This is the first entry into the blog.
I currently have two open positions They are;
KORS which I entered on 5/27/2015 at an average price of 46.60 and
URI which I entered on 5/29/2015 at 88.70
The S&P’s current P/E(price to earnings ratio) is over 21. That means that on average the 500 stocks in the S&P 500 are worth $21.00 for every dollar of past(or trailing) earnings.
I am a conservative trader looking for stocks that are undervalued. A 15 P/E is a more historical average and that is what I use as a valuation metric to determine value when looking at an equity.
(Yes, the market is overvalued.)
There is more involved which I will get to in the future.
KORS reported earnings on the morning of 5/27/2015. They missed their earnings by a penny(.90 versus.91 consensus) but were inline on the sales. The problem cropped up with their guidance for next quarter and next year. They guided the quarter from consensus of 1.03 to .74 to .78 cents. They lower FY2016 guidance from $4.71 to $4.40 to $4.50.
The forward guidance gives me a value of $66.00 which is my target.
I have three target prices on KORS. They are $53.00, $59.90 and $66.00. My plan is to sell half or more of my holding at $53.00 and the rest at $59.90.
URI took a huge dump because the CEO said they were having a soft quarter at a conference. URI has support at $87.00 and $88.50. It dropped to $87.89 and I bought it on the bounce. My target here is $94.25 although URI could go back over $100.00.
URI”s valuation is $110.70(15 x 7.39 trailing earnings = 110.70) but this will be muted in the short term by the CEO’s comments.