Category Archives: Nasdaq 100 Watch List

Nasdaq 100 Watch List: November 16, 2012

Posted on November 17, 2012 by nlo-admin | Leave a comment

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from low
BIDU	Baidu, Inc.	92.68	20.97	4.42	-	8.87	0.95%
VOD	Vodafone Group	25.27	-	-0.55	7.9	1.11	1.28%
BBBY	Bed Bath & Beyond Inc.	56.4	13.1	4.3	-	3.27	1.48%
MCHP	Microchip Technology Inc.	29.37	27.94	1.05	4.8	2.93	1.56%
^NDX	NASDAQ-100	2,534.16	-	-	-	-	1.59%
FLEX	Flextronics Int’l	5.54	7.55	0.73	-	1.51	1.65%
DELL	Dell Inc.	8.86	6.03	1.47	3.3	1.63	1.94%
AMAT	Applied Materials Inc.	10.15	118.02	0.09	3.5	1.74	2.01%
NVDA	NVIDIA Corporation	11.38	14.21	0.8	2.6	1.53	2.06%
INTC	Intel Corporation	20.19	8.81	2.29	4.5	2.03	2.12%
ALTR	Altera Corp.	30.45	17.02	1.79	1.3	2.97	2.91%
TEVA	Teva Pharmaceutical	38.29	15.6	2.45	2.1	1.46	3.82%
EXPD	Expeditors Int'l of WA	35.76	22.35	1.6	1.5	3.62	4.56%
CTXS	Citrix Systems, Inc.	59.21	32.34	1.83	-	3.56	4.67%
MRVL	Marvell Technology	7.4	12.67	0.58	3.2	0.88	4.96%
NUAN	Nuance Communications	20.35	77.38	0.26	-	2.4	5.28%
KLAC	KLA-Tencor Corporation	44.33	10.78	4.11	3.6	2.18	5.35%
APOL	Apollo Group Inc.	19.51	5.61	3.48	-	2.37	5.69%
ATVI	Activision Blizzard, Inc.	11.05	14.26	0.78	1.7	1.08	5.75%
MU	Micron Technology Inc.	5.47	-	-1.04	-	0.72	6.01%
FFIV	F5 Networks, Inc.	86.64	25.11	3.45	-	5.19	6.87%
WCRX	Warner Chilcott plc	11.98	8.2	1.46	4.2	-4.48	6.87%
CHKP	Check Point Software	43.67	15.21	2.87	-	2.71	7.56%
DLTR	Dollar Tree, Inc.	38.82	15.6	2.49	-	5.9	7.71%
GRMN	Garmin Ltd.	37.18	12.57	2.96	4.8	2.14	8.05%
XLNX	Xilinx Inc.	32.56	17.6	1.85	2.7	3.12	8.53%
FAST	Fastenal Company	41	29.71	1.38	2.1	7.29	9.01%
MSFT	Microsoft Corporation	26.52	14.34	1.85	3.5	3.26	9.14%

Watch List Summary

In the November 2, 2012 Watch List summary we pointed out NetApp (NTAP) as a viable investment candidate. In the two weeks since, NTAP has managed to rise +9% while the Nasdaq 100 and Apple Inc. declined –4% and –9%, respectively. NTAP is sitting at $30.26 price and may have found some support at that level. Although we’re hopeful about the prospects of this company, we recommend putting +9% gains in two weeks into perspective and decide if selling the principle is the most prudent approach to take.

On the November 2, 2012, we discussed the prospects for Dell (DELL). At the time we felt that the stock had a high probability of going back to the $8 level. On Friday November 16, 2012, we believe that DELL has fallen through the last line of technical defense against going to the $8 level. We believe that on a short-term basis DELL will rise on a possible market reaction. However, the intermediate-term seems to indicate that DELL will go to $8 before any “true” indication of prospects is revealed, unless the company gets acquired which seems possible. Dell would be one of the best acquistion target of any computer manufacturer since Lenovo bought the personal computer division from IBM.

Apple Inc (AAPL) and short-term Dow Theory analysis

As described in our last Nasdaq 100 Watch List dated November 2, 2012, Apple Inc. (AAPL) is the stock to watch. Right now, there are many who are suggesting that the bottom is in for AAPL. For various reasons, we believe that the verdict has not been delivered on this stock. Especially since AAPL managed to close below the May 2012 low, a previous technical low point for the stock. Regardless of our view on the matter, we’d like to see what Dow Theory has to say about the upside prospects from the current price. The chart below outlines the four upside targets for AAPL.

Starting with the first upside target is the $572.19 level. This is an easily attainable level for the stock and would equal an +8.44% gain from the closing price of Friday November 16, 2012. After coming off of such a dramatic decline that was started on September 17th, we should expect this as the minimum reaction of a declining trend. There is little in the way to suggest that AAPL is clearly on the ascent when it reaches $572.19. However, in theory, this would be the easiest money every made in AAPL stock.

The next upside target for Apple Inc. (AAPL) is $605.41. This level is based on Dow’s 50% principle which indicates the average price paid by long-term investors and would be compelled to continue holding the stock if it rises above this level. If AAPL can manage to rise above this level then long-term investors are likely to hold their positions in the stock, leaving speculators to push the stock higher. However, failure to rise above the $605.41 level and falling below the $505 level will be confirmation that the trend of the stock is much lower than the $505 level.

The $638.63 price falls in line with Dow’s assertion that stocks then can retrace 1/3 to 5/8 of the previous move. In this case, the $638 level is 2/3 of the previous decline. Rising to such a level almost assures that the stock will rise to the previous high. However, those wishing to take advantage of such a “guaranteed” move to the upside should be aware of the risk that any gains that are achieved can be quickly taken away. This would be the hardest money ever made for any speculator in AAPL’s stock.

Finally, rising above the $705 level would be the only indication that the stock is going higher in a meaningful fashion. We believe that if AAPL manages to exceed prior high then there are great opportunities of other tech companies near a new 52-week low to take advantage of the renewed faith in Apple Inc.

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Nasdaq 100 Watch List: November 2, 2012

Posted on November 4, 2012 by nlo-admin | 3 comments

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from low
WCRX	Warner Chilcott plc	11.47	10.07	1.14	0	13.28	0.35%
DELL	Dell Inc.	9.15	5.45	1.68	3.5	1.66	0.44%
BBBY	Bed Bath & Beyond Inc.	57.1	13.27	4.3	-	3.31	0.67%
FFIV	F5 Networks, Inc.	82.59	23.94	3.45	-	5.1	1.87%
ALTR	Altera Corp.	30.51	17.05	1.79	1.3	3.1	3.11%
APOL	Apollo Group Inc.	19.78	5.69	3.48	-	2.43	3.13%
NTAP	NetApp, Inc.	27.74	19.58	1.42	-	2.33	3.39%
INTC	Intel Corporation	22.06	9.62	2.29	4.1	2.26	3.96%
ATVI	Activision Blizzard, Inc.	11.16	15.9	0.7	1.6	1.18	4.00%
VOD	Vodafone Group Public Limited Company	26.91	12.29	2.19	7.4	1.1	4.99%
FLEX	Flextronics International Ltd.	5.74	7.81	0.74	-	1.61	5.32%
BIDU	Baidu, Inc.	105.09	23.78	4.42	-	10.09	5.40%
MCHP	Microchip Technology Inc.	32.14	20.75	1.55	4.4	3.12	6.32%
NVDA	NVIDIA Corporation	12.49	16.46	0.76	-	1.75	7.39%
EXPD	Expeditors International of Washington Inc.	36.91	21.97	1.68	1.5	3.83	7.92%
AMAT	Applied Materials Inc.	10.81	12.98	0.83	3.3	1.62	8.43%
SPLS	Staples, Inc.	11.47	8.64	1.33	3.8	1.18	8.51%
GRMN	Garmin Ltd.	37.5	12.67	2.96	4.8	2.19	8.98%
MRVL	Marvell Technology Group Ltd.	7.98	10.22	0.78	3	0.94	9.02%
DLTR	Dollar Tree, Inc.	39.59	17.63	2.24	-	6.11	9.85%
MNST	Monster Beverage Corporation	44.03	24.6	1.79	-	6.68	9.91%

Watch List Summary

The top stock on our list is Warner Chilcott (WCRX). On April 30, 2012, we recommended that investors sell WCRX after a +50% increase in the stock price from our December 16, 2011 watch list. Since our recommendation to sell WCRX, the stock has declined -47.41%.

We believe that WCRX will declined to the $10 level before it is worth reconsidering the value attributes of this company.

On January 12, 2012, we assessed the points at which an investor could take advantage of the decline of NetApp (NTAP). At the time, NTAP was trading at $36.85 and we suggested that the stock would be a good buy at $30 and $23.47. Afterwards, NTAP increased +34.5% to the March high and the fell below the Jan. 12th price. After falling slightly below the $30 level, NTAP rose +20% to the September high. Anyone who has not participated in the $30 purchase price can do so at the current price and potentially at the $23.47 level.

Nasdaq 100 and Apple Inc.

The most important aspect of the movement of the Nasdaq 100 (NDX) is the impact that Apple Inc. (AAPL) has on the index. Below you can see a comparison between the index and the stock.

The high level of correlation that exists between the Nasdaq 100 and Apple, since mid-2011, suggests that the tail is wagging the dog and should result in the index declining further if any negative news comes from Apple. Strictly from a technical standpoint, it would not be unusual for AAPL to retest the May 2012 lows before recovering in price. In addition, we believe that Apple Inc. could retest the conservative downside target of $312.87 based on the revised Speed Resistance Line below:

In order to understand where the Nasdaq 100 might go, consideration of Apple Inc. (AAPL) is required.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of November 4, 2011 (found here) and have checked their performance one year later. The top five companies on that list are provided in the chart below from November 4, 2011 to November 2, 2012.

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Posted in AAPL, Nasdaq 100 Watch List, NDX, NTAP, WCRX

Nasdaq 100 Watch List: October 5, 2012

Posted on October 7, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from low
INTC	Intel Corporation	22.68	9.63	2.36	4	2.31	1.84%
EXPD	Expeditors International of Washington	35.55	21.16	1.68	1.6	3.65	2.07%
ATVI	Activision Blizzard	11.3	16.1	0.7	1.6	1.2	2.91%
DELL	Dell Inc.	9.66	5.75	1.68	3.4	1.68	3.32%
MRVL	Marvell Technology Group	9.25	11.84	0.78	2.6	1.09	3.35%
LRCX	Lam Research Corporation	32.26	23.9	1.35	0	1.16	3.50%
WCRX	Warner Chilcott plc	13.3	11.67	1.14	0	15.18	5.35%
CHKP	Check Point Software Technologies	46.72	16.86	2.77	0	2.92	8.20%
BBBY	Bed Bath & Beyond Inc.	61.6	14.31	4.3	0	3.57	8.60%
TEVA	Teva Pharmaceutical Industries	40.12	11.27	3.56	2.1	1.55	8.79%
MCHP	Microchip Technology Inc.	33.25	21.47	1.55	4.2	3.18	9.99%

Watch List Summary

As we’ve indicated in our most recent Transaction Alert, we bought Intel (INTC). Below is the Altimeter for Intel since 2006.

According to the Altimeter, Intel at it’s worst, a la the 2009 low, has a downside target of $19.35. It is very important to consider the 2009 low because according to Charles H. Dow:

“…the very foundation of investments in industrials should be knowledge of what these companies earned, say in 1893 to 1896, making, perhaps, reasonable allowances for economies under consolidation [1].”

It is important to note that the period of 1893 to 1896 had declines in the market as much as -40%. What is useful about Dow’s view on earnings is that they should be judged in comparison to the prior bear market lows for the company in question. In the instance of a company that experienced a low in earnings in a bear market or during a recessionary period, essentially Dow is advocating the use of the worst-case scenario.

According to Value Line Investment Survey, 2009 was the most recent low in earnings and reasonably reflects where we should expect the price of Intel to revert to under a worse case scenario. Although Intel fell as low as $12 a share in 2009, provided the company can afford to continue dividend increases, we believe additional purchases should take place at $16.

To reiterate, the fundamental reason for our purchase of Intel are as follows:

Trading at 9x earnings
At $22.47, the stock is within 3% of the one year low
The stock has a 4% dividend yield, the ex-dividend date is approximately November 2, 2012
INTC has increased the dividend steadily since 1992, the annual rate of increase has averaged 31% since 2003
Trading at 5.7x cash flow; Value Line indicates that fair value is at 10x cash flow, nearly double the current price

Another stock to watch for is Microchip Technology (MCHP). This Altimeter for the stock is below:

In the chart are the upside and downside levels to look out for. As an example, the next upside target is $35.80 while the next downside target is $30.54.

Of particular interest about MCHP is the fact that it appeared on our March 20, 2010 watch list as having the highest yield in the Nasdaq 100 index. That high relative yield translated into a +35% gain one year later for a total return of +39.80%. As a way to manage risk, we may later buy Microchip Technology (MCHP) instead of Intel for our second 15% purchase for our portfolio.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top five stocks on our list from our October 7, 2011 list and have checked their performance one year later. The top five companies on that list can be seen in the table below.

Symbol	Name	10/7/2011	10/5/2012	% change
ILMN	Illumina, Inc.	27.18	51.79	90.54%
QGEN	Qiagen N.V.	12.65	19.2	51.78%
BMC	BMC Software, Inc.	36.98	43.34	17.20%
LIFE	Life Technologies Corp.	36.82	50.29	36.58%
TEVA	Teva Pharmaceutical	36.75	40.12	9.17%

			Average gain:	41.06%

NDX	Nasdaq 100	2202.76	2811.94	27.66%

As reflected in the chart and table above, the top five stocks on our list achieved substantial gains on the average. Only Teva Pharmaceuticals (TEVA) was unable to keep up the pace. Six months after the watch list, all of the stocks were able to achieve our minimum annual gain of +10%.

Citation:

George W. Bishop Jr., Charles H. Dow: Economist, Dow-Jones & Company (Princeton, 1967), page 11.

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Nasdaq 100 Watch List: August 6, 2012

Posted on August 6, 2012 by nlo-admin | Leave a comment

Below are the Nasdaq 100 companies that are within 11% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Price	P/E	EPS	Price/Book	% from low
EXPD	Expeditors Int'l of Washington	36.04	20.83	1.73	3.66	3.47%
DELL	Dell Inc.	11.8	6.74	1.75	2.2	3.60%
LRCX	Lam Research Corporation	34.62	25.64	1.35	0.9	4.15%
CHRW	CH Robinson Worldwide Inc.	53.63	19.72	2.72	6.79	5.55%
APOL	Apollo Group Inc.	27.24	6.52	4.18	3.34	5.70%
INFY	Infosys Ltd.	40.67	13.3	3.06	3.78	7.22%
NFLX	Netflix, Inc.	56.79	32.3	1.76	4.35	7.54%
MRVL	Marvell Technology Group Ltd.	11.12	11.91	0.93	1.3	8.28%
WYNN	Wynn Resorts Ltd.	97.8	19.16	5.1	43.32	8.53%
CTRP	Ctrip.com International Ltd.	13.47	14.93	0.9	1.7	8.98%
SPLS	Staples, Inc.	13.08	9.39	1.39	1.26	9.55%
ATVI	Activision Blizzard, Inc.	11.42	16.27	0.7	1.17	9.81%
RIMM	Research In Motion Limited	7.26	-	-0.1	0.38	10.67%

Watch List Summary

Standing out on our Nasdaq 100 Watch List is Lam Research (LRCX). According the Yahoo!Finance, Lam Research is a company that “…designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits. The company offers etch products that remove portions of various films from the wafer in the creation of semiconductor devices.”

Starting with the fundamentals, Value Line Investment Survey indicates that LRCX has grow the book value from $5.20 in 2003 to the current level of $19.99 as of 2011. Value Line suggests that LRCX has a fair value of 12x cash flow. Based on the Value Line estimated cash flow of $2.60 for 2012, LRCX should be fairly valued at $31.20. Value Line estimates that 2013 cash flow will be $4.55 resulting in a $54.60. Additionally, shares outstanding have declined from 141 million shares to the estimated level of 119 million shares.

One issue that must be considered is the fact that in 2011, long-term debt skyrocketed 40 times the 2010 level. This may have occurred at a time that borrowing costs are at their lowest point which ordinarily is a smart financial move. However, we’d recommend considering the debt position as a potential negative before investing in LRCX.

Lam Research holds the largest market share of etchers (54% in 2011). In our view their process technology is greater than its competitors, Applied Materials (AMAT) and Tokyo Electron. Some of their top customers are Intel (INTC), Samsung, and TSMC (TSM).

According to Dow Theory, LRCX has the following downside targets:

$29.52
$24.59
$19.66
$14.73

Those interested in LRCX should consider buying the stock at $19.66 and below.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top five stocks on our list from August 12, 2011 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

Symbol	Name	8/12/2011	8/6/2012	% change
INFY	Infosys Limited	53.78	40.67	-24.38%
ATVI	Activision Blizzard, Inc	10.71	11.42	6.63%
LIFE	Life Technologies	38.42	45.72	19.00%
NIHD	NII Holdings, Inc.	36.9	8.08	-78.10%
AMGN	Amgen Inc.	50	82.43	64.86%
				-2.40%

NDX	Nasdaq 100	2182.05	2694.09	23.47%

The top five on our Watch List from last year were crushed when compared to the performance of the Nasdaq 100 Index. Three stocks on our watch list (ATVI, LIFE, AMGN) were able to achieve 10% or greater within a one year timeframe.

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Nasdaq 100 Watch List: June 20, 2012

Posted on June 20, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	Price/Book	% from Low
EA	Electronic Arts Inc.	$12.66	55.04	0.23	0	1.65	3.77%
DELL	Dell Inc.	$12.30	7.02	1.75	0	2.29	5.31%
CHKP	Check Point Software	$50.55	19.08	2.65	0	3.14	5.78%
SYMC	Symantec Corporation	$15.03	9.57	1.57	0	2.12	5.85%
CHRW	CH Robinson Worldwide	$59.31	22.12	2.68	2.2	7.8	6.14%
INFY	Infosys Ltd.	$43.95	14.65	3	1.8	3.84	6.16%
MRVL	Marvell Technology Group	$12.01	12.86	0.93	2	1.38	6.95%
CTRP	Ctrip.com International Ltd.	$17.54	16.78	1.04	0	2.19	7.94%
RIMM	Research In Motion Limited	$10.33	4.65	2.22	0	0.55	7.94%
TEVA	Teva Pharmaceutical Industries	$37.78	11.74	3.22	2.1	1.44	7.94%
EXPD	Expeditors Int'l of Washington	$39.90	23.06	1.73	1.4	4.08	7.95%
SPLS	Staples, Inc.	$13.03	9.35	1.39	3.5	1.25	9.13%
WYNN	Wynn Resorts Ltd.	$104.89	22.24	4.72	2	47.38	9.47%
APOL	Apollo Group Inc.	$33.96	7.39	4.6	0	3.79	9.80%

Watch List Summary

In our last summary dated June 8, 2012 (found here), we referred to the struggle that we were having in not purchasing NVIDIA (NVDA). Since that posting, NVDA is up +9.24% (all within the last 3 days) on news that their chips will power Microsoft’s new tablet PC. We’re not sure that the latest news is going to catapult NVDA as high as the last 120% run after being on our list, however, we believe the chip stocks on the Nasdaq 100 should be closely followed and accumulated over time.

Marvell Technology (MRVL) is another chip manufacturer that is on our radar. According to Yahoo!Finance, Marvell, “…designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. It offers mobile and wireless products comprising communications processors; modem processors; Wi-Fi and other communication protocols, including Bluetooth and/or FM; mobile computing products; and connected home computing products.”

Dow Theory suggests that the following are the downside targets for Marvell:

$10.61
$7.54
$4.47

So far, Marvell has fallen within 6% of the $10.61 target, however, it has not breached that point thus far. We’d be buyers of the stock at $8.25 with little regard for downside risk at that point in time.

In a follow-up to a previous piece on Wynn Resorts (WYNN), dated January 20, 2012 (found here), we indicated that Wynn, at $115.47, was likely to decline to $74. 76. So far, WYNN has managed to decline to the $105 level. Although the path hasn’t been straight down we are confident that this stock will come through on our downside projections.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top 5 stocks from our June 17, 2011 Nasdaq 100 Watch List (found here). The top 5 companies from the watch list are provided below with the closing price from June 17, 2011 to June 17, 2012.

Symbol	Name	2011	2012	% change
URBN	Urban Outfitters, Inc.	28.27	27.51	-2.69%
MRVL	Marvell Technology	13.79	11.46	-16.90%
CSCO	Cisco Systems, Inc.	15.05	17.1	13.62%
RIMM	Research In Motion	35.33	10.89	-69.18%
SPLS	Staples, Inc.	15.05	12.67	-15.81%
			Average	-18.19%

The top five from our watch list from last last year got blown away by the Nasdaq 100 Index, in the end. The index went up while the stocks, as a group, went down. The Nasdaq 100 index outperformed the top 5 by 36.78%. Amazingly, the top five achieved our minimum goal of +10% gains within the first three months.

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Nasdaq 100 Watch List: June 8, 2012

Posted on June 10, 2012 by nlo-admin | Leave a comment

symbol	Name	Price	P/E	EPS	Yield	P/B	% from Low
SYMC	Symantec Corporation	14.57	9.28	1.57	-	2.06	2.17%
DELL	Dell Inc.	12.12	6.92	1.75	-	2.28	2.71%
CHRW	CH Robinson Worldwide Inc.	57.92	21.6	2.68	2.3	7.51	3.65%
EA	Electronic Arts Inc.	13.47	58.57	0.23	-	1.75	4.74%
INFY	Infosys Ltd.	43.62	14.54	3	1.3	3.81	5.36%
NVDA	NVIDIA Corporation	12.12	14.8	0.82	-	1.72	5.67%
GMCR	Green Mountain Coffee Roasters	23.13	11.11	2.08	-	1.76	6.25%
EXPD	Expeditors Int'l of WA	39.36	22.75	1.73	1.4	3.95	6.49%
CTRP	Ctrip.com Int'l	18.66	17.86	1.04	0	2.38	6.63%
SPLS	Staples, Inc.	12.86	9.23	1.39	3.4	1.24	7.71%
LRCX	Lam Research	37.62	16.65	2.26	-	1.72	8.07%
NFLX	Netflix, Inc.	65.64	22.22	2.95	-	5.41	8.14%
WYNN	Wynn Resorts Ltd.	104.21	22.1	4.72	1.9	46.53	8.76%
NTAP	NetApp, Inc.	30.33	19.2	1.58	-	2.65	9.14%
MCHP	Microchip Technology Inc.	32.01	19.4	1.65	4.4	3.08	9.25%
VOD	Vodafone Group	26.58	12.6	2.11	7.5	1.1	9.34%
MRVL	Marvell Technology	12.28	13.15	0.93	2	1.4	9.35%
ORCL	Oracle Corporation	27.16	14.23	1.91	0.9	3.16	9.87%
CTSH	Cognizant	58.85	19.81	2.97	-	4.14	9.92%

Watch List Summary

Of interest on our watch list is NVIDIA (NVDA). According to Yahoo!Finance, “NVIDIA Corporation provides graphics chips for use in smartphones, personal computers (PC), tablets, and professional workstations markets worldwide.” As we’ve described in the past, we have a strong interest in chip sector stocks and believe that the long-term prospects for companies in the chip industry is very appealing.

NVDA first appeared on our watch list on June 12, 2010. At that time, NVDA was trading at $11.61. By February 18, 2011, NVDA was trading as high as $25.68 which was a gain of over +120%. We’re not certain that NVDA’s decline has ended. According to Edson Gould’s Speed Resistance Lines, NVDA has already declined below the conservative downside target of $17.87 based on the February 2011 high. The persistence of the current decline suggests that the stock could decline to the extreme downside target of $8.67. We’re doing everything we can to hold off buying this stock at the current time.

Watch List Performance Review

The following is a performance review of the top five Nasdaq 100 Watch List from June 4, 2010. Keep in mind that this is a 2 year performance review instead of a 1 year review.

Symbol	Name	2010	2012	% change
GILD	Gilead Sciences, Inc.	$34.71	49.21	41.77%
SYMC	Symantec Corporation	$13.92	14.43	3.66%
ERTS	Electronic Arts Inc.	$15.81	13.07	-17.33%
APOL	Apollo Group, Inc.	$51.48	32.42	-37.02%
QCOM	QUALCOMM	$35.30	55.85	58.22%
			average	9.86%

NDX	Nasdaq 100	1,832.04	2,478.13	35.27%

As can you can see, the list of top five stocks significantly underperformed the Nasdaq 100 (NDX), mainly due to Apple Inc. (AAPL) having an outsized impact on the index. However, underneath the static 2-year performance data is a story to be told, which is the basis of our New Low investment strategy.

In the chart below, take note of the period around July 2011. At that time, Qualcomm had gains of +60%, Electronic Arts had gains of +55%, Symantec had gains of +42% and Gilead Sciences had gains of +21%. Only Apollo Group had losses to compare against the other stocks.

In the case of Symantec and Electronic Arts, they have come full circle after a 2-year period. This cycle is not unusual for most of the stocks that we track. Even when the stock does not approach the prior low of a watch list, many stocks attain a 52-week low after 2 to 2.5 years (as in the NVDA example above). Be on the lookout for stocks that have similar cycles like EA, SYMC and NVDA since their ability to replicated such moves adds to the prospect that they could pull a repeat performance.

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Nasdaq 100 Watch List: May 18, 2012

Posted on May 20, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	Price/Book	% from Low
FSLR	First Solar, Inc.	13.66	-	-7.01	0	0.4	0.08%
GMCR	Green Mountain Coffee	24.05	11.56	2.08	0	1.74	0.17%
CHRW	CH Robinson Worldwide	58.88	21.96	2.68	2.2	7.78	0.26%
EXPD	Expeditors Int'l of Washington	37.32	21.57	1.73	1.5	3.8	0.38%
SYMC	Symantec Corporation	14.74	9.39	1.57	0	2.12	0.41%
CTRP	Ctrip.com International Ltd.	18.91	18.01	1.05	0	2.59	0.53%
SNDK	SanDisk Corp.	31.52	8.81	3.58	0	1.12	0.59%
WYNN	Wynn Resorts Ltd.	101.94	21.62	4.72	2	46.03	0.91%
RIMM	Research In Motion Limited	10.99	4.95	2.22	0	0.58	0.92%
INFY	Infosys Ltd.	42.87	14.29	3	1.3	3.69	0.97%
NTAP	NetApp, Inc.	33.06	22.01	1.5	0	3.07	0.98%
FOSL	Fossil, Inc.	70.28	14.99	4.69	0	3.9	1.02%
EA	Electronic Arts Inc.	14.1	61.3	0.23	0	1.91	1.95%
APOL	Apollo Group Inc.	32.02	6.97	4.6	0	3.54	3.52%
ORCL	Oracle Corporation	25.61	13.42	1.91	0.9	3.05	3.60%
MCHP	Microchip Technology Inc.	30.49	18.48	1.65	4.5	3	4.06%
VMED	Virgin Media, Inc.	21.48	53.17	0.4	0.7	7.83	4.68%
GOLD	Randgold Resources Limited	76.45	16.63	4.6	0.5	3.06	4.86%
NVDA	NVIDIA Corporation	12.08	14.75	0.82	0	1.82	5.32%
AMAT	Applied Materials Inc.	10.36	10.23	1.01	3.5	1.55	6.80%
VOD	Vodafone Group plc	26.1	12.08	2.16	3.6	1.01	7.36%
LRCX	Lam Research Corporation	37.57	16.62	2.26	0	1.73	7.93%
ALTR	Altera Corp.	33.23	16.45	2.02	1	3.46	9.35%
SPLS	Staples, Inc.	13.07	9.39	1.39	3.3	1.29	9.46%

Watch List Summary

We’d like to address the first four companies on our list with a rating of AVOID or SELL for the following reasons:

First Solar (FSLR): We never believed in the attributes of the solar industry despite all the claimed benefits to the environment. If a detailed examination of the solar industry was done for the period of 1970 to 1980, you would find that the reasons for the lack of success then is re-emerging today. FSLR might be a great speculation, however, anyone wishing to buy the stock should be willing to accept 100% loss or avoid the stock altogether. As was the case in the 1970’s, the “top tier” solar companies will probably get acquired by the major oil companies. However, the timing of such an acquisition is too difficult for us to predict. Therefore, the safest postures is to assume more downside risk with little sustainable upside opportunity.
Green Mountain Coffee Roasters (GMCR): We’ve had a history of calculating the downside risk associated with GMCR. On October 25, 2011 (found here), we published Edson Gould’s Speed Resistance Lines [SRL] which indicated that the downside risk for the stock was between $59.93 and $37.21 (at the time GMCR was trading at $64.75). In that same posting we said that if GMCR were to fall below $37.21, then the next downside target is the absurdly low level of $3. Even if $3 is never achieved, falling from the current price of $24.05 to $12.02 is too much pain to accept.
C.H. Robinson (CHRW) and Expeditors International of Washington (EXPD): Our recent Dow Theory (found here) indication pointing to an end to the bear market rally with the joint decline of the Dow Jones Industrial Average and Dow Jones Transportation Average means that large declines may lie ahead. Since the Transportation Index has led the way up, it stand to reason, and experience, that the index will lead the way down. We believe that CHRW and EXPD are in for more pain and faster than most other stocks because they are in the business of freight forwarding and logistics.

Companies that we’re excited to see on our watch list are as follows:

Microchip Technology (MCHP): Microchip Technology first appeared on our watch list on March 20, 2010 (found here) at the price of $28.25. Afterwards, MCHP rose as high as $41 by May 10, 2011. On July 15, 2011, after the stock declined nearly -22% from the high, we suggested that MCHP would be too hard to ignore at such a high dividend yield. This recommendation was within 9% of the current 1-year low. We will become serial acquirers of MCHP as the stock price declines further.
Applied Materials (AMAT), NVIDIA (NVDA), Altera (ALTR): These chip stocks are runners-up in the chip stock sweepstakes. We feels that accumulating of chip stocks with high ROA, ROE, profit margins, operating margins and low debt will prove highly profitable in both the intermediate and long term.

Watch List Performance Review

In our ongoing review of the NLO Nasdaq 100 Watch List, we have taken the top five stocks on our list from April 29, 2011 and have check their performance one year later. The top five companies on that list can be seen in the table below.

Symbol	Apr-11	Apr-12	change
AKAM	34.43	32.59	-5.34%
TEVA	45.73	45.77	0.09%
CSCO	17.52	20.16	15.07%
URBN	31.47	28.96	-7.98%
MRVL	15.43	15.01	-2.72%
		Average	-0.18%

Nasdaq 100			15.31%

No two ways about it, the stocks on our watch list got hammered big time. The Nasdaq 100 index gained 15.31% while our top five stocks went nowhere. However, three of the five stocks our goal of at least 10% within a year. TEVA gained 10% in the first month before declining –20%. CSCO gained +10% in six months while AKAM gained +10% in 9 months.

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Nasdaq 100 Watch List: April 27, 2012

Posted on April 29, 2012 by nlo-admin | Leave a comment

Below are the Nasdaq 100 companies that are within 20% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Company	Price	P/E	EPS	Yield	P/B	% from Low
CHRW	CH Robinson Worldwide	59.02	22.01	2.68	2.2	7.72	0.49%
FSLR	First Solar, Inc.	18.35	0	-0.46	0	0.43	3.03%
EXPD	Expeditors Int'l	39.9	22.29	1.79	1.3	4.27	4.31%
CTRP	Ctrip.com Int'l	21.66	19.32	1.12	0	2.76	5.40%
EA	Electronic Arts Inc.	15.32	0	-0.52	0	2.34	5.80%
INFY	Infosys Ltd.	47.06	15.69	3	1.2	4.07	5.87%
APOL	Apollo Group Inc.	35.78	7.79	4.6	0	3.99	6.14%
SYMC	Symantec Corporation	16.48	15.86	1.04	0	2.58	10.31%
RIMM	Research In Motion	14.03	6.32	2.22	0	0.72	12.69%
NVDA	NVIDIA Corporation	12.98	13.81	0.94	0	1.93	13.16%
VOD	Vodafone Group plc	27.93	12.64	2.21	3.4	1.06	14.89%
SNDK	SanDisk Corp.	37.58	10.51	3.58	0	1.29	16.56%
ALTR	Altera Corp.	35.56	17.6	2.02	0.9	3.73	17.01%
NTAP	NetApp, Inc.	39.03	25.99	1.5	0	3.53	18.27%
ORCL	Oracle Corporation	29.24	15.32	1.91	0.8	3.37	18.28%
VMED	Virgin Media, Inc.	24.45	64.01	0.38	0.7	6.81	19.15%
SRCL	Stericycle, Inc.	87.64	32.58	2.69	0	6.08	19.97%
^NDX	NASDAQ-100	2,741.34	-	-	-	-	-

Watch List Summary

First on our list is Electronic Arts (EA). the last time Electronic Arts was on our Watch list was on June 6, 2010. At that time, Electronic Arts was trading at $15.81 with a per share earnings loss of –$2.08 and with a price-to-book ratio of 2. By July of the next year, Electronic Arts increased in value by +58%.

Electronic Arts (EA) has the following downside targets:

$12.77
$10.22
$7.66

Ordinarily, we don’t have a preference for a stock that doesn’t have earnings, however, the reason we focus on the Nasdaq 100 is because we know that lacking any value attributes, companies won’t disappear from the index until the end of each year, unless an acquisition occurs. This usually means that stocks in this index will likely appear to rebound due to significant institutional support and the requirement to be invested in constituents of the index.

Next on our watch list is Infosys Ltd (INFY). Infosys appeared on our watch list on September 9, 2011 at the price of $47.17. Less than two months later, Infosys (INFY) increased and peaked at +30% above the price of when it was on our watch list. Below are the downside targets to consider if purchasing INFY:

$38.43
$34.11
$29.80
$21.17

Finally, the next company on our list is Symantec (SYMC) which last appeared on our watch list on December 16, 2011. At the time, SYMC had a P/E ratio of 17.59 and a price-to-book ratio of 2.49.

Shortly after appearing on our December 16, 2011 watch list, SYMC rose +21%. The following are the downside targets for anyone considering the purchase of SYMC:

$14.24
$13.26
$12.20
$10.05

Considering all of the companies on our watch list, we believe that the three that we’ve covered are reasonable investments at the current time, with money set aside for a second purchase if the stock price declines.

Watch List Performance Review

The top five stocks on our watch list from April 29, 2011 got hammered in the market decline from June to October 2011. Hardest hit was Akamai which fell over –40%. Only three stocks gained more than +10% within a year. Right out the gate was TEVA in the first month. Nearly 9 months after our watch list, CSCO and MRVL were able to gain +10%. The average return of all five companies in the last year was –0.10%.

symbol	Company	2011	2012	% change
AKAM	Akamai Tech.	34.43	33.18	-3.63%
TEVA	Teva Pharma.	45.73	45.63	-0.22%
CSCO	Cisco Systems	17.52	19.98	14.04%
URBN	Urban Outfitters	31.47	29.21	-7.18%
MRVL	Marvell Tech.	15.43	14.89	-3.50%
			Average	-0.10%

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Nasdaq 100 Watch List: April 13, 2012

Posted on April 14, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from Low	Div/Share
CHRW	CH Robinson Worldwide Inc.	64.13	24.48	2.62	2	8.45	2.94%	1.32
CTRP	Ctrip.com International Ltd.	21.33	19.01	1.12	0	2.79	3.29%	0
APOL	Apollo Group Inc.	36.7	7.99	4.6	0	4.13	3.53%	0
RIMM	Research In Motion Limited	12.89	5.81	2.22	0	0.68	3.53%	0
FSLR	First Solar, Inc.	20.83	0	-0.46	0	0.52	4.05%	0
EA	Electronic Arts Inc.	16.18	0	-0.52	0	2.42	5.34%	0
INFY	Infosys Ltd.	49.15	17.01	2.89	1	5.53	6.57%	0.56
GMCR	Green Mountain Coffee Roasters	43.59	22.43	1.94	0	3.33	10.58%	0
VOD	Vodafone Group plc	26.95	12.36	2.18	3.5	1.04	10.86%	0.95
AMZN	Amazon.com Inc.	188.46	137.56	1.37	0	11.19	12.87%	0
ORCL	Oracle Corporation	28.5	14.93	1.91	0.8	3.33	15.29%	0.24
SRCL	Stericycle, Inc.	86.1	32.01	2.69	0	6.13	17.86%	0
VMED	Virgin Media, Inc.	24.2	64.19	0.38	0.7	6.86	17.93%	0.16
WCRX	Warner Chilcott plc	15.34	22.9	0.67	0	57.52	18.91%	0
ATVI	Activision Blizzard, Inc.	12.42	13.5	0.92	1.4	1.35	19.42%	0.18
^NDX	NASDAQ-100	2,846.04	-	-	-	-	-	-

Watch List Summary

On this week’s list we’re focusing on the stocks that have single digit price-to-earnings ratios (P/E). Stock investing theory suggests that investors should focus on, among other things, stocks with a low P/E ratio because the higher the ratio the more expensive a price is being paid for the company’s current and future earnings.

In theory, the P/E ratio reflects the number of years it takes to get to break even on the investment. In the case of C.H. Robinson (CHRW) with a P/E ratio of 24, it would take 24 years to break even on your investment unless CHRW were able to increase their earnings over time. As a word of warning, a low P/E can be an indication of a lack of confidence in some aspect of the company’s business model or competitive strategy. Be on the lookout for the reason why these companies have a low P/E ratio.

First up is Apollo Group (APOL) with a P/E ratio of 7.99. According to Dow Theory, APOL has no downside risk???! This seems to be confirmed by the fact that the stock is near a 52-week low and slightly above the low set in 2007. Having no apparent downside risk seems implausible so we’ve used the 2000 low of $10 to the high of $93.49 in 2004 to come up with some kind of assessment of risk. When considered from these levels, APOL has the following downside targets:

$28.55
$19.27
$13.92
$10

The next stock with a low P/E ratio on our list is Research In Motion (RIMM) with a ratio of 5.81. RIMM has been batter due to it’s loss of competitive edge against Apple (AAPL) and Google’s (GOOG) Android operating systems. Our best guess is that if RIMM isn’t going out of business then it must be the single best investment of the decade. As with lottery tickets the gains are enormous but the odds against winning are significant, this is the way that we’d treat this company. However, unlike the lottery, RIMM has the potential to rise from the ashes with its large cash hoard and depressed stock price.

Watch List Performance Review

In review of our watch list from April 15, 2011, two of the companies underperformed the Nasdaq 100 index by a wide margin. However, four of the top five companies on our watch list achieved our goal of +10% within a 1-year timeframe.

Symbol	Name	2011	2012	% change
CSCO	Cisco	17.03	19.85	16.56%
URBN	Urban Outfitters	30.64	28.67	-6.43%
TEVA	Teva Pharma.	50.01	44.19	-11.64%
AMGN	Amgen	55.51	65.59	18.16%
MSFT	Microsoft	25.37	30.81	21.44%
			Average	7.62%

^NDX	Nasdaq 100	2408.3	2846.04	18.18%

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Nasdaq 100 Watch List: March 30, 2012

Posted on March 30, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	Price/Book	Div/Share	% Chg from Low
FSLR	First Solar, Inc.	25.05		-0.46		0.6		2.24%
EA	Electronic Arts Inc.	16.49		-0.52		2.42		2.71%
CTRP	Ctrip.com International Ltd.	21.64	19.29	1.12		2.74		3.00%
APOL	Apollo Group Inc.	38.64	8.41	4.6		4.34		4.21%
CHRW	CH Robinson Worldwide Inc.	65.49	25	2.62	2.00%	8.48	1.32	5.12%
VOD	Vodafone Group plc	27.67	12.75	2.17	3.40%	1.07	0.95	13.82%
SRCL	Stericycle, Inc.	83.64	31.09	2.69		5.95		14.50%
ORCL	Oracle Corporation	29.16	15.28	1.91	0.80%	3.4	0.24	17.96%
RIMM	Research In Motion Limited	14.7	3.46	4.25		0.69		18.07%
GMCR	Green Mountain Coffee Roasters Inc.	46.84	24.11	1.94		3.67		18.82%

Watch List Summary*

Update: December 16, 2011 Summary Stocks

Today we’re going to review the price action of the Nasdaq 100 stocks profiled in the summary section of our December 16, 2011 watch list. First on the list was BMC Software (BMC), we indicated the following about BMC:

“If BMC were to replicate the percentage decline from the May 2008 top to the October 2008 low, the stock would decline to a price of $31.11.”
“The $40 level seems reasonable within the next year for BMC even though it is 20% above the current price.”

BMC declined from the December 16th price of $33.17 down to the low $31.62 on January 10, 2012. The actual low of $31.62 was within 1.64% of the projected downside target. Additionally, BMC managed to close above the $40 level starting on March 26, 2012.

Virgin Media (VMED) was the second stock listed in our summary section. We projected an initial downside target of $18.29. This never materialized as the stock reversed its decline at $20.52, we said the following regarding the VMED’s upside target:

“The next upside target for VMED is $25.07 which assumes the best case scenario.”

From December 19, 2011 to February 7, 2012 VMED rose as high as $24.49 but struggled to move any higher. On February 8, 2012, VMED jumped to $25.27 and managed to close as high as $25.93 on February 14, 2012. This was a gain of +23.77% in a month and a half.

Ctrip.com (CTRP) was the last stock that we reviewed. At the time, we said the following about CTRP:

“…on a pace to replicate the performance from the high in April 2008 to the low of January 2009 which equaled a loss of -72%. A similar decline in CTRP from the high of $50.57 would bring the price down to $14.16.”
“CTRP sits one penny below the 2^nd Dow Theory support level of $23.11. Any further deviation below the current price almost ensures that the stock is destined for the $10 range.”

On March 28, 2012, CTRP declined significantly enough below the $22.44 level for us to believe that the stock would fall first to the $14.16 level and possibly to the $10 range.

*Stocks that are in our Watch List Summary section are those that we find the most compelling among all the stocks that appear in the watch list above.

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Nasdaq 100 Watch List: March 23, 2012

Posted on March 25, 2012 by nlo-admin | Leave a comment

Below are the Nasdaq 100 companies that are within 20% of their respective 52-week lows. This Nasdaq 100 Watch List is strictly for the purpose of researching whether or not the companies have viable business models or are about to go out of business. These companies are deemed highly speculative unless otherwise noted.

Symbol	Company	Price	P/E	EPS	Yield	P/B	% from Low
FSLR	First Solar, Inc.	$26.11	0	-0.46	0	0.64	3.24%
CHRW	C.H. Robinson Worldwide	$64.42	24.59	2.62	2	8.44	3.40%
CTRP	Ctrip.com Int'l	$22.83	20.37	1.12	0	2.93	3.68%
EA	Electronic Arts Inc.	$16.86	0	-0.52	0	2.49	5.05%
RIMM	Research In Motion	$13.66	3.22	4.25	0	0.7	9.72%
VOD	Vodafone Group Plc	$27.65	12.74	2.17	3.4%	1.07	13.74%
APOL	Apollo Group, Inc.	$42.41	12.02	3.53	0	4.1	14.37%
ORCL	Oracle Corporation	$28.55	14.96	1.91	0.8%	3.31	15.49%
SRCL	Stericycle, Inc.	$84.66	31.47	2.69	0	6.04	15.89%
AMZN	Amazon.com, Inc.	$195.04	142.36	1.37	0	11.29	16.81%
VMED	Virgin Media Inc.	$23.98	63.95	0.38	0.7%	6.82	16.86%

Watch List Summary

Because we’re still in a bear market and have had significant divergence between the Dow Industrials and the Dow Transports index, we believe there could be significant downside action in the near term. With this in mind, our first stock of interest is Oracle Corporation (ORCL). While the stock is slightly more than 15% above the 1-year low, it is necessary to plan your next purchase of this stock.

When viewed from a Dow Theory perspective, the following are the downside targets from the current price:

$25.48 (fair value)
$21.82
$14.48

The low of December 2011 is the exact level of ORCL’s fair value based on Dow Theory. If Oracle were to fall below the December 2011 low the next downside target is $21.82. We wouldn’t put it past Oracle to decline to $14.48, however, a 3-part purchase plan with the first at $25.28 would be reasonable. If you have $10,000 to invest in ORCL then we’d arrange the purchased in the following order:

1st-$5,000 at $25.48
2nd-$3,500 at $21.82
3rd-$1,500 at $14.48

The next stock that we’re considering is Stericycle (SRCL). Stericycle first appeared on our October 17, 2009 Nasdaq 100 Watch List. At the time, Stericycle was trading at $52.12. Since then, SRCL has soared as high as $95.71 on an intra-day basis, a gain of 83.63%. Don’t be fooled by the fact the Stericycle sports a “high” price relative to the $52 level. The point of a stock approaching a new low is that it transmits new information on the relative value.

According to Dow Theory, Stericycle has the following downside targets:

$79.39
$71.23 (fair value)
$63.07
$46.75

We’d structure the purchase of Stericycle (SRCL) into two steps. The first purchase at $71.23 (or lower) with 75% of the intended amount and the second purchase at $63.07 (or lower) with the remaining funds.

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Nasdaq 100 Watch List: March 16, 2012

Posted on March 18, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	Price/Book	payout	% from Low
CHRW	C.H. Robinson Worldwide	65.67	25.06	2.62	2.00	8.55	50.38%	5.41%
VOD	Vodafone Group Plc	26.41	12.28	2.15	3.60	1.02	44.19%	8.64%
EA	Electronic Arts Inc.	17.46	0	-0.52	0.00	2.45	0.00%	8.79%
CTRP	Ctrip.com Int'l	24.68	22.09	1.12	0.00	3.03	0.00%	12.08%
APOL	Apollo Group	42.59	12.08	3.53	0.00	4.07	0.00%	14.86%
FSLR	First Solar	29.08	0	-0.46	0.00	0.66	0.00%	14.99%
AMZN	Amazon.com	185.05	135.07	1.37	0.00	10.82	0.00%	15.07%
RIMM	Research In Motion	14.38	3.39	4.25	0.00	0.68	0.00%	15.50%
VMED	Virgin Media Inc.	24.18	65.18	0.37	0.70	7	43.24%	17.84%
SRCL	Stericycle, Inc.	86.88	32.3	2.69	0.00	6.11	0.00%	18.93%
DTV	DIRECTV	47.47	13.68	3.47	0.00	-10.53	0.00%	19.21%
EXPD	Expeditors Int'l of Wash	45.81	25.59	1.79	1.10	4.71	27.93%	19.76%

Watch List Summary

A company that we’re considering buying is C.H. Robinson Worldwide (CHRW), the first company on our list. The primary consideration that we have is always the downside risk. We almost ignore the upside targets and projections in order to come up with an idea on the best ways to avoid loss.

The following are two perspectives on the way to view the potential downside risk of buying CHRW. First, according to Dow Theory, CHRW has three significant downside targets that should be considered carefully. The three downside targets are as follows:

$60.34 (fair value)
$52.91
$38.06

The way we approach the Dow Theory downside targets is to buy CHRW if it falls to $60.34 (fair value according to Dow Theory). However, we prepare ourselves for the worst case scenario by expecting that CHRW will decline to the $38.06 level, the low for 2009. With this assumption, we ensure that our initial purchase does not include 100% of what we'd normally invest. Instead, we only invest 30%, 50% or 65% of the amount that we'd ordinarily invest. The remainder of funds is set aside for the possibility that the stock declines. Naturally the greater the amount invested initially, the greater the loss or gain if the stock declines or rises.

The second way to view CHRW's downside risk is strictly from the "technical" patterns based on a chart from the last 5 years.

3-16-2012

From a "technical" standpoint, there are significant support levels at $63.50, $55 and $38. These technical levels are not very different from Dow Theory even though the technical levels based on the chart above are strictly based on the visual cues. We specifically chose the last 5 years because Charles H. Dow has said that best way to gauge a company's future prospects is usually through careful consideration of the period when earnings, book value, price and other fundamental attributes are at their worst. For us, the inclusion of 2007 to 2009 is the best reflection of the worst that has been experienced recently. With either approach to reviewing the downside risk of a stock, the purpose is ensure that you do not get caught off guard at the prospect of a major price decline.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the topic 5 stocks from our March 6, 2011 Nasdaq 100 Watch List. The top 5 companies from the watch list are provided below with the closing price from March 7, 2011 to March 6, 2012.

Symbol	Company	2011	2012	% Change
CSCO	Cisco Systems, Inc.	$18.40	$20.03	8.86%
CEPH	Cephalon, Inc.	$56.17	$81.49	45.08%
AMGN	Amgen Inc.	$52.32	$67.38	28.78%
TEVA	Teva Pharmaceutical Industries	$50.32	$43.08	-14.39%
ATVI	Activision Blizzard, Inc	$11.27	$12.65	12.24%
			Average	16.12%

NDX	Nasdaq 100	$2,328.07	$2,712.78	16.52%

Our primary goal at the New Low Observer is to achieve 10% gains within the span of a year inside of our tax deferred accounts. In the case of AMGN, CEPH and ATVI our goal of 10% within a year was accomplished within the first four months. CSCO was the last 10% gain that arrived at the end of the 1-year period. Teva Pharmaceutical (TEVA) severely underperformed for the remainder of the 1-year period. CEPH did not last very long since it was acquired by none other than Teva Pharmaceutical. Cephalon was acquired by TEVA within two months of being on our watch list.

Our specific recommendation of Cephalon at $58.99 on February 15, 2011 and the subsequent acquisition explains why we’re drawn to companies at a new low.

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Nasdaq 100 Watch List

Posted on January 20, 2012 by nlo-admin | Leave a comment

Below are the Nasdaq 100 companies that are within 15% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from Yr Low
BMC	BMC Software, Inc.	34.01	13.93	2.44	N/A	3.74	7.56%
DTV	DIRECTV	43.03	13.41	3.21	N/A	N/A	8.06%
CHRW	C.H. Robinson Worldwide, Inc.	67.66	26.33	2.57	2.00%	8.92	8.60%
NTAP	NetApp, Inc.	36.85	22.46	1.64	N/A	3.54	11.67%
SYMC	Symantec Corporation	16.79	19.1	0.88	N/A	2.69	12.38%
INFY	Infosys Limited	52.29	18.09	2.89	1.10%	5.03	13.38%
EXPE	Expedia, Inc.	31.04	9.21	3.37	3.60%	1.59	13.78%
VOD	Vodafone Group Plc	27.76	13.16	2.11	3.60%	1.07	14.19%
WYNN	Wynn Resorts, Limited	115.47	26.95	4.28	1.80%	5.66	14.30%

Watch List Summary

NetApp (NTAP) has fallen 39.61% from the high of $61.02 on February 11, 2011. The low of October 2009 acts as a significant downside support since it is aligned with the long rising trendline from the 2002 low. According to Dow Theory, the current downside targets are $28.02, $22.52 and $17.02. Based on the current price of $36.85, NTAP could fall by 53% in the worst case scenario. According to Dow Theory, NTAP has upside targets of $44.52, $50.02 and $55.52.

The Punchline: After a 39% decline in price, NetApp (NTAP) is a prime candidate for a two transaction purchase. The first purchase should take place starting at $30. The second purchase should take place around $23.47. Based on the market capitalization of NTAP may actually be a buyout candidate.

Symantec (SYMC) has declined by 19.07% from the high set on May 12, 2011. Dow Theory ascribes downside targets of $15.08, $14.91 and $13.30. When considering the worst case scenarios, SYMC has a downside risk of either -25.62% if the stock falls to the 2010 low of $12.34 or -39.42% at the 2009 low. Both cases present reasonable risk/reward scenarios. The upside target is $18.67.

The Punchline: SYMC seems like an opportune purchase for reasonable gains over next year. Consideration of a single purchase with a larger percentage of the portfolio is most ideal. A sort of "one-and-done" with the acceptance of the downside risk of -40% is in order for SYMC.

Wynn Resorts (WYNN) has extreme downside risk. Based on Dow Theory, WYNN has just fallen below the first of three support levels at $115.47. The next downside target, based on the Dow Theory 50% principle is $74.76 which is 35% below the current price. Our expectation is that WYNN has a high probability of falling to $74 with $64 and $40 as reasonable downside targets.

The Punchline: The volatility profile for WYNN is only for those willing to accept extreme downside risk. "Investors" in WYNN should break their transaction up into at least 3 trades.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of January 23, 2011, based on the closing price of January 21, 2011(found here), and have checked their performance one year later. The companies on that list are provided below with the closing prices from January 21, 2011 to December 20, 2012.

Symbol	Name	2011	2012	% change
CEPH	Cephalon, Inc.	59.64	81.5	36.65%
CSCO	Cisco Systems, Inc.	20.73	19.92	-3.91%
QGEN	Qiagen N.V.	18.56	15.42	-16.92%
TEVA	Teva Pharmaceutical	52.86	45.83	-13.30%
ATVI	Activision Blizzard, Inc	11.25	12.22	8.62%
			average	2.23%

	Nasdaq 100	2268.32	2437.02	7.44%

The Watch List from last year underperformed the Nasdaq 100 by a wide margin. Only Cephalon (CEPH) and Activision (ATVI) were able to keep pace with the index. Teva Pharmaceutical (TEVA) and Qiagen (QGEN) took the large hit among the top five stocks.

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Nasdaq 100 Watch List: December 30, 2011 (revised)

Posted on January 1, 2012 by nlo-admin | Leave a comment

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from low
BMC	BMC Software, Inc.	32.78	13.43	2.44	N/A	3.65	1.83%
ORCL	Oracle Corp.	25.65	14.11	1.82	0.90%	3.1	3.76%
VMED	Virgin Media Inc.	21.38	68.53	0.31	0.70%	4.99	4.19%
SYMC	Symantec Corp.	15.65	17.8	0.88	N/A	2.54	4.75%
CTRP	Ctrip.com	23.4	19.93	1.17	N/A	3.09	4.79%
LRCX	Lam Research	37.02	7.67	4.82	N/A	1.89	6.35%
EXPE	Expedia, Inc.	29.02	8.61	3.37	3.90%	1.49	6.38%
BRCM	Broadcom Corp	29.36	17.68	1.66	1.20%	2.57	6.42%
SRCL	Stericycle, Inc.	77.92	30.92	2.52	N/A	5.66	6.67%
EXPD	Expeditors Int'l of Was	40.96	22.63	1.81	1.20%	4.46	7.08%
DTV	DIRECTV	42.76	13.33	3.21	N/A	N/A	7.38%
AMZN	Amazon.com	173.1	91.25	1.9	N/A	10.19	7.79%
CA	CA Inc.	20.22	11.86	1.7	1.00%	1.74	8.62%
AVGO	Avago Tech.	28.86	13.18	2.19	1.60%	3.57	9.24%
WYNN	Wynn Resorts	110.49	25.79	4.28	1.80%	5.32	9.37%
MSFT	Microsoft Corp.	25.96	9.44	2.75	3.10%	3.68	9.77%
NTAP	NetApp, Inc.	36.27	22.1	1.64	N/A	3.42	9.91%

Watch List Summary

Broadcom (BRCM) has fallen to a one-year low recently, the stock is also near a two-year low. According to Dow Theory, BRCM is considered at fair value at $30.72. The remaining Dow Theory downside targets for this stock are $25.17, $21.47 and $17.77. With the stock trading slightly more than double the 2009 low, the company and its fundamental allow for purchases to be made in two stages.

The Punchline: Broadcom is a strong company in a strong industry that is experiencing consolidation, thereby reducing the number of competitors. Consider buying BRCM in two stages, once at the current price and again at any price below $25.17.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of January 7, 2011 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from January 7, 2011 to December 30, 2011.

Symbol	Name	Jan-11	Dec-11	% change
ISRG	Intuitive Surgical	267.4	463.01	73.15%
CEPH	Cephalon	60.32	81.49	35.10%
CSCO	Cisco Systems	20.97	18.08	-13.78%
APOL	Apollo Group	37.98	53.87	41.84%
AMGN	Amgen	56.98	64.21	12.69%

			Average	29.80%
^NDX	Nasdaq 100	2276.7	2277.83	0.05%

Even with the underperformance from Cisco (CSCO), our watch list from the beginning of last year exceeded the Nasdaq 100 Index by a wide margin.

Disclaimer:
On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.

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Nasdaq 100 Watch List: December 16, 2011

Posted on December 16, 2011 by nlo-admin | Leave a comment

Symbol	Name	Trade	P/E	EPS	Yield	P/B	% from Low
BMC	BMC Software, Inc.	33.17	13.59	2.44	N/A	3.76	0.79%
VMED	Virgin Media Inc.	20.95	67.58	0.31	0.70%	5.02	1.01%
CTRP	Ctrip.com International, Ltd.	23.1	19.88	1.16	N/A	3.08	1.32%
SYMC	Symantec Corporation	15.46	17.59	0.88	N/A	2.49	1.51%
BRCM	Broadcom Corporation	28.72	17.29	1.66	1.30%	2.46	2.39%
LRCX	Lam Research Corporation	35.92	7.45	4.82	N/A	1.85	2.86%
SRCL	Stericycle, Inc.	76.51	30.36	2.52	N/A	5.49	4.74%
WYNN	Wynn Resorts, Limited	105.65	24.66	4.28	2.00%	5.04	5.11%
EXPD	Expeditors Int'l of Was	40.37	22.3	1.81	1.20%	4.37	5.54%
FSLR	First Solar, Inc.	31.91	5.24	6.09	N/A	0.67	6.23%
AMAT	Applied Materials, Inc.	10.33	7.12	1.45	3.10%	1.51	6.49%
HSIC	Henry Schein, Inc.	62.44	16.39	3.81	N/A	2.23	6.74%
CHRW	Robinson Worldwide	66.59	25.91	2.57	2.00%	8.6	6.89%
DTV	DIRECTV	42.1	13.12	3.21	N/A	N/A	7.62%
GILD	Gilead Sciences, Inc.	37.16	10.86	3.42	N/A	4.76	7.87%
CA	CA Inc.	20.12	11.81	1.7	1.00%	1.73	8.11%
NTAP	NetApp, Inc.	35.71	21.76	1.64	N/A	3.42	8.21%
WCRX	Warner Chilcott plc	14.02	36.89	0.38	N/A	88.81	8.68%
AVGO	Avago Technologies	28.8	12.87	2.24	1.50%	3.76	9.01%
RIMM	Research In Motion	13.44	2.45	5.48	N/A	0.79	9.19%
INFY	Infosys Limited	50.37	18.12	2.78	1.10%	4.73	9.22%
MSFT	Microsoft Corporation	26	9.45	2.75	3.10%	3.62	9.94%

Watch List Summary

BMC Software (BMC) has not only fallen to a new 52-week low, it has also fallen to a 2-year low.Based on the decline so far, according to Dow Theory, BMC could retrace to the $40 level.Fair value for the stock is at $44.86.The $40 level seems reasonable within the next year for BMC even though it is 20% above the current price.The most obvious downside target for BMC is the October 2008 low of $22.A decline of $22 would equal a loss of 33%.

It should be noted that despite the market turmoil of 2008, BMC did not fall to the 2006 low.Additionally, the long term support line as drawn in the chart for BMC indicates that $22 ultimate price to watch for. If BMC were to replicate the percentage decline from the May 2008 top to the October 2008 low, the stock would decline to a price of $31.11.

The Punchline: Those interested in BMC could split their investments into two transactions.The first purchase could be done between Friday’s closing price and $31.11 and the second if the stock declines to the $22 level. No additional shares should be bought if the price increases.

Virgin Media (VMED) has an almost uninterrupted price movement from the low in 2008 to the most recent high of $33.32 in May 2011.According to Dow Theory, VMED broke just below the initial support level of $23.30.The next downside target is the 50% principle level of $18.29.Once breaking below $18.29, VMED could be expected to drop to the $13.28 level.The next upside target for VMED is $25.07 which assumes the best case scenario.

However, when contrasting the price movement of VMED to BMC during the decline of 2008, the price of VMED gave up all of the gains from 2004 to 2006 and then some.Those interested in VMED should be willing to accept the stock price to decline to the $13.28 in a worst case situation.

The Punchline:There is significant price support at the $14 level for VMED.This transaction should be broken into thirds with an equal number of shares being bought at each level on the downside.No additional shares should be bought if the price increases.

Ctrip.com International (CTRP) is on a pace to replicate the performance from the high in April 2008 to the low of January 2009 which equaled a loss of 72%. A similar decline in CTRP from the high of $50.57 would bring the price down to $14.16.Suffice to say, the stock “only” needs to decline another $8.94 or 38% from the current price of 23.10.This seems very easy considering the high volatility of Chinese stocks.We believe that unless CTRP is summarily dismissed from the Nasdaq 100 index, there may yet be life in this company.

We believe that the Nasdaq 100 committee added CTRP to the index based on the performance of Priceline.com (PCLN).Amazingly, at the current price of $23.10, CTRP sits one penny below the 2^nd Dow Theory support level of $23.11.any further deviation below the current price almost ensures that the stock is destined for the $10 range.

The Punchline: Watch and wait for CTRP to establish a solid support level.The nearest upside target is $32.26.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of December 10, 2010 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from December 10, 2010 to December 9, 2011.

Symbol	Name	2010	2011	% change
CSCO	Cisco Systems, Inc.	19.70	18.88	-4.16%
ISRG	Intuitive Surgical, Inc.	260.07	440.4	69.34%
AMGN	Amgen Inc.	53.89	58.59	8.72%
DISH	DISH Network Corp	18.80	25.83	37.39%
APOL	Apollo Group, Inc.	37.95	50.36	32.70%
			Average	28.80%

^NDX	Nasdaq 100 Index	2,207.45	2,318.68	5.04%

The performance of the top five stocks from last year was amazing. The average performance was five times better than the Nasdaq 100 index in the same period of time.

Disclaimer:

On our current list, we excluded companies that have no earnings. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and extensive due diligence. We suggest that readers use the March 2009 low (or the companies' most distressed level in the last 2 years) as the downside projection for investing. Our view is to embrace the worse case scenario prior to investing. A minimum of 50% decline or the November 2008 to March 2009 low, whichever is lower, would fit that description. It is important to place these companies on your own watch list so that when the opportunity arises, you can purchase them with a greater margin of safety. It is our expectation that, at the most, only 1/3 of the companies that are part of our list will outperform the market over a one-year period.

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Category Archives: Nasdaq 100 Watch List

Nasdaq 100 Watch List: November 16, 2012

Nasdaq 100 Watch List: November 2, 2012

Nasdaq 100 Watch List: October 5, 2012

Nasdaq 100 Watch List: August 6, 2012

Nasdaq 100 Watch List: June 20, 2012

Nasdaq 100 Watch List: June 8, 2012

Nasdaq 100 Watch List: May 18, 2012

Nasdaq 100 Watch List: April 27, 2012

Nasdaq 100 Watch List: April 13, 2012

Nasdaq 100 Watch List: March 30, 2012

Nasdaq 100 Watch List: March 23, 2012

Nasdaq 100 Watch List: March 16, 2012

Nasdaq 100 Watch List

Nasdaq 100 Watch List: December 30, 2011 (revised)

Nasdaq 100 Watch List: December 16, 2011

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