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Company name Aruba Networks, Inc.
Stock ticker ARUN
Live stock price [stckqut]ARUN[/stckqut]
Confident Investor Rating Poor

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

Aruba Networks, Inc., is a provider of next-generation network access solutions for mobile enterprise networks. The Mobile Virtual Enterprise (MOVE) architecture unifies wired and wireless infrastructures into one seamless network access solution for traveling business professionals, remote workers, corporate headquarters employees and guests. Aruba’s MOVE architecture provides context-aware networking for the post-desktop personal computer (PC) era. Mobility network services are delivered centrally from the data center across thin network access devices or on-ramps. It addresses the secured mobility problem using a user-centric architecture that assigns network access policies to users instead of to data ports or other infrastructure. On November 30, 2011, it completed its acquisition of Avenda Systems (Avenda). On May 23, 2012, it acquired a wireless technology company. In May 2013, Aruba Networks Inc announced the acquisition of Meridian Apps, Inc.
Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. It is not possible to confidently invest in a company that is not currently profitable.

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

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Editors Note: It is important to manage your portfolio as market conditions evolve. It is also important to invest differently for different types of savings goals. Gloria’s article helps explain these comments.

Guest Post by Gloria Agnello

The success of investment generally hinges on long-term planning. However, most investors can’t help but make day-to-day shifts with their investment portfolios. Some of the concern is certainly justified given the increase in the volatility over the last few years. The fact is that both bull and bear market are completely dissimilar and can behave distinctly during different situations. The stock market investors must be feeling pretty satisfied with 2013 so far as the Dow Jones industrial average is up by 900 points and has been flirting around with a record-high level before the economic downturn that set at 2008. Some of the other major indices are S&P 500 and Nasdaq that have also been doing specifically well.

Even so, years after years of turbulence and tumbles in the stock market has left the investors wondering whether or not their portfolio is set up in an effective way that can help beat the odds and the future financial storms. As the previous market meltdown is still freshly placed in our memories, even slight declines in the price of stocks leave investors wondering whether or not they’re going to end up in a plunge in their assets. There have been countless studies to ensure the investment strategy to adopt in every kind of markets, but rarely there has been a worthwhile result. Here’s how you can make your own mix to take advantage of a mixed financial environment.

Start off with the best strategy for your needs: Always remember that a long term strategy for investment should offer a mix of various types of assets, including stocks and some other high risk investments for growth like bonds and other income producing investments. Everyone’s financial needs are different and therefore you need to customize your portfolio mix than accepting a solution that is common for all. If your goals are pretty short-term, you might want more predictable investment like bank CDs, bonds in spite of their low returns.

Hold on to the right stocks at the right time: Usually the right move is by keeping the stock allocations in the right move but which stocks you need to favor will depend on few current conditions. Soon after the market rose sharply, the solid blue-chips with dependable dividend income can even stem your losses in case of a bear market. Kraft Foods [stckqut]KRFT[/stckqut] or energy giant Chevron [stckqut]CVX[/stckqut] are some of the successful stock examples.

Allow your money to travel the world: Whether you’re investing in bonds or stocks, one should have both international and domestic investments. Adjust your mix as market conditions will constantly keep changing. For instance, even though the US stock market has risen to record high levels, the stock markets in Brazil and China remain below their levels. Therefore, you need to know every detail of the investment market in order to make the best choice.

You will see that hot investment fads will come and go but still you shouldn’t let go of your basic investment strategy to take the plunge into the latest bandwagon. Have the right investment mix in order to be a confident investor who has the potential to beat the odds of the financial catastrophes.

Gloria Agnello is an independent Financial adviser and also a content writer who has written many articles on debt, mortgage and on other finance related topics. She has been associated with some leading finance related websites. You can reach her at: gloria dot agnello at gmail.

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Company name Cna Financial Corp
Stock ticker CNA
Live stock price [stckqut]CNA[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

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

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $46.43
Target stock price (averages with growth) $49.46
Target stock price (averages with no growth) $38.28
Target stock price (manual assumptions) $35.7

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

CNA Financial Corporation (CNAF) is an insurance holding company. Its core business commercial property and casualty insurance operations operate in two segments: CNA Specialty and CNA Commercial. Its non-core businesses are managed in two business segments: Life & Group Non-Core and Corporate & Other Non-Core. Its insurance products primarily include commercial property and casualty coverages, including surety. Its products and services are marketed through independent agents, brokers and managing general underwriters to a rang of customers, including small, medium and large businesses, associations and professionals. Its property and casualty and remaining life and group insurance operations are primarily conducted by Continental Casualty Company, The Continental Insurance Company, Western Surety Company and Continental Assurance Company. In July 2012, it acquired Hardy Underwriting Bermuda Ltd. On December 14, 2012, it sold SUR Insurance Agency, Inc. and The Bond Exchange.

 

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.

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

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Over the last several weeks, I have been re-checking the Watch List that I maintain on this site. This is an essential exercise that I do on a regular basis, and you should do as well. You need to ask yourself if the stocks that you have currently selected to be in your portfolio are still high enough quality to be in your portfolio. If you followed along, you know that I took several stocks off of my Watch List.

My book, The Confident Investor, is designed to help you grow a portfolio over time. It is designed for the investor that does not have enough money to fully diversify into enough quality stocks. The strategy uses an easy method to identify the time to invest an oversized share of your portfolio into certain stocks, allow that investment to grow quickly, and then rebalance to the next fast moving stock.

There are situations where an investor has saved money for a long time and has accumulated a comfortable sum in an investment account. In those situations, the investor may want to acquire shares in a diverse portfolio and have that money grow without active effort. Some would say that this is where mutual funds come to play, but the success of managed mutual funds is quite suspect. Index funds are always a good option, and I suggest that every investor have some exposure to index funds.

In the case of a mature investor with substantial savings to invest, I suggest that neither managed mutual funds nor index funds are appropriate. Rather, I suggest that the investor evenly divide the investment among high quality stocks such as my Watch List. As a test to this strategy, I compared the 3-year return of my Watch List to the major stock indicators. My Watch List achieved a 90.01% return over 3 years! This compares to the Dow Jones Industrial Average 3-year return of 53.19%, the 3-year S&P 500 return of 56.35%, and the 3-year NASDAQ return of 61.95%. This means I beat those indexes by 69.21%, 59.73%, and 45.28% respectively! This is a very sizable difference in return and can make a sizable impact in your longterm financial success.

Watch List Performance

It is rare that someone has enough investment dollars saved up to invest evenly in this many stocks. If you have achieved that level of savings, then this may a simpler way to take advantage of this technique. The process is actually quite simple. Divide your money evenly among the 51 stocks that are on the Watch List. Every year, on the anniversary of beginning this technique, rebalance your investments evenly across the list. That is all that is required.

My traditional method of investing should be a higher return than this method. It requires more vigilance and effort. My traditional method has you tracking the performance of each stock several times a week. You will then invest a larger than normal amount of money into a couple fast moving stocks. When a stock cools down, you will leave the stock and invest your capital in another stock that is increasing rapidly. Think of it as always increasing the value of the stock and never decreasing it by taking advantage of all of the highs but none of the lows. This allows you to grow your investment fund so that you can achieve the steady state described here.

One of the elements of the traditional method that I teach is that you leave your profit with the stock that generated the profit. I call this system Grow on Other People’s Money. It essentially allows you to move your limited cash to the fastest growing stock and leave the profit that is generated in that stock. The profit that you leave in place is “free money” since you have already preserved your initial capital and invested it elsewhere. This strategy tends to have rapid increases in specific stock holdings but even the remaining profit will beat the market because you have invested in a great company.

My overall philosophy is simple. Find great companies that are so well run that it is easy to beat the market and invest in those companies with a plan.

I regularly update the Watch List. Every week I publish reviews of companies. Sometimes those companies are so good that I add them to my Watch List. You should follow my posts to get updates on great companies that I have found (and learn the companies that you should drop). You can make sure that you are receiving my updates by subscribing to me in several forums:

The companies that I used for this analysis (and my current Watch List as of this writing) were:

  • Agilent Technologies Inc.
  • Apple Inc.
  • Akamai Technologies Inc.
  • Alexion Pharmaceuticals Inc.
  • American Tower Company
  • ANSYS, Inc.
  • Atlas Pipeline Partners
  • Ascena Retail Group Inc.
  • Balchem Corporation
  • Blackrock, Inc.
  • Broadcom Corporation
  • Baytex Energy Corp
  • Compania de Minas Buenaventura SA (ADR)
  • Buffalo Wild Wing
  • Capital One Financial Corp
  • Cirrus Logic, Inc.
  • Cummins Inc.
  • Darling International Inc.
  • Deckers Outdoor Corporation
  • Ebay Inc.
  • Equinix, Inc.
  • Extra Space Storage
  • First Financial Bancorp
  • Fossil, Inc
  • Goldcorp Inc.
  • Google Inc.
  • Herbalife Ltd.
  • HMS Holdings Corp
  • Harley-Davidson, Inc.
  • Helmerich & Payne Inc.
  • IBERIABANK Corpor
  • Intuitive Surgical Inc.
  • JPMorgan Chase & Co.
  • KLA-Tencor Corporation
  • Liberty Property Trust
  • Monster Beverage
  • Merck & Company
  • Net Servicos de Comunicacao SA (ADR)
  • Annaly Capital Management Co.
  • Priceline.com Inc
  • Potash Corporation
  • QUALCOMM Incorporated
  • Questcor Pharmaceuticals
  • Royal Gold, Inc.
  • The Boston Beer Company
  • Skyworks Solutions Inc.
  • Tractor Supply Co
  • VALE S.A.
  • Volterra Semiconductor Corporation
  • Washington Banking
  • Yum! Brands, Inc.

You can find my updated Watch List on the right side of this site as well as reproduced on this page.

If you want to learn more about how I find great companies, read my book. 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.

 

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Company name Acuity Brands, Inc.
Stock ticker AYI
Live stock price [stckqut]AYI[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

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

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $85.41
Target stock price (averages with growth) $93.29
Target stock price (averages with no growth) $68.48
Target stock price (manual assumptions) $86.08

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

Acuity Brands, Inc. (Acuity Brands), incorporated on September 20, 2007, is the parent company of Acuity Brands Lighting, Inc. (ABL), and other subsidiaries. Acuity Brands is a provider of lighting solutions for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. The Company’s lighting solutions include devices, such as luminaires, lighting controls, power supplies, prismatic skylights, light-emitting diode (LED) lamps, and integrated lighting systems for indoor and outdoor applications utilizing a combination of light sources, including daylight, and other devices controlled by software that monitors and manages light levels while optimizing energy consumption (collectively referred to herein as lighting solutions). Effective March 14, 2013, the Company acquired eldoLED Europe BV.

 

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.

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