10 Coiled Spring Blue-Chip Bargain Buys

seekingalpha03-29

The market is near record highs and NVDA is up 11 straight weeks. Yet, blue-chip coiled spring bargains are still bountiful.VFLO is the best deep value strategy ETF I've found. A great combo of deep ...

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Yet, blue-chip coiled spring bargains are still bountiful.VFLO is the best deep value strategy ETF I've found. A great combo of deep ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680419-10-coiled-spring-blue-chip-bargain-buys\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4567","symbol_name":"ESG概念","start_time":0,"source_url":"https://seekingalpha.com/article/4680419-10-coiled-spring-blue-chip-bargain-buys","article_id":"2423452145","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/520885672/image_520885672.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2423452145","pubTimestamp":1711710000,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The market is near record highs and NVDA is up 11 straight weeks. 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Yet, blue-chip coiled spring bargains are still bountiful.VFLO is the best deep value strategy ETF I've found. A great combo of deep value, quality, and growth. It's beating the S&P, value, and even the Nasdaq since inception.Combining ETFs with individual stocks is a great way to potentially achieve superior returns and yield than ETFs can achieve.These 10 deep value coiled spring blue-chip bargains have significant fundamentally justified return potential in the next year.They yield 3.4%, have BBB+ average credit ratings, are growing 12% to 13%, and are 42% historically undervalued. Their average 12-month fundamentally justified return potential is 79%.   peshkov Annual rebalancing time is a joyous opportunity to examine one's portfolio, potentially prune weeds, and water the flowers.   Ritholtz Wealth Management  Vanguard research shows that annual rebalancing is optimal. Annual rebalancing can boost long-term yearly returns by 0.6% over time. The \"only free lunch\" on Wall Street is diversification because of rebalancing. Morningstar research confirms that annual rebalancing is highly efficient regarding taxes and maximizing volatility-adjusted returns. It's also convenient if you're using an automated rebalancing software platform.   Sharesight I'm rebalancing the Zen Value portfolio today. The Zen series of portfolios consists of 50% ETFs and 50% individual blue-chips.  The instant diversification benefits of ETFs. The fundamental (yield, growth, value) boosting power of individual companies.  Changing Out The Value ETF We started the Zen series on January 1st, 2022, right at the market's top before the Great Inflation Bear Market of 2022. We underperformed the Vanguard Value ETF (VTV) most of the time before rallying to take a slight lead as Meta (META) recovered from a 75% peak decline.   Sharesight PayPal (PYPL) didn't recover, and the long bonds (ZROZ) that we added to hedge the recession didn't work out in the worst bond bear market in US history. A recession is now unlikely. Positive Economic Outlook Means Deep Value Has Strong Economic Tailwinds VFLO: 5 Reasons I'm Buying This Dividend ETF For My Retirement Portfolio In this article, I explained how the VictoryShares Free Cash Flow ETF (VFLO) is the best deep-value ETF I've ever found, and now that it's almost one-year-old, I'm gaining confidence that its strategy will generate 1% to 2% superior annual returns relative to the Pacer US Cash Cows 100 ETF (COWZ) that it was designed to deliver.   VictoryShares The historical backtest since 1991 for this strategy shows 17.6% annual returns, compared to the Russell 1000's 9.6%. Thirty-two years doubling the market's returns is the best I've ever seen, and it's not just backtest data that says VFLO is the best value ETF.   Ycharts Since inception, VFLO has outperformed COWZ, VTV, and even the S&P and Nasdaq.   Dividend Kings S&P Valuation Tool While less than one year of data is not statistically significant, VFLO's concentrated deep value + growth approach is attractive enough that I have opened a starter position in my ZEUS Family Fund. And here's why I'm confident VFLO could outperform VTV in the next 12 months. Economic Data Pointing To No Landing Scenario   Atlanta Federal Reserve Last week, the Federal Reserve raised its growth outlook for the year by 50%, from 1.4% to 2.1%. This is in accordance with the Atlanta Fed's model, the blue-chip consensus, and the New York Fed's real-time model.   New York Federal Reserve According to JPMorgan Asset Management, current productivity is running at 3.2%, which means a GDP growth potential of 3.5%.   Ycharts Goldman and JPMorgan estimate that AI, once it ramps up, could boost productivity growth by 3% to 4.5%. Record US productivity (for the entire year) was in the roaring 1920s at 3.8%. Analyst firm McKinsey is the most optimistic, estimating 3.9% to 6.2% long-term productivity potentially generated by the AI revolution. 4.2% to 6.5% potential GDP growth long-term. According to Bank of America, US corporations have the world's best corporate earnings growth leverage. Each 1% change in GDP growth = 4% to 5% corporate profit growth. In other words, stronger-than-expected economic growth, which we've had for two years as productivity has been trending higher, could boost S&P profits. S&P Growth Consensus   FactSet Research Terminal Mind you, Schwab, McKinsey, Goldman, and JPMorgan don't expect AI to start boosting economic growth for 3 to 5 years, but profit growth is expected to be strong regardless. 2027 and beyond is a potentially even more substantial EPS growth period. For context, our rivals' corporate profit growth consensus forecasts for various countries.  Emerging markets: 4.5% EPS growth China: 7.5% Europe: 8% Japan 10% US 13%  VFLO Growth Consensus   FactSet Research Terminal Why is VFLO soaring when its earnings are expected to fall 13.5% in 2024?   Pacer Wall Street's favorite valuation metric is 12-month forward P/E, and the market is looking beyond a weak 2024 and to double-digit earnings growth in 2025 and 2026. VFLO trades at 11X EV/FCF or a 9% FCF yield, just 7.5X cash-adjusted earnings, pricing in -2% EPS growth forever. In a stronger-than-expected economy, a \"no landing\" scenario where growth doesn't even slow below trend,   VTV Growth Consensus   FactSet Research Terminal Vanguard value offers higher multiples with slower growth recovery, and that's why fundamentals justify VFLO's 2X outperformance over it. With the economy likely to outperform in the short and medium term (AI boost coming in 2027 to 2029), value is expected to benefit from solid earnings growth courtesy of a strong economy. And the biggest beneficiary of that earnings boom is deep-value companies like what VFLO owns. VFLO Holdings       Holding Portfolio %   CIGNA GROUP/THE 4.00   CENTENE CORP. 3.72   CVS HEALTH CORP 3.33   EXXON MOBIL CORP 3.21   CHEVRON CORP 3.18   LENNAR CORP. CL A 3.18   ELEVANCE HEALTH INC 3.16   EXPEDIA GROUP INC. 2.79   QUALCOMM INC. 2.51   NRG ENERGY INC. 2.49   SKYWORKS SOLUTIONS INC 2.44   ZOOM VIDEO COMMUNICATIONS 2.33   CARDINAL HEALTH INC 2.27   CONOCOPHILLIPS 2.25   EOG RESOURCES INC 2.14   DR HORTON INC. 2.13   PACCAR INC. 2.11   ARCHER-DANIELS-MIDLAND CO 2.08   MARATHON OIL CORP. 2.07   PULTEGROUP INC. 2.06   VISTRA CORP 2.00   PHILLIPS 66 1.93   MCKESSON CORP. 1.90   MOLINA HEALTHCARE INC 1.87   HUMANA INC. 1.85   DEVON ENERGY CORP. 1.85   OWENS CORNING INC 1.82   TAPESTRY INC 1.81   DELTA AIR LINES INC 1.80   CENCORA INC 1.77   TOLL BROTHERS INC. 1.66   PAYCHEX INC. 1.65   NVR INC 1.63   PIONEER NATURAL RESOURCES 1.62   DIAMONDBACK ENERGY INC 1.61   INCYTE PHARMACEUTICALS 1.57   WILLIAMS-SONOMA INC 1.42   JUNIPER NETWORKS INC 1.39   SNAP-ON INC. 1.37   GODADDY INC - CLASS A 1.35   NETAPP INC 1.35   AMDOCS 1.34   RELIANCE INC 1.33   DOCUSIGN INC 1.27   F5 Inc 1.26   HALLIBURTON CO. 1.23   BAKER HUGHES CO 1.18   COTERRA ENERCOTERRA ENERG 1.15   OVINTIV INC 1.06   JABIL INC 1.00   CASH AND CASH EQUIVALENTS 0.54   Total 100.00   Click to enlarge (Source: VictoryFunds) Finding The Best Deep Value Blue-Chip Bargains Now that you can see why I'm confident that VFLO is poised to keep beating VTV, how about the ten individual blue chips? What are the best names for potentially fundamentally justified returns next year and beyond? First, let me be very clear. I NEVER MAKE RETURN FORECASTS ABOUT THE SHORT-TERM.  In the short-term, luck is 20X as powerful as fundamentals, and only in the long-term (10+ years) are fundamentals 10X to 33X as powerful as luck). I always describe FUNDAMENTALLY JUSTIFIED TOTAL RETURN POTENTIAL.   IF AND ONLY IF a company grows as the analyst consensus expects. And returns to historical market-determined fair value. Then, this is the total return you would expect. Which would be 100% justified by today's consensus fundamentals.  Let me use Nvidia (NVDA) and Amazon (AMZN) as two examples of fundamentally justified return potential. Nvidia Current Price: $942.89. Fair Value Today: $1,020.06 End of Year Fair Value: $1,182.93 Based on current 2025 NVDA estimates of $29.47 in earnings and the 10-year average P/E of 40.14, if NVDA ends the year at $1,182.93, that would be 100% justified by fundamentals. 26% fundamentally justified upside to fair value by year-end. Does that mean I think NVDA will be at $1183 by year-end? Is this an official \"price target\"? Absolutely not. In the short term, luck, momentum, and sentiment dominate fundamentals. If NVDA is up 26% from here by year-end, that would simply be justified by fundamentals. Amazon current price: $178.87 Fair Value Today: $335.09 Fair Value Year End: $378.73 (112% upside justified by current consensus fundamentals) Amazon is even more of a coiled spring and trading at a PEG of just 0.5, with 14X cash flow vs 31% growth expected through 2029. Finding 10 Deep Value Blue-Chips With Explosive Upside Potential Here is how I use the DK Zen Research Terminal to find the best blue-chip ideas for articles and my family's $2 million real-money fund.           Screening Criteria Companies Remaining % Of Master List   1 Add \" FCF Yield and 12 month fundamentally justified upside\" Under \"Columns\"   0.00%   3 BHS Rating \"reasonable buy, good buy, strong buy, very strong buy, ultra value buy\" 297 58.81%   4 Blue-Chip Quality Or Better(10+ Quality) 286 56.63%   5 Credit Rating Investment Grade (BBB- or better) 217 42.97%   6 LT Total Return Potential 10+% 128 25.35%   7 Non-Speculative 122 24.16%   7 Sort By Valuation   0.00%   8 Use the 10th highest discount to fair value (36%) to isolate the top 10 names 10 2.57%   Total Time 2 minutes       Click to enlarge So here are the best non-speculative, investment grade, deep value blue-chip bargains with 10+% long-term consensus total return potential and the most explosive total return potential for 2024, up to 100%. NOT A FORECAST, JUST FUNDAMENTALLY JUSTIFIED RETURN POTENTIAL 10 Blue-Chip Bargains With Up To 100% Upside Potential In The Next Year Let's start with the fundamentals of all ten companies to showcase just how impressive these companies are.   Dividend Kings Zen Research Terminal 3.4% average yield is superior to VTV and even Vanguard's high-yield ETF, which yields 3%. The average historical discount to fair value is 42%, compared to the S&P's 6% historical premium. The 87% average safety and 84% overall quality are Super Sleep Well at Night (Aristocrat level) quality, with a 0.5% risk of a dividend cut today and just 2% in another Great Recession or Pandemic-level recession. S&P estimates these companies have long-term risk management in the top 18% of global companies, and according to the FactSet analyst consensus, they are growing at 12% to 13%. That means 12% to 13% long-term dividend growth and 16% to 17% if you reinvest the dividends.  Total returns track closely with portfolio income growth. 16% to 17% consensus long-term return potential for these ten deep-value blue chips.  The average credit rating is BBB+ stable with 5.75% year bankruptcy risk. The average FCF yield (free cash flow/market cap + net debt) is 7.1%, compared to 3.3% for the S&P 500 and 8.7% for VFLO. Nearly the exact FCF yield of VFLO but with 2X the yield and similar expected future return potential. That's why they average a 79% fundamentally justified upside over the next 12 months, with up to 112% for Amazon by the end of the year.  The Complete Portfolio (56 companies)   Morningstar  Here is the complete list of the holdings, factoring in VFLO as 50% of the portfolio.   Morningstar   Morningstar   Morningstar   Morningstar   Morningstar  The best description of this portfolio is a balanced mid-cap deep value portfolio.   Morningstar  A diversified portfolio focused on healthcare, consumer cyclicals, energy, and financials should do well in a stronger economy.   Morningstar  Morningstar's analysts estimate that the current portfolio will generate 12% to 13% long-term returns, ignoring its deep discount to fair value. VFLO's portfolio consensus growth is 11%, but its historical backtest returns of 17% to 18% combined with the 16% to 17% long-term consensus return potential of the stock bucket indicate that 16% to 18% long-term returns are possible with this portfolio. 12X earnings for 11% growth sound? Global stocks like those in Europe are trading at similar valuations but offering 8% medium-term growth and much lower long-term growth potential. Historical Returns Since 2017 (COWZ Substituting for VFLO) While history is no guarantee of future returns, it can provide a reasonable verification that current analyst forecasts are consistent with historical returns. For strategy ETFs like VFLO, where the portfolio is rebalanced quarterly, historical returns are the best way to estimate future returns. The current portfolio will completely differ within one to two years, so current growth forecasts for VFLO are meaningless.   Portfolio Visualizer Premium  VFLO should have historically outperformed COWZ by 1% to 2% (per its historical backtests and current 6% outperformance since inception), meaning that Zen Value would have likely delivered 14% to 15% returns. Using COWZ instead of VFLO would have beaten VTV by over 2% and with lower volatility.   Portfolio Visualizer Premium  Based on historical returns, I would expect 13% to 15% average rolling returns, and using COWZ, it was 12% to 13%, far better than VTV's 9% to 11% and even similar to the S&P's 12% to 13%. At a time when almost no value ETF could match the S&P, Zen Value came close and significantly beat VTV, the most popular value ETF.  FOMO = market envy. It can cause you to abandon a good long-term strategy out of disgust. Minimal FOMO risk with Zen value due to superior growth characteristics.  Consider the worst rolling returns of the portfolio. -11% in the worst 12-month period was better than VTV's -15% worst year and the market's -18%. The worst 3-year return was 4.2% vs 0.4% for VTV and 5% for the S&P (and -3.3% for COWZ). The lowest five-year return was 9% annually, the same as the S&P's worst five-year period and 7% for VTV. The worst 7-year rolling period was 11.5%, compared to 9.9% for VTV and 13% for the S&P. But you don't have to wait years or decades for this portfolio strategy to pay off potentially. Consensus Total Return Potential Through 2026  If and only if each company grows as currently expected (consensus of all analysts) and returns to historical fair value by the end of 2026, these are the returns you could expect. It's not a forecast, just fundamentally justified upside potential.  HDFC Bank (HDB)   FAST Graphs, FactSet Global Payments (GPN)   FAST Graphs, FactSet Baxter International (BAX)   FAST Graphs, FactSet   Amazon (AMZN)   FAST Graphs, FactSet   Comcast (CMCSA)   FAST Graphs, FactSet   Humana (HUM)   FAST Graphs, FactSet Truist Financial (TFC)   FAST Graphs, FactSet British American Tobacco (BTI)   FAST Graphs, FactSet Brookfield Renewable Corporation (BEPC)   FAST Graphs, FactSet Rexford Industrial Realty (REXR)   FAST Graphs, FactSet Risks To Consider Let me be very clear about this. Fundamentally justified upside potential within 12 months is NOT a forecast. It is what would be justified based on today's information. For example, Amazon's cash flow estimates will change by the end of the year. If they fall 20%, then so will the fundamentally justified return potential. Remember that 12 months' returns are 95% sentiment and luck. Sell-side Wall Street analysts offer these \"price targets\" only because their bosses force them to.  According to FactSet, analyst consensus is 92% accurate at forecasting earnings. But their price targets require guessing the multiple, and that's not possible.  I personally don't expect Amazon to return to historical fair value for two or three years. Also, remember that even blue chips are volatile.   Ycharts Johnson & Johnson (JNJ) is a AAA-rated dividend king with a recession-resistant business model. However, during the pandemic, it fell over 5% in a single day.   Portfolio Visualizer  During the pandemic, the Zen Value fell less than most other value funds, but it was still a significant amount.   Portfolio Visualizer  Three corrections, including one bear market in the last seven years. History is rather bloodless, however.   Portfolio Visualizer  11% declines in one month are normal, and to be expected from a value portfolio. If you can't tolerate the occasional double-digit decline in a few weeks, you need to own non-stock assets like cash, bonds, and managed futures.   DK Research Terminal You can tailor a portfolio for your specific risk profile using a good hedging strategy like long bonds and managed futures. If you can't emotionally handle a bear market, then own at least 30% hedges; historically speaking, you're unlikely to experience one. If you can't emotionally handle a 10+% correction, then a 40% hedging allocation will, historically, minimize the risk you ever go through. And if you just don't want a portfolio that falls during a bear market, then if you're willing to go 60% hedges historically speaking, you'd be up modestly in the historical bear market.   Wide Moat Research                Crisis Period US Stocks Bonds (ZROZ) Long Bonds Cash RSBT DBMF KMLM 50/50% Long Bonds And KMLM   December 2021 to September 2022 -25% -14.4% -44.8% 0.6% 28.7% 31.6% 44.8% 0.0%   January 2020 to March 2020 -20% -2.6% 20.3% 0.3% 0.3% -0.8% 13.9% 17.1%   October 2007 to February 2009 -50% 6.1% 24.0% 2.5% 25.9% 13.5% 37.4% 30.7%   August 2000 to December 2002 -41% 33.4% 149.6% 11.2% 78.6% 28.8% 30.4% 90.0%   Average -34% 5.6% 37.3% 3.6% 33.4% 18.3% 31.6% 34.5%   Click to enlarge ZROZ and KMLM are the optimal hedging strategies, assuming you want to minimize the risk of ever having your hedging allocation fail to deliver flat or positive returns. However, this doesn't guarantee that a portfolio will act as expected in every bear market.  Every downturn is different. Historical returns are a guide, not a map.  Combining a Zen portfolio (50% ETFs and 50% stocks) with hedges creates a 33%/33%/33% ZEUS portfolio. ZEUS = Zen Extraordinary Ultra Sleep Well At Night portfolio Bottom Line: Coiled Spring Blue-Chips Are All Around Us The market is near record highs, and some stocks are in absolute crazy bubbles, trading as much as 1,500X sales. But that doesn't mean you can't find blue chips at nearly 50% discounts that have fundamentally justified return potential of 100% in the next 12 months. These companies have solid balance sheets, good to excellent management, and risk management you can trust in recession, bear markets, or anything else we'll face in the coming years or decades. Combined with the best ETFs for your particular needs, like VFLO in the case of deep value, you can tailor a portfolio that gives you the income, yield, growth, and total return potential best suited to your needs. You can also tailor your asset allocation so that you won't panic sell and blow up your carefully designed long-term investment plan when the market does correctly. That is key to long-term success. I'm not guessing what stocks will do in 12 months; that's a parlor game Wall Street analysts do because clients demand it. I deal in facts, not forecasting the future. That’s crystal ball stuff. That doesn’t work.”— Peter Lynch If you want to succeed on Wall Street, you need discipline, not luck. It's about risk management, not YOLOing meme stocks.  It's about safety and quality first, and prudent valuation and risk management.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2423452145"}