Company name Harley-Davidson, Inc.
Stock ticker HOG
Live stock price [stckqut]HOG[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $85.66
Target stock price (averages with growth) $108.83
Target stock price (averages with no growth) $82.09
Target stock price (manual assumptions) $185.01

The following company description is from Google Finance: http://www.google.com/finance?q=hog

Harley-Davidson, Inc. produces heavyweight cruiser and touring motorcycles. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson dealers and customers. The Company operates in two segments: the Motorcycles & Related Products (Motorcycles) segment and the Financial Services (Financial Services) segment. The Motorcycles segment designs, manufactures and sells at wholesale heavyweight (street legal with engine displacement of 651+cc) Harley-Davidson motorcycles as well as a line of motorcycle parts, accessories, general merchandise and related services. The Financial Services segment consists of Harley-Davidson Financial Services (HDFS). HDFS provides wholesale and retail financing and provides insurance and insurance-related programs primarily to Harley-Davidson dealers and their retail customers.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

Company name HMS Holdings Corp.
Stock ticker HMSY
Live stock price [stckqut]HMSY[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $35.98
Target stock price (averages with growth) $52.57
Target stock price (averages with no growth) $37.99
Target stock price (manual assumptions) $35.63

The following company description is from Google Finance: http://www.google.com/finance?q=hmsy

HMS Holdings Corp. (HMS) provides cost containment services to Government and private healthcare payers and sponsors. Its services ensure that healthcare claims are paid correctly, and its coordination of benefits services ensure that they are paid by the responsible party. Together, these services help clients recover amounts from liable third parties; prevent future improper payments; reduce fraud, waste and abuse; and ensure regulatory compliance. Its clients are the Centers for Medicare & Medicaid Services (CMS); state Medicaid agencies; commercial health plans, including Medicaid managed care, Medicare Advantage, and group health lines of business; government and private employers; Pharmacy Benefit Managers (PBMs); child support agencies; the Veterans Health Administration (VHA); and other healthcare payers and sponsors. In December 2012, the Company acquired the assets and liabilities of MRM, which provides Workers' Compensation recovery services for commercial health plans.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

A short time ago, I explained how to grow your holdings in a company for free. I more fully explain this method in my book, The Confident Investor. After you have practiced this method for a while, you will come upon the situation where you have to choose the best company to receive your investment dollars.

As I have explained before, you will have divided your portfolio into equal allotments. You should have at least 10 allotments but you could have 20-50, if your cash supports this amount. For the sake of argument, lets say that you have decided to have 10 allotments in your portfolio. Eventually, you will run into the situation where you have already invested some of your allotments, let’s stay 7 in this case, and only have 3 more allotments to invest. If the market is growing nicely, you may find 5 companies on the Watch List that are presently ready for investment.  This creates a dilemma – you need to choose the best 3 of the 5 companies.

This situation is not rare and I personally experience it on a regular basis. Here is my logic to reduce the number of potentials:

  1. Recheck to make sure the indicators are all equally strong. In many cases, I can eliminate one choice because the stock barely passes all of the minimum tests. If I have to be picky, the weak ones need to get a bit stronger so they get trimmed off the list.
  2. Am I already exposed to the market in my other allocations? For instance, I would want to avoid having 2 oil companies or 2 specialty retailers. I would also want to avoid a supplier and its main customer. Once again, this probably doesn’t matter, except if I am trying to eliminate a stock.
  3. If the first 2 filters don’t cut down my choices, I look for where I have existing free shares already in my portfolio. The company that has the least accumulated free shares is the company that I will eliminate.  For instance, if I am choosing between two companies and I have 35 free shares in one and 85 free shares in the other, I will choose the 85.  My goal in this situation is to develop a portfolio that has a full allotment of each company that I am tracking. I have explained this earlier, once I have achieved a full allotment in a company, I will suspend building up more shares in that company.

Hopefully, by applying these three simple tests you are able to decide which stock is prime for your portfolio.  If some of this is not clear, you can ask me questions on Twitter or Facebook or leave a comment below. You can also achieve a greater understanding by reading my book, The Confident Investor. You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

Company name Herbalife Ltd.
Stock ticker HLF
Live stock price [stckqut]HLF[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $73.53
Target stock price (averages with growth) $91.74
Target stock price (averages with no growth) $63.67
Target stock price (manual assumptions) $61.4

The following company description is from Google Finance: http://www.google.com/finance?q=hlf

Herbalife Ltd. is a global network marketing company that sells weight management, nutritional supplements, energy, sports and fitness products and personal care products through a network of approximately 2.7 million independent distributors, except in China, where the Company sells its products through retail stores. The Company is a network marketing company that sells a range of weight management products, nutritional supplements and personal care products. As of December 31, 2011, the Company sold products in 79 countries throughout the world. Herbalife’s products are grouped in four principal categories: weight management, targeted nutrition, energy, sports and fitness and Outer Nutrition, along with literature and promotional items. On December 31, 2012, the Company acquired a manufacturing facility in Winston-Salem, North Carolina.

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns. I am leaving the company on my Watch List as the biggest concern is the slowdown in P/E growth.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

Gold prices have dropped a bit in the last couple months. This has caused some consternation among some investors. This is utterly foolish!

My gut is investing in gold right now is not particularly logical. It unquestionably is trending down. That is unwelcome news for some of the gold mines, but it is hardly a concern for a Confident Investor. We can easily invest in other companies that are doing well and are not subject to the whims of a commodity price. If you read this site even for a short time, you should know that I don’t like a “Buy and Hold” investment strategy.

Historically, gold was used as a safeguard against risk in the financial world. It was seen as a safe harbor when there was uncertainty in other investments. This was one of the principal reasons given when gold was growing so quickly from the beginning of 2006 to mid-2011. Then as the economy stopped hurting so badly, the price leveled off in late 2011 and 2012. It is not surprising, in fact it is expected, the price would drop with a stable economy.

As we look at the Gold ETF [stckqut]GLD[/stckqut], this is exactly what we see. There is quite a bit of volume as the price increases into 2011. Then, the volume drops substantially as the price oscillates in a sideways channel. Now the volume has increased as the price drops. What this shows is that money was flowing into this investment vehicle, it was be held, and now it is flowing out. The new home for that money is not currently clear but maybe it is the reason the stock market has been breaking records lately.

NYSEARCA GLD SPDR Gold Trust ETF from Google Finance

Many will point out that the economy is not as strong as it could be. That is fine. I won’t argue that point. However, the economy has been fairly stable for at least the last 12 months with a extremely slow recovery and painfully slow reduction in unemployment. The economy is not getting worse, and by most measures it is holding its own or slightly improving.

A while back I suggested that you should not invest based on politics or economic announcements. Gold is an economic announcement. You should watch it and understand it, but trying to decipher how it is going to move Google [stckqut]GOOG[/stckqut], Apple [stckqut]AAPL[/stckqut] or Ebay [stckqut]EBAY[/stckqut] is a fool’s errand.