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Jelly Roll Capital Equity Research |
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Market Analysis, Education, and Wall Street-Quality Stock Reports |
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Top Stocks for the Month of June |
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About once every month I rerun a data model that does a quantitative evaluation of about 1,600 stocks. The model gathers the names, prices, and latest financials, does some calculations, and then generates a power ranking from (for this update) stock #1 to stock #1575. While not perfect, this model is very useful for generating leads into some excellent and potentially under-priced businesses. The 25 stocks are: 1. Freightcar America (RAIL) Only a few notes to add to this list, which is obviously energy heavy again: Southern Copper (PCU) is the mining play according to the model, but on a pro forma basis, Freeport McMoRan (FCX Stock Report) would replace Southern Copper. The model, however, does not make such adjustments - both companies appear to be fine, but FCX has been a personal recommendation. For more information on Freeport, I recommend consulting the stock report that accompanies the linked page above. Very few of the companies given above really excite me, but the one that jumps out is Accenture (ACN). Accenture is a consulting and outsourcing firm whose business is essentially to make other people’s businesses better. For once, a company can point to itself and say “do as I say, and as I do.” For Accenture - a $25 billion company - to have the profitability and efficiency ratios it does indicates what an incredible internal business model the company utilizes. For over one dozen points, I have been arguing for ACN to have a higher multiple than it does because it is one of the best companies on the planet and it is the leader in a vital and promising industry, and I plan on continuing to promote that thesis until this stock gets a multiple of 12x free cash flow at a minimum - that is 25% higher than the 9.6x FCF multiple it currently has. ACN trades for 20x earnings, why don’t people look at the real cash that this company generates, in addition to the cash that is swelling their balance sheet? ACN is a $50 or $60 stock in my book. I would be cautious with Western Refining (WNR). The stock has had a big run-up of about 20% in the last two weeks or so since I bought it - I will admit to some lucky timing there - and typically a strong rally tends to fade a bit and pull back. Still, it did make the top 25 despite the new elevated valuation… but if the recent price movements have you spooked, you can turn to one of the other energy stocks or Occidental (OXY) or my preferred refining stock, Valero (VLO), both of which just missed the top 25. Finally (if you’ve read this far), I will be on vacation this next week, so the potential to update the site will be slim to none considering where I will be. The following week I come back will be an update on past performance numbers, and a new stock report should be coming along soon. Best of luck to all, and when the market crashes, keep your cool and start bargain hunting. |
