Wiser Trader Stocks and Options Newsletter

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Issue No. 79  June 5, 2006                            Prescott, Arizona                       Systems@WiserTrader.com

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1.0   Trading

     

      Selecting options based on the Black Scholes formula or implied volatility can be quite complicated.  There is a simple way to tell which option will give you the highest trading return.

 

1.1 Delta

 

      When selecting options for trading, it pays to look at the ratio of delta to the options premium.  Delta is the dollar amount of a change in the option premium for each dollar change in the underlying stock price.  When the stock price moves in the direction of trade, up for calls and down for puts, the highest ratio of delta to the option premium will provide the greatest percentage return on value.  It sounds logical.  Right?

 

      It might surprise you to know that options having the highest delta do not necessarily provide the highest trading return.  The highest values for delta are found when options are deeper in the money.  However, premium values increase faster than delta as options move deeper in the money.  For options lying farther out of the money, premium values decrease faster than delta.  The net result is that the highest ratios of delta to options premiums occur for low priced out of the money options.  Of course, one has to check the actual ratio of delta to option premium to be sure to avoid deltas of zero for options that are so out of favor that they receive no bids. 

 

     A similar counter intuitive effect concerns expiration dates.  Ratios of delta to option premium are highest when the expiration date grows nearer.  The option premium declines faster than delta such that the highest delta to premium ratio occurs for near expiration options.  Here one has to be wary of exponential declines in premium values during the final month.  When trading, you do not want to hold near term expiring options more than a few days. 

 

      Many students are taught to select at the money options that are expected to deliver trading profits at least one month before expiration.  However, this prevents one from trading options for many higher priced stocks because at the money options with long expirations can be quite expensive.  By looking for the highest delta to premium ratios, one can find the highest returns at affordable prices.  Values of delta for any option can be found at Etrade.com using the link https://us.etrade.com/e/t/invest/quotesandresearch and selecting “Greeks” in the “Select Chain” pull-down menu.  

 

      The listed value of delta takes into account all five elements that the Back Scholes formula takes into account when calculating the fair value of an option:

 

  • Stock Price
  • Strike Price
  • Time remaining until expiration
  • Current risk-free interest rate
  • Volatility

 

      The actual premium price can be above or below the fair value of an option.  By looking at the ratio of delta to the actual premium price, a clear assessment can be made of the probable trading return

 

 

 

© 2006 WiserTrader.com, LLC.  Members of wisertrader.com are neither licensed brokers nor licensed advisors.  Trades discussed represent recommendations made by the editor for the wisertrader.com portfolio.  The newsletter and web site are for information only and should not be considered as personal advice.  While it is believed that the posted information is factual, mistakes can be made in transcription.  Investors should trade stocks only after verifying all information and consulting with a licensed broker or adviser.  WiserTrader.commarkets third party trading systems but has no other affiliation with trading system companies. 

   

 

   

1.2 Filter Studies

 

      Continuing with filter performance studies, the latest 1 year period is shown at the bottom of Table 1A.  Details of the filters can be found on the web site.  Currently we are tracking filter performance with the S&P 500 Index 30-day SMA (simple moving average) relative to its 200-day SMA 1 month prior to the dates listed.  The ongoing hypothesis is that although stocks wee selected a year ago, portfolio performance is strongly influenced by behavior of the S&P 500 within the past month.

 

 

Table 1A

1 Year Filter Performance Using No Trailing Stop

Year Ending

1 Year S&P500 Gain

Month Ago S&P 500

SMA 30 vs SMA 200

Growth $15-$40 Filter Gain

Growth >$40 Filter Gain

Absolute Value Filter Gain

Relative Value Filter Gain

9/02/05

9.4%

+2.8%

60.1%

40.7%

19.3%

50%

9/30/05

8.6%

+1.8%

25.4%

61.4%

12.3%

24.1

11/04/05

8.0%

-0.1%

8.2%

14.8%

4.4%

-0.6%

12/02/05

6.2%

+1.9%

24.6%

9.6%

17.0%

34.7%

01/06/06

8.2%

+4.1%

39.8%

50.3%

27.8%

28.3%

02/03/06

6.1%

+4.2%

34.8%

60.7%

11.5%

34.3%

03/03/06

5.7%

+3.5%

32.7%

26.4%

11.0%

29.7%

04/07/06

9.5%

+3.3%

25.2%

61.2%

16.1%

18.4%

04/28/06

13.2%

+4.0%

95.0% *

19.9%

12.2%

32.0%

06/02/05

7.7%

+3.8%

32.0%

7.1%

40.7%

85.0%

* Only 2 stocks were filtered for this group

 

 

      The recent S&P 500 move towards its 200-day SMA is shown in Figure 1.  Although the month ago 30 day SMA was 3.8% above the 200 day SMA, the sudden down move took a toll on higher priced growth stocks. Lower priced growth stocks and value stocks faired much better.

 

 

FIGURE 1A

 

 

      The data continues to confirm that stocks selected by either filter do best when the S&P 500 remains several percent above its 200-day SMA for the most recent month.  The performance shown in Table 1A is for cases where no trailing stops were used.

 

 

1.3 Trailing Stop Settings

 

     Table 1B shows how profits change as trailing stops are widened from -10% to -100%.  One factor in such performance is that the S&P 500 has been in a bull market over the past year, all be it with a saw tooth rising wedge pattern.  Another factor is the quality of the filters themselves. 

 

      Stocks were filtered 1 year ago.  In some cases, a fixed nominal trailing stop setting X% can be improved upon by applying a trailing stop to each individual stock based on its highest percentage gain.  The variable value applied to stocks individually is,

 

        Variable trailing stop percentage = Highest_%Gain / 3 - X%        

 

       This effectively tightens the trailing stop as the stock price rises in order to preserve gains.  The variable trailing stop percentage is not allowed to expand wider than -X% or any narrower than -10%.  For this group of stocks, fixed and variable trailing stops gave similar results over the past year.  A slight improvement is more likely when the trailing stop setting is narrower than -35% in an up trending market.  Results depend on market behavior.

 

 

Table 1B

1-Year %Gains with Variable and Fixed Trailing Stop Settings

 

Absolute Value

Relative Value

Growth $15 to $40

Growth > $40

“X“ Nominal Stop Setting (%)

Variable Trailing Stop

Fixed Trailing Stop

Variable Trailing Stop

Fixed Trailing Stop

Variable Trailing Stop

Fixed Trailing Stop

Variable Trailing Stop

Fixed Trailing Stop

-10

11.6%

11.6%

38.5%

38.5%

31.4%

31.4%

7.9%

7.9%

-15

35.2%

35.2%

38.5%

38.5%

27.0%

27.0%

1.5%

2.4%

-20

40.7%

39.1%

47.6%

39.2%

32.7%

32.7%

-0.4%

0.4%

-25

40.7%

40.7%

47.6%

47.6%

32.7%

30.9%

1.1%

-0.7%

-30

40.7%

40.7%

47.6%

47.6%

37.8%

36.0%

3.2%

1.3%

-35

40.7%

40.7%

47.6%

47.6%

37.8%

36.0%

2.8%

2.8%

-40

40.7%

40.7%

47.6%

47.6%

32.4%

32.4%

6.7%

0.5%

-50

40.7%

40.7%

47.6%

47.6%

32.0%

32.0%

7.1%

7.1%

-60

40.7%

40.7%

47.6%

47.6%

32.0%

32.0%

7.1%

7.1%

-70

40.7%

40.7%

47.6%

47.6%

32.0%

32.0%

7.1%

7.1%

-80

40.7%

40.7%

47.6%

47.6%

32.0%

32.0%

7.1%

7.1%

-90

40.7%

40.7%

85.0%

85.0%

32.0%

32.0%

7.1%

7.1%

-100

40.7%

40.7%

85.0%

85.0%

32.0%

32.0%

7.1%

7.1%

 

 

 

      Applying trailing stops to individual stocks is most easily done by putting the data and formulas in an Excel spreadsheet.  XLQPlus can then be used to retrieve stock prices automatically from Yahoo and MSN.  The spreadsheet then dynamically calculates stop loss settings and when it is time to buy, hold or sell.  An automated spreadsheet named “Portfolio Tracking” that does this is now available as a free download at http://www.wisertrader.com/excel.php . 

 

 

 

2.0 Market Analysis

 

      Fear in the markets has temporarily subsided.  An inability of the Fed to pause its tightening stance should lead the S&P 500 to migrate lower to its long-term support level below 1,240 before it resumes a sustained rally. 

 

      Key industry ETF’s in Table 2A are Biotech and Semiconductors, which confirm the NASDAQ.  Transportation confirms the Dow Jones Industrial Average according to Dow Theory.  Banking and Financials are confirming indicators for the S&P 500.  Gold and Housing are respective indicators for the inverse health of the currency (inflation) and the capacity for consumer spending. 

 

 

Table 2A

Indices, Key Industry ETF’s and Sector SPDR’s

 

1 month

1 wk ago

2 wks ago

3 wks ago

4 wks ago

Dow Jones Industrial Index

-2.8%

-0.3%

1.2%

-2.1%

-1.7%

NASDAQ Composite Index

-5.3%

0.4%

0.8%

-2.2%

-4.2%

S & P 500 Index

-2.8%

0.6%

1.0%

-1.9%

-2.6%

NYSE Composite Index

-3.8%

0.8%

0.8%

-2.8%

-2.6%

Russell 2000 Index

-5.7%

1.1%

1.0%

-2.7%

-5.0%

HGX, Phil. Housing Index

-10.9%

-1.9%

0.1%

-4.4%

-5.1%

IYR, Real Estate

-0.9%

2.2%

1.7%

-1.5%

-3.2%

GLD, GOLD

-6.6%

-2.5%

-0.7%

-7.8%

4.6%

RKH, Banking

-3.3%

1.4%

0.7%

-1.9%

-3.4%

IYT, Transportation

-3.8%

1.8%

1.1%

-4.2%

-2.4%

SMH, Semiconductors

-9.0%

1.2%

-2.8%

-2.1%

-5.6%

BBH, Biotechnology

1.7%

0.9%

2.3%

0.4%

-1.9%

OIH, Oil Infrastructure

-5.9%

3.5%

2.9%

-7.4%

-4.6%

XLE, Energy

-4.0%

2.6%

2.0%

-4.8%

-3.6%

XLU, Utilities

1.1%

2.9%

1.7%

-0.5%

-2.9%

XLB, Materials

-5.3%

0.8%

1.0%

-4.6%

-2.5%

XLI, Industrial

-3.8%

0.6%

0.3%

-2.5%

-2.1%

XLK, Technology

-5.5%

-0.2%

0.8%

-1.8%

-4.3%

XLV, Healthcare

0.4%

1.1%

0.9%

-0.4%

-1.3%

XLF, Financials

-2.7%

0.9%

1.0%

-1.8%

-2.8%

XLP, Consumer Staples

-0.4%

-0.5%

2.0%

-0.2%

-1.6%

XLY, Consumer Discretionary

-1.8%

0.9%

0.0%

-1.2%

-1.5%

 

 

 

      The VIX and VXN volatility indexes are listed in Table 2B.

 

 

Table 2B

Volatility

Indicator

Current

Last Week

2 Weeks Ago

Complacent

Cautious

VIX **

14.3

14.3

17.2

< 20

> 50

VXN ***

18.4

18.6

21.0

< 30

> 70

**   Below 20 day SMA = Short-term buy signal.

*** Below 20 day SMA = Short-term buy signal.

 

 

 

      Figure 2A compares the major averages with key ETF’s and Sector SPDR’s.

 

 

FIGURE 2A

 

 

 

 

 

 

 

 

Table 2C

Market Summary

 

Industries are listed according to the Dow Jones Classification System

 

 Major Indices 
 For the Past Week:
 Dow Jones     -0.3%
 NASDAQ         0.4%
 S&P500 Index   0.6%
 Russell 2000   1.1%
 NYSE           0.8%
 
 30 Year Bond 5.094%
 10 Year Note 4.994%
 
 Leading Industries
 For the Past Week:
 Pipelines 
 Coal 
 Oil Equipment, Services & Dis 
 Health Care Providers 
 Gas Distribution 
 Oil Equipment & Services 
 Gas, Water & Multiutilities 
 Mining 
 Exploration & Production 
 Utilities  
 
 Lagging Industries
 For the Past Week:
 Home Construction 
 Tires 
 Automobiles 
 Business Training & Employ 
 Software 
 Internet 
 Household Goods 
 Nondurable Household Products 
 Software & Computer Services 
 Specialized Consumer Services 
 Leading Industries
 For the Past Month:
 Pipelines 
 Automobiles 
 Broadcasting & Entertainment 
 Health Care Providers 
 Automobiles & Parts 
 Soft Drinks 
 Media 
 Auto Parts 
 Electricity 
 Beverages  
 
 Lagging Industries
 For the Past Month:
 Platinum & Precious Metals 
 Home Construction 
 Tires 
 Toys 
 Recreational Services 
 General Mining 
 Paper 
 Leisure Goods 
 Semiconductors 
 Insurance Brokers  
 
 Crude Oil $72.33
 
 Gold for the past 30 days:
 USD    -4.38%
 CAD    -4.91%
 CHF    -6.58%
 GBP    -6.45%
 EUR    -6.54%
 JPY    -6.09%

 

 

 

 

 

  • It Watches All Your Favorite Stocks
  • Issues Precision Buy and Sell Signals
  • Price Targets & Stop Loss Points
  • It will even track all your trades open or closed

 

 

3.0 Procedure

 

      The following watch lists contain stock candidates for consideration.  They are not necessarily trades.  Categories include checklists for insider buying and cash rich companies, as well as, filters that employ stock picking methods used by master traders.  The information is not meant to imply any endorsement or sponsorship by these master traders.

 

      Current stock rankings are based on the degree to which stocks are overbought or over sold based on the 28-period Williams %R for the past two trading days.  Two columns are labeled “%R1” and “%R2” with “%R2” indicating the Williams %R for the most recent trading day.  Of course, values more negative than -80 are oversold and those less negative than -20 are overbought.

 

      One should keep in mind that oversold stocks are not necessarily ready to move upward.  They could very well be in a condition of continuous decline.  The lists are meant to serve as a starting point for further due diligence. 

 

      A column labeled “Monthly % Gain” was added to show the inverse relationship between price action over the past month and the Williams %R.  The change from a 10-period Williams %R with a weekly percent change to a 28-period Williams %R with a monthly percent change was done to reflect a longer term view.

 

      The “Reference” is the date that a stock passed the indicated filter and was first added to or returned to the list.  The “% Change” is how the price has changed since the reference date.  Stocks that are down 10% or more after being listed are removed for a period of about two months.  The “% from Max” is the percentage the price has declined from the maximum price reached since the reference date.  Stocks that are down 8% from their highs after being listed are flagged in yellow.  Stocks that are down 15% from their highs after being listed are removed for two months.  More information on filters is available on the web site.

 

      A performance summary of filtering techniques for checklists and master trader selection methods is given in Table 3A. 

 

 

Table 3A

Stock Filter Summary

Filter

Avg. % Change Since Listed

Avg. % Change Monday

1 Month

1 Week Ago

2 weeks Ago

3 Weeks Ago

4 Weeks Ago

Net Insider Buying

4.5%

0.7%

2.2%

0.8%

4.4%

-1.6%

-1.0%

Cash Rich Companies

2.0%

-0.5%

-5.4%

-0.3%

-1.6%

-6.3%

2.6%

Price to Free Cash Flow

9.4%

-0.5%

-2.7%

-1.8%

1.6%

-0.1%

-2.3%

Growth Momentum

13.4%

0.6%

-5.6%

1.1%

1.2%

-5.6%

-2.3%

Lynch

24.9%

0.7%

-5.6%

1.3%

-0.4%

-3.1%

-3.4%

Buffett

22.7%

0.8%

-4.3%

1.0%

1.3%

-3.3%

-3.2%

Graham

8.8%

1.0%

0.2%

2.7%

2.3%

-1.9%

-2.8%

Templeton

4.2%

0.1%

-2.4%

0.5%

0.2%

-1.3%

-1.9%

 Zweig

5.2%

0.4%

-4.3%

2.0%

1.1%

-2.6%

-4.6%

Average

10.6%

0.4%

-3.1%

0.8%

1.1%

-2.9%

-2.1%

 

 

Key

Passed Recent Filter

Price declined by half of stop loss setting

Oversold  based on  Williams %R  (%R2 is most recent)

Overbought based on Williams %R  (%R2 is most recent)

 

 

      Companies that have experienced net insider buying within the past 6 months of 5% or more of issued stock are listed in Table 3B.  These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  This list is a mixture of stocks that are optionable and those that are not.

 

 

Table 3B

Net Insider Buying Check List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

TRGT

06/02/06

0.0%

Targacept , Inc.

Health Care

Biotechnology & Drugs

0.0%

-8.2%

-78

-85

EQS

04/13/06

0.0%

Equus II Incorporated

Financial

Investment Services

-5.9%

0.1%

-68

-67

ULBI

06/02/06

0.0%

Ultralife Batteries, Inc.

Technology

Electronic Instruments & Controls

0.0%

-0.2%

-77

-57

LXU

12/23/05

31.8%

LSB Industries, Inc.

Basic Materials

Chemical Manufacturing

-7.0%

-2.7%

-55

-55

NAHC

05/12/06

1.2%

National Atlantic Holdings Corporation

Financial

Insurance (Property & Casualty)

-0.3%

3.1%

-34

-38

RGNC

05/26/06

2.4%

Regency Energy Partners LP

Utilities

Natural Gas Utilities

0.0%

1.4%

-48

-34

MOCC

05/26/06

-1.2%

Moscow CableCom Corp.

Services

Broadcasting & Cable TV

-1.5%

11.7%

-18

-18

ACME

05/12/06

1.6%

ACME Communications, Inc.

Services

Broadcasting & Cable TV

0.0%

5.8%

-22

-14

 

 

      Companies with net cash positions that comprise at least 40% of their share price are listed in Table 3C.  These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  Again, this list is a mixture of stocks that are optionable and those that are not.

 

 

Table 3C

Capital Rich Companies Check List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

HRAY

05/19/06

-6.3%

Hurray! Holding Co., Ltd. (ADR)

Services

Communications Services

-6.3%

-27.5%

-92

-92

ACTS

05/05/06

-2.3%

Actions Semiconductor Co., Ltd. (ADR)

Technology

Semiconductors

-9.6%

-2.3%

-45

-53

WSC

03/11/06

-1.9%

Wesco Financial Corporation

Conglomerates

Conglomerates

-3.9%

-1.3%

-44

-50

SCIX

04/07/06

18.5%

Scailex Corp., Ltd.

Technology

Computer Networks

0.0%

9.4%

-4

-4

 

 

      Table 3D was added to contain companies having a low price to free cash flow (P-FCF) less than 5.  Companies having P-FCF less than 10 are typically capable of financing the purchase of all their outstanding shares of stock.

 

 

Table 3D

Price to Free Cash Flow Companies Check List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

KWD

03/04/06

17.5%

Kellwood Company

Consumer Cyclical

Apparel/Accessories

-7.4%

-2.6%

-65

-82

FIS

05/12/06

1.4%

Fidelity National Information Services

Services

Business Services

0.0%

0.6%

-61

-47

 

 

      For the Peter Lynch style screen in Table 3E, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30. 

 

 

 

Table 3E

Peter Lynch Value Watch List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

TM

12/13/04

46.1%

Toyota Motor Corporation (ADR)

Consumer Cyclical

Auto & Truck Manufacturers

-11.3%

-11.3%

-80

-80

PKX

02/17/06

17.3%

POSCO (ADR)

Basic Materials

Iron & Steel

-12.3%

-0.5%

-73

-75

CAE

04/21/06

-5.5%

Cascade Corporation

Capital Goods

Misc. Capital Goods

-8.2%

-6.5%

-68

-68

KOF

04/29/05

39.7%

Coca-Cola FEMSA, S.A. (ADR)

Consumer Non-Cyclical

Beverages (Non-Alcoholic)

-7.4%

-5.7%

-49

-49

AZN

02/03/06

16.7%

AstraZeneca PLC (ADR)

Health Care

Major Drugs

-1.9%

0.3%

-37

-37

BTI

08/12/05

27.4%

British American Tobacco (ADR)

Consumer Non-Cyclical

Tobacco

-1.7%

-1.7%

-32

-32

SKM

02/07/05

32.7%

SK Telecom Co., Ltd. (ADR)

Services

Communications Services

-3.4%

-2.2%

-32

-32

 

 

      For the Growth Momentum screen in Table 3F, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30. 

 

 

Table 3F

Growth Momentum Watch List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

HCC

10/21/05

12.2%

HCC Insurance Holdings, Inc.

Financial

Insurance (Property & Casualty)

-12.4%

-8.7%

-95

-95

JEF

04/21/06

-9.9%

Jefferies Group, Inc.

Financial

Investment Services

-12.7%

-11.6%

-73

-73

BHP

09/09/05

35.8%

BHP Billiton Limited (ADR)

Basic Materials

Metal Mining

-12.9%

-10.5%

-68

-72

SYT

04/08/05

28.0%

Syngenta AG (ADR)

Basic Materials

Chemical Manufacturing

-11.2%

-5.9%

-65

-65

BEN

11/04/05

-0.5%

Franklin Resources, Inc.

Financial

Investment Services

-12.4%

-3.1%

-59

-59

CSR

05/12/06

-5.3%

Credit Suisse Group (ADR)

Financial

Insurance (Life)

-5.3%

-7.1%

-59

-59

KCS

05/12/06

-3.0%

KCS Energy, Inc.

Energy

Oil & Gas Operations

-3.0%

-6.9%

-55

-55

CHE

05/06/05

39.9%

Chemed Corporation

Services

Business Services

-11.4%

-3.8%

-67

-52

ENDP

02/17/06

2.3%

Endo Pharmaceuticals

Health Care

Biotechnology & Drugs

-8.8%

3.1%

-51

-51

GS

04/21/06

-7.1%

Goldman Sachs Group, Inc.

Financial

Investment Services

-7.1%

-6.3%

-48

-48

ET

10/21/05

36.7%

E*TRADE FINANCIAL Corporation

Financial

Investment Services

-11.3%

-6.4%

-47

-47

MDR

05/12/06

N/A

McDermott International

Capital Goods

Construction Services

N/A

-1.7%

174

-31

GRMN

03/03/06

31.5%

Garmin Ltd.

Technology

Communications Equipment

-0.4%

2.6%

-21

-21

 

 

      The filter for Warren Buffet style stock picking in Table 3G is for the intermediate to long term.  Two requirements were added.  One was to include only optionable stocks in order to find LEAPS opportunities.  The other requirement was to include only those stocks having a PE of 17 or less.

 

 

Table 3G

Warren Buffett Value Watch List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

ANF

03/03/06

-2.8%

Abercrombie & Fitch Co.

Services

Retail (Apparel)

-10.8%

-8.4%

-78

-78

RCII

10/21/05

53.3%

Rent-A-Center, Inc

Services

Rental & Leasing

-12.2%

-12.2%

-78

-78

RS

04/15/05

117.8%

Reliance Steel & Aluminum

Basic Materials

Misc. Fabricated Products

-14.3%

-10.4%

-71

-71

CCRT

12/30/05

0.7%

CompuCredit Corporation

Financial

Consumer Financial Services

-7.9%

-5.7%

-70

-70

RI

09/02/05

31.3%

Ruby Tuesday, Inc.

Services

Restaurants

-11.6%

-5.8%

-69

-69

APA

05/12/06

-4.3%

Apache Corporation

Energy

Oil & Gas Operations

-4.3%

-8.2%

-77

-69

AH

02/03/06

14.3%

Armor Holdings, Inc.

Capital Goods

Aerospace and Defense

-10.5%

-10.3%

-66

-66

NAT

05/12/06

1.6%

Nordic American Tanker Shipping Limited

Transportation

Water Transportation

0.0%

-7.8%

-65

-55

NUE

04/15/05

120.9%

Nucor Corporation

Basic Materials

Iron & Steel

N/A

-7.9%

-53

-53

AEOS

03/10/06

10.1%

American Eagle Outfitters

Services

Retail (Apparel)

-4.6%

-2.8%

-51

-51

ABFS

04/29/05

38.9%

Arkansas Best Corporation

Transportation

Trucking

-4.1%

0.9%

-43

-43

OXY

03/03/06

6.2%

Occidental Petroleum Corporation

Energy

Oil & Gas Operations

-5.8%

-3.4%

-40

-40

JBHT

03/31/06

15.7%

J.B. Hunt Transport Services, Inc.

Transportation

Trucking

-3.5%

-3.1%

-39

-39

HDI

10/14/05

2.9%

Harley-Davidson, Inc.

Consumer Cyclical

Recreational Products

-9.3%

-0.4%

-38

-38

STR

05/26/06

7.0%

Questar Corporation

Utilities

Natural Gas Utilities

0.0%

-3.9%

-37

-37

BTI

12/30/05

14.0%

British American Tobacco (ADR)

Consumer Non-Cyclical

Tobacco

-1.7%

-1.7%

-32

-32

FNF

10/21/05

14.4%

Fidelity National Financial

Financial

Insurance (Property & Casualty)

-3.8%

-2.6%

-30

-31

UNT

03/03/06

10.7%

Unit Corporation

Energy

Oil & Gas Operations

-2.7%

6.0%

-45

-27

NKE

09/23/05

0.6%

NIKE, Inc.

Consumer Cyclical

Footwear

-10.6%

0.3%

-23

-23

IMO

06/02/06

0.0%

IMPERIAL OIL LTD

Energy

Oil & Gas - Integrated

0.0%

9.6%

-13

-13

 

 

 

      Stocks from Benjamin Graham’s style of utility investing are listed in Table 3H.  A requirement was added to include only those stocks having a PE of 17 or less. 

 

 

Table 3H

Benjamin Graham Utility Watch List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

EON

03/10/06

4.6%

E.ON AG (ADR)

Utilities

Electric Utilities

-6.0%

-4.1%

-57

-57

WPS

05/26/06

2.3%

WPS Resources Corp

Utilities

Electric Utilities

0.0%

-1.8%

-40

-40

SRE

01/10/05

27.6%

Sempra Energy

Utilities

Natural Gas Utilities

-5.4%

-1.8%

-28

-28

ATO

04/01/05

1.1%

Atmos Energy Corporation

Utilities

Natural Gas Utilities

-8.5%

-0.7%

-23

-23

WGL

12/23/05

-3.9%

WGL Holdings, Inc.

Utilities

Natural Gas Utilities

-6.8%

-1.0%

-23

-23

PGN

01/10/05

-3.1%

Progress Energy, Inc.

Utilities

Electric Utilities

-6.6%

-1.0%

-21

-21

VVC

03/03/06

4.1%

Vectren Corporation

Utilities

Natural Gas Utilities

-1.7%

-1.0%

-15

-15

UGI

12/30/05

17.0%

UGI Corporation

Utilities

Natural Gas Utilities

0.0%

3.9%

-5

-5

OKE

11/11/05

29.4%

ONEOK, Inc.

Utilities

Natural Gas Utilities

0.0%

6.7%

-2

-2

UU

06/10/05

5.2%

United Utilities PLC (ADR)

Utilities

Electric Utilities

0.0%

0.4%

-2

-2

ATG

10/21/05

12.1%

AGL Resources Inc.

Utilities

Natural Gas Utilities

0.0%

2.4%

-1

-1

 

 

 

      Optionable stocks from John Templeton’s style of investing are listed in Table 3I. 

 

 

Table 3I

John Templeton Watch List

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

Monthly % Gain

%R1

%R2

RYL

06/02/06

0.0%

The Ryland Group, Inc.

Capital Goods

Construction Services

0.0%

-23.0%

-57

-95

LEN

05/19/06

-1.4%

Lennar Corporation

Capital Goods

Construction Services

-1.9%

-1.9%

-92

-92

SPLS

05/26/06

0.6%

Staples, Inc.

Services

Retail (Specialty Non-Apparel)

0.0%

-9.2%

-84

-84

SPF

05/12/06

-0.9%

Standard Pacific Corp.

Capital Goods

Construction Services

-2.9%

-7.4%

-73

-78

SNV

05/27/05

-9.5%

Synovus Financial Corp.

Financial

Regional Banks

-11.6%

-4.9%

-77

-77

CHD

11/18/05

7.8%

Church & Dwight Co., Inc.

Consumer Non-Cyclical

Personal & Household Products

-5.0%

-2.4%

-75

-75

GTRC

03/03/06

-0.4%

Guitar Center, Inc.

Services

Retail (Specialty Non-Apparel)

-9.0%

-7.4%

-74

-74

AMSG

10/14/05

8.2%

AmSurg Corp.

Health Care

Healthcare Facilities

-7.5%

2.6%

-66

-66

MMM

05/12/06

-2.1%

3M Company

Conglomerates

Conglomerates

-2.7%

-2.9%

-62

-62

ORLY

01/20/06

6.1%

O'Reilly Automotive, Inc.

Services

Retail (Specialty Non-Apparel)

-11.2%

-3.2%

-55

-44

HHS

10/28/05

6.4%

Harte-Hanks, Inc.

Services

Printing & Publishing

-9.7%

-0.6%

-43

-43

GBCI

05/05/06

-2.8%

Glacier Bancorp, Inc.

Financial

Regional Banks

-2.8%

-2.8%

-40

-40

DGX

08/19/05

14.5%

Quest Diagnostics Incorporated

Health Care

Healthcare Facilities

-2.5%

0.9%

-39

-39

HDI

02/24/06

-3.6%

Harley-Davidson, Inc.

Consumer Cyclical

Recreational Products

-5.1%

-0.4%

-38

-38

UNH

05/26/06

9.0%

UnitedHealth Group Inc.

Financial

Insurance (Accident & Health)

0.0%

1.3%

-39

-37

LOW

11/18/05

-3.8%

Lowe's Companies, Inc.

Services

Retail (Home Improvement)

-8.6%

-2.8%

-33

-33

FLIR

04/28/06

4.1%

FLIR Systems, Inc.

Capital Goods

Aerospace and Defense

-3.6%

4.6%

-33

-33

MIK

12/30/05

10.1%

Michaels Stores, Inc.

Services

Retail (Specialty Non-Apparel)

-0.5%

-0.4%

-19

-19

CPS

05/27/05

13.7%

ChoicePoint Inc.

Services

Business Services

-1.6%

2.0%

-15

-15

JNJ

02/17/06

2.8%

Johnson & Johnson

Health Care

Major Drugs

-0.4%

0.1%

-11

-10

GISX

12/30/05

21.0%

Global Imaging Systems, Inc.

Technology

Office Equipment

0.0%

7.9%

-4

-4

EWBC

12/30/05

12.1%

East West Bancorp, Inc.

Financial

Regional Banks

0.0%