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Monthly Archives: July 2011

Caterpillar, Cummins and the PEG Ratio

July 22, 2011
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Fundamental analysis is any method used to evaluate a company, and by extension, its stock. Fundamental analysis includes just about all types of analysis except chart reading. I found out long ago that reading a stock chart does not suit my scientific approach to investing. As I’ve mentioned a time or three, I need numbers, formulas and tangible results. For the past 25 years, I’ve been using a system designed to find undervalued growth stocks. The system uses the PEG ratio and works remarkably well. Twenty-five years ago, Standard & Poor’s created the PEG ratio to measure the degree...

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Darden Restaurants (DRI): A Three-in-One Stock

July 21, 2011
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Today’s stock comes from the latest issue of the Dick Davis Dividend Digest, where it was recommended by J. Royden Ward, editor of Cabot Benjamin Graham Value Letter. Ward focuses on stocks that are undervalued, using the same system as Ben Graham and Warren Buffett. For his system, a company’s earnings and fundamentals are more important than its chart. So I took notice last week when he recommended Darden Restaurants (DRI). Not only does Ward think DRI is undervalued, the stock also has a decent chart: It gapped up from 50 to 52 at the end of June and...

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Bringham Exploration is Outhustling Major U.S. Oil Stocks

July 20, 2011
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Today I want to discuss some wildly exciting–and controversial–divining underway about a huge domestic oil field prospect you may have heard of: the Bakken. The Bakken is a rock formation in the Williston Basin, which is a geological area that covers North and South Dakota, the eastern third of Montana and part of the abutting Canadian provinces. Geologists have known since the 1950s that the Bakken contains oil, but they believed there wasn’t much that could be recovered. It’s only been in the past few years that technological advances in the oil industry have made extracting crude oil from...

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Whole Foods: A Stock with Long-Term Potential

July 19, 2011
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Today’s stock recommendation comes from Cabot Stock of the Month, one of the best newsletters to get started with Cabot because it gives subscribers an idea of what many of our other advisories have to offer. The stock is Whole Foods Market (WFM) and it was originally recommended in Cabot Top Ten Trader last year. Here’s what Cabot Stock of the Month Editor Tim Lutts wrote about it in May 2010: “One of ace investor Peter Lynch’s favorite business models is the ‘cookie-cutter,’ which simply involves building the same successful store again and again in new places. McDonald’s perfected...

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Things Are More Like They Are Today Than They Ever Were

July 18, 2011
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Things Are More Like They Are Today Than They Ever Were

Now for this week’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here. Things Are More Like They Are Today Than They Ever Were Credited to Dwight D. Eisenhower, the original phrase has an additional word at the end: “Things are more like they are today than they ever were before.” In any event, its truth is unassailable. But what is its utility to investors? It reminds us that while market cycles rhyme, they don’t repeat, and we should guard against the temptation to believe that today’s market—and therefore tomorrow’s—will mirror some market...

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