The best US stocks today that you can buy cheap! (21/7)

by **Starry** on 23 Jul 2006, 04:54

Due to the recent correction, many top US companies have came down in price. There are a lot of bargains out there, but the problem is to find those solid companies with great fundamentals but got beaten down by the irrationality of Mr. Market.

While I do not think that buying US stocks should be a main part of your portfolio, but having some exposure to these top companies maybe good for the diversification of your portfolio. What's more if they can be bought cheap in relative to their fair value. In searching for these companies, my main priority is to hunt for value so that I can buy and forget about them for a good amount of time. It is also my goal to look at all small to large caps so that you can have a good selection of company size depending on what you want. Some of these companies you may have heard of them, some you may not, but they all have a certain growth story in them. I also try to look across different industries so that we can have a list with good diversification across industries

Because there are too many companies to analyse, I decided to seek help by taking analysis from Motley Fool and Morningstar. Motley Fool's recommendations had been trouncing S&P 500 since their inception. Morningstar on the other hand has very good and unbias analysis since they are not a stock broker. Their analysis and star rating have a lot of value investing concepts in it and that suits my style very well. I addition to that, I also I do my own fundamental calculations to verify the recommendations from Motley Fool and Morningstar.

Attached below is a list of the best 22 US companies that can be bought cheap now. To get a place in the list, the company need to be a recommendation from Motley Fool and need to have at least a 4-star rating from Morningstar. However, there are 5 companies that are not from Motley Fool but was included because from my calculations, I thought they were great companies too (they also offer good diversification, for example Johnson and Johnson from the Healthcare sector). Incidentally these 5 companies also coincide with the 5-star rating from Morningstar. (these 5 companies are listed in red to show that they are not from Motley Fool).

Besides just finding companies that coincide with Motley Fool and Morningstar 4/5 star rating, I also decided to add another screen to filter away companies that have a low 5-year ROE record. Some companies may look very good now and earn good recommendations and ratings but their 5-year ROE is low. Which means their growth story has just started recently. For example Motorola. Motorola has a 4-star rating from Morningstar but not a recommendation from Motley Fool and I thought that their 5 year ROE of 1.1% is simply too low anyway. In cases like this, the company will not make it to the list. There are two companies in the list however that does not have a 5-year ROE maybe because they were listed only a few years back but their growth numbers and their economic moat look good enough to be place in the list.

As an added bonus, I also put in some technical comments on the stock. While this is not really that important for value search, but some of you may like to know their technicals before deciding.

As a disclaimer, this list of stocks is not a solicitation for you to buy or sell. They are simply good stocks of good value. There is also no gurantee that they will definitely make you money. The idea to put out this list is to help you to know where to start searching. Do your homework first on these stocks and decide yourself if they are right for you. I have listed down their market cap and their industry sector so that you can select the company size you like and you can have a good diversification across industries.

Happy investing. Click HERE to download

by **Starry** on 23 Jul 2006, 04:59

Please let me know if you guys can download the excel file.

by **fundnewb** on 23 Jul 2006, 08:31

I got a php file.. not the excel file..

by **kleer** on 23 Jul 2006, 09:54

Starry,

For people who may not have enough bullets to buy a diversified basket of diverse US stocks, can they buy a US equity UT or ETF?

Or are you only bullish on these companies and not the US market in general?

by **choozm** on 23 Jul 2006, 13:14

You can first use a US equity UT or ETF to capture the whole market for diversification, then allocate another 5-10% as "fun money" for individual stocks.

by **BlueFlix** on 23 Jul 2006, 14:06

Starry, I can't see any download link.

by **Starry** on 23 Jul 2006, 14:27

BlueFlix wrote:Starry, I can't see any download link.

try to click on the link somewhere at the bottom of my first post to try again.

Let me know if you can get it this time

by **wilfredling** on 23 Jul 2006, 14:42

Starry,

I don't see the download link.

But anyway this problem for download as a *php extension is an on-going problem that has existed for a long time already. I think I have flag out this issue in the relevant posts. Also if you try to download it using Windows 2000, it will be OK. Only XP got this problem

by **Starry** on 23 Jul 2006, 14:43

wilfredling wrote:Starry,

I don't see the download link.

But anyway this problem for download as a *php extension is an on-going problem that has existed for a long time already. I think I have flag out this issue in the relevant posts. Also if you try to download it using Windows 2000, it will be OK. Only XP got this problem

I edited my first post. The list should be able to download now by clicking on the link at the bottom of my first post.

by **wilfredling** on 23 Jul 2006, 14:44

Starry,

I got an error saying "Sorry but you are not authorized to view or download this Attachment"

by **choozm** on 23 Jul 2006, 14:47

Starry, I have downloaded the EXcel file successfully when you attached it with the post. Now it is at http://www.singastro.org, I got "Sorry but you are not authorized to view or download this Attachment".

by **Starry** on 23 Jul 2006, 14:50

choozm wrote:Starry, I have downloaded the EXcel file successfully when you attached it with the post. Now it is at http://www.singastro.org, I got "Sorry but you are not authorized to view or download this Attachment".

try to click the link above again and see how

by **wilfredling** on 23 Jul 2006, 14:52

Nope, didn't work.

by **boing** on 23 Jul 2006, 15:08

works on my side

juz wondering.. how abt intel? (looks cheap but negative outlook due to fierce price competition with amd?)

by **Starry** on 23 Jul 2006, 15:08

wilfredling wrote:Nope, didn't work.

weird should be able to work since I set permissions to allow all can read and view.

I manage to download from that link

To all, please let me know if you manage to download from the link in the first post.

by **songlip** on 23 Jul 2006, 15:13

works for me. Tks!

by **Starry** on 23 Jul 2006, 15:17

boing wrote:works on my side

juz wondering.. how abt intel? (looks cheap but negative outlook due to fierce price competition with amd?)

Yes....you can include INTEL if you want. Their estimated fair price is around 23 bucks and it is also rated currently as a 5-star stock by Morningstar (Morningstar update their analysis daily to relfect the current share price)

My only concern with INTEL is that I can't see its direction clearly. Their fate relies also quite heavily on what AMD does. If you look at their EPS (earning per share), their growth there is quite inconsistent. Some years good, some years bad....

INTEL has been on a downtrend since 2000, but the current level do look tempting. Anyway check your msn email.

by **wilfredling** on 23 Jul 2006, 15:27

i could download now. What does the red colored font means?

by **choozm** on 23 Jul 2006, 15:29

works for me now. thanks

by **kleer** on 23 Jul 2006, 15:30

Actually, wouldn't you need to hold about at least 5-10 of these stocks in order to diversify away the risk of any one of them suffering a corporate scandal type meltdown.

To do so you would need to invest quite a hefty initial sum, unless you're comfortable with just holding 1 stock.

by **dowz** on 23 Jul 2006, 15:34

can dl. thanks

by **Starry** on 23 Jul 2006, 16:35

kleer wrote:Actually, wouldn't you need to hold about at least 5-10 of these stocks in order to diversify away the risk of any one of them suffering a corporate scandal type meltdown.

To do so you would need to invest quite a hefty initial sum, unless you're comfortable with just holding 1 stock.

For US stocks, you don't have to buy min 1000 shares like SGX. You can buy 10 or 20 if you wish. Entirely up to you. Also, if you are tight on budget, you can go for ETFs which I think make more sense because you have lesser USD risk.

I would have never consider US stocks if not for the fact that the recent downturn has brought down prices significantly to a lot of good US companies who are also world leaders in their own field. A lot of these companies are now selling for a song. Buying them will have some USD risk, so for me, I will just keep them as a small portion of my portfolio. Some of them could be the next Wal-mart or the next Starbucks....and if they can be bought cheap (which negates away a lot of downside risk), it is worth some considering.

For me, I will just choose 5 from the list and then buy and forget.

by **Starry** on 23 Jul 2006, 16:47

wilfredling wrote:i could download now. What does the red colored font means?

The red ones are not from Motley Fool but I think they are great companies and offer good diversification to the mix of the companies in the list.

by **awcute** on 23 Jul 2006, 22:08

fundnewb wrote:I got a php file.. not the excel file..

this was there for quite sometime ago. like zip files also, but quick fix is to change the filename. it is just having problem and naming all to download.php but the binaries downloaded are fine.

by **awcute** on 23 Jul 2006, 22:12

Starry, one question. That column on "fair price" (column d) is that from montley fool?
Thanks for the technicals too.

The best US stocks today that you can buy cheap! (21/7)

The best US stocks today that you can buy cheap! (21/7)

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