
looking at the stock specifically it's a
great charting tool
and that's a big component of what we do
in this class because we like
undervalued stocks we like growth stocks
but we don't like downtrending companies
i mean we like companies to be
trending on higher as well okay so let's
go ahead and do that right now so let's
take a look at for example
this was a company that we looked at
last week okay and i've got a handful of
others to show you as well but just big
picture
don't be too surprised to find some
stocks that are
undervalued once again
lower p e ratios compared to their
industry
lower price to sales ratios uh compared
to their industry and compared to where
they've been previously
don't be too surprised if you see them
kind of bottoming down here
now this is pilgrim pilgrim's pride and
we talked last week
about a few components that are a few
areas within the company
that do suggest it's growth okay if the
cfra one of the analyst reports that you
can pull up on the td ameritrade site
they have it as a five-star company just
so happens to be
but a lot of times what you'll notice
i'm on a weekly chart here
with these companies that are
undervalued
right good metrics good valuation
metrics as you can see down here there's
been a history of getting very close
if not touching right down to this level
right near 15.
okay there are a number of potential
drivers for this stock and you can take
a look at last week's discussions we
reviewed this but
when you find companies like this and
one one comparison to kind of look at
is that when we have come close to this
range or
through that 15 you can see that there
has been a tendency to run up to
higher levels right up here there's a
higher level you came down here this one
wasn't too big
but then we had another rally that came
very close to 15 and it ran up high
came down again ran up high of course
coronavirus the whole situation has
pulled things down
but analysts are talking about growth
potential with this stock growing
uh chicken was one of the areas that
really didn't see too much disruption
due to coping 19 as opposed to uh
cattle and the pork markets
most of the chicken comes from mexico
and this is where these guys have their
chicken you know
i guess you could say a chicken
headquarter if you want to call it that
and so there are there are ways for
companies to be positioned
to recover but every time that's come
down there i mean
over this time frame and we just kind of
point this out to you from 15 to where
we're at right now
if i could just get this straight okay
so here we go
i'm just going to use a little drying
tool to show you that these are pretty
big moves
that's a 100 percent return from there
now if that's the case and we didn't go
up as high as these other two moves well
yeah 15 dollars to thirty that's a
hundred percent move
we don't know if that's going to happen
but what investors might do next
once they've found an undervalued
company that has the possibility of
going higher they might wait for the
trend to break higher
we sold some puts on this some 15 puts
in the portfolio class on friday if
you're new to this
short puts to bring in some income
we also said in that class that if we
break above this level
and the trend begins to pick up higher
well
the train might start leaving the
station is one way that investors could
look at this right
and it might be trekking back up to
where it was before because it does have
some drivers or some catalysts out there
uh
you know within the within the system
there that could help
propel it on up all right so
quick note let's do some comparisons now
with this company
we just looked at the chart and we saw
that there are some some historical
levels of support
if i go into the td ameritrade site and
a lot of people just don't go here
ppc i'm just going to plug in the symbol
here and then we'll run through some
other stocks like
like three or four others three or four
others as we go through here
okay it tells us some information okay
it says staples food products you can
read about the company here
here are the analyst reports that we
checked out last week cfra
was the group we looked at but folks
these are key tabs in the td ameritrade
site
if i click on evaluation here it reverts
automatically to a sub tab called
valuation
and it gives us all of our valuation
metrics compared
to the industry let's zoom on down and
take a look at them right now
and this is really kind of central and
important to take a look at because a
lot of times what value investors are
looking to do
as we examine each of these metrics over
here
what are we seeing price to earnings
ratio
okay we have here price to earnings
related to the industry we get a little
bar graph a little graph to show us
what's going on
but to the right this is where pilgrim
pride is at it's at 15
relative to the exact industry that it's
in
it's about half as much now
that can happen of course when the price
comes down a lot it's going to
influence that price to earnings ratio
as long as the earnings still remain
okay
or an expectation for earnings to grow
in the future it's really going to
influence
prices the price earnings ratio to come
on down it's half the industry
let's just examine a couple more of
these price to sales ratio
folks tremendously low compared to the
norm to the industry itself 0.33
that is telling us once again that
for every dollar that the company makes
in sales in revenue same thing
we as an investor in terms of what we're
paying for
in terms of the share price of the stock
we're paying 33 cents
for every dollar that that company
generates and it's had a history of
potential
of being able to maybe bake it up to a
higher range
where it's historically been priced at
let's say
by the market and who makes up the
market well
in many cases analysts and institutions
the big holders out there so
it might be at a higher level it's where
it's being valued at
okay this is how you can come in here
and take a quick check at this
interesting historical studies have
shown too is just a side note and i
don't have them here to cite
although i've read them over time that
the lower that price to sales ratio
generally speaking well and all outs
being equal
i have to go through my um just a little
discussion but i mean
generally speaking they tend to perform
better than those that have higher price
to sales ratios
okay but now we're looking as a reason
why maybe
sales might also be going up in the
future okay so that's when we reviewed
last week
all right let's continue on with some
others okay so
crs is another company
carpenter technology gosh we look at it
we say yeah it's down
it sure is it's showing us a little bit
of that valuation pattern a little bit
but is there the possibility of a change
in trend i'm going to zoom in here
on the finger swim platform real quick
and just kind of show you and highlight
here
if we really stop and examine if you've
got a if you've got a good eye for this
what you're going to be able to do is
kind of pick up over time
as you get better and better this is
which is what you will do
put a little bit of time into it you
know just examining
am i getting higher highs and higher
lows now it might be taking its time
but am i getting higher highs and higher
lows in other words is this low
uh lower than this low in other words
are we getting a higher low
we are okay and you can actually i've
got a little bit of a line in here in
fact i'm going to draw a longer line
just to make it even that much more
obvious for you folks
as i draw this through here but right
there about 20 as you can see we're
clearly above the prior low
now if we're looking at technicals
we may there might be a whole host a
whole basket of different areas to look
at here
to help us understand when the trend is
turning moving
averages can be helpful trend lines
also just to stop getting above a high
or even breaking above
a short term resistance level
i'm going to activate this drawing i'm
just going to pull it up slowly and just
see if you can spot with me
an area where prior support has been on
this pullback
and now which is often the case
we're seeing resistance
right there a lot of traders investors
might
well even though maybe a longer term
trend is starting to take up
folks they might certainly be interested
in the stock taking out those highs
first
pain you know giving us some indication
that we're really
ready to begin that that trend up this
particular stock
was significantly higher before the
coronavirus really started to kick in i
mean they were up around
50 range we'll just say 50 45 to 50
they might be clearly undervalued let's
do another quick check
we'll hit we'll hit uh at least two more
stocks pretty quickly here
in rapid fire mode to take a look but
i'm right back into crs um
so i'm going to pull it up uh
the cool thing is is i'm already in the
valuation ratio
area right the the site remembers it so
valuation
tab sub tab valuation
uh and it's right there let's take a
look price to earnings ratio right now
six just over six compared to the
industry
i mean amazingly good now what group are
these guys in we can read more about the
company
metals and mining industry um
scroll on down price to sales on our in
terms of our price to sells
once again it's less than a dollar we're
paying 42 cents
relative to the share price what we're
buying in the stock for
compared to a dollars worth of earnings
that the company brings in
those are low numbers really i mean you
got other ones that we can talk about
later price to book etc
incredibly though so it's checking off
the boxes if you will
in terms of what we've looked at over
here as investors go through and make
these assessments the lower the better
clearly lower than their industry i mean
a six price to earnings ratio is just
low
across the market itself too
you know amongst a number of companies
one other quick note
if you look down here with me on the
chart folks they do pay
a dividend and some of you are income
minded you know i mean you like
you know if you're buying a company that
might be under value you want to get
paid
a dividend too it sort of gives us a
reason to stick around a little bit
longer as well does it not
if i go to the trade tab over here uh on
the thinkorswim platform and right under
my arrow i click on that there's your
dividend yield so
nothing really two spots over that three
percent level that a lot of investors
like to see
so three percent so so going through a
number of steps that investors will take
a look at to try to find undervalued
securities
uh this company might be you know one
that
they look at okay
so this is a company that we could
easily add
to a portfolio i'll look at this on
on friday as we examine more growth in
the portfolio analysis class but uh
yeah i mean this certainly has some
interesting
value characteristics associated with it
let's continue on hxl
another one so hxl excel
corporation so uh again
lower lows for a period of time and then
we broke above those lows and we began
to make
a higher low right here but we have yet
to make
sort of a higher high above this range
so again
taking the time to make sure that the
charts themselves
are making higher highs and higher lows
is
really an area that a lot of investors
don't want to miss
you know and i wouldn't want you to miss
this portion right we can see the stock
okay let's draw this so here is a higher
high over here
and this obviously is a higher low now
the bigger trend could resume if we take
out
this high range the smaller trend could
resume
if in fact we start to just take out
prior highs
right through there could be something
that investors are waiting for they
might not be too anxious to jump in now
but maybe once prices get rolling boom
they could hit it and maybe get in i
mean that
that could be kind of the thought
process behind it
a quick note too i just want to examine
the crs and hxl with you
under analyst reports because there's a
lot of good information that you'll find
in here as well
could no analyst reports right here
if you take a look at mls reports folks
i want you to get all the information
you can
to help you make and you know to help
you make an educated decision
so td ameritrade does provide good
information
new constructs is i mean these are all
really really good
pieces of information to find they're
all a little bit different this does
forensic stock and earns it will give
you an assessment of the company
under cfra down here if i click on it
what it will do is it will give us an
explanation of this company and there
are not very many companies out there
because they they really cover quite a
few that are listed
as a strong buy they give it the highest
rating
and that's a five star now folks that's
not a guarantee that it's going to go
higher but i mean it's
it's uh it's an assessment of
this company you got your analyst there
and what he looks at for this particular
business and you can read about that
company too
now that is crs that we just looked at
okay so i encourage you to take
the next step too we're going to go
through all these steps and kind of line
them all up for you
in the coming weeks and i encourage you
you know to be there because i really do
look forward to future discussions with
you as we go through this
time goes so quick in this class there's
a lot to get through so
we really kind of uh narrowed down and
hit specific topics each time you know
we discussed this stuff but
uh let's hit one more stock out there
there's a lot in the news about uh bank
stocks
and and this company is ing okay so it's
a it's a
i guess a british bank is what you would
call it a british bank and there's a lot
of been said about
uh banks right now they have they carry
the financial institutions as a sector
carry the lowest p e ratio out of
everything
there could be some turnaround potential
in these companies i wanted to highlight
this company though because
it is an adr so it's a company that's
that's outside the u.s but it sells you
know their shares are held at a bank
here
uh in the united states is how adrs work
so they follow
our accounting standards our auditing
procedures etc
uh but um on that uh you know
there are some additional risks that
could be presented here so
it's a company that has undervalued
metrics
and maybe some higher highs and higher
lows and maybe in an industry
that's even also turning around so
there's certainly some
some catalysts to possibly propel growth
higher
but i just want to let you know that you
have to be mindful of the securities
you're looking at too there can be
additional risk
when you are looking outside of the u.s
for example so
i wanted everybody to keep that in mind
you know as you go through this um
all right folks well uh that is what we
had in store for you this evening
and today what we really did is we went
through the process
of identifying um what we did a market
overview first we looked at the s p 500
right
so we went through that in detail and we
noticed we took a look at the spx and we
said well the spx is going higher
and that's another trend or a kind of
a tailwind right that investors like to
kind of help
push their own individual stocks higher
collectively
is generally a good position that you
like
for stocks that you own you like this
behind the scenes you know the market's
strong
so we combine that and we really kind of
broke down today
some additional details on finding value
candidates
so we went through the process of
actually uh
we talked about investing styles and
then we talked about on a basic scale
valuation ratios and comparing them
specifically to their industries
which we went through over here on the
td ameritrade site
those were analyst reports too that i
wanted to point out to you on these
companies
um and uh so if we went over here yeah
we went under
uh so we put in the symbol and then we
went under the valuation
tab and then sub tab so key tab
valuation
sub tab valuation and then you can go in
here and you can take a look at the
companies where their
price to earnings ratios are relative to
their industry
and so we went through that process and
that was really kind of the um
this portion right here you know finding
value candidates and how investors go
through that process and then we took
those together
combined it with uh value stock
examples right and the ones that we went
through and i'm just going to put them
over here just so you have kind of a
record
of some of those that investors could
could be looking at based on value
criteria so the first one we looked at
was ppc so pilgrim's pride
which is also a five-star rated uh
company too
within cfra just as a side note there
we've also got crs
in addition to that we took a look at
hxl and ig
hxl xl and ing
as potential value stock candidates
so we would just love for you to you
know consider
these uh these sorts of just these sorts
of considerations really these
characteristics of
value stocks right uh taking a look at
the valuation ratios comparing to them
to their industry and then looking at
the charts too
making sure that the trends are looking
good or there is a trend that's
developing
higher highs and higher lows because
ultimately folks we want you
you know to apply this to your portfolio
your own individual watch list to help
you out
that is the idea and that's what i try
to do here
and uh let's see so we'll just say uh
value candidates uh yeah let's see
that we discussed
uh right value can be
i'll just say potential value stocks
because that's what that's what
investors might be looking at is just
simply value stocks okay
all right so those were the ones we
covered today uh it's been
awesome being here with you as we as we
went through those stocks at the end and
i really hoped you gained something from
this
discussion of course that's what this is
all about is going through the process
of uh
getting getting more equipped better and
like i said
i'll go through the process each week of
trying to find those stocks that
investors traders might be looking at
that might match certain value criteria
keeping in mind the charts too which are
very important as well
but folks if you do get a chance to fill
up that circuit that would be awesome
as always we'll try to do the best we
can to help you out here
uh and uh thanks so much for your time
today
uh by the way uh i do salute all of you
for being here today thanks for taking
time out of your evening to learn more
about combining you know value analysis
with technical analysis to help
your own investments i look forward to
many future discussions with you
and bring a friend along next time if
that's of interest to you but
more than happy to help you out folks uh
just
to kind of summarize we just got to end
on one quick disclosure item here
and in order to demonstrate the
functionality of the platform we did use
actual symbols however td ameritrade
does not make any recommendations
or determine the suitability and
security strategy for individual traders
on that note everybody hope you have a
pleasant evening nice being here
and uh we'll catch you next time
everybody bye
you
