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Cheap or Not Cheap?

Cheap or Not Cheap?

There has been a lot of talk on both sides of the value fence lately. The bulls and “value investors” are beating the drums of value everywhere the eye can see, while the bears are screaming its all fraud.

Who to believe? The “value investors” definitely lost a lot of street cred with the last meltdown as they were all the last ones to get out. Explaining the whole way down to the bottom how stocks were cheap because they are always basing everything on old numbers and earnings expectations that can always fall off a cliff.

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INTC Earnings Prep

On the post is the earnings chart for Intel. It shows the history of Intels earnings and upcoming expections with the stocks performance during the same period. As you can see in the chart below the earnings difference year over year for the upcoming earnings Thursday could be potentially huge if they meet expectations. The earnings outlook will be very interesting and important for the streets reaction as well. The street expects $0.45 tomorrow evening.

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Alcoa Earnings Preview

Alcoa kicks off earnings tonight. Obviously the industry that Alcoa falls into has been red hot as of late with the falling dollar. It will be interesting to see what the numbers look like. Below is a chart showing the earnings expectations and the past earnings of the last year or so with a back lay of the stocks chart. The year over year comparison of Q4 earnings has the potential to spark a rally based on validation of Alcoa turning the corner from the depths of last March. 2008 Q4 earnings -$0.28 and the expectations for 2009 Q4 is $0.05, which is quite a difference and even more so for next quarter if they set positive outlooks.

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Naked Hedge Fund Weekly

Naked Hedge Fund Weekly report. PDF on post.

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Meredith Whitney Downgrades Goldman

Today Meredith threw a curve ball at the overly optimistic market with fresh downgrade on Goldman Sachs from a buy to a Neutral. Normally this kind of thing doesn’t matter to us here because most analysts are completely off base or in the companies pocket, but Meredith has proven herself in the recent past. Her reasoning behind the downgrade follows a theme of “Why be greedy” in that the price of GS has already met her year target price ($186) in the matter of months. Thanks to ZeroHedge for making this document available.

Actual note from Meredith Whitneys Advisory Group on the post.

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Earnings Party

Well even though the earnings season has just started there has definitely been a trend established where the earnings have been received well and stocks have responded in a positive fashion. Of course the rallies in gold and oil have helped as well.

This week has some big boys reporting:

* Intel : Tues Night
* JP Morgan: Wed Morning
* Citigroup: Thur Morning
* Goldman Sachs: Thur Morning
* Google: Thur Night
* IBM: Thur Night
* Bank of America: Fri Morning
* General Electric: Fri Morning

In the post we go into some more details and charts about JPM and INTC.

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Alcoa Earnings Prep

Well after much anticipation the 3rd quarter earnings season is upon us. There has been endless talk on both sides of the tape. The bears have beaten to death the “lack of earnings” argument, while the bulls have done the same with the “things are getting better” argument. Starting with Alcoa we will see what kind of reaction the market will have with the results…. and thats all that matters is what the market thinks.

This post has some charts that will help you get up to speed with the expectations.

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1200 on S&P in 12 Months?

The new CFA at Bank of America/ Merrill Lynch put out a report today that predicts a 17% gain in the S&P 500 from the current levels. Some of the bullet points from the paper are:

* Slow GDP + low inflation + more saving = Shrink resistant P/E
* S&P 500 EPS recovery to outpace the US GDP recovery
* Overweight: Financials, Energy, Tech and Consumer Staples

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Long Term Earnings Charts

Below are a couple of charts showing the earnings situations long term. Using data that goes back to 1989, which is the max with the Standard and Poors Data.

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2009 Q3 Earnings Estimates Revised Down Again

With earnings season winding down and the market roariing to new YTD highs the party seems like it will never end. A sobering fact is that each quarter that has past the future estimates for earnings keeps going down. You would think with all the recovery talks that companies would have seen improvement on their horizon, but Q3 estimates were again revised down overall. Does anyone take notice of this? You don’t see any reporting on earnings decelerating still. Are companies finding that the Apple way of earnings estimates is the way to go? Sandbag the estimates then beat them to get everyone’s panties in a twist on CNBC and boom you got a nice rally on your stock price.

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