Thursday, July 2, 2009

Daily Wrapup For July 2nd

Pre-long weekend, the averages were down sharply, and the morning loss was not partly erased near the end of the trading day. Consequently, the cut-off P/E for the lowest quintile dropped too, and the dividend cutoff rose. For this shady Thursday, the cut-offs were 8.92 and 2.94% respectively.

One more stock made it through the screens than yesterday. Once ETFs, issues yielding 10% or more, and ones with less than 500M market cap were thrown out, ninety-two ended up fitting the above-mentioned criteria. Today's changes in the Bin are dash-listed below:

- Bank of Hawaii Corporation
- Cooper Industries, Ltd.
- FirstEnergy Corp.
- Polaris Industries Inc.
- Spectra Energy Corp.

- AGL Resources Inc.
- Bancolombia SA
- CVB Financial Corp.
- Textainer Group Holdings Limited

As you may have already guessed, all five arrivals got there through P/E compression - a nice way of saying that they dropped 'til they plopped. Of the departures, AGL got out of the list through its P/E compressing more slowly than the lowest-quintile cutoff. Bancolumbia was actually up on the day, so P/E expansion got it out of the Bin. The other two left for a more guessable reason, given the lousy market: CVB and Textainer both saw their market cap shaved to below 500M.

One of the Arrivals, Polaris Industries, shows why the low P/E anomaly is still around. It got killed, dropping 6.05% on a day when all three averages dropped less than 3%. This one's been floating on and off the list recently, and its year-to-date chart looks pretty grim even if what's shown is a wide trading range. Polaris has a really good 10-year return on equity: 42%, if a sum-of decade average is used. Its continuing-operations EPS growth isn't very impressive: 8.947%, using logarathmic regression. Over the last decade, though, it did beat the S&P even if it's no Garmin.

I should disclose that I haven't the best record when it comes to tips. I tipped Tesoro yesterday, only to see the thing get slaughtered to the tune of 5.50% today. The Goldman analyst who had put Tesoro on the "sell" block last Tuesday is going to have a happy July 4th, I'm fairly sure.

That makes for the end of today's Daily Wrapup. Thanks for reading, and enjoy the long weekend if you rate it. There's always hope for Monday...

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