Over Valued:
EIFZF, PM, UNS
Fairly Valued:
AVA, EMR, GIS, HNZ, ITW, KO, LTC, OMI, PEP, PG, SBSI, SNH, T
Under Valued:
ABT, COP, JNJ, NSC
Significantly Under Valued:
BWP, CVX, INTC, LINE, RTN, TD
I really like FAST graphs as a tool to quickly determine valuations. The fact that they cover foreign stocks like TD and EIFZF is just fantastic. They also have a technique which is used to value MLPs and REITs. Awesome! In the past I've mostly looked at P/Es, yields, dividend discount calculators, market conditions, and my gut feeling (I've been watching these stocks for a few years) to determine entry prices. FAST Graphs takes it a little further into a format which is easy to use and a bit more scientific. Taking emotions and hunches out of investing is good.
The downside is that this service is not free :( I really hate to add $10 a month to my budget, but I think in this case it's worth it.
Check it out guys! You can sign up for a 2 week trial and cancel if you don't like it!
I forgot to mention that all the above examples are on a 15 year scale. When I was playing around and made it 5 years some of those companies become overvalued. KO is an example. It's fairly valued based on 15 year historical p/e. I'm assuming this is because it includes the dot.com bubble when it's p/e was sky high. Using a 5 or 10 year period might be more realistic.
ReplyDeleteI am familiar with FAST Graphs through many articles on Seeking Alpha. I think it's a great tool for visualizing differences in valuation. I have considered signing up for the service, but I have held back for two reasons:
ReplyDelete(1) I don't know whether my frequency of use would justify the monthly subscription fee. Once I look at the graphs for all the stocks in my portfolio and on my watch list, I am not sure how much I would use the service on a regular basis.
(2) I have found that the valuation judgments based on FAST Graphs are often in agreement with my own judgments based on independent analysis. Thus, it is unclear how much added value it would provide me above and beyond my own due diligence.
That said, it is something I will continue to think about, given that it is the best valuation tool I have seen anywhere.
Good points D. I think we've all done pretty good jobs buying stocks at favorable valuations. I've slipped up here and there, but overall I'm happy. I've thought about it some more and now plan to do a quarterly review with FAST graphs. That way I'm only paying $40/year instead of $120. I can save the graphs and determine buy prices in a more scientific way.
DeleteCI,
ReplyDeleteI might have to sign up for the trial and see how I like it. I also would hate to add $10 to my monthly budget, but considering that it's already at a pretty low baseline it might be worth it. It wouldn't take much in terms of investment gains to make the service worth it. However, like DGM pointed out, if independent analysis already leads you to appropriate and approximate valuations (using research and DCF, DDM valuation) then the F.A.S.T. graphs could possibly be overkill.
Definitely an interesting service. I'll have to take a look. I know Morningstar and others offer similar investor services with valuations.
Best wishes!
Really nothing to lose trying as long as you remember to cancel. I think I'm going to do quarterly reviews with FAST graphs instead of maintaining a monthly subscription.
DeletePersonally I find a lot more value in FAST graphs than calculators. The calculators are hit and miss for me. They tend to have trouble with utilities, MLPs, REITs, and anything with a high div growth (the dividend discount calculators anyways). I find that I have to use a high discount rate for some stocks to make sense and lower rates for others. I'd rather it be the same for all. The advantage with the calculators is that you can get a precise dollar value and then factor in a margin of safety.
You will get differences between the two. PM is overvalued on FAST graphs and undervalued using the dividend discount model. KMI makes no sense on FAST graphs since it wasn't publicly traded for a while.
Anyways I'd be interested in your opinion if you decide to try it.
FAST Graphs seems like an interesting resource. However, I believe that information should be readily accessible and free. I use excel to compile 10+ years worth of financial data to determine a company's valuation. I only update the data once per year since it's calculated on an annual bases. This is the site if you're interested.
ReplyDeletehttp://www.advfn.com/p.php?pid=financials&btn=start_date&mode=annual_reports&symbol=NYSE%3AKO&start_date=14
Morningstar is a good resource too, but you have to be a paid subscriber to access the premium content, which I'm not. =P
If you know some basic accounting and financing then I suggest doing the work yourself. Plus you can save $120 annually. That's my take, cheers!
By the way, if you want I can send you the data for my portfolio. I own some of the companies in your portfolio.
Yes you are right, it is possible to do this on your own. It's not my area of expertise but I suppose I could figure it out.
DeleteI'll check out the site.
I'm interested to see how you use these CI. I'm familiar with the graphs from SA. Let us know if you add to one of your positions that FAST graphs show to be undervalued or you open up a new position from data you collect from FAST graphs.
ReplyDeleteAlthough I tend to agree that keeping expenses low is the best approach, I also try to look at my investment activity as a business. Some expenses are part of the business, but if they provide you a greater profit then they are justifiable. Think of it as R&D!!
I'm still trying to figure out the best way to use 'em. Right now I like to use a 10 year graph because I like to put a stock in historical context when figuring out valuations. However with tech, telecom, and defense companies I'm leaning towards 5 year charts. These types of companies change quicker so data from 10 years might not be as meaningful. Take AT&T. 10 years ago I didn't even have a cell phone. Finally joined the cool kids in 2003! Now a days every has one and even a regular cell phone is out of date. It's smart phones now. The industry has matured.
DeleteStill refining my method, but FAST graphs are worthwhile to me.
FAST Graphs looks like a very powerful tool. However, since it isn't free, I haven't given it a try yet, and would prefer not to have to add another item to my monthly expenses.
ReplyDeleteAs a compromise, what I've tried to do is create my own program to help aid me in my dividend investment/purchases. I've created a tool that will load in a spreadsheet of historical prices, dividends, and process the data to calculate: dividend growth, dividend growth rate, price growth rate, yield on cost, eps growth, etc. It will output an Excel file with all this information.
This isn't a graphing program, but it simply computes data. The user can elect when to start and stop the investment time frame.
Examples of this data collection can be found on my website. Usually, I include this data when I have an update on a new stock purchase (such as INTC).
One catch, is this program does involve some manual work - you have to save the historical prices, dividend data to a spreadsheet first. I don't know how to automatically extract data from the web just yet.
If anyone is interested, feel free to send me a note/e-mail. This program is free of charge, of course.
Sounds interesting. FAST graphs is geared toward figuring out valuations. Is a stock overvalued? Undervalued? How do you know? That is what this is attempting to answer. Now they could simply output the data into a table, but most people (myself included) gain more utility in a graph.
DeleteIt graphs price in relationship to historical p/e (I use operating earnings p/e, but there are others) and a fair value line. In doing so it gives me a reasonable picture as to whether something is under, over, or fairly valued. I'm not sure it's right everytime, but it's the best method I've come across so far.
It's not going to tell you "what" companies, it's going to help you determine "when". That's the hard part of investing!
Do take a look. This is quite powerful.
Its be some times since you wrote this. Are you still using FAST Graphs? Have you compared their estimated undervalued stocks vs what they actually did?
ReplyDeleteI think $10 is way too much for this service. Your quarterly $40 review makes more sense. $120 a yr is extremely expensive compared to $200 for S&P Outlook and 35 reports a month and $129 1st yr with Morningstar.
I guess I'm a bit late responding Haha! Pretty much everything went up the past year. Interesting how RTN performed the best price wise and was significantly under valued at the time. On the other hand BWP was horrible, so much so that I sold it, and it was considered significantly under valued too. It got LINE wrong too, so with that in mind I don't trust it for MLPs, but it appears to work for C-corps.
DeleteIt's only been 14 months and stocks could easily stay under valued longer than that.
I've done quarterly check ups with it and will continue to do so.
FAST Graphs™ Announces Reinvestment of Dividend Performance Calculation Option
ReplyDeleteFAST Graphs™ is proud to announce the addition of our reinvestment of dividend option for calculating performance. Now subscribers can continue to view performance separately as they have in the past or check the Reinvest Dividends at EOQ (End of Quarter) box and redraw the chart. There are additional calculations that are automatically provided, such as the company’s average dividend growth rate, and others.
For a more detailed explanation of how to take advantage of this exciting new feature, follow this link to our tutorial video. http://www.youtube.com/watch?v=1WGq3tm5oGA&feature=youtu.be
FAST Graphs™
NEW FEATURE: CUSTOM P/E RATIO OVERLAY
ReplyDeleteAt the request of several subscribers, F.A.S.T. Graphs™ is pleased to announce a new feature to our research tool. In the tan navigational bar to the left of the graph, and located just under our checkbox for the Normal P/E Ratio Line, we have added a white rectangular box labeled Overlay P/E Ratio. This allows subscribers to add their own custom theoretical P/E ratio line to the F.A.S.T. Graphs™. This will enable subscribers to add a third P/E ratio line of their choosing to the F.A.S.T. Graphs™.
There are several utilities that this new feature provides subscribers. For starters, it will allow longer-term graphs to be drawn where the normal P/E ratio may not appropriately apply for recent history. Microsoft (MSFT) would be a representative example. If you draw a 15-year graph on Microsoft, the normal P/E ratio calculation is 27.5. Although this is mathematically correct, it is skewed due to the extremely high P/E ratios that Microsoft was trading at in 1999 and 2000. In other words, Microsoft’s recent stock price never trades at a P/E of 27.5.
With our new custom P/E ratio overlay, subscribers can now add a third P/E ratio line that would reflect Microsoft’s normal P/E ratio over the last five years. To illustrate, type in the number 12 into the overlay P/E ratio box, and a third magenta colored P/E ratio line will be added to the F.A.S.T. Graphs™. An additional utility of this feature is the ability to draw a range of P/E ratios that can be reviewed to determine a normal range of P/E ratios that may apply to any given company.
You can also draw a target P/E ratio calculation in order to determine what price a given stock would trade at if it were to trade at that P/E ratio. Subscribers should recognize that this custom feature allows you to draw arbitrary P/E ratios on a F.A.S.T. Graphs™. Therefore, you are free to allow your imaginations to create any P/E valuation or level of your choosing. Finally, to remove the line, simply delete the number that is typed into the box.
On behalf of the entire F.A.S.T. Graphs™ team, we hope you find this new feature useful. Any feedback would be greatly appreciated.
Sincerely,
The F.A.S.T. Graphs™ Team
I would suggest to you that if you are a stock trader, and don't feel that you can cough up $10 a month to pay for this service, you should just put your money in a general Vanguard fund, and forget it.
ReplyDelete#1. I'm not a stock trader (I take offense to that notion). #2. I can easily afford a fixed cost of $10 per month, but I HATE fixed expenses. #3. index funds are appropriate for most investors, however I am an income investor and index funds are not appropriate for my goals (they better suit people who want total return). #4 I plan to use FAST graphs as my main valuation tool when I deploy to Afghanistan next year, it saves time.
DeleteThat is really the point. In my opinion, most of these remarks about the cost do not include any value of one's time. At $10 or even $40 per month how much of your time is spent duplicating the same information manually or using other methods. If you look at it that way FAST is cheap. I always include my hourly wage or billing rate when evaluating anything I am interested in, especially service fees.
DeleteMany comments here about the $10 per month cost , seriously ? Most people lose that much in loose change in their couch each year. I think FAST Graphs is a good source for any investor with a meaningful individual stock portfolio to run a monthly check on their portfolio as well as stocks that are on their buy list. It is especially useful when stocks are selling off and the emotional tendency of the majority of investors is to hunker down in cash. FAST Graphs will give you an objective , easy to see view , of undervalued stocks and will pay for a lifetime of fees with one or two good , timely picks.
ReplyDeleteI agree with Anonymous. With what I spend on Scottrade trades, TD Ameritrade trades, WSJ, Barron's, finviz, and Morningstar (MSI, MDI, and Premium!), $10/month doesn't seem like much. Also, check what they are taking out of you on your 401K!
ReplyDeleteTo understand the value of FASTgraphs you have to realize that it is not a stock picking service or investment advisory newsletter (like Motley Fool) Instead it is a fundamental analyst charting service. As Chuck Carnevale said himself, you can do all of this yourself, it’s just very tedious and very time consuming. Take for example the TSX it’s currently deep into bear territory but to figure out what stocks are true diamonds in the rough and what ones are true dogs you’d have to spend hours researching and then charting everything. I simply don’t have time for that. Where I don’t think FASTgraphs would be helpful if you simply dollar cost average your investments. If you the only research you do is to check the price of BCE before sending off your quarterly DRIP investment cheque than no it’s not really worth it. But if you’re an active investor as I am the 10 dollars a month is money well spent.
ReplyDeleteRob
Any updates to this post?
ReplyDelete