How to Screen Your Investments

How to Screen Your Investments

FREE SPECIAL REPORT

pto logoAt Wall St. Renegade, we help you find investments you can be “proud to own”.  We do this using a three step process:

1. Avoid companies that violate your faith and values. Some of the types of companies we can avoid include those involved in the abortion industry, those producing explicit entertainment and pornography, those conducting embryonic stem cell and fetal tissue research, companies funding and lobbying for homosexuality, those involved in vices like alcohol, tobacco and gambling and companies that are abusing the environment.

2. Seek out those companies that complement your faith and values. This involves finding companies: Helping the poor and defenseless; Protecting the sanctity of human life; Producing morally sound entertainment; Finding cures for life threatening diseases; and Improving the society we live in…

3. Seek companies with strong profit potential. This involves finding companies in solid financial condition that have strong profit potential and/or provide strong cash flows via dividends. We use a five-point inspection to evaluate each investment we are considering. We analyze a company’s earnings potential, price momentum, risk, financial health, and its current valuation. Our goal is to find quality companies that stay true to your values AND are profitable! This is not an either /or scenario but rather a winning combination.

Download THE FREE SPECIAL REPORT by clicking Below:

How to Screen Your Investments 2015

 

Get Access to Our Premium Research for just $20/month!

 

Each Month You Gain Access to:

  • 7 Faith-Based Investment Portfolio Strategies
  • Premium articles on retirement, insurance, investing, estate planning, taxes, and much more from a Christian perspective
  • My monthly buy list of top rated investment ideas
  • Trade alerts as I buy and sell positions
  • Commentary and articles to help you navigate today’s challenging environment
  • My monthly cheat sheet: top sectors, stocks, countries, commodities, and currencies to consider
  • Market indicator: helps you know when danger is coming. We track 12 key indicators and monitor both short-term and long-term trends. 

LEARN MORE

 

 

Developing a Kingdom Mindset

Developing a Kingdom Mindset

How to develop a kingdom mindset when you invest…

Kingdom

This week we look at:

  • How to develop a kingdom mindset when you invest
  • I will cover 7 key biblical principles
  • My trade idea of the week.
  • Then we will take a look at the lay of the land:
  • 4 of my favorite sectors you need exposure to
  • 3 of my favorite countries to invest in right now
  • 2 of my favorite commodities
  • 2 currencies that are gaining momentum

Untitled design-3

Each and every week we tackle the world of finances so I can help you grow, protect, and share your wealth!

 

If you would like a review of your portfolio, whether you have IRAs, 401ks, Roths, or taxable investment accounts give me a call at 866-594-9919.

 

 

Listen Below:

3 Steps to Find Cheap Growth Stocks

3 Steps to Find Cheap Growth Stocks

Stocks on Sale

111stocks-on-saleMarket downturns can provide great buying opportunities. Let’s look at a time-tested method to find some attractive companies with lots of upside potential.

When looking for reasonably priced growth stocks, I often use the PEG ratio as one of my key metrics.  According to investopedia, a PEG ratio is “A stock’s price-to-earnings ratio divided by the growth rate of its earnings for a specified time period.”

I like the PEG ratio more than just using a P/E ratio (price to earnings) because the PEG ratio also takes a company’s earnings growth into account.

Here is a three-step process I use to find growth stocks on sale:

  1. Look for stocks with a PEG ratio under 1.00.  These are stocks selling a deep discount compared to their growth potential
  2. Look for stocks with 1 year expected earnings growth above 33%. I love fast growing companies expected to grow quickly over the next 12 months.
  3. Look for stocks with 3-5 year expected annualized earnings growth above 17%.  I also want companies that are expected to grow over the next 3-5 years and 17% would allow earnings to double within six years or less

Using these key metrics, here are three cheap growth stocks as of 2-18-15:

1 Yr Projected

3-5 Yr Projected

Company Name Symbol Industry

Price

P/E

PEG

Earnings Growth

Earnings Growth

AVAGO TECH. AVGO SEMICONDUCTORS

109.70

16.50

0.94

46.68%

22.10%

AKORN INC. AKRX GENERIC DRUGS

47.14

25.50

0.97

68.31%

69.75%

SKYWORKS SOLUTIONS SWKS SEMI-RADIO FREQ

82.59

18.27

0.89

60.57%

24.37%

Avago Technologies Limited (AVGO)engages in the design, development, and supply of analog semiconductor devices with a focus on III-V based products. Its product portfolio comprises RF amplifiers, RF filters, RF front-end modules, ambient light sensors, light emitting diodes, low noise amplifiers, mm-wave mixers, optical finger navigation products, diodes, fiber optic transceivers, serializer/deserializer ASICs, motion control encoders and subsystems, optocouplers, and optical mouse sensors. The company’s products are used in cellular phones, consumer appliances, data networking and telecommunications equipment, enterprise storage and servers, renewable energy and smart power grid, factory automation, displays, optical mice, printers, voice and data communications, keypad and display backlighting, backlighting control, base stations, storage area networking, in-car infotainment, lighting, motor controls, power supplies, and optical disk drives applications.

Akorn, Inc. (AKRX) manufactures and markets diagnostic and therapeutic pharmaceuticals in specialty areas such as ophthalmology, rheumatology, anesthesia and antidotes, among others. They also market ophthalmic surgical instruments and related products. Customers include physicians, optometrists, wholesalers, group purchasing organizations and other pharmaceutical companies. They also provide contract manufacturing services.

Skyworks Solutions, Inc. (SWKS) is the industry’s leading wireless semiconductor company focused on radio frequency (RF) and complete semiconductor system solutions for mobile communications applications.

Bottom Line: The PEG ratio is not an end all solution, but it does help you find attractively priced growth stocks that could help your portfolio outperform the markets over the long-haul.

Want more growth ideas?

Join our VIP Program and get access to all of our top picks!

The Power of Tactical Asset Management

The Power of Tactical Asset Management

Tactical Asset Management

When it comes to investing, I prefer a “tactical asset management” approach. Tactical asset strategicmanagement is an active type of asset management that adjusts allocations across different asset classes and market sectors.

Before 2008, many investors took a passive “buy and hold” approach to investing. You simply bought stocks for the long run and held onto them and way went up, up, up! When a bear market came along no worries, it won’t last long. Soon enough, a new bull market kicked in, and investors kept holding on.

That was all good and well until “buy and hold” turned into “buy and lose”. The 2000s were called a “lost decade” for a reason as the S&P 500 lost nearly -1% in value from 2000-2009, including dividends. The financial collapse of 2008 wrecked many investors’ portfolios and many retirement dreams turned into nightmares. The “buy and hold” crowd was faced with two choices: either sell stocks with huge losses, or hold on and hope for the best.

Tactical asset management is a response to the changing landscape on Wall Street. Active management can help investors exploit market volatility and take advantage of short-term performance momentum. Instead of sitting back and waiting for stocks to move higher, this approach moves assets in and out of sectors to try and profit from present and near-term conditions.

Sector Rotation

One way to utilize tactical asset management is to employ a sector rotation strategy. This is a dynamic effort to shift portfolio assets from one industry sector to another in an attempt to outperform the market. Sector rotation, at its heart, is about gauging market and business cycles. A new bull or bear market often turns out to be a prelude to an economic recovery or downturn. Keep in mind; the lag time may be several months before you see a clear trend developing.

An essential assumption in sector rotation is that the economy is either improving or faltering to some degree. So there are three steps that an investor must take:

  1. Identify the business cycles that commonly correspond to these market cycles
  2. Shift assets to the particular industry groups that do well in these business cycles
  3. Shift assets out of particular industry groups that do not do well in these business cycles

When you have a full-blown recession, certain types of businesses do better; when the economy is booming, certain types of companies excel. Tactical asset management recognizes these opportunities exist and utilizes sector rotation strategies for an investor’s potential advantage.

When looking at sector rotation, I look for the top 1/4 (25%) of the stock universe (companies in sectors that fall in the top 25% of all sectors). These are the top sectors stack ranked against one another. I take the major sectors like health care and break it down further by categories like pharmaceuticals, biotechnology, health care providers, and hospitals (to name a few).

In using this screen process for our Faith-Based 100 Index, our top 100 stocks. As of 1-14-15, this produces 34 companies:

Company Name Ticker Rank
Casey’s General Stores, Inc. CASY 1%
Cintas Corp. CTAS 1%
Skyworks Solutions Inc. SWKS 1%
Spirit Airlines SAVE 4%
O’Reilly Automotive, Inc. ORLY 4%
Team Health TMH 4%
NICE-Systems Ltd. NICE 10%
Old Dominion Freight ODFL 10%
Federated National FNHC 11%
Genuine Parts Co. GPC 11%
Douglas Dynamic PLOW 11%
United Insurance UIHC 11%
Panera Bread Co. PNRA 12%
Tessera Technology TSRA 12%
Cracker Barrel CBRL 13%
Domino’s Pizza DPZ 13%
Jack In The Box, Inc. JACK 13%
Williams-Sanoma WSM 14%
Zebra Technology ZBRA 14%
Realty Income Corp. O 17%
Mercadolibre MELI 18%
Blackhawk Network HAWK 21%
Costco Wholesale Corp. COST 22%
Health Care REIT, Inc. HCN 22%
Dollar Tree, Inc. DLTR 23%
Extra Space Storage Inc. EXR 23%
National Health Investors NHI 23%
Omega Healthcare Invs, Inc. OHI 23%
Acuity Brands, Inc. AYI 24%
Cedar Fair L P FUN 24%
HCA Holdings Inc. HCA 24%
IGI, Inc. IG 25%
Ambarella, Inc. AMBA 25%
Avago Technology AVGO 25%

From here, I want to further narrow our list. To do so, I utilize a concept called “relative strength”.

Relative Strength

Relative strength is a simple performance metric. It helps us figure out: How well a stock performed compared to the S&P 500 and how it performed relative to other stocks in its industry group. The difference in price performance indicates a company’s relative strength.

The idea is to find companies that are stronger than:

  1. The market or
  2. Companies the strongest within a particular sector.
  3. A corresponding objective is to dump stocks that are relatively weak.

How does this work:

  • After a big selloff, the stocks and sectors that have remained up (i.e., the ones with relative strength) may be the ones that will make pronounced gains when the market recovers. Their strength has been tested and validated in the market swoon.
  • When Wall Street rallies you examine the sectors and stocks that have lost ground. These weak stocks and sectors may be targets for shorting.

In using relative strength I look for companies who score 75% or better than their peers. So if I take my list of 34 companies from above, the following 23 companies make it through my Relative Strength Screen:

Symbol Name RS Score
AMBA Ambarella, Inc. 98.6
SWKS Skyworks Solutions Inc. 98.6
IG IGI, Inc. 97.6
HCN Health Care REIT, Inc. 97.2
AYI Acuity Brands, Inc. 97
JACK Jack In The Box, Inc. 95
EXR Extra Space Storage 93.5
CTAS Cintas Corp. 92.4
OHI Omega Healthcare Inv. 91.3
TSRA Tessera Technology 90.9
CASY Casey’s General Stores 90.7
NICE NICE-Systems Ltd. 90.5
CBRL Cracker Barrel 89.5
O Realty Income Corp. 89.2
DLTR Dollar Tree, Inc. 86.6
PNRA Panera Bread Co. 83.7
HAWK Blackhawk Network 82.9
COST Costco Wholesale Corp. 80.3
ZBRA Zebra Technology 79.1
HCA HCA Holdings Inc. 78.5
FUN Cedar Fair L P 78.3
WSM Williams-Sanoma 76.9
ORLY O’Reilly Automotive 75.8

 

We all want better returns right? How can we get them?

Real estate investing is about location, while stock investing is about getting a good price. That search leads more than a few investors to find attractive companies at a fair price. I use the PEG ratio, to separate the wheat from the chafe. The price/earnings to growth ratio (PEG ratio) is simply a given stock’s price/earnings ratio (P/E ratio) divided by its percentage growth rate. I generally look for stocks that are under 2. When applying this to our list, we narrow the list down further to just 12 companies:

Company Name Ticker PEG Ratio
Blackhawk Network HAWK 0.92
Skyworks Solutions Inc. SWKS 0.93
HCA Holdings Inc. HCA 1.15
Tessera Technology TSRA 1.2
Dollar Tree, Inc. DLTR 1.38
O’Reilly Automotive ORLY 1.4
Zebra Technology ZBRA 1.67
Williams-Sanoma WSM 1.73
Panera Bread Co. PNRA 1.75
Acuity Brands, Inc. AYI 1.88
Jack In The Box, Inc. JACK 1.92
Cintas Corp. CTAS 1.99

So now we have a manageable list of stocks in top sectors of the economy, that have strong relative strength scores, and are reasonably priced.

In our current screen, we see:

  1. O’Reilly Automotive, Inc., (ORLY), a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States.
  2. Jack in the Box (JACK) is a quick-service hamburger restaurant chain.
  3. Dollar Tree, Inc. (DLTR), which operates discount variety stores in the United States and Canada.
  4. Blackhawk Network Holdings, Inc. (HAWK), a provider of prepaid and financial payments products for consumers and businesses.
  5. HCA Holdings, Inc., (HCA) provides health care services in the United States.
  6. Acuity Brands, Inc. (AYI) engages in the design, production, and distribution of lighting solutions and services in North America and internationally.
  7. Skyworks Solutions, Inc. (SWKS) is the industry’s leading wireless semiconductor company focused on radio frequency (RF) and complete semiconductor system solutions for mobile communications applications.
  8. Panera Bread Company (PNRA), which operates a retail bakery-cafe business.
  9. Williams-Sonoma, Inc. (WSM) is specialty retailer of products for the home.
  10. Zebra Technologies Corporation (ZBRA), which designs, manufactures and supports a broad range of direct thermal and thermal transfer bar code label printers, receipt printers, instant-issuance plastic card printers and secure identification printing systems, related accessories, and support software.
  11. Tessera Technologies (TSRA) develops semiconductor packaging technology that meets the demand for miniaturization and increased performance of electronic products.
  12. Cintas Corp. (CTAS) provides a specialized service to businesses of all types – from small service and manufacturing companies to major corporations. 

Bottom Line: A tactical asset management strategy may help you to mitigate market losses and realize better returns. This dynamic, responsive approach keeps macro factors in mind and makes a lot of sense today as the “buy and hold” approach seems ill-suited to these times. If you want to improve portfolio performance, tactical asset management may be the way to go about it.

 

Sign up for our VIP Service to help put tactical asset management into place for your portfolio!

wsg-vip-large-transp

Each Month, VIP members receive:

  • 24/7 Real-Time Access to all 7 of the Renegade Portfolios ($349 value).
  • Instant BUY and SELL alerts directly in your email inbox every time we make a change to the portfolio.
  • Monthly portfolio briefings from Jay Peroni, CFP.
  • You will gain access to our best trading and investment ideas each month!

Sign up for our VIP Service

Protecting Your Retirement Portfolio From Inflation

Protecting Your Retirement Portfolio From Inflation

PROTECTING-5While most people are primarily focused on funding and growing their retirement portfolios, there’s an almost mystical force pulling in the opposite direction. Inflation guarantees that whatever you put aside for the future will be worth less than it is right now. For this reason, protecting your retirement portfolio from inflation is one of the most important retirement related jobs that you have.

What Inflation Can Do to a Retirement Portfolio

For the past 30 years or so, inflation has been running the neighborhood of 3% per year. Compared to the 1970s and early 1980s, that seems like a tame level of inflation. And maybe it is from year-to-year, But on a long-term basis it’s much more damaging.

Roughly speaking, a 3% rate of inflation means that the value of your money will decline by about half over the next 25 years. That means that if you are 40 years old and planning to have a $500,000 retirement plan by the time you turn 65, you’ll really need to have $1 million to account for inflation.

That’s something of a game changer, wouldn’t you agree? But that’s not the worst of it.

You’ll Need to Worry About Inflation Even After You Retire

Inflation will continue to wear down your retirement assets even after you retire. In fact, the combination of inflation and withdrawals from your portfolio, can weaken the plan each year. For example, a 3% inflation rate combined with a 4% annual withdrawal rate, will reduce your portfolio by 7% per year.

The only way to avoid seriously draining your retirement portfolio in just a few years is to make sure that the rate of return on your investments at least matches – and preferably exceeds – 7% per year.

That may not seem like a difficult task when most of your money is in stocks. But since retirees have a preference for more reliable assets, earning at least 7% per year – every year – can be a tall order.

Building Inflation Protection Into Your Retirement Portfolio

Since interest rates are so low – and have been for years – maintaining the bulk of your portfolio in fixed income assets will be a losing proposition. At the same time, maintaining the majority of your portfolio in the stock market will become increasingly risky as you get older.

You’ll have to come up with a portfolio mix that is not only balanced in terms of risk, but also has the potential to outperform inflation, with reasonable allowance to cover your annual withdrawal rate.

Here are some of the possibilities of what to include in your portfolio:

Growth Stocks.
Unlike many of the retirees from previous generations, you probably won’t have the luxury of parking most of your money in high-yielding, low risk fixed income assets. Some percentage of your portfolio – probably a larger percentage than you’re comfortable with – will have to be in stocks. Since growth stocks represent the highest yielding stocks in the long-term, a significant amount of your money will have to be invested in these equities. Growth stocks represent the best potential to consistently outperform inflation for many years.

Some of our top VIP Growth Stocks include:

Company Symbol Sector
Hain Celestial HAIN Consumer Staples
O Reilly Automotive Inc. ORLY Consumer Discretionary
Ulta Salon Cosmetics & Fragrance Inc. ULTA Consumer Discretionary
AmTrust Financial Services Inc AFSI Financials
Alexion Pharmaceuticals Inc. ALXN Health Care
Illumina Inc. ILMN Health Care
Celgene Corp. CELG Health Care
AmerisourceBergen Corp. ABC Health Care
Akorn Inc. AKRX Health Care
Spirit Airlines Inc. SAVE Industrials
Avago Technologies Limited AVGO Technology
NXP Semiconductors N.V. NXPI Technology
Bitauto Holdings Ltd. ADS BITA Technology
Skyworks Solutions Inc. SWKS Technology
Ambarella Inc. AMBA Technology

* As of 1-6-15

Inflation Sensitive Stocks.
So far we’ve talked about the effects of a relatively modest 3% inflation rate. But at times in the past inflation has been considerably higher. You’ll need to have a portfolio allocation that will help you to cover such times. Certain stock sectors react favorably to higher inflation. These include stocks in energy, home building, industrial metals, strategic commodities, and food. During periods of higher inflation, you may want to favor these sectors in your portfolio.

Real Estate.
The home that you own is one of the best protections you can have against inflation. In a way, real estate is the ultimate commodity. Since it represents shelter, and is a big ticket asset, it tends to move up in price with inflation. Plan to payoff your mortgage so that your equity will grow even faster than the rate of inflation.

Commodities.
Certain commodities tend to react especially well to inflation, though mainly during times of very high inflation. Gold and silver quickly come to mind, but as we’ve seen in recent years, they seem to react favorably to inflation only at the extremes. For this reason, you might want to keep only a small percentage of your portfolio precious metals – maybe no more than 5%. A better way to use commodities to deal with inflation may be to invest in gold funds, or even energy funds, since energy also tends to react favorably to higher levels of inflation.

Treasury Inflation Protected Securities (TIPS).
Once you retire, an increasing percentage of your portfolio will need to be invested in fixed income securities. This will be necessary to minimize the volatility in your portfolio since you will have less time to recover from major declines in the equity markets. Treasury Inflation Protected Securities (TIPS) are an excellent place for your fixed income allocation, particularly where inflation is concerned.

TIPS pay a fixed rate of interest (twice annually), but then the principal is increased each year based on the Consumer Price Index. That will give you both steady interest income, and inflation protection. Still, you’ll want to come up with some sort of laddering strategy with your TIPS to allow you to take advantage of changes in interest rates.

You can buy TIPS through the US Treasury’s Treasury Direct portal. TIPS are sold in terms of five, ten and 30 years, and can be purchased for as little as $100.

Inflation is a given in everyday life. And it affects investments as well, and especially retirement portfolios. But you are hardly defenseless in the face of it. Understand what inflation can do to a retirement portfolio, and take as many steps as you need to in order to protect your investments from it.

Get our 2015 Profit Guide FREE ($200 Value) When You Join our VIP Service!

wsg-vip-small-transp

Each month, VIP members receive:  

  • 24/7 Real-Time Access to all 7 of the Renegade Portfolios -$343 value
  • Instant BUY and SELL alerts directly in your email inbox every time we make a change to the portfolio
  • Get monthly portfolio briefings from Jay Peroni, CFP

Just $20 per month or $197 per year (save over $42!)   JOIN NOW!