March Webinar: Options Part 5
Finding Fundamentally Strong Companies, Part 3
Who Belongs to that 800 Phone Number?
InvestEd 2015: $20 Savings ends 3.31.15
Richmond VA, June 12-14, 2015
InvestEd 2015 registration is $389 until March 31, 2015, and includes a complete set of paper handouts. All attendees receive the CD of handouts and supplementary materials. Beginning April 1, 2015, registration is $409 and excludes the paper handouts. Register Now!
Do you have friends or family members who are new to investing? Bring them along with you to InvestEd 2015 in Richmond, Virginia, June 12-14, 2015. Enroll them in our outstanding Newbies Program, a logical progression through introductory classes designed for the novice investor. Many of our Newbies from prior conferences have gone on to attend InvestEd conferences and have become successful investors who continue to increase their investing knowledge.
Come early and attend our computer/technology sessions on Friday afternoon, a bonus offering for no additional fee.
InvestEd is a cutting-edge investor education conference that introduces new topics to enhance our traditional offerings. We offer a staffed computer lab where attendees may work on stock studies or become better acquainted with websites mentioned by instructors.
We continue to run our pioneering, open-topic Cyber Cafe on Friday and Saturday evenings for all InvestEd Conference attendees. The Cyber Cafe is complimentary to all attendees and offers an opportunity to interact with fellow investors in an informal atmosphere.
Conference attendees have the opportunity to speak directly with our instructors in the Cyber Cafe, gain additional information related to their sessions, ask questions, and discuss aspects of investing that don’t quite fit into Q & A at the end of session presentations. Often, the Cyber Cafe is cited by attendees as a favorite educational and social happening at which enhanced investor education is achieved in a relaxed, informative, and entertaining manner.
InvestEd 2015 does not stop at merely having a large set of topics presented. You will enjoy traditional sessions in addition to new and dynamic material. The sessions range across all levels of investor experience so that all attendees will be challenged, each to the attendee’s individual abilities and experience.
Our all-volunteer staff and instructors eagerly look forward to your arrival in Richmond. Our Gold Level sponsors (Aflac, American Water, Duke Energy, GE, Procter & Gamble, The Shell Group, and FINRA) believe in our mission and in the importance of providing investor education to our conference attendees. Their corporate representatives look forward to meeting you, having you become better acquainted with their companies, and answering your questions.
You can’t afford to miss InvestEd 2015! Please join us in Richmond this June 12-14 and enjoy the education and our famous camaraderie as we increase our investing knowledge together. We are looking forward to welcoming you to our best InvestEd ever. All we need for that to happen is YOU! Register Now!
InvestEd Inc. Free Webinar
Options Part 5
Sunday, March 29, 2015
8:00 PM-9:00 PM ET / 5:00 PM-6:00 PM PT
Instructor: Saul Seinberg
This month's webinar deals with finding stocks that are appropriate for option trading. In addition to over-writing, a strategy based on fundamentals and a strategy based on Value Line metrics will be described using appropriate examples. Attendees may review webinar recordings for the previous four parts of the series by logging into InvestEd's Online Education portion of the website.
Register now to attend this InvestEd Inc. free online investor education webinar. Space is limited.
Saul is an InvestEd Inc. advisory director and a conference instructor. A former vice president for education of InvestEd, he teaches at local through national investor education events. With degrees in electrical engineering and law, Saul spent most of his career as a corporate attorney. In addition, he served as an adjunct professor at Albany Law School in New York.
Finding Fundamentally Strong Companies, Part 3
Part 1 of this article introduced the investor to the nine criteria that comprise the Piotroski F-score. In Part 2 of the article, Erica shared information about the structure, performance, and general results of the screener. This month, in the final part of the article, she displays and discusses the screener results when breaking out each of the S&P sectors.
Screener Results by Sector
Now let's go over the 40 stocks sector by sector to see if any patterns emerge. I will use market cap, P/E Sector Decile, 5-year Return, 5-Year Return versus the S&P, and 5-Year Return versus the sector.
The stocks in Basic Materials and Communication Services, shown in the Chart 1 above, outperformed their sectors, but underperformed the S&P, so clearly the problem was a sector problem, not a problem with the individual stocks.
Consumer Defensive (Chart 2 above) tells a similar story, but with one of the three stocks (ORKLY) doing (very) poorly.
Consumer Cyclical in Chart 3 below shows us the opposite picture. In the table below, you can see from the similarity between the 5-year Return vs the S&P and the 5-year Return vs Sector that the Consumer Cyclical sector had a return similar to the S&P in the past five years.
However, all but one of the Consumer Cyclical stocks (GPK) found through this screener underperformed both their sector and the S&P 500 in the five year time period, and we see another micro-cap stock (NILE) with the worst performance. Despite the fact that the Piotroski typically finds strong companies, given this information, I may stay away from the stocks it gives me from the Consumer Cyclical sector.
The Energy stocks, as seen in Chart 4 below, are a mix. The sector as a whole underperformed the S&P, and while CVR Energy (CVI) shot the lights out with a 5-year return of 336.3%, the other stocks in this sector, both mid cap and small cap, are underwhelming.
Financial Services, as seen in Chart 5 below, is polarized with one stock (AMG) doing really well and one (EZPW) doing really poorly. Healthcare, also seen in the table below, is similar: CSLLY handily outperformed its sector and the S&P, but MMSI was down 6.5% in the past five years and down 97.4% from the S&P.
Interesting to note is that both the poorly performing stocks in Financial Services and Healthcare are micro caps. Here we see the high risk, but without the hefty reward that we saw from Rockford in an earlier example. On the flipside, the stocks that did very well in these sectors were both large cap.
Six of the eight stocks in Industrials outperformed the S&P, even while the sector underperformed, as shown in Chart 6 below.
This leads me to believe that the Piotroski could be used to find strong stocks in the Industrials sector. Of the two that underperformed, COLDF came in a little under its sector and significantly under the S&P, and CKP did very poorly against both benchmarks. Additionally, both of these underperformers are on the smaller side, and CKP is another micro-cap stock whose price performance failed spectacularly.
And in Real Estate ...
Only one Real Estate stock passed the screener (CXW), as is noted in Chart 7 above. This stock outperformed its sector over the past five years by 17.9%, and it came in just a hair over the S&P. With a sample size of one, I'm not comfortable extrapolating to a larger trend about the sector as a whole, but I'll note that the stock is a mid-cap company.
Lastly, Technology ends up looking pretty respectable in this screener, as seen in Chart 8 below.
Though the sector itself underperformed the S&P over five years, four of the six tech stocks outperformed the S&P, so perhaps the Piotroski screener has a nose for good tech stocks.
Now that I have the general rundown of the sectors, I'll try to find specific stocks that look like they'd warrant more investigation. First, I'll filter out any of them that didn’t outperform their sector over the past five years. This knocks out 17 stocks and brings my list down to 23. I'm concerned about some really little guys in that listing, so I'll remove any stock that has a market cap below $500 million. The small companies are a little too risky for my taste, and the backtest showed that micro caps from this screener were more likely to underperform. That reduction brings my list to 20 stocks. Lastly, I've sorted the list by Price/Earnings Sector Decile so I can see which stocks look like good values within their sectors. These stocks are located in Chart 9 below.
In this view, we see that we have a range of valuations. We have some cheap stocks, like CSL (CSLLY), that have done very well against their sector and the S&P in the past five years, but are still cheap relative to their sector. We also have some expensive stocks, like Premiere Global Services (PGI) (highlighted) that are more expensive and haven't done well against the S&P 500. In fact, this stock barely squeaked by when I screened out stocks that didn't outperform their sectors.
Based purely on valuation (cheaper than the median in their sector) and performance (strong outperformance of both the S&P and their sector), I'd be interested in diving deeper into the following stocks (in no particular order):
- CSL (CSLLY)
- IAC/InterActive (IACI)
- G&K Services (GK)
- Rockwell Automation (ROK)
- Matrix Service (MTRX)
- CVR Energy (CVI)
- Idex (IEX)
- Igate (IGTE)
- Constellation Software (CSU.TO)
- Verisk Analytics (VRSK)
- TIBCO Software (TIBX)
- Corrections of America (CXW)
Many more ways are available to slice and dice these results, and this article only takes a largely aerial view of the stocks as a whole. However, I believe that recognizing overall patterns in screener results can better inform us about how to proceed with further research. Investors should keep in mind that the F-Score is not designed to be the sole consideration when evaluating a company for possible purchase of its stock. Rather it is an additional metric to use when filtering or evaluating stocks, particularly those that are value stocks.
Based on the backtest, I'd stay away from a stock that's been underperforming in the past. Even with the strong financials that the Piotroski screener demands, those financials are not enough to predict a turnaround of a chronically weak stock.
Additionally, the Piotroski seems to be a more reliable indicator for mid- to large-cap stocks. A majority of the stocks that performed the worst were micro caps. The stocks found by the screener in Basic Materials, Communication Services, Industrials, and Technology generally outperformed their sectors. Stocks found in the Consumer Cyclical sector appeared to be weaker.
If you use Piotroski results and weed out the underperformers and the expensive stocks, you should be left with a handful of solid stocks with which you can do more in-depth research. Check this method out for finding some fundamentally strong companies to study.
Come to InvestEd and visit with the Stock Rover representatives. They will present a session on screening and one on using technical analysis to supplement your fundamental analysis.
Erica is the director of education for Stock Rover, an online investment research platform bringing institutional-grade analytics to individual investors. Though relatively new to the investing world, she has learned fundamentals and a value approach to investing through Stock Rover. Erica graduated from Brown University with a bachelor of science in applied math-economics and, prior to joining Stock Rover 2011, worked at the Federal Reserve Board of Governors in Washington DC performing macroeconomic research. When not working, Erica enjoys cooking, biking, and selling on eBay.
Who Belongs to that 800 Phone Number?
An 800 phone number pops up on your caller ID. Hmmm! You are thinking: most likely I don't want to speak with the person on the other end of the line. So, you don't answer. The caller persists. You want to know the identity of this caller, just as I would, suspecting it may belong to a scammer.
Should I answer the call and ask "who's calling, please?" No, I probably don't want to answer the call. And, if my answering machine or voice mail picked up the call, I would not want to return that call because I don't want these pesky callers to know they reached a working number. I have no need for them to know that or to know who belongs to that phone number. But, my curiosity gets the best of me, and maybe (though unlikely), the call is from someone I do want to speak with. How can I find out more about this 800 phone number?
The website 800notes is a directory including unknown phone numbers not published for public viewing. The number calling you may be connected to a current scam, or it may be connected to a legitimate sales group. Either way, probably you don't want to be enticed into answering a call when you do not know who is calling. The 800notes website lets you conduct a reverse phone number search. The website is built by users and updated continually as more people insert phone numbers they question. After entering the 10-digit phone number, you will see comments from others who have also received calls from that phone number, and you may be able to determine who owns the phone number or at least make a decision about whether or not you want to answer it the next time you receive a call from that number.
The website encourages users to report unwanted calls and provides a form for doing that. Your name, which you select, along with your message, will appear among the comments related to the phone number you identify. The more comments collected for a given number, the better users are able to determine if the number is legitimate or is a scam.
You'll need to keep a couple of points in mind. If a scammer has a new phone number, you may be among the first called, so no information may yet be in the 800notes database. Do not assume no information about the phone number is good news. The second caveat to keep in mind is that you may see conflicting comments about a given number. For example, if you check the number 800-266-2278, you will see the first two comments about that number conflict in assessment. Glancing through other comments about this number indicate that some share the opinion that the number is legitimate, but more seem to find it did not come from a legitimate source. While at one time, that number may have belonged to Comcast, the current customer service 800 toll-free number for Comcast is different.
The website menu includes a Forum with discussions about debt collection calls, telemarketing calls, phishing and scam calls, and more. In addition, a tab lets users learn about the most recent trends in calls. An option on both the Forum page and the Latest Trends page is to add a new topic. The menu also includes a News tab where users may view news about FTC actions and related items. The Articles tab brings the user to articles, such as Where to Report Phone Crime. The site includes a variety of videos where users may listen to actual calls.
Users of the site may enter a phone number with any area code. I actually entered my own phone number in the search box and received the message that the site had no reports on my number yet. It invited me to submit my comments about the number to help in identifying the person/group behind the number. On a related website, we are able to view area codes for all areas of the country. A link to this does not seem to appear on the 800notes.com page, but clearly this is part of that overall website. For those curious about the numbering system for area codes, checking Wikipedia will bring the system to light. Another area code locater may be found at AreaCodeLocations.info. The FCC identifies the following as toll free numbers: 800, 888, 877, 866, 855, and 844. But keep in mind that not all scammers use an 8xx phone number. Any number may be suspect. Entering a phone number in 800notes may be helpful in determining whether or not you want to pick up the phone when you do not recognize the number.
The 800 phone numbers seem to be the ones favored by scammers. In addition, based on research by Whitepages, other popular numbers include those in Atlanta area code 404, Birmingham area code 205, Dallas area code 214, Detroit area code 313, Fort Lauderdale area code 954, Houston area code 713, Orlando area code 407, Pennsylvania area code 484, and Washington DC area code 202. More information about this research was published in an online Forbes article.
Sandy is an InvestEd Inc. director and serves as vice president for education. She is lead editor and prepares the general program brochure for the conference. Sandy has helped form investment clubs, presented introductory investing programs, and taught stock study and mutual fund classes at local, regional, and national events. In her leisure time she participates in a line dance group, plays handbells, bridge, and golf, and enjoys a variety of other activities, including investing. Sandy is professor emeritus of kinesiology, Georgia Southern University.
Questions? Contact InvestEd
InvestEd Inc. is a 501(c)(3) non-profit corporation.