tag:blogger.com,1999:blog-2335748440449035592.post338895793643912345..comments2007-12-30T09:53:34.497-05:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2335748440449035592.post-30112039794628846352007-12-30T09:53:00.000-05:002007-12-30T09:53:00.000-05:00Ford Equity Research’s Investment Conclusion<BR/>The Ford research team projects that Suntech will outperform the market over the next 6 to 12 months. Our<BR/>decision is based on systematic analysis, which balances Suntech's quality and trend of its earnings growth, relative<BR/>fundamental valuation and its timeliness.<BR/><BR/>Projected Outperformance<BR/>Recommendation Decision: Buy<BR/>Ford’s Buy recommendation on Suntech Power<BR/>Holdings Corp (ADR) is the result of our systematic<BR/>analysis of three basic characteristics: changes in<BR/>earnings growth, relative valuation, and price<BR/>momentum. For a stock to be rated in either the buy<BR/>or sell category, we require a clear signal from these<BR/>factors. A clear signal can be generated by a very<BR/>positive or very negative rating in as few as one of<BR/>the identified measures. Once a buy or sell rating is<BR/>triggered, notable deterioration (or improvement in<BR/>the case of a sell rating) in one or more factors can<BR/>cause the rating to change materially. Consequently,<BR/>simple averaging of the factors may not always add<BR/>up to match the overall recommendation.<BR/>Earnings Momentum: Very Positive<BR/>The operating earnings per share of Suntech Power<BR/>Holdings Corp (ADR) have increased 66.1%, from<BR/>$0.56 to $0.93, in the last 12 months. Ford’s<BR/>research on historical earnings growth rates shows<BR/>that they provide little value in predicting near term<BR/>price change. However, measuring the change in the<BR/>growth rate of operating earnings over time gives a<BR/>good indication of future price performance. In the<BR/>case of Suntech Power Holdings Corp (ADR),<BR/>proprietary analysis of the change in earnings over<BR/>each of the last four quarters and the current quarter<BR/>estimate shows strong acceleration in the quarterly<BR/>growth rates, which should lead to a good<BR/>improvement in earnings growth.<BR/>Analysts Forecasts: Very Positive<BR/>Recent changes to analysts’ forecasts and variances<BR/>between reported and estimated earnings provide<BR/>important information about a company’s future<BR/>earnings performance. Ford uses this information in<BR/>conjunction with earnings momentum to identify<BR/>early evidence of a catalyst to near term stock price<BR/>performance. Earnings forecasts for Suntech Power<BR/>Holdings Corp (ADR) have been increasing<BR/>recently, which indicates an improvement in future<BR/>earnings growth. The company has also reported<BR/>earnings higher than those predicted in earlier<BR/>estimates. This indicates an ability to exceed analysts’<BR/>expectations and the potential for improving<BR/>earnings growth in the near future.<BR/>Valuation: Negative<BR/>Ford measures the value of a company relative to all<BR/>companies in our coverage universe based on<BR/>operating earnings yield, an earnings to price ratio<BR/>based on the last 3 quarters of operating earnings<BR/>and the current quarter’s estimate. Relative<BR/>valuation defines the price appreciation potential of<BR/>a stock, in that those companies with low relative<BR/>valuations, on average, produce higher returns. The<BR/>operating earnings yield for Suntech Power Holdings<BR/>Corp (ADR) indicates that it is overvalued compared<BR/>to other companies in the Ford universe.<BR/>Price Momentum: Neutral<BR/>The analysis of historical price changes forms our<BR/>evaluation of Suntech Power Holdings Corp<BR/>(ADR)’s near term price appreciation potential. Our<BR/>research has shown that a stock’s price change over<BR/>the past year proved to be a good indicator for its<BR/>performance over the subsequent six month period,<BR/>but more importantly, large price movements over<BR/>the past quarter or month showed a large mean<BR/>reversion effect. A mean reversion effect indicates<BR/>that an above average price change will be followed<BR/>by an opposite change, converging toward the<BR/>average trend. Suntech Power Holdings Corp<BR/>(ADR)’s stock price is up 140.6% in the last 12<BR/>months which should lead to above average<BR/>performance over the next 6 months. Its stock price<BR/>is also up 10% in the past month, which should lead<BR/>to below average performance in the very near term.dhttp://www.blogger.com/profile/08500359981802753931noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-82487830223203938432007-12-29T17:33:00.000-05:002007-12-29T17:33:00.000-05:00I see why now<BR/>SJH highest sector (1/3rd) is financials<BR/>for SKK financials make up 8%<BR/>I would assume this explains the large variance :)<BR/>TWM has 20% exposureTraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-51106837264287142872007-12-29T17:30:00.000-05:002007-12-29T17:30:00.000-05:00Looks good<BR/><BR/>looks like its trading in line with TWM but slightly better<BR/><BR/>http://finance.yahoo.com/q/bc?t=3m&s=SJH&l=on&z=m&q=l&c=twm<BR/><BR/>Looks like SKK is the outperformer (the growth component) and the SJH is the underperformer. TWM is of course the mix of both. <BR/><BR/>Might have to look into that 1- thanks for the head up. Looks like it outperformed on 6 mo and 1 year basis as well.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-4820971276629024892007-12-29T17:24:00.000-05:002007-12-29T17:24:00.000-05:00Mark,<BR/><BR/>Great Blog. What do you think of SJH UltraShort Russell 2000 Value instead of TWM? SJH has been producing great returns.goldbearhttp://www.blogger.com/profile/11841825110752909651noreply@blogger.com